Oil and Gas Majors Capture Only 8% of Low-Carbon Hydrogen Market, Future Landscape Projected to Shift

Kuwait Oil Company

A recent analysis conducted by Wood Mackenzie reveals that oil and gas majors currently hold a mere 8 percent market share in the announced global net low-carbon hydrogen production capacity, totaling approximately 102.6 million tonnes per annum (Mtpa). This statistic underscores the evolving landscape of the energy sector and the push towards sustainable practices.

The focus of these major players, according to Wood Mackenzie’s findings, revolves around initiating smaller-scale projects before 2030, with the intention of laying a robust foundation for large-scale industrial operations in the following decade.

Wood Mackenzie’s Energy Transition Outlook, published in September, outlines a trajectory projecting global low-carbon hydrogen production to surge from 1 Mtpa in 2023 to a staggering 200 Mtpa by 2050.

Senior Research Analyst Bridget van Dorsten from Wood Mackenzie highlighted the potential for rapid shifts in the market, mentioning the likelihood of undisclosed projects that could significantly alter the current landscape. Van Dorsten also anticipated consolidation within the sector, considering the involvement of over 750 participants in announced projects.

Wood Mackenzie’s breakdown of the Majors’ share in the global net announced pipeline depicts Equinor, BP, and Shell as the frontrunners, with Equinor leading in total announced production capacity, largely attributed to its H21 project. ExxonMobil, on the other hand, takes the lead in advanced development capacity.

The report emphasizes the major players’ strategies concerning blue and green hydrogen. While blue hydrogen projects constitute 23 percent of their market share, leveraging existing gas positions and infrastructure, the focus on blue hydrogen stems from its cost competitiveness and capacity for large-scale production, a contrast to the smaller-scale electrolyser deployments in the green hydrogen domain.

The European Majors hold dominance in green hydrogen, leveraging their renewable power portfolios to integrate with green hydrogen facilities. In contrast, the US Majors, lacking exposure to green hydrogen, have prioritized other strategic directions.

However, questions linger regarding strategic choices and potential missed opportunities. With green hydrogen projected to claim 70 percent of the global low-carbon hydrogen supply by 2050, concerns arise about strategic disadvantages for those heavily invested in blue hydrogen. Despite this, van Dorsten remains optimistic, pointing out that the sector is in its infancy, allowing ample time for adjustments in portfolios and anticipating a phase of consolidation as commercial scale-up becomes clearer.