OMV Petrom obtains EU funding for two green hydrogen plants

Oil and gas company OMV Petrom is stepping up its decarbonization efforts with projects for two green hydrogen production units at its Petrobrazi refinery. It signed financing contracts worth EUR 50 million through Romania’s National Recovery and Resilience Plan for the electrolyzers, which would have a combined capacity of 55 MW.

Romania is rushing to distribute grants and cheap loans from the European Union’s funds for the energy sector to meet tight deadlines. Fossil fuel companies are under double pressure as they need to keep up with the tightening of environmental regulations, carbon dioxide emission costs and ambitious decarbonization schedules. OMV Petrom, controlled by Austria-based OMV, isn’t wasting time.

The oil and gas producer, which also operates a large network of service stations, launched a massive renewables investment plan over two years ago. In its latest update, the company said it signed two financing contracts through the National Recovery and Resilience Plan (NRRP or, in Romanian, PNRR).

The Ministry of Energy approved EUR 50 million in total for two production facilities for green hydrogen, with 20 MW and 35 MW in capacity, at its Petrobrazi refinery. Total investment is estimated at EUR 140 million.

OMV Petrom earmarked 35% of investments for low-, zero-carbon projects

OMV Petrom obtained the funding after a competitive call for projects supporting investments in green hydrogen, initially launched in 2022, was reopened last July.

“Through our Strategy 2030, we committed to support the energy transition in Romania and the region, with investments of around EUR 11 billion by the end of this decade, of which approximately 35% will support low- and zero-carbon projects. We have made great strides in renewables and electromobility projects, and with this project we are adding hydrogen to our portfolio of low carbon projects,” Chief Executive Officer Christina Verchere said.

The European Union is heavily subsidizing green hydrogen production to make the budding industry competitive

Hydrogen has multiple uses. For instance in fuel cells for cars, as a replacement for fossil gas or to be mixed with it, and for the direct reduction in the process of making steel. Burning the smallest molecule and its chemical reactions don’t directly cause greenhouse gas emissions.

On the other hand, more than 95% of the world’s hydrogen is produced from fossil gas and the process is carbon intensive indeed. The product is labeled gray hydrogen. If CO2 is captured in the process and permanently removed, hydrogen gets a blue tag. But the technology for carbon capture, utilization and storage (CCUS or, without utilization, CCS) is more expensive than carbon emissions certificates and, above all, not yet accessible or even reliable enough.

It’s where green hydrogen comes in. It is produced in electrolyzers, like the ones that OMV Petrom intends to install. The plant, powered by renewable sources, separates water molecules into oxygen and hydrogen. Actually, such systems are far from competitive with grey hydrogen, but investors in Europe count on huge subsidies.

Green hydrogen production requires 60.2 kWh per kilo

The two planned systems would together produce an estimated eight kilotons of green hydrogen per year. The PiataAuto media outlet calculated that it translates to 60.2 kWh per kilo if both units operate around the clock throughout the year.

For that, OMV Petrom requires a steady and constant source of renewable electricity supply. The Ministry of Energy holds a 20.7% stake in the company while domestic pension funds control 22.5%.

Developing the two projects is an important step towards sustainable refining, OMV Petrom stressed. It said integrating green hydrogen into the production process of green fuels, such as sustainable aviation fuel and biodiesel, cuts emissions by 70%.

The electrolyzers are in the engineering phase and the company said wants to reach the final investment decision before the end of the year.

Ministry backs CE Oltenia’s switch from coal to gas, hydrogen

Just last week, the ministry signed a financing contract with CE Oltenia’s subsidiary CCGT Power Ișalnița for 850 MW in combined cycle gas turbine capacities. The facility is set to be located in Dolj county in southern Romania. The project includes the possibility of switching to hydrogen.

The joint venture with Alro, which holds 40.1%, obtained EUR 253 million via the Modernisation Fund. OMV Petrom is a partner of the coal producer, Complexul Energetic Oltenia, in its green energy transformation.