Saudi Arabia’s pivot toward green energy reached a new milestone with a major Sino-Saudi collaboration in green hydrogen. In August 2025, China’s oil and chemical giant Sinopec secured a contract to provide engineering services for ACWA Power’s planned green hydrogen and ammonia megaproject in Yanbu, on Saudi Arabia’s Red Sea coast.
Billed as the world’s largest integrated green hydrogen facility, the project will harness vast solar and wind resources to produce an estimated 400,000 metric tons of green hydrogen per year and about 2.8 million tons of green ammonia (a hydrogen carrier) annually by 2030. For context, this output is roughly double the capacity of the high-profile NEOM green hydrogen project now under construction in northwest Saudi Arabia, underscoring Yanbu’s unprecedented scale.
Sinopec’s involvement at the front-end engineering and design stage signals not only confidence in the project’s viability but also a broader shift in energy business models, from fossil-fuel-centric to diversified clean energy ventures.
Turning Point For Saudi’s Energy Diversification
Saudi Arabia remains the world’s leading oil exporter, but under “Vision 2030”, it has been aggressively investing in renewable energy and clean fuels to future-proof its economy. The Yanbu green hydrogen and ammonia project has emerged as a cornerstone of this strategy, marking a shift from concept to execution in large-scale hydrogen production.
Once operational in 2030, the facility will use 4 GW of electrolysers powered by dedicated wind and solar farms to split water and produce emissions-free hydrogen. The hydrogen will then be synthesised with nitrogen from the air to form green ammonia, allowing easier shipping to international markets.
The choice of Yanbu as the site is deliberate. As an industrial city with a port and established infrastructure, it is well-positioned to export ammonia via tankers to customers in Europe and Asia seeking low-carbon fuel and feedstock.
This venture illustrates the new energy business model Saudi Arabia is pursuing. Rather than exporting crude oil or natural gas alone, the Kingdom aims to export green molecules such as ammonia, positioning them as commodities of the future. Saudi firms are adapting accordingly.
ACWA Power, once known primarily as an independent power producer focused on gas and solar plants, now finds itself at the forefront of producing and marketing carbon-free fuels. The project’s economics will depend on long-term offtake agreements for green ammonia, whether for power generation, fertilisers, or shipping fuel abroad, much like oil sales rely on crude contracts.
In effect, Saudi Arabia is leveraging its advantages of low-cost land and abundant sunshine to become a top supplier of clean energy in a scalable form. If successful, this model could transform the Kingdom’s energy sector, creating a revenue stream that parallels, and may eventually succeed, oil exports.
International Collaboration On A Sustainable Megaproject
The partnership with Sinopec underscores the international collaboration driving this venture. Sinopec’s engineering arm will conduct front-end engineering design (FEED) and could later manage procurement and construction, bringing Chinese technical expertise and project experience.
Sinopec is no newcomer to Saudi Arabia. It has a long-standing presence through ventures such as the YASREF refinery (a joint venture with Saudi Aramco in Yanbu) and has executed major contracts, including a USD 1.1 billion gas pipeline project. By joining the green hydrogen project, Sinopec extends this partnership into clean energy.
The move also aligns with China’s strategic interest in hydrogen. Chinese companies are eager to develop supply chains for green ammonia and hydrogen, which could eventually be imported to meet China’s rising demand for cleaner fuels. Sinopec’s dual identity as an oil refiner and emerging hydrogen player reflects how traditional energy firms are reinventing themselves for a low-carbon future.
Crucially, the Yanbu project is also attracting Western partners, making it a multinational endeavour. Germany’s utility EnBW has agreed to partner with ACWA Power on the first phase of the Yanbu hydrogen hub, likely as a future ammonia offtaker and investor. A consortium of European and Saudi entities, including Edison and TotalEnergies, has signed agreements to create a green energy export corridor from Saudi Arabia to Europe.
This demonstrates that the project is not merely a bilateral Saudi-Chinese undertaking but part of a wider collaboration network spanning the Middle East, Europe, and Asia. Global expertise is being pooled to address the technical challenges of green hydrogen. Spanish firm Técnicas Reunidas is working alongside Sinopec’s engineers in the design phase, while companies such as GE and Siemens Energy are exploring grid and transmission solutions to deliver clean energy from production sites to export terminals.
This breadth of collaboration signals strong confidence in the project’s prospects. It spreads risk and technical know-how among partners, while the involvement of foreign stakeholders strengthens assurances on both technology and long-term purchase agreements. For Saudi Arabia, attracting such partners is both a financial advantage and a diplomatic achievement, reinforcing its image as a credible player in global climate action.
Sustainability, New Business Models, And Green Profit
From a sustainability perspective, the Sinopec-ACWA project is poised to avoid millions of tons of CO₂ emissions each year by producing green hydrogen in place of fossil fuels. If 400,000 tons of green hydrogen replaced conventional hydrogen or diesel, it could eliminate five to six million tons of CO₂ annually, depending on end use.
This supports Saudi Arabia’s pledge to reach net-zero emissions by 2060 and contributes to global decarbonisation efforts in hard-to-abate sectors such as fertiliser production, where green ammonia can replace carbon-intensive alternatives. The project also offers a template for public-private partnerships in clean energy, combining government vision and financing with private-sector technology and capital from abroad.
Business models are evolving in parallel. ACWA Power’s role highlights a shift from selling electrons (electricity from plants) to selling molecules (hydrogen and ammonia as tradable commodities). This requires expertise in chemical plant operations, export logistics, and commodity trading, marking a convergence between power utilities and hydrocarbon companies.
Similarly, Sinopec, one of the world’s largest oil refiners, is signalling that its future portfolio will include non-fossil energy infrastructure. The company already produces hydrogen for its refineries and is expanding into green hydrogen domestically. By engaging in Saudi Arabia’s project, it gains experience and positions itself within the emerging global green hydrogen supply chain.
Long-term offtake agreements may emerge from this partnership. Sinopec could eventually purchase a portion of the green ammonia output for use in China, though no such arrangement has yet been confirmed. Such synergies would deepen the growing China–Middle East energy relationship, which is moving beyond oil into renewables.
Challenges remain, but the commitment is clear. This initiative marks a turning point, showing that Vision 2030’s promises of diversification are being realised through concrete projects of global significance. In the years ahead, the Yanbu hydrogen hub could stand as a landmark in the energy transition, with Saudi Arabia and its partners helping power the planet more sustainably.