French utility Engie and Norwegian oil major Equinor plan to develop low-carbon hydrogen value chains across Belgium, the Netherlands and France.

Green is the new black. Subscribe to Accelerate

Get the market insight you need into the global oil & gas industry's energy transition – from the new newsletter from Upstream and Recharge. Sign up here

The two companies will both explore the production and market potential for hydrogen from natural gas linked to carbon capture and storage (CCS), so called-blue hydrogen, and hydrogen made from renewable power via electrolysis, or green hydrogen, and potentially initiatives across the technologies.

"Engie produces renewable hydrogen and supports the development of the market for low-carbon hydrogen," said Edouard Neviaski, chief executive of the utility’s global energy management business unit.

"Both these technologies will be necessary to accelerate the development of a solid infrastructure and the transition to a carbon neutral economy."

The partnership is a an early stage, and the two companies in coming months will start talks with customers, stakeholders and relevant authorities, Engie and Equinor laid down in a memorandum of understanding (MoU).

"As the project [cooperation] is at a very early stage, no CO2 storage site has been decided yet," an Equinor press official told Recharge.

"Our focus at this stage is on permanent offshore storage in the North Sea. It is too early to say anything specific about capacities, costs and markets."

Equinor’s gas bias

Equinor – a major producer of offshore natural gas - in the past has told Recharge that green hydrogen could not be scaled up fast enough to meet the coming demand for low-carbon H 2 , so large amounts of blue hydrogen would be required.

That point of view is disputed by climate activists, who argue spending billions to create a CCS infrastructure would only cement the use of natural gas for decades to come and thus harm the environment. The CCS process can only filter out 95-99% of the CO2 in natural gas.

Equinor as part of the Northern Lights project in Norway and the UK’s H21 North of England and Humber projects is at the forefront of CCS developments in the world.

"Equinor aims to be a leading company in the energy transition. We believe that hydrogen and CCS will be vital if we are going to succeed with the transition," said Grete Tveit, Equinor’s senior vice president for low carbon solutions.

"Collaboration and partnerships will be absolutely necessary to find the best solutions. Our two companies have complementary areas of expertise that we can utilize to develop low carbon hydrogen initiatives together."

The Norwegian oil major is also part of a group of companies including Shell that is developing the NortH2 project that aims at using up to 10GW of North Sea offshore wind power for the production of green hydrogen.

Engie is quickly transforming into a major renewable energy player, but has roots in French gas company Gas de France, and operates a vast gas distribution network in Europe. The company last year formed the Ocean Winds joint venture with Portuguese utility EDPR with the aim to become an offshore wind giant.