Keppel and partners to develop hydrogen project in Australia; invests in Vietnam residential development

KEPPEL Corporation : BN4 0% on Friday (May 26) said it has joined a consortium to develop a large-scale hydrogen project in Queensland, Australia.

It also inked a memorandum of understanding (MOU) with Incitec Pivot, Australia’s top fertiliser maker, to explore the development of a green ammonia production facility in Gladstone, Queensland.

The group said its participation in the green hydrogen project consortium will give it access to a ready and reliable source of hydrogen, as feedstock for the green production facility it plans to develop with Incitec Pivot and other potential partners.

Keppel will join the Central Queensland hydrogen (CQ-H2) project consortium, which includes participation from Stanwell, Iwatani, Kansai Electric Power Co and Marubeni.

The CQ-H2 project has ambitions to produce renewable hydrogen for the Japan and Singapore markets, to be delivered via different carriers as well as to be supplied to customers in central Queensland. Production may scale up to around 2,500 megawatts of hydrogen.

The consortium has initiated a front-end engineering design (Feed) study, with a final investment decision planned for late 2024 and commercial operations targeted for 2028.

A NEWSLETTER FOR YOU

Friday, 12.30 pm

ESG Insights

An exclusive weekly report on the latest environmental, social and governance issues.

Sign Up

Keppel said the Feed represents the largest investment in an Australian renewable hydrogen project of its kind to date.

The green ammonia production facility it is looking to develop with Incitec Pivot will include an end-to-end export supply chain to Singapore and Asia.

The facility will supply ammonia to Australian markets to support the decarbonisation of Incitec Pivot’s domestic manufacturing assets, and export ammonia to Singapore to meet Keppel’s zero or low-emission power generation needs. Excess green ammonia will be marketed and sold to Asia customers.

The group’s MOU with Incitec Pivot follows an earlier feasibility study on producing green ammonia for export, commenced by both parties and Temasek in 2021.

Keppel and Incitec Pivot will work with the Queensland government on essential infrastructure requirements, licences and approvals for the projects.

Cameron Dick, Queensland’s Treasurer and Minister for Trade and Investment, said: “After a number of discussions with Keppel, we are delighted the company and Incitec Pivot have chosen Gladstone for their green ammonia production facility. This will open exciting and significant export possibilities, let alone regional jobs.”

Keppel does not expect the two projects to have any material impact on its earnings per share and net tangible asset per share for the current financial year, it said.

Separately, the group said the joint venture between Keppel Land and Keppel Vietnam Fund (KVF) is acquiring a 49 per cent interest in two adjacent residential development projects in Thu Duc City, within Vietnam’s Ho Chi Minh City, for 3.2 trillion dong (S$187.1 million).

Keppel Land is a unit of Keppel Corporation, and KVF is one of the group’s private funds. Each member of the joint venture consortium will hold an equal shareholding ratio.

The project’s seller, Khang Dien Group, will hold the remaining 51 per cent interest and jointly develop the projects with Keppel Land and KVF.

Necessary approvals for the development, including the master plan and land-use right certificates for both sites, have been obtained. 

The Keppel consortium and Khang Dien Group plan to jointly develop over 200 landed homes and more than 600 high-rise apartments on the two sites, which span a total land area of about 11.8 hectares.

Keppel estimates the total cost of the projects – including the land cost – to be around 10.2 trillion dong.

The acquisition marks the Keppel consortium’s second joint investment, after it acquired three residential land sites in Hanoi, Vietnam, in 2022. 

Joseph Low, president of Keppel’s real estate division for Vietnam, said the acquisition is in line with the group’s asset-light strategy and enables it to tap third-party funds for growth.

“As Keppel continues to expand its presence in Vietnam, we look forward to collaborating with like-minded partners to offer our suite of sustainable urban-space solutions, and further contributing to Vietnam’s sustainable development,” he said. 

Shares of Keppel closed S$0.09 or 1.4 per cent higher at S$6.40 on Friday, after news of both projects in Australia and Vietnam were announced.