Provaris Energy Ltd (ASX:PV1)’s recently-announced collaboration with Norwegian Hydrogen AS may result in the company signing an offtake agreement that will see its H2Neo green hydrogen (GH2) carrier set sail on its maiden voyage in Europe in 2027, according to Edison Investment Research Ltd.
PV1 announced last week that it had signed a Memorandum of Understanding (MoU) with Norwegian Hydrogen to identify and develop green hydrogen value chains within the Nordic region.
The collaboration will allow the Norwegian company to accelerate its plans to scale up production volumes of compressed hydrogen from multiple sites in the Nordic region to deliver to major European import hubs.
Edison expects the first Norwegian commercial hydrogen export volumes to become available around the time of H2Neo’s maiden voyage, neatly linking with the European Union’s REPowerEU ambition to develop a hydrogen industry.
The following are excerpts from the research firm’s latest note on PV1.
Norwegian Hydrogen MOU speeds up development
Norwegian Hydrogen is a developer of GH2 projects with an industrial ownership base. Its aim is to develop GH2 production projects focused on the Nordics with a view to domestic supply and export. Norwegian Hydrogen’s foundation project, the Hellesylt Hydrogen Hub Pilot-E, is expected to be operational this year.
The collaboration with Provaris will allow Norwegian Hydrogen to accelerate its plans to scale up production volumes of compressed hydrogen from multiple sites in the Nordic region to deliver to major European import hubs.
Government/EU support for H2 gathers momentum
Norway has a well-established hydrogen strategy that should see plans to scale up activity by 2030 aligning it with the European Union’s REPowerEU ambition to produce 10mtpa and import a further 10mtpa of hydrogen. Intergovernmental and EU support for the development of low-emission hydrogen production and the development of hydrogen demand is gathering momentum, with numerous financial support packages available to participants.
The timeline for the development of Provaris Energy’s H2Neo GH2 carrier is an obvious transport solution to link the Norwegian GH2 export volumes with hydrogen import hubs in the EU.
Valuation: Each new announcement adds credibility
The MoU with Norwegian Hydrogen is the latest positive announcement from Provaris in its development following the class ‘design approval’ for the H2Neo from the American Bureau of Shipping in December.
The next key milestone would be the signing of an offtake agreement, which would add even greater confidence to the commercial viability of Provaris’s ambitious projects.
Our modelling, which produces internal rates of return of 9.7-18.7% from a range of scenarios and vessel sizes, remains robust. We would revisit this in the event of an offtake agreement being announced. We consider this as being likely, given the exponential growth in demand for GH2 forecast by the International Energy Agency.
