One of the least visited countries in the world, Mauritania is being thrust into the spotlight through various green hydrogen project announcements.
The biggest of these is Australian CWP Global’s Aman project which aims to produce green hydrogen through a 30-gigawatt (GW) wind and solar hybrid project worth $40bn. On May 24, the Mauritanian government signed a framework agreement with CWP Global following a memorandum of understanding (MoU) last year.
But the scale of the endeavour, which dwarfs the country’s whole economy by a factor of five, combined with Mauritania’s chronic water scarcity, has raised eyebrows.
“It’s so disproportionately large in comparison to the country’s gross domestic product (GDP) and the existing energy sector,” says Ben Attia, principal research analyst at Wood Mackenzie.
Desalination and water shortages
A 2021 report from consultancy Rystad said that the majority of green hydrogen projects have appeared in water-stressed regions, prompting the need for more renewable energy capacity and higher costs to run these desalination plants, which effectively ‘clean’ and prepare sea water for use in hydrogen production.
Situated in the coastal regions of Dakhlet Nouadhibou and Inchiri, CWP Global aims to produce 1.7 million tonnes of green hydrogen for local use and export, to power steelmaking and produce ammonia to make fertiliser.
Nouri Chahid, general manager of CWP Global in Morocco and Mauritania, refutes the idea that the desalination process poses a problem to either the project or the future of green hydrogen production in Mauritania.
“If anything, it’s an advantage for Mauritania as we can sell excess cubic metres of water to the [government] for their agriculture,” he says, estimating that CWP will desalinate 150 million tonnes of water — a third of which will go to local use once CWP’s desalination plant, or plants, are built.
Wedged between the Maghreb and west Africa, Mauritania is comparatively stable in the conflict-riven neighbourhood of the Sahel region and in spite of its natural resources, its GDP remains relatively low at $7.9bn as of 2020.
Nonetheless, Mr Chahid expects “breakthrough” commitments from off-takers, operators and financiers this year for green hydrogen projects in Mauritania, including CWP Global’s, and is assured that there is a “wide portfolio of companies that will need these products” — especially after the EU carbon tax is implemented.
In broad terms, roughly half the project will be financed by a consortium of equity investors, with the rest funded by regional and intergovernmental lenders, such as the IMF and the African Development Bank, he predicts.
“What is trickier is the legal and regulatory aspects, because the price and carbon costs of, say, green steel or green ammonia still need to be defined,” he adds.
This has not prevented other investors from piling in. In May 2022, the Mauritanian government also signed a pre-feasibility study with Africa-focused energy company Chariot for a 10GW green hydrogen project, Project Nour. In April, Chariot also signed an MoU with the port of Rotterdam in The Netherlands to import renewables-based hydrogen.
Galvanised by the rising private sector interest in Mauritania, the government opened an investment promotion agency in December 2020 to help drive foreign direct investment (FDI) into the country.
Aïssata Lam, director general of the investment promotion agency of Mauritania, says that the effect of CWP Global’s project and other green hydrogen projects has been that the investment proposition of the country has changed.
“With Mauritania in the top five locations for green hydrogen, the [purpose] of creating the investment promotion agency has been to position the country to attract FDI and to kickstart the diversification of the economy,” she says.
The question of how large-scale green hydrogen investments will bring about economic development is “one of our highest priorities”, Ms Lam says, adding that the agency is using this to mobilise the agricultural and fishing sectors.
Mamadou Kane, special adviser at Mauritania’s ministry of energy, says that Mauritania did not tender the project, but rather developers came to the country. “The origin story of all these foreign companies coming to Mauritania has taken exactly the same trajectory as what happened with the oil and gas and mining companies. The basin of west Africa was of interest to these investors and, all of a sudden, they came,” he explains.
Over the past six years, energy companies, including US oil company Kosmos Energy and UK energy giant BP, have been moving into the waters off the coast of Mauritania for gas exploration.
Mr Kane says that the government has assessed green hydrogen proposals as they would any other.
“We evaluated [companies’ green hydrogen] propositions on the basis of a number of criteria, the most important of which was that they already had a similar project in development elsewhere, be it in Australia, in Chile or Namibia,” he says, adding that an Emirati investor is likely to sign soon on a green hydrogen investment.
Asked whether CWP Global’s mega-project will actually see the light, Mr Kane says that in light of the agreement signed, “if we didn’t believe in it, we wouldn’t have committed to it”, adding that if green hydrogen does become one of the main drivers of the energy transition, then “we’ll likely be making more than has been announced”. He stresses that Mauritania has outlined a strategy for the decarbonisation of its oil and gas sector.
Rhetoric and reality
Wood Mackenzie’s Mr Attia says that in terms of technology, this is still “uncharted territory” for a project of this size and amid the wider green hydrogen hype, there is a “gap between rhetoric and reality”.
“Even if it’s an export-oriented project ... my baseline assumption for projects on this scale and with relatively immature technology is somewhat bearish,” he explains.
But the stars may well be aligning for Mauritania’s future. Felix Fischer, the country director of Mauritania at the IMF, says that there has been a macroeconomic consolidation underway in Mauritania over recent years, creating more stability for investors.
The debt profile of the country has also improved as a result of external factors. In April, the Saudi government agreed to renegotiate a deposit of $300m with the Mauritanian central bank into a soft loan, according to the Saudi Press Agency.
Mr Fischer remarks that as a result of this, the IMF is due to update the country’s debt distress risk from “high” to “moderate”. Even with an improving fiscal situation, it is still private investors who will do most of the heavy lifting, he adds.
Mr Chahid reflects on how the Aman mega-project augurs a new world of green hydrogen. “The market is crystallising this year, and we’re past the point of no return now. With a long queue of developers, all the best spots in the world have been taken,” he says.
This article first appeared in the June/July 2022 edition of fDi Intelligence. Read the online edition of the magazine here.