Malaysia-based Petronas will invest $1.6bn in an Indian green ammonia venture, it has been announced.

The move will allow the company to secure a 30% stake in AM Green Ammonia Holdings (AMG Ammonia), a company founded by Indian renewables group Greenko.

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The investment will be made through Gentari, Petronas’ renewables division, with Singapore’s GIC sovereign wealth fund also contributing. According to a joint statement issued by Gentari and AM Green, the project aims to produce 5 million tonnes of green ammonia each year (MTPA) until 2030. This is equivalent to around 1 MTPA of green hydrogen and will account for 20% of India’s target for green hydrogen production by 2030 or 10% of Europe’s imported renewable hydrogen targets.

AMG Ammonia will become one of the world’s leading producers of green ammonia.

The first shipments of green ammonia will begin by late 2025 and will serve key OECD markets, including Germany, Japan, South Korea and Singapore.

News about the investment came after Petronas, XyloNetics, and Caterpillar confirmed in May new investments totalling over $4bn in the Indian state of Tamil Nadu.

Sushil Purohit, Chief Executive Officer of Gentari, said: “As Gentari expands our portfolio of clean energy solutions in Malaysia, Asia Pacific and beyond, we believe in the critical importance of industry-level collaborations that combine complementary strengths and unlock synergies.

“This partnership with AM Green and GIC is a testament to our commitment in accelerating green hydrogen adoption globally, to make an impact in the pursuit of a net zero future. In OECD, Southeast and East Asian economies, green ammonia will address the decarbonisation of industries such as power generation, through co-firing, as well as shipping.”

The largest project, by far, remains Petronas’ plans to build a green hydrogen and ammonia plant worth $4.13bn in the Indian industrial city of Thoothkudi. The plant will run on solar power on a site of about 4,000ha.

Green ammonia is a gas used as an agricultural fertiliser and helps generate hydrogen through water electrolysis. This type of ammonia results from a process whereby making ammonia is 100% renewable and carbon-free.

However, producing green ammonia remains a costly endeavour. According to tech consultancy firm FutureBridge, in November 2022, the price of green ammonia ranged dbetween $700 and $1,400 per tonne – or six times more expensive than traditional ammonia.

Nevertheless, GlobalData believes that hydrogen costs will go down over the next decade – a decrease which, in turn, will drag down the costs involved in producing green ammonia.

India was the top foreign direct investment (FDI) destination for jobs in 2022, mostly due to worsening trade relations between China and the West. According to GlobalData’s FDI Projects Database, the number of Indian greenfield investments grew by more than 70% in 2022 in the country.