Sinopec aims to massively expand its hydrogen refuelling network as the state-owned oil giant, which has the potential to become one of the world’s largest hydrogen producers, attempts to carve out a role in China’s transition to cleaner energy.
Sinopec last week announced its plan to build the largest hydrogen refuelling network in the world with 1,000 stations by 2030. At the end of last year, there were 650 hydrogen refuelling stations across the world and only 100 in China.
China’s target is to have 1,500 hydrogen refuelling stations by 2030, making Sinopec’s goal of 1,000 by 2025 almost 70% of this total. The ambitious target underscores the emphasis China is putting behind the still-nascent transport technology.
“Sinopec’s ambitious hydrogen development plan in 2021-2025 will speed up fuel cell penetration significantly,” Morgan Stanley analyst Jack Lu said in a report following the announcement.
Two-thousand stations would be enough to maintain 150,000 to 300,000 fuel-cell vehicles on the road, Lu said.
Analysts at investment house Bernstein said Sinopec’s planned rollout would be the largest hydrogen refuelling network in the world and while it is a fraction of the 30,000 gasoline and diesel stations which Sinopec operates across China, it is a statement of the importance that Sinopec places on hydrogen as a fuel of the future.
Sinopec is viewed by many as a company which has limited growth given “peak oil demand” which many expect to happen between 2025-30 in China, said Bernstein.
But “hydrogen could represent an opportunity for the company beyond fossil fuels. Sinopec is among the largest producer of hydrogen in the world today with 3.5MTPA of production of grey hydrogen. While most of this hydrogen is used in refining and fertilizer production, some of it could be redeployed in transport. While Sinopec needs to transition to green hydrogen, it is worth noting that if the company could build up to a scale of 3.5MTPA it could generate a revenue of S$7 billion to $21 billion annually,” added the analysts.
“It should be no surprise that Sinopec is acutely interested in hydrogen. China after all is the largest producer of hydrogen today with roughly 22MT of hydrogen, which is over 2x that of the US,” said Bernstein.
Indeed, Sinopec is trading as sunset stock, but has the potential to be one of the world’s largest hydrogen producers, added the analysts.