Korean energy and environmental solutions provider SK Ecoplant said Thursday that the company will work together with the China State Construction Engineering Corp. on a 2.6 trillion won ($1.9 billion) green hydrogen project in Egypt.

SK Ecoplant, CSCEC and the Egyptian government signed a memorandum of understanding in Cairo on Wednesday, the company added.

Under the project, SK Ecoplant and China’s largest construction company will establish solar panels and wind turbines in Egypt, which can generate 778 megawatts of energy that will be used in hydrogen production. They will also build a 250-MW water electrolysis system that can produce green hydrogen, as well as a system that can convert hydrogen into ammonia.

The two companies are currently conducting a feasibility study for the project, according to SK Ecoplant. The two companies will continue their talks with the Egyptian government to decide on detailed terms of their contract, to begin commercial operation in 2029, the company added.

According to industry sources, SK Ecoplant is likely to be responsible for building the water electrolysis and hydrogen-to-ammonia conversion system since the company already has experience in building them for a green hydrogen commercialization project in Canada.

Last year, SK Ecoplant acquired access to electrolysis and hydrogen-ammonia conversion technologies through its 700 billion won investment in the US fuel cell company Bloom Energy. Based on the technologies, SK Ecoplant is participating in green hydrogen and green ammonia projects in the United Arab Emiratesand Oman as well.

A large proportion of the hydrogen produced in Egypt is expected to be exported to other countries, including those in Europe, according to an official from SK Ecoplant.

“The hydrogen-to-ammonia conversion system will the companies to transport green ammonia to overseas countries at lower costs,” the official added.

Converting hydrogen to ammonia as a means of transporting it over long distances usually has lower costs than transporting it as there are more storage and transportation systems for ammonia than hydrogen, the source explained.

Meanwhile, SK Ecoplant said the company will continue to seek new green hydrogen projects in overseas countries, including those in the Middle East and Africa.

“Countries in Africa, including Egypt, have great potential for production and export of hydrogen as they have abundant natural resources and enough lands where facilities can be built,” said Bae Sung-joon, the head of SK Eco Plant's energy business. “SK Ecoplant will continue its strategic partnership with CSCEC to step up as a global player in the green hydrogen sector.”