Air Products will deconsolidate the NEOM green hydrogen joint venture from its balance sheet when the Saudi Arabian facility begins operations in June 2027. The accounting change will remove the multi-billion dollar project from the company's consolidated debt and assets.
Air Products holds a 33.3% stake in the joint venture alongside ACWA Power and Saudi Arabia's NEOM. The project represents the world's largest green hydrogen production facility, designed to produce 650 tons of hydrogen daily using 4 gigawatts of renewable power from solar and wind.
Deconsolidation occurs when a parent company loses control of a subsidiary or joint venture. Air Products will shift from consolidating 100% of the project's assets and liabilities to reporting only its proportionate equity investment. This typically improves debt-to-equity ratios and other balance sheet metrics.
The NEOM facility has carried a total project cost estimated at $8.4 billion. Air Products has funded its share of construction through a combination of equity contributions and project finance debt. Once operational, the plant will convert hydrogen into ammonia for global export to markets in Asia, Europe and North America.
Air Products reported Q1 2025 earnings with total debt of $16.2 billion. The deconsolidation will remove the NEOM project debt from this total, though the company retains obligations related to its ownership percentage. The accounting treatment reflects the joint venture structure where no single partner controls operations.
The facility uses thyssenkrupp nucera electrolyzers and Haldor Topsoe technology. Air Products will be the exclusive off-taker of the green ammonia under a 30-year agreement, distributing the product through its global network. The company plans to reconvert ammonia back to hydrogen at end-use markets.
Investors monitoring Air Products' leverage metrics should note the June 2027 deconsolidation date. The balance sheet change does not alter cash flows or the economic value of the company's stake, but will materially impact reported financial ratios used in debt covenants and credit analysis.