Oman is one of the Mideast Gulf’s early movers on hydrogen. Its project pipeline is already longer and firmer than those of its peers in the region, with a growing list of international partners signed up to both invest and advise.

Unlike its neighbours, which want to monetise their fossil fuel resources via gas-based blue hydrogen, the sultanate is building its hydrogen strategy for the next two decades around green hydrogen, government officials told the inaugural Oman Green Hydrogen Summit in the capital in early December.

Green hydrogen is seen not only as an alternative export commodity for when global demand for crude oil wanes but also as the bedrock feedstock for existing and future domestic industry when Oman’s gas reserves run out, Ministry of Energy and Minerals (MEM) undersecretary Salim bin Nasser al-Aufi told the summit.

[Oman] is well-placed for green hydrogen production given its vast swathes of sun-baked desert and a long windy coastline

The country is well-placed for green hydrogen production given its vast swathes of sun-baked desert and a long windy coastline, making its renewables costs some of the lowest in the world.

Oman could have 1GW in place of electrolyser capacity by 2025, 10GW by 2030 and 30GW by 2040, according to a study by the National Hydrogen Alliance,  a 13-member coalition led by MEM and comprising the main players across the sultanate’s existing energy value chain, including BP, Shell and TotalEnergies. Among the capacity additions already identified is a 25GW project announced by Hong Kong-based Intercontinental Energy (ICE) in May.

The national strategy envisages attracting some $34bn in foreign direct investment (FDI) into green hydrogen projects over the next two decades. The initial signs are strongly positive. In October, Japan’s Marubeni, Germany’s Linde and Dubai’s Dutco became the latest to provisionally commit, signing a joint development agreement with state-owned conglomerate OQ for a plant at Salalah, the site of an existing downstream energy cluster in the far south, producing 1,000t/d of green ammonia based on a 400MW electrolyser and 1GW of total renewable power capacity.

Sohar, an industrial city in the north, will be the main test bed for the decarbonisation of existing enterprises—notably steel and cement: Sohar Port and Freezone is working with Shell, Germany’s Hydrogen Rise and the Port of Rotterdam, its Dutch shareholder, to find ways to replace natural gas with both renewables and hydrogen.

Key industrial zone

However, it is the fledgling port and industrial zone at Duqm, on the central-east coast, that is emerging as the centre of the new industry. The project is based  on the solar resource of the huge but sparsely populated Al-Wusta governorate in which it lies, and on existing transportation and export infrastructure developed in the last decade for an envisioned hydrocarbons-based downstream hub. The project is also in a propitious geographic position on key trade routes to Asia and Europe, outside the overcrowded Strait of Hormuz.

The remote province is the intended site of ICE’s megaproject on which FID is not expected before mid-decade.

It is also home to two other large-scale projects that are notably well-advanced. Representatives of Hyport Duqm, a joint venture between OQ and Belgium’s DEME, told the summit that FID was anticipated by end-2023 on its planned export-oriented green hydrogen and ammonia facility, which will be based on a 500MW electrolyser. Startup is pencilled in for 2026.

$34bn – FDI needed to implement hydrogen strategy

Indian solar specialist Acme aims to complete the first phase of a 2,400t/d green ammonia plant, powered from 3GW of solar and 500MW of wind developed nearby, by end-2022. With first-mover advantage considered important in the early stages of the industry’s development, and with better-resourced Saudi Arabia and Abu Dhabi snapping at its heels, Muscat’s sense of urgency is understandable. Early tie-ups with potential offtakers are also emerging as a key feature, as potential upstream investors, national and corporate, seek to derisk projects. Last month, OQ signed a memorandum of understanding with South Korea’s Kogas to explore green hydrogen opportunities.

While energy exports from the sultanate are expected to continue flowing predominantly east, Europe, which has stiffer decarbonisation schedules in place than most major Asian economies, is also a target market.

Germany’s Uniper signed up in July for the right to negotiate an exclusive offtake agreement with the Hyport Duqm developers.

The chief executive of Duqm Port, Reggy Vermeulen, told this month’s summit  of the potential to exploit the facility’s link with Belgium’s Port of Antwerp,  which owns a 50pc stake in the operating company,  as a potential customer, an entry point into the EU market and a source of expertise in establishing greenfield industrial clusters.

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Author: Clare Dunkley