A clear green hydrogen strategy

According to a report by Oxford Analytica, an independent geopolitical analysis and advisory firm drawing on a worldwide network of experts, Oman has a long pipeline of green hydrogen projects and the clearest strategy in the Gulf Cooperation Council (GCC) for the industry’s development. As stated by the report, “Oman aims to achieve 30 GW of electrolyser capacity by 2040”, noting that “investors are attracted by the country’s sun, wind and land resources, access to potential markets and supportive government policy”.

The firm also added that “the hydrogen sector will become a major contributor to Oman’s GDP and external balances by 2030, which will offset the decline in oil revenues. The country will increasingly shift its marketing focus from Asia to Europe, as the latter attempts to reduce its energy dependence on Russia, and regional sovereign wealth funds are likely to be major investors in Oman’s green hydrogen revolution”.

Furthermore, the city of Duqm is an ideal location for green hydrogen export as it is located on major global trade routes and just outside the crowded and politically sensitive Strait of Hormuz; there is also the availability of solar and wind energy throughout the year in Duqm. Other potentials include having a port that facilitates the easy import and export, in addition to the spacious areas of land allocated for renewable energy projects, covering 150 square kilometres.

The Omani government’s decision to embark on the green hydrogen journey is driven by 4 interrelated factors, these being:

• The domestic and external financial crises caused by the decline in oil prices in 2020;
• The high cost of oil production in Oman, and the low levels of reserves;
• Gas shortage caused by high domestic demand, limited production and the need to meet LNG export contracts; and
• Acknowledgment that Oman needs to diversify its economy from dependence on hydrocarbons.

Oxford Analytica’s report concluded that “the growing momentum behind the development of green hydrogen in Oman will intensify over the next decade, benefiting from the development of the nascent industry with lower production costs, acceleration of decarbonisation efforts and the development of the international market in both green hydrogen production and its liquid carriers.

Eng Abdulaziz al Shaithani, Director General – Renewable Energy and Hydrogen at the Ministry stated that “Oman aims to become one of the world’s leading hydrogen hubs. Over the last few months, the Ministry of Energy and Minerals has developed an ambitious green hydrogen strategy and defined the structure of the green hydrogen sector. The development of the green hydrogen economy will provide a strategic opportunity for Omani and international companies to participate and collaborate in driving local and global energy security, economic diversification and much needed climate change mitigation”.

Oman has set an ambition to become one of the largest green hydrogen producers and exporters globally, targeting production of 1 million tonnes per annum by 2030.

Setting up key pieces

Al Shaithani also mentioned that green hydrogen related investments will unlock immense investment opportunities across the value chain. It includes opportunities in the manufacturing of solar panels, wind turbines, electrolysers, hydrogen-derived products, storage and transportation, water desalination and other components. Oman’s investments alone will encompass about 3 million solar panels, approximately 10,000 wind turbines, 5,200 electrolysis units and about 180 GW of renewable energy production capacity.

This being said, in October 2022 HE Salim bin Nasser al Aufi, Minister of Energy and Minerals of Oman, unveiled its ambitious Green Hydrogen Strategy, an initiative that envisions an estimated USD $140 billion in investment in a new low-carbon energy industry. Moreover, the Minister also formalised the establishment of a new hydrogen-centric energy company, Hydrogen Oman (HYDROM), that will oversee the country’s vision for the growth of a green hydrogen based energy future.

Eng Mazin al Lamki, CEO of Energy Development Oman (EDO), added “we are delighted to announce the new brand identity of HYDROM, a fully owned autonomous subsidiary of EDO. Working in tandem with the government’s ambitious plans, HYDROM will leverage Oman’s location and abundant solar and wind resources to produce green hydrogen and support the government’s drive to reduce its carbon footprint and achieve decarbonization targets”.

These decisions complement HM Sultan Haitham bin Tarik’s commitment to reach Net-Zero emissions by 2050, in line with the Paris Agreement’s objectives of limiting global warming to 1.5 degrees celsius compared to pre-industrial levels. To lead its transition towards a green economy, His Majesty has also mandated the creation of the Oman Sustainability Centre, which will be the leading body undertaking the supervision and follow up of all carbon neutrality plans and programs.

The Minister also highlighted that “green hydrogen presents itself as a key vector that enables Oman to pursue its decarbonisation, economic and energy security objectives. With the abundant renewable energy resources Oman is blessed with and with the appropriate structuring of the sector via the creation of HYDROM, Oman is positioned as one of the most attractive nations to produce green hydrogen competitively and at large scale”.

Eng Faiza al Harthy, Head of Energy, Environment and Natural Resources Priority Support at Oman Vision 2040 Implementation  Follow-up Unit, also pointed out that “the vision is to create effective, balanced, and resilient ecosystems to protect and sustain Oman’s natural resources in support of the national economy. This will be done by setting targets, a measurement mechanism and a follow-up methodology for the initiatives and projects helping to achieve Net-Zero emissions”.

Oman’s first round of bidding for green hydrogen blocks

On October 23 2022, Dr. Firas al Abduwani, Acting Managing Director of HYDROM, opened registrations for international developers interested in bidding for a number of blocks offered up by the Omani government for the establishment of green hydrogen projects in Oman.

As many as 2 blocks in Duqm and 4 blocks in Salalah are available in Phase A of the government’s strategy to attract international investment in a future green hydrogen industry. Covering a total area of 1,900 square kilometres, they represent just a fraction of the estimated 50,000 square kilometres of acreage earmarked for green hydrogen projects around Oman.

As highlighted by al Abduwani, “the 6 blocks on offer in Phase A of the tendering plan will help meet the country’s green hydrogen production target of 1 million tonnes per annum by 2030”. Future developments are envisioned in blocks delineated in other parts of the country, including Al Dhahirah (8,200 square kilometres), Al Dakhiliyah (5,180 square kilometres), Al Wusta/Duqm (15,930 square kilometres), Al Jazir (25,700 square kilometres), and Dhofar (7,910 square kilometres).

Successful bidders will be given the prerogative to choose which type of end-product their investment will ultimately produce. As stated by Al Abduwani, “we’re keeping it very flexible. We’re allowing the developers themselves to choose the end product, whether they want it to be hydrogen itself and transport it in a liquified manner, or with a liquid organic carrier; that’s up to them. Whether they want to move with ammonia or methanol – that is also open to them if they want to bring some of the hard-to-abate sectors and industries and bring them as part of the solutions (…) Responsibility for the offtake of the end-product will also be the responsibility of the developer”.

Crucially, with multiple developers expected to invest in Oman’s green energy space, HYDROM plans to tender out the common infrastructure separately.

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