Oman Gets to Work on Green Hydrogen Goals
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In relatively short order, Opec-plus member Oman has managed to shed its predominantly upstream image by restructuring its energy sector to focus more on renewable and green hydrogen projects. The Gulf Arab state has embarked on an ambitious plan to produce 1 million tons per year of green hydrogen by 2030, with concrete plans being taken to ensure the target is met or exceeded. At the Green Hydrogen Summit in Muscat this week, international energy executives rushed to the sultanate, showcasing the industry’s interest and the potential growth of the sector — a critical development since greater scale would increase commercial returns. State backing should give investors more confidence to enter Oman’s green hydrogen projects, Omani officials reckon. “When looking at Oman’s energy sector, we want people to first think about renewable and clean energy, and not oil and gas… and in a short time, with support of the state, we managed to achieve that,” one Omani executive said on the sidelines of this week’s summit. The country’s energy transition push doesn’t come out of nowhere. It has been part of the sultanate’s economic reform program introduced by the country’s leader, Sultan Haitham bin Tariq, who came to power in 2020. Oman has many advantages when it comes to green hydrogen production. The sparsely populated country has plenty of available land and huge potential for low-cost solar and wind power, potentially putting it in a prime spot to become the Mideast’s premier producer of the zero-emissions fuel, the International Energy Agency (IEA) said in a recent report. The IEA predicts that Oman could become the sixth-largest exporter of hydrogen globally by 2030. This week’s COP28 outcome in Dubai could provide an additional boost: the climate summit’s conclusion explicitly calls for accelerating zero- and low-emission technologies, including — among others — “low-carbon hydrogen.”
Key to driving Oman’s green hydrogen strategy has been restructuring the government entities involved in the energy sector. Last year, Muscat established Hydrogen Oman (Hydrom) as an enabling entity that would manage the award of land blocks across the country for green hydrogen projects. Following an inaugural bid round that closed earlier this year, a second one to award two or three blocks for green hydrogen projects is now open, with a closing date for prequalification set for Jan. 28, Hydrom Managing Director Abdulaziz al-Shidhani told Energy Intelligence at the summit. “We offered up to three blocks, and we expect to get two projects … we are not in a rush to get three,” said al-Shidhani. The winning bidders are set to be announced by the end of April. The minimum requirement for each project is 150,000 tons/yr of green hydrogen production. Overall, Hydrom has awarded six projects. Between legacy projects prior to the formation of Hydrom and new projects, this brings total planned production to around 925,000 tons/yr. Four more projects remain to be awarded, which is expected to happen by June 2024, Firas al-Abduwani, director general of renewable energy and hydrogen at the Ministry of Energy and Minerals, told Energy Intelligence. “We are not in a rush to award projects … we are happy to withhold awarding to get quality developers to achieve financial close and who are familiar with Oman,” said Al-Abduwani. The latest project was awarded this week to the SalalaH2 consortium comprising Oman’s state-owned OQ AE, Marubeni, Dutco and Samsung C&T. Earlier this year, BP and Shell were among the companies that signed agreements with Hydrom.
Oman is targeting total green hydrogen capacity of up to 3.75 million tons/yr by 2040 and up to 8.5 million tons/yr by 2050 — goals that could require investment as high as $140 billion. However, none of the projects awarded already have reached final investment decision (FID). Officials and executives are expecting this to happen closer to 2026, upon completion of front-end engineering design works. If financial pressures persist due to higher-than-expected costs, the Omani government is willing to step in by granting additional incentives such as tax breaks and discounted land fees, according to Hydrom’s al-Shidhani. The only project in the region that has so far managed to reach FID is Saudi Arabia’s Neom scheme, which plans to produce up to 1.2 million tons/yr of green ammonia. The project’s green ammonia output will be exported from end 2026 to global markets, with a view to supporting the decarbonization of the heavy-duty transport sector and reducing CO2 emissions. Asked whether this would intensify regional competition, al-Abduwani said he was confident that global green hydrogen demand would be large enough for all the presently planned volumes in the region and beyond. “If you look at the number of projects that have reached financial close, that’s only around 3% … and demand is much larger than that,” said al-Abduwani. “And any FID that’s taken [for any project worldwide], we actually take it positively because it shows that the risks across the globe are being addressed.” Those risks include uncertainty around how green hydrogen supply contracts will look and function so they can underpin financing of production facilities.
In relatively short order, Opec-plus member Oman has managed to shed its predominantly upstream image by restructuring its energy sector to focus more on renewable and green hydrogen projects. The Gulf Arab state has embarked on an ambitious plan to produce 1 million tons per year of green hydrogen by 2030, with concrete plans being taken to ensure the target is met or exceeded. At the Green Hydrogen Summit in Muscat this week, international energy executives rushed to the sultanate, showcasing the industry’s interest and the potential growth of the sector — a critical development since greater scale would increase commercial returns. State backing should give investors more confidence to enter Oman’s green hydrogen projects, Omani officials reckon. “When looking at Oman’s energy sector, we want people to first think about renewable and clean energy, and not oil and gas… and in a short time, with support of the state, we managed to achieve that,” one Omani executive said on the sidelines of this week’s summit. The country’s energy transition push doesn’t come out of nowhere. It has been part of the sultanate’s economic reform program introduced by the country’s leader, Sultan Haitham bin Tariq, who came to power in 2020. Oman has many advantages when it comes to green hydrogen production. The sparsely populated country has plenty of available land and huge potential for low-cost solar and wind power, potentially putting it in a prime spot to become the Mideast’s premier producer of the zero-emissions fuel, the International Energy Agency (IEA) said in a recent report. The IEA predicts that Oman could become the sixth-largest exporter of hydrogen globally by 2030. This week’s COP28 outcome in Dubai could provide an additional boost: the climate summit’s conclusion explicitly calls for accelerating zero- and low-emission technologies, including — among others — “low-carbon hydrogen.”
Key to driving Oman’s green hydrogen strategy has been restructuring the government entities involved in the energy sector. Last year, Muscat established Hydrogen Oman (Hydrom) as an enabling entity that would manage the award of land blocks across the country for green hydrogen projects. Following an inaugural bid round that closed earlier this year, a second one to award two or three blocks for green hydrogen projects is now open, with a closing date for prequalification set for Jan. 28, Hydrom Managing Director Abdulaziz al-Shidhani told Energy Intelligence at the summit. “We offered up to three blocks, and we expect to get two projects … we are not in a rush to get three,” said al-Shidhani. The winning bidders are set to be announced by the end of April. The minimum requirement for each project is 150,000 tons/yr of green hydrogen production. Overall, Hydrom has awarded six projects. Between legacy projects prior to the formation of Hydrom and new projects, this brings total planned production to around 925,000 tons/yr. Four more projects remain to be awarded, which is expected to happen by June 2024, Firas al-Abduwani, director general of renewable energy and hydrogen at the Ministry of Energy and Minerals, told Energy Intelligence. “We are not in a rush to award projects … we are happy to withhold awarding to get quality developers to achieve financial close and who are familiar with Oman,” said Al-Abduwani. The latest project was awarded this week to the SalalaH2 consortium comprising Oman’s state-owned OQ AE, Marubeni, Dutco and Samsung C&T. Earlier this year, BP and Shell were among the companies that signed agreements with Hydrom.
Oman is targeting total green hydrogen capacity of up to 3.75 million tons/yr by 2040 and up to 8.5 million tons/yr by 2050 — goals that could require investment as high as $140 billion. However, none of the projects awarded already have reached final investment decision (FID). Officials and executives are expecting this to happen closer to 2026, upon completion of front-end engineering design works. If financial pressures persist due to higher-than-expected costs, the Omani government is willing to step in by granting additional incentives such as tax breaks and discounted land fees, according to Hydrom’s al-Shidhani. The only project in the region that has so far managed to reach FID is Saudi Arabia’s Neom scheme, which plans to produce up to 1.2 million tons/yr of green ammonia. The project’s green ammonia output will be exported from end 2026 to global markets, with a view to supporting the decarbonization of the heavy-duty transport sector and reducing CO2 emissions. Asked whether this would intensify regional competition, al-Abduwani said he was confident that global green hydrogen demand would be large enough for all the presently planned volumes in the region and beyond. “If you look at the number of projects that have reached financial close, that’s only around 3% … and demand is much larger than that,” said al-Abduwani. “And any FID that’s taken [for any project worldwide], we actually take it positively because it shows that the risks across the globe are being addressed.” Those risks include uncertainty around how green hydrogen supply contracts will look and function so they can underpin financing of production facilities.
In relatively short order, Opec-plus member Oman has managed to shed its predominantly upstream image by restructuring its energy sector to focus more on renewable and green hydrogen projects. The Gulf Arab state has embarked on an ambitious plan to produce 1 million tons per year of green hydrogen by 2030, with concrete plans being taken to ensure the target is met or exceeded. At the Green Hydrogen Summit in Muscat this week, international energy executives rushed to the sultanate, showcasing the industry’s interest and the potential growth of the sector — a critical development since greater scale would increase commercial returns. State backing should give investors more confidence to enter Oman’s green hydrogen projects, Omani officials reckon. “When looking at Oman’s energy sector, we want people to first think about renewable and clean energy, and not oil and gas… and in a short time, with support of the state, we managed to achieve that,” one Omani executive said on the sidelines of this week’s summit. The country’s energy transition push doesn’t come out of nowhere. It has been part of the sultanate’s economic reform program introduced by the country’s leader, Sultan Haitham bin Tariq, who came to power in 2020. Oman has many advantages when it comes to green hydrogen production. The sparsely populated country has plenty of available land and huge potential for low-cost solar and wind power, potentially putting it in a prime spot to become the Mideast’s premier producer of the zero-emissions fuel, the International Energy Agency (IEA) said in a recent report. The IEA predicts that Oman could become the sixth-largest exporter of hydrogen globally by 2030. This week’s COP28 outcome in Dubai could provide an additional boost: the climate summit’s conclusion explicitly calls for accelerating zero- and low-emission technologies, including — among others — “low-carbon hydrogen.”
Key to driving Oman’s green hydrogen strategy has been restructuring the government entities involved in the energy sector. Last year, Muscat established Hydrogen Oman (Hydrom) as an enabling entity that would manage the award of land blocks across the country for green hydrogen projects. Following an inaugural bid round that closed earlier this year, a second one to award two or three blocks for green hydrogen projects is now open, with a closing date for prequalification set for Jan. 28, Hydrom Managing Director Abdulaziz al-Shidhani told Energy Intelligence at the summit. “We offered up to three blocks, and we expect to get two projects … we are not in a rush to get three,” said al-Shidhani. The winning bidders are set to be announced by the end of April. The minimum requirement for each project is 150,000 tons/yr of green hydrogen production. Overall, Hydrom has awarded six projects. Between legacy projects prior to the formation of Hydrom and new projects, this brings total planned production to around 925,000 tons/yr. Four more projects remain to be awarded, which is expected to happen by June 2024, Firas al-Abduwani, director general of renewable energy and hydrogen at the Ministry of Energy and Minerals, told Energy Intelligence. “We are not in a rush to award projects … we are happy to withhold awarding to get quality developers to achieve financial close and who are familiar with Oman,” said Al-Abduwani. The latest project was awarded this week to the SalalaH2 consortium comprising Oman’s state-owned OQ AE, Marubeni, Dutco and Samsung C&T. Earlier this year, BP and Shell were among the companies that signed agreements with Hydrom.
Oman is targeting total green hydrogen capacity of up to 3.75 million tons/yr by 2040 and up to 8.5 million tons/yr by 2050 — goals that could require investment as high as $140 billion. However, none of the projects awarded already have reached final investment decision (FID). Officials and executives are expecting this to happen closer to 2026, upon completion of front-end engineering design works. If financial pressures persist due to higher-than-expected costs, the Omani government is willing to step in by granting additional incentives such as tax breaks and discounted land fees, according to Hydrom’s al-Shidhani. The only project in the region that has so far managed to reach FID is Saudi Arabia’s Neom scheme, which plans to produce up to 1.2 million tons/yr of green ammonia. The project’s green ammonia output will be exported from end 2026 to global markets, with a view to supporting the decarbonization of the heavy-duty transport sector and reducing CO2 emissions. Asked whether this would intensify regional competition, al-Abduwani said he was confident that global green hydrogen demand would be large enough for all the presently planned volumes in the region and beyond. “If you look at the number of projects that have reached financial close, that’s only around 3% … and demand is much larger than that,” said al-Abduwani. “And any FID that’s taken [for any project worldwide], we actually take it positively because it shows that the risks across the globe are being addressed.” Those risks include uncertainty around how green hydrogen supply contracts will look and function so they can underpin financing of production facilities.
Source: Energy Intelligence
