Energy

Oman ready to be global hydrogen player

June 19, 2023, 10:52 AM

Oman energy minsiter Salim Al-Aufi hydrogen plans — Oman minister of energy Salim al Aufi calls decarbonising and producing renewable hydrogen 'economically rational'

Oman is set to be Middle East’s largest hydrogen exporter by 2030
Increasing production could require $33bn of investment
Aims to produce 8.5m tonnes of renewable hydrogen a year by 2050

Oman will need cumulative investment of around $33 billion if it wants to scale up production of renewable hydrogen to 1 million tonnes by 2030.

The sultanate is on track to become the sixth-largest exporter of hydrogen globally and the largest in the Middle East by 2030, according to analysis by the Paris-based International Energy Agency (IEA) of the current global project pipeline.

Oil and gas today represent around 60 percent of Oman’s export income and domestic natural gas accounts for over 95 percent of the country’s electricity generation.

Last year Oman announced a target to achieve net zero emissions by 2050 and began reducing fossil fuel use in its domestic energy mix.

“Thanks to its huge potential for low-cost solar and wind, renewable hydrogen is set to bring multiple benefits to Oman,” said IEA executive director Fatih Birol.

Renewable hydrogen is the term used to describe hydrogen produced on a CO2-neutral basis through the electrolysis of water.

Oman aims to produce at least 1 million tonnes of renewable hydrogen a year by the end of the decade, up to 3.75 million tonnes by 2040 and up to 8.5 million tonnes by 2050.

This would be greater than the total hydrogen demand in Europe today, according to the IEA’s latest report Renewable Hydrogen from Oman: A Producer Economy in Transition.

“From an energy perspective, Oman is better known for being an oil and gas developer,” said Oman’s minister of energy and minerals Salim Al Aufi.

“However, it is also blessed with globally competitive solar and wind energy resources, and the most economically rational action for us is to embark on using this as the most viable and sustainable energy of tomorrow, including decarbonising the power generation, local industry and hydrogen production for export.”

Achieving Oman’s net-zero emissions target and using one-third of renewable hydrogen for domestic uses would significantly contribute to the Sultanate’s clean energy transition.

It could lead to a reduction in domestic use of natural gas of 3 billion cubic metres a year and avoid 7 million tonnes of carbon dioxide emissions, the report said.

So far, 1,500 square kilometres of land has been put aside for development by 2030 – and up to 40 times more land has been identified for potential production in the long term.

Six projects have already been allocated land for renewable hydrogen in the country’s first such auction process.

A consortium headed by South Korea’s steel company Posco Group has won a $6.7 billion deal to build a green hydrogen plant in Duqm. Posco aims to produce carbon-neutral steel using hydrogen at its pilot facility at the Pohang steel complex starting in 2026.

Hydrogen Oman SPC – Hydrom – a subsidiary of Energy Development Oman, signed three deals to develop green hydrogen projects with investments worth more than $20 billion earlier this month.

The three projects were signed with the consortia of Amnah, Green Energy Oman and BP Oman. They are expected to yield a total production capacity of half a million tonnes of green hydrogen per annum.

The global hydrogen production market was valued at $130 billion last year, according to the World Bank, and is estimated to grow by up to 9.2 percent per year until 2030.