Oman and its foreign energy partners

The cameras were in Riyadh but the oilpeople were in Muscat. As our colleague Saleh Al-Shaibany has noted, Oman was not on the itinerary of the 47th US president, although the sultanate has been hosting the US Iran nuclear talks.

Trump was missing something. There at the Convention and Exhibition Centre was Baker Hughes, there was Halliburton and SLB (still Schlumberger, surely?), there was Occidental and BP and Eni and Shell and PDO. Just like old times. 

All were attending the Oman Petroleum and Energy Show and its sister event, Oman Sustainabilty Week, the sultanate’s annual (well-attended) oil and gas jamboree.

What makes the Oman event interesting is that high tech matters. The more marginal oil and gas plays in the sultanate – Khazzan tight gas, steam flooding in the Amal field and polymer in Marmul – mean that the big international players are welcome because they are needed. 

The sultanate has become a test bed for enhanced oil recovery techniques. So there were sessions on “Epoxy Grout Solutions”, “Whipstock Technology” and “Sustainable Pigging Strategies”. Updates to follow.

As one long-term resident notes, Oman has been running out of oil for as long as he has been there – but production now hovers around 1 million barrels per day, having recovered from lows of 770,000 in 2007.

Oman, a member of Opec+ but not of Opec, controls only 5.2 billion barrels of proven oil deposits and 25 trillion cubic feet of gas. This is OK for the moment but, by comparison with its peers to the north, not a big cushion for a population of just over 5 million.

So the sultanate has been moving downstream – with partners. Export of refined products almost tripled last year after the start-up of the $9 billion Duqm Refinery, a joint venture between the government-owned OQ and Kuwait Petroleum International.

TotalEnergies of France has just started to build an entirely solar powered liquefied natural gas project in Sohar, which its sponsors say is one of the lowest emission plants in the world. I believe them. The plant will supply low carbon fuel to the shipping industry.

And so it is that Oman is powering ahead with green hydrogen plans. The country vies with Egypt, the UAE and Saudi Arabia as pretender to the crown of the region’s green hydrogen early adopter. 

Hydrom, the state-owned hydrogen facilitator and regulator, is just about to launch a third bidding round for a chunk of 50,000 square kilometres of desert on which to put solar plants and wind turbines. Uptake has been limited so far but given the uncertainties around green hydrogen, this is not so surprising. 

What is clear is that Oman is putting structures in place and does not appear hung up on foreigners having a piece of the pie.

• Oman Centre for Net Zero signs agreements worth $2bn
• Oman invests $200m in port to bolster re-export business
• OQEP deals are part of Omani job creation drive

ACME, an Indian developer, for example has received a first tranche in funding from its backers for a 300MW green hydrogen and ammonia project in Duqm. It has actually broken ground at the site and – this is crucial – has an offtake agreement in place with a Norwegian fertiliser supplier to take the green hydrogen product. Lack of deep pocketed and risk-unaverse customers is the bane of green hydrogen development. This is changing.

Jindal Shadeed of India and Mitsui of Japan also each have a memorandum of understanding to make green hydrogen powered steel at Duqm. That will surely be a game changer – steel being one of those hard-to-abate industries.

These green hydrogen schemes are unlikely to start production for at least another two years and probably more but the sultanate, which has always been a little different, had several years of staring down the barrel of oil and gas poverty. 

This means that it is more than happy to engage with international oil companies and other innovators to bring their best technologies to Oman – and is comfortable with those investors taking a share.