Oman’s ‘enormous’ hydrogen potential hangs on project delivery

Hydrogen presents “enormous” opportunities for Oman, but the sultanate needs to focus on timely delivery of new project agreements if it is to achieve its ambitious targets, industry experts told AGBI.

Oman’s Hydrom signed two agreements worth $11 billion with the Electricité de France (EDF Group) consortium as well as Actis and Fortescue to develop hydrogen projects in the Dhofar governorate. 

“The hydrogen opportunity is enormous,” said Lucy Heintz, head of energy infrastructure at Actis. “So it’s not going to matter whether you’re first or second. Because it is a very big opportunity.”

“The most important thing is going to be to deliver and not have a huge number of projects, with nothing having happened to any of them,” she added.

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These deals bring the total number of projects to eight with an estimated investment of just under $50 billion put into the sector. 

Government support for the projects makes the difference, Heintz said: “The government that really wants to do business with the private sector is a game changer.”

However, it is paramount that delivery of Oman’s hydrogen projects is timely to attract foreign investors and manage costs. 

Globally, only 7 percent of announced investments in clean hydrogen have passed the final investment decision stage. Equipment and financial costs are increasing, according to the International Energy Agency, putting projects at risk and reducing the impact of government support for deployment.

The Actis-Fortescue joint venture project, which is in the feasibility stage, is expected to involve construction of up to 4.5GW of wind and solar renewable energy resources that will power electrolysers with the potential to produce up to 200,000 tonnes of green hydrogen per year.

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This is expected to be sold to local industrial offtakers as well as processed into green ammonia for export via the existing port of Salalah.

This project aims to reach financial closing within the next three years, when the final investment decision is made and debt and equity is committed to start building out the $5 billion project. 

Oman aims to produce at least 1 million tonnes of renewable hydrogen a year by 2030, up to 3.75 million tonnes by 2040, and up to 8.5 million tonnes by 2050. That would be greater than total hydrogen demand in Europe today.

The International Energy Agency says Oman is on track to become the sixth-largest exporter of hydrogen globally, and the largest in the Middle East, by 2030.

While the 2040 hydrogen target would represent 80 percent of Oman’s current liquefied natural gas (LNG) exports in energy-equivalent terms, this does not mean fossil fuels will necessarily take a backseat. 

Oman’s minister of energy and minerals Salim Al Aufi said: “The world energy demand is growing and hydrogen and renewable energy will not be able to satisfy all the demand. Our responsibility is to make sure traditional energy is clean.”

Another important project is Marsa LNG, a joint venture between TotalEnergies (80 percent) and OQ (20 percent). It will be the first LNG bunkering project in the Middle East and Africa.

The $1.6 billion project is an integrated complex that will be built in the port of Sohar and is primarily intended to serve the marine fuel market in the Gulf.

Watch the video to learn more about the importance of hydrogen in Oman’s plans for its energy future and their delivery