Oman’s Ministry of Energy & Minerals tendered for an international consultant in early June to help formulate the sultanate’s energy transition strategy—encompassing policies on hydrogen, carbon sequestration and renewables. Whatever the study’s conclusions, it will inevitably end up in part validating developments already underway as international investor activity outruns the wheels of state bureaucracy.

In the second quarter alone, a Saudi/US team signed up to develop a multibillion-dollar green hydrogen project in the far south, a German developer committed to a smaller scheme in the far north, while Shell agreed to collaborate with the country’s main oil and gas producer on carbon capture, utilisation and storage (CCUS).

On 26 May, Saudi government-affiliated Acwa Power and US industrial gases company Air Products signed a joint development agreement with Muscat-owned OQ to establish a green hydrogen and ammonia production facility at Salalah, the sultanate’s southern industrial hub. Capacity and cost were undisclosed, but the project was described as being similar to the foreign partners’ more-advanced scheme in northwestern Saudi Arabia, which is slated to produce 1.2mn t/yr of carbon-free ammonia and is budgeted at $5bn.

The plan originated in a memorandum of understanding (MoU) signed during a state visit by Crown Prince Mohammed bin Salman—Saudi Arabia’s de facto ruler—in December.

25GW – Capacity of Intercontinental Energy project at Duqm

However, Oman’s nascent green hydrogen sector is flourishing on its own merits—namely the country’s plentiful sunshine and wind resources, which are spread across sparsely populated land. Acwa will work alongside a Japanese/German/Emirati team of Marubeni, Linde and Dutco at Salalah, which has the advantages of existing infrastructure and potential industrial offtakers.

At Duqm, the sultanate’s most-advanced project will enter the construction phase shortly, following signature on 22 June by the joint venture developer of India’s Acme and Norway’s Scatec of a lease on the 12km² of land required for its first phase, which will produce 100,000t/yr of green ammonia. Belgium’s Deme is at an earlier stage of developing a 330,000t/yr facility nearby.

Mega project

The Duqm site, which is ideally located for Asia-bound exports, was also selected in May last year as the potential home to a 25GW renewables and green hydrogen megaproject planned by Hong Kong-based Intercontinental Energy. The scheme, unprecedented in scale but not due for FID until the middle of the decade, received a boost in late June when BP signed up as the lead investor in the Australian version of project, validating the concept.

Meanwhile, the northern industrial port of Sohar—where hydrogen’s potential use in abatement and marine bunkering provides the locational pull—attracted a new investor in April, when Germany’s Hydrogen Rise signed an agreement with local firm Jindal Shadeed Iron & Steel to develop, build and operate 35MW of electrolyser capacity by mid-2024, ratcheting-up to a potential 350MW.

Shell, which has always been the main international player in Oman’s oil industry, is also engaged in mitigation efforts at Sohar, starting up the company’s first utility-scale PV plant in the Middle East at the industrial port in January last year. As a 34pc stakeholder in government-led Petroleum Development Oman (PDO), the major will play a direct role in the sultanate’s decarbonisation. The pair inked an MoU on 25 May calling for a wide-ranging collaboration on CCUS, covering technical and financial assessments of potential projects and coordinating input into the development of a regulatory and fiscal framework.

A longstanding national gas scarcity, combined with the energy-intensity of the enhanced oil recovery (EOR) techniques required to extract the crude on which Muscat’s economy and budget depend, made PDO an early adopter of renewables—with a solar-powered EOR project up and running at a southern oilfield and the sultanate’s first utility-scale (105MW) solar PV plant commissioned by the company in mid-2020.

The new collaboration will study the use of sequestered CO₂ in EOR at PDO’s operations and in the production of “low-carbon hydrogen” using the gas from Shell’s block 10 licence in the northwest, the joint statement says. Shell acquired the concession in December 2021 as part of an integrated scheme that included a commitment to develop a downstream project—which it said  would “produce and sell low-carbon products and support the development of hydrogen in Oman”—to monetise the gas produced.

---

Author: Clare Dunkley