Oil major BP and French energy company Engie have both withdrawn from significant green hydrogen projects in Oman, which has ambitions to be a leading global supplier, amid concerns over the development of demand.

BP has cancelled the 1.5GW Duqm Green Hydrogen Project in the Special Economic Zone at Duqm on the east-central coast, which had been expected to produce 150,000t/yr but was at an early stage of development.

In the same region, Engie has halted the 1.3GW HyDuqm green-hydrogen-to-ammonia project, which it was developing with Oman’s state hydrogen agency Hydrom and South Korean steelmaker Posco.

“The decision follows an in-depth assessment of global renewable hydrogen offtake dynamics and investment frameworks” Engie

Engie cited demand as a direct factor. “The decision follows an in-depth assessment of global renewable hydrogen offtake dynamics and investment frameworks,” a spokesperson said.

BP’s move must also be seen in the context of its recent strategic shift away from renewables to its core oil and gas business, as investors demand higher returns.

The retreat from clean hydrogen has been overseen by CEO Murray Auchincloss, who has wasted no time in unwinding the clean energy position taken by his predecessor Bernard Looney.

The Oman decision is “in line with BP’s global strategy to high-grade projects in hydrogen, investing with discipline in projects that meet our long-term strategy”, a spokesperson said. However, the company remains operator and 49% shareholder in a separate Oman green hydrogen project, HYPORT Duqm.

Elsewhere, BP recently dropped H2Teesside, one of the UK’s largest blue hydrogen projects, citing a “deteriorating” demand outlook. The company also lost out to a datacentre in the planning process. In March 2025, BP pulled the plug on another major UK project, the 500MW  Hygreen Teesside.

It remains invested in the 100MW LGH2 project at the Lingen refinery in northwest Germany, from which it aims to start supplies in the second half of 2027. The refinery will be an anchor offtaker for the plant, but the strength of demand from other industries in the region remains to be seen. BP invited potential offtakers to register their interest in a process it ran over summer 2025, the results of which have not been made public.

Both Engie and BP were keen to stress their confidence in Oman’s strategy, which has ambitions to be a world leader in green hydrogen and is developing trading corridors to ship exports to Europe and Southeast Asia. The Gulf state, which is the biggest Middle Eastern oil producer outside of OPEC, is allocating 50,000km² of land for green hydrogen projects to help produce as much as 3.75mt/yr by 2040 and 8.5mt/yr by 2050. Its hydrogen strategy continues to attract significant international interest.

“Hydrom, ENGIE and POSCO value the collaboration established through the HyDuqm project and reaffirm their shared commitment to supporting the growth of Oman’s hydrogen ecosystem, exploring future opportunities for partnership within the country’s evolving renewables landscape,” the company said.

The awarded projects from the first two rounds are progressing on schedule to achieve the country’s green hydrogen production targets of more than 1mt/yr, it added. Engie said. “The third auction round is currently underway, with continued international participation reflecting strong confidence in Oman’s competitive framework.”

BP said it “remains supportive of Oman’s Vision 2040 focused on advancing energy transition initiatives to meet the nation’s growing energy demand”. BP operates Block 61, one of Oman’s largest tight gas reservoirs.

Challenging year

The exits of BP and Engie form their respective Oman projects capped a challenging year for the clean hydrogen sector. A shakeout of projects has accelerated globally, with no region or production process immune. More than 50 projects have been shelved during the past 18 months, according to industry group Hydrogen Council. Economies of scale are not insulating projects from the harsh realities that offtakers remain very reluctant converts to clean hydrogen.

“Despite the rhetoric, there are very few companies out there willing to pay a premium for low-carbon products,” said ExxonMobil CEO Darren Woods in October, noting the US oil major was likely to pause its Baytown blue hydrogen project in Texas, the largest of its type in the world.

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Author: Stuart Penson