Oman launched its third green hydrogen auction on 30 April and expects to benefit from the global trade war as companies facing high levies move to base projects in a country that acts as transit hub, Mohsen al-Hadhrami, undersecretary of energy and minerals, told Hydrogen Economist.

Oman wants to capitalise on its trade relationships to attract more foreign direct investment (FDI) into its renewables sector, which is forecast to grow to 30–40% of its energy mix by 2030 from about 11% now. It has already attracted the likes of Shell, France’s EDF, Australia’s Fortescue, Japan’s Marubeni and South Korea’s POSCO to its two previous rounds, awarding eight licences as part of plans to produce 1.4mt/yr of green hydrogen starting in 2030.

Why did Oman launch a third green hydrogen round at a time when there is low foreign investor appetite for low-carbon hydrogen projects amid reduced spending on the energy transition by most IOCs?

Hadhrami: Oman's decision to launch a third green hydrogen auction round in early 2025 reflects a strategic and forward-looking approach aimed at long-term positioning rather than short-term market sentiment, aligning with the country’s sustainability and economic targets.

The key reasons behind this move are as follows:

1. Strategic positioning in the global hydrogen economy: Oman is leveraging its abundant renewable resources (solar and wind) and strategic geographic location to become a major exporter of green hydrogen, especially to Europe and Asia. The country aims to be a first-mover in the emerging hydrogen economy, which could yield long-term economic benefits, and secure end-markets.
2. Focus on end-use integration: Oman is aligning hydrogen production with downstream industries such as green steel and fertilisers. This vertical integration helps create domestic demand anchors, which can stabilise project economics and reduce full reliance on export markets.
3. Refined and streamlined processes: Learning from earlier rounds, Oman has refined block allocation strategies, streamlined bidding processes and offered scaling options as well as phased development designs to make participation easier and more appealing to a broader range of investors.
4. Long-term vision over short-term trends: While it is true that certain investors globally have scaled back energy transition spending, Oman is doubling down on its green hydrogen ambitions. This, what may be seen as a counter-cyclical investment strategy, could pay off as global demand for green hydrogen is expected to rise over time, driven by advancements in technology and larger-scale investments.
5. Diversification of investor base: Oman is actively targeting a wider pool of investors, including those from emerging markets and new entrants, leading to a more dynamic market, a wider range of offerings, improved efficiency and potentially lower prices, all of which benefit end-users and may stimulate the development of the green hydrogen value chain.

Having said that, Oman’s actions are not just focused on supply-side initiatives. Oman has been working on the demand side by assessing sectors present or wishing to onshore onto Oman and reaching agreements with these parties on clean hydrogen targets. Furthermore, Oman has been supporting nascent transport vectors that have not received much traction in the market to further enable global hydrogen trade.

What is the targeted levelised cost of hydrogen for green hydrogen and how will Oman help developers in Duqm and Salalah reach FID and secure offtake agreements by 2027?

Hadhrami: Oman has set an ambitious strategy to become a global leader in green hydrogen, with a clear focus on achieving a competitive levelised cost of hydrogen (LCOH) and supporting developers in regions such as Duqm and Salalah to reach FID. Oman has not published a fixed LCOH target in US dollar terms, nevertheless its strategy emphasises:

• Global competitiveness in LCOH to attract FDI.
• Leveraging the combination of high solar and wind potential to reduce production costs.
• Shared infrastructure and regulatory clarity to lower both project development and operational costs.

In Oman's green hydrogen ecosystem, the responsibility for hydrogen offtake primarily rests with the developer. Oman, nevertheless, is actively working on enabling project developers to reach FID through offtake facilitation.

The Ministry of Energy and Minerals and Hydrom, the national orchestrator, are building strategic bilateral/multilateral partnerships and coordinating with

governments, financing institutions and industry to develop green hydrogen trade corridors and supply chains. A landmark agreement for, example, was signed with the Belgian Hydrogen Council to enhance trade facilitation, regulatory alignment and joint development of hydrogen supply chains between Oman and Europe.

Oman may notably benefit from the global tariff developments by leveraging its trade relationships with countries facing higher tariffs

Oman is additionally a founding partner of the world's first liquid hydrogen corridor, linking the sultanate with the Netherlands and Germany: a unique infrastructure initiative to enable commercial-scale shipment of liquefied hydrogen across continents. Oman is similarly collaborating with Asian countries including South Korea, Japan and Singapore to develop green hydrogen trade corridors.

On the domestic front, the Omani government is working on bringing the hydrogen ecosystem to life by nudging targeted local industries to gradually shift to clean hydrogen as feedstock within certain processes. To support this transition, the government has designated national champions to build shared infrastructure for three critical components: hydrogen pipelines, water supply and electricity transmission.

Additionally, a streamlined Single Permit System has been introduced to simplify and accelerate the approval process for green hydrogen projects. This system aims to reduce administrative complexity and expedite the development process. Oman also offers incentives such as reduced land lease fees and is evaluating other supportive mechanisms to attract investments and facilitate growth in the sector.

Overall, Oman's hydrogen economy is witnessing progress. The opening of the country’s first green hydrogen refuelling station near Muscat airport in early 2025 marked the beginning of downstream market activation and local demand development. The green hydrogen and ammonia project developed by ACME Group in Duqm with an initial electrolyser capacity of 300MW has officially been integrated into Oman’s national green hydrogen framework and is under construction. Oman will continue to actively support developers and facilitate the materialisation of green hydrogen projects.

What are Oman’s plans to build more renewables projects and what is the target of renewables in the energy mix by 2030?

Hadhrami: Oman is actively expanding its renewable energy portfolio as part of its national strategy to achieve net-zero emissions by 2050 and support its diversification target of energy resources. Oman's long-term development plan aims for a 30–40% renewable energy share in the electricity mix by 2030, 60–70% by 2040 and 90–100% by 2050. Oman's renewable energy expansion is taking a multi-faceted approach. Oman is developing IPPs for solar and wind power generation with Nama Power and Water Procurement Company (PWP) serving as the tendering entity and sole procurer.

The Ibri II project is a 500MW solar photovoltaic private sector investment that was inaugurated in 2022. The Manah I and II projects are larger, with a combined capacity of 1,000MW, and came online in early 2025. These plants have accumulatively expanded the average share of renewable energy in the electricity mix to 11%. Oman has several other tenders for renewable energy projects for wind and solar underway.

The Ibri III Solar IPP, a 500MW project, is a major solar tender in the final qualification stage, scheduled for commercial launch in 2027. PWP is also working on five new wind IPPs with an aggregate capacity of around 1GW in Jaalan Bani Bu Ali, Duqm, Mahoot, Harweel and Sadah, planned for commercial operation in 2027.

Oman has also introduced a new electricity policy, known as the ‘Renewable Energy Policy for Self-Generation and Direct Sale’, which aims to further liberalise Oman's electricity market, encourage the wider adoption of renewable energy sources and establish a regulatory framework for self-generation, direct sales and wheeling. This policy allows businesses to both generate their own electricity as well as purchase electricity directly from producers through electricity wheeling mechanisms—independent from PWP. Oman also allows the adoption of solar panels in residential settings, promoting clean energy use in homes.

Additionally, Oman is expanding its power grid to support the integration of solar and wind power projects, including the ‘Rabt’ project, which connects the northern and southern power systems of Oman in phases. Phase 1, which has been completed, connects the northern Main Interconnected System with Duqm region.

Phase 2 will connect the Duqm grid station to the Dhofar System via a 400kV transmission line, expected to be completed by 2027. That is in addition to expanding Oman’s interconnection with the Gulf Cooperation Council through a direct electrical connection contributing to a more sustainable energy mix.

Oman’s growing momentum in delivering renewable energy projects has led to the localisation of several upstream supply chain projects, including United Solar Polysilicon and Mawarid—the latter a joint venture including Shanghai Electric for the manufacturing of wind turbines in Oman.

What is likely to be the impact of the global tariff changes and projected slowdown in global economy on Oman’s green hydrogen and renewables plans and oil and gas projects?

Hadhrami: Despite the headwinds facing the clean energy industry, the consensus is that the sector will continue to grow. Oman may notably benefit from the global tariff developments by leveraging its trade relationships with countries facing higher tariffs and by drawing on its geographic location as a transit hub. In fact, Oman has been steadily drawing foreign investment into its renewable energy sector while advancing the vertical integration of its value chain.

Oman is actively targeting a wider pool of investors, including those from emerging markets and new entrants

This year, Oman has successfully onshored the production of polysilicon, a crucial material in the manufacturing of solar panels. The country has also attracted a global manufacturer of high-performance photovoltaics to produce solar cells and panels locally with an annual production capacity of 6GW and 3GW respectively, scheduled to begin operations in 2026.

Oman as well recently announced the launch of a specialised factory in the Special Economic Zone at Duqm to manufacture wind turbines. Onshoring can create a more resilient supply chain and allows for better control over the supply chain, faster lead times and potentially lower costs.

Meanwhile, the country will continue working closely with international investors, technology providers and governments to build robust renewable energy and green hydrogen ecosystems. Oil and gas, on the other hand, are critical inputs for global industrial and economic activity and are explicitly excluded from the recent global tariff developments being witnessed.

---

Author: Dania Saadi