CURRENT STATUS OF HYDROGEN PROJECTS

Under the leadership of His Majesty Sultan Haitham bin Tarik, Oman announced in October 2022 its commitment to achieve net zero emissions by 2050, in line with the Paris Climate Agreement’s objective of limiting global climate change to below 1.5 degrees Celsius compared to pre-industrial levels. In March 2022, His Majesty Haitham bin Tariq issued a royal directive which ordered (i) the creation of a new general directorate for clean energy and hydrogen power within the Ministry of Energy and Minerals; and (ii) the establishment of a new company to develop the clean energy and hydrogen sector in Oman. To uphold His Majesty’s commitment and directive of structuring and accelerating the development of the green hydrogen sector in Oman, Hydrogen Development Oman (Hydrom) was established in 2022, which is Oman’s central entity that orchestrates the country’s interest in green hydrogen. Hydrom’s short-term target is to achieve 1 MTPA of green hydrogen production by 2030.   

In order to achieve the 2030 target, several large-scale hydrogen-related projects have been awarded and endorsed by Hydrom. Six large-scale renewable hydrogen-based schemes were part of an early first wave of projects commenced prior to Hydrom’s emergence. These so-called “legacy projects” have been allocated land blocks by the Omani government and have  signed term sheets (and in some cases fully termed development agreements) with Hydrom in which Hydrom may elect an Oman Government nominee to receive certain back-in shareholding rights in the project company and a right to offtake a certain percentage of hydrogen production. In return, Hydrom proposed to facilitate the securing of services to be provided by Government entities to Oman’s green hydrogen projects, such as electricity supply, water supply and product transmission systems. However, so far it is unclear how and when such services will be available.

In parallel to the “legacy projects”, Hydrom auctioned, in two rounds, land blocks for green hydrogen projects. In June 2023, two blocks in Duqm were awarded:

  • Amnah: awarded to a consortium comprised of Copenhagen Infrastructure Partners, Blue Power Partners and Al Khadra, part of Oman’s Hind Bahwan Group. The project is expected to develop approximately 200 KTPA of green hydrogen for planned green steel plants located in Port of Duqm, within SEZAD.
  • Green Energy Oman: awarded to a consortium comprised of OQ, Shell Oman, Kuwait's state-backed energy investor EnerTech, InterContinental Energy and Golden Wellspring Wealth for Trading. This project will produce 150 KTPA of green hydrogen for ammonia export purposes.

In 2024, two blocks in Salalah were awarded:

  • EDF, J Power, Yamnah: awarded to a consortium consisting of EDF Group, J-POWER and Yamna that will aim to produce approximately 178,000 TPA of green hydrogen by 2030. The produced hydrogen will be supplied to an ammonia plant to be built in the Salalah Free Zone and set to produce 1 MTPA of green ammonia.
  • Actis - Fortescue: awarded to a consortium consisting of Actis and Fortescue with the potential to produce up to 200,000 tonnes of green hydrogen per year. This will then be sold to local industrial off-takers as well as processed into derivatives (such as green ammonia) for export via the existing Port of Salalah.

RECENT POLICY CHANGES

In the last 18 months, Oman has implemented several significant policy changes under the Oman Vision 2040 to position Oman as a global green hydrogen location. One of the key aspects of this was the decision to allow the implementation of green hydrogen projects under Oman’s existing legislative and regulatory framework as opposed to following other countries in developing specific legislation/regulation to govern the hydrogen sector.

The only piece of legislation specific to hydrogen which has been enacted is Royal Decree No. 10/2023 (RD 10/2023) which legislates for the grant of rights over lands for clean energy and green hydrogen. RD 10/2023 has designated specific areas of land whereupon renewable and green hydrogen projects may be developed pursuant to the grant of usufruct rights.

Finally, the Ministry of Energy and Minerals of the Sultanate and Hydrom signed a Joint Study Agreement (JSA) with the Port of Amsterdam, Zenith Energy Terminals and GasLog, to collaborate on the development of a liquid hydrogen route to market for green hydrogen produced in the Sultanate of Oman. These agreements are part of a broader strategy to establish Oman as a global hydrogen hub, particularly for exports to Europe. 

RECENT DEVELOPMENTS

Development 1

On 16 February 2023, Oman issued RD 10/2023  which allocates specific lands in the Sultanate of Oman to be used for renewable energy and clean hydrogen projects. RD 10/2023 prohibits rights over the specified lands from being granted or disposed of without the prior written approval of the Oman Ministry of Energy and Minerals.

RD 10/2023 then provides that a usufruct right in the land stipulated in the law will be granted to Hydrom based on a request by the Oman Ministry of Energy and Minerals. Hydrom is then given the competence in RD 10/2023 to sub-divide the land and contract with others to use the sub-divided land for the purpose of renewable energy and clean hydrogen projects awarded via an auction process.

RD 10/2023 essentially puts Hydrom (with the blessing of Oman’s Ministry of Energy and Minerals) in control of the key component of Oman’s green hydrogen sector i.e., the land allocation. 

Development 2

Oman’s strategic approach to developing its green hydrogen sector includes the establishment of a comprehensive common-use infrastructure, a crucial element for the success of its ambitious hydrogen projects development programme.

The revised projections, up from previous estimates of $30 – 40 billion for the green hydrogen projects alone, point to the sizable investment that will go into the development of the common-use infrastructure, encompassing a new hydrogen pipeline transmission network, water desalination and pipeline networks, and specialised storage capacity as well.

Hydrom has also launched a new entity, provisionally named ‘InfraCo’, to oversee the development of the common-use infrastructure. The Sultanate of Oman has decided to design and roll-out entirely new common infrastructure to be able to satisfy the most stringent “green” standards set by importers.

This commitment to building out greenfield infrastructure spans not only the hydrogen pipelines, but also the renewable energy systems, power cables, desalination plants and other utilities. Hydrom’s plan is not just about laying down pipelines and building storage tanks; it involves a carefully coordinated effort to align with Oman’s broader energy strategy. The infrastructure will be integrated with Oman’s electricity transmission systems and utility services, with significant contributions from entities such as OQ Gas Networks, Nama Group, and other subsidiaries of the Oman Investment Authority.

One of the key aspects of this common-use infrastructure is its role in attracting foreign direct investment (FDI). Moreover, the development of this infrastructure aligns with Oman’s Vision 2040, which emphasises economic diversification and sustainable development. In addition to its comprehensive infrastructure plans, the Ministry of Energy and Minerals of the Sultanate and Hydrom have also signed a JSA with the Port of Amsterdam, Zenith Energy Terminals and GasLog, to collaborate on the development of a liquid hydrogen route to market for green hydrogen produced in the Sultanate of Oman.

The JSA  entails conducting a detailed assessment of the requirements to develop an open-access hydrogen liquefaction, storage, and export facility in the Sultanate of Oman, along with the provision of specialised vessels for the transportation of the liquid hydrogen, currently under development by GasLog. The primary aim of the Agreement is to establish a green hydrogen corridor between the Sultanate of Oman and the Netherlands, with the terminal of Zenith Energy as the destination for the import, regasification and further distribution of Oman-produced hydrogen to both local off-takers within the port of Amsterdam, as well as large industries in the European hinterland. 

Development 3

The government has introduced several policy measures and strategies to support the development of its hydrogen sector. In late 2023, the government unveiled a comprehensive national hydrogen strategy as part of its Vision 2040 plan.

The national hydrogen strategy outlines the country’s objectives and includes specific targets for hydrogen production capacity, investment levels and export volumes. It also sets out a regulatory framework to facilitate the development of infrastructure such as production facilities, storage systems and distribution networks.

The strategy aims to create sustainable value for Oman’s economy through the development of a competitive and sustainable green H2 ecosystem. Oman aims to produce at least one 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, which would be greater than the total hydrogen demand in Europe today. The 2040 hydrogen target would represent 80% of Oman’s current LNG exports in energy-equivalent terms, while achieving the 2050 target would almost double them.

In addition to large-scale projects and strategic partnerships, Oman has made notable advancements in hydrogen infrastructure and technology. One of the key infrastructure advancements is the construction of specialised hydrogen storage and transport facilities. In early 2024, Oman announced the development of a state-of-the-art hydrogen storage facility in the port of Salalah. This facility is designed to store hydrogen in liquid form and facilitate its distribution to international markets. The storage system will employ innovative technologies to ensure safety, efficiency, and scalability, addressing one of the crucial challenges in the hydrogen supply chain.

Oman is also focusing on technological advancements to enhance hydrogen production efficiency. The country has partnered with leading research institutions and technology companies to develop and deploy advanced electrolysers, use renewable electricity to split water into hydrogen and oxygen, and ongoing research aims to improve their efficiency and reduce costs.

Another significant technological development is the integration of hydrogen with other renewable energy systems. Oman is exploring the use of hydrogen as a storage medium for excess solar and wind energy. This approach not only stabilises the transmission systems, but also maximises the use of renewable resources, contributing to the country’s overall energy sustainability goals.