By: AGBI

Oman’s Sultan Haitham bin Tariq is calling for renewable energy to be prioritised as the country works to diversify its economy. 

Renewables featured prominently in his National Day speech in November.  

The Omani ruler said: “Renewable energy should not be only about a clean environment but our way of life and we should go all out for it to make sure we get it right for the sake of the future of our country.” 

Although Oman is an exporter of liquefied natural gas and crude oil, its reserves are smaller than those of its GCC peers with the exception of Bahrain. It has identified abundant solar potential as supportive of green hydrogen production – although transport costs and emerging regulation remain significant constraints.

In October this year, state-owned Energy Development Oman (EDO) secured a $1 billion loan to fund a planned expansion of its renewable energy operations.

EDO owns Hydrogen Oman (Hydrom), which is investing $20 billion in green-hydrogen projects, plans to increase production by 20 percent to 1.4 million tonnes per year by 2030. 

Hydrom’s first two bid rounds for blocs in 2022 and 2023 met with only limited interest from investors. A third round is ongoing after Hydrom eased the terms on offer. 

“The shift toward renewable energy is more than just an energy project for Oman. It is a strategic national transformation for stronger energy security,” Essam Al Sheibany, vice president of sustainability at Asyad Group, told AGBI. 

He said renewables would reduce reliance on a single fuel source, free up natural gas for industry or export and stabilise power supply in the long term. 

“This will make Oman more resilient to global energy price fluctuations,” Al Sheibany said.

Most green energy projects are in the Sohar, Salalah and Duqm free zones. 

The most ambitious is the HyDuqm green hydrogen project, a consortium of France’s Engie and South Korea’s Posco. It has been established in Duqm and hopes to attract up to $8 billion in investment. When complete, it should have a capacity of 5 gigawatts of wind and solar power generation. 

Ammar Alali, co-founder and CEO of geothermal tech specialist Strataphy, said Oman might have access to one of the largest prospects of geological hydrogen anywhere on the planet. 

“Oman could become for geological hydrogen what Saudi Arabia is for oil and gas, where there’s not only huge, but also easy-to-access reserves,” Alali said.

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 LNG exports in energy-equivalent terms, this does not mean fossil fuels will take a backseat. 

“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,” Oman’s minister of energy and minerals Salim Al Aufi told delegates at a Green Hydrogen forum in September.