MUSCAT: A new report by the International Energy Agency (IEA) sees the Sultanate of Oman generating over $2 billion a year in economic value from the export, as well as domestic utilisation of green hydrogen as an alternative to natural gas, starting from 2030 – value that could rise to “double-digit USD billion levels” in the long term.
The Paris-based autonomous intergovernmental agency noted in its latest report, titled ‘The Oil and Gas Industry in Net Zero Transitions’, that pending firm offtake commitments for its green hydrogen output, Oman has an opportunity to utilize this low-carbon energy resource for its own industrialization and decarbonisation requirements.
“Most of the hydrogen is intended for export – the 2040 hydrogen target would represent 80 per cent of its LNG exports today in energy-equivalent terms – but developing a domestic market can strengthen Oman’s position while international demand grows,” said the IEA.
One such sector that can benefit from the availability of renewable hydrogen, it said, is the Omani refining industry, which currently consumes around 350,000 tonnes per annum (tpa) of fossil fuel-based hydrogen.
“Expanding renewables for hydrogen could also accelerate cost reductions for other renewable projects in the country, assist emission reductions in the country’s power system (natural gas accounts for over 95 per cent of the country’s electricity generation today) and bolster natural gas export revenues by displacing domestic gas demand. Achieving Oman’s 2030 hydrogen and power sector emissions reduction goals would require around $37 billion in investment,” the Agency stated in its report.
Significantly, the deployment of renewable hydrogen in refining in place of fossil-hydrogen could cut CO2 emissions by more 3 million tonnes annually, which represents 4 per cent of Oman’s current total emission levels, the IEA points out.
This new industry, based on renewable hydrogen production, can also unlock new economic activities, while driving inward investments and intellectual property exports, it said.
“Renewable energy generation, electrolysis, power grids, CCUS and the production of ammonia, synthetic fuels and low-carbon steel could all play such a role in developing alternative sources of revenue; this is especially important in the Announced Pledges Scenario (APS) and the Net Zero Emissions by 2050 Scenario (NZE) where there are large falls in income from oil and gas.
Finally, low-emissions fuels allow producers to leverage their existing strengths, resources and competencies in oil and gas for the new global energy economy,” it stressed.
In line with its pledge to become Net Zero by 2050, Oman is targeting the production of at least 1 million tpa of renewable hydrogen by 2030, which is projected to rise to 3.75 million tpa by 2040 and 8.5 million tpa by 2050.
Boding well for the achievement of these targets is the high quality of its solar PV and onshore wind resources, coupled with its existing fossil fuel infrastructure that can be suitably repurposed for low-emission fuel production.
Furthermore, Oman has earmarked around 50,000 sq km of land for hydrogen development, which if optimally utilized can produce up to 25 million tpa of renewable hydrogen. Around 1,500 sq km of this acreage has already been committed to large-scale projects that are targeting around 1 million tpa of green hydrogen output by 2030.
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