INTERVIEW - OQ unleashing Oman's green hydrogen potential

Oman aims to become a major player in the green hydrogen market, targeting an annual production of 1 million-1.25 million tonnes by 2030. With abundant low-cost solar and wind energy, ample renewable energy generation areas, robust port infrastructure, and a strategic geographic location, Oman has launched an auction for integrated green hydrogen projects in Duqm. OQ, the state-owned global integrated energy group, is instrumental in driving Oman's green hydrogen ambitions.

Renewables Now interviewed Najla Al Jamali, Chief Executive of OQ Alternative Energy, discussing Oman's goals, ongoing projects, challenges, and the company's contribution to decarbonising the local oil and gas industry.

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Q: In your opinion, what are the main challenges and obstacles that developers of hydrogen projects in Oman will have to overcome?

The green hydrogen industry is in a very exciting phase as an energy sector. We are witnessing an increase in the conversation about exploiting green hydrogen as a fuel source, including utilising green hydrogen as a safeguard against energy insecurity. Economies are realising that green hydrogen can be incorporated into decarbonisation strategies while also meeting growing energy demands. Nevertheless, as with other emerging industries, there will be challenges. But challenges create opportunities where OQ’s Alternative Energy strategic business unit can demonstrate leadership. We have an optimistic outlook and are firmly committed to investing in and developing this sector. Our projects in the pipeline are valued at more than USD 40 billion. Given that green hydrogen is derived from renewable energy – wind and solar—a key pillar for growth of this industry is already in place as the technology and know-how to produce renewable energy are mature. The challenges in this field are generally found in the technology. For instance, there are no established mechanisms to ensure that electrolysis systems can handle high-volume outputs. Congruently, when green hydrogen is converted to ammonia for export, the process of then converting ammonia back to hydrogen hasn’t been adapted for large-scale conversion. Despite the obstacles, the industry is making steady progress in these areas, and we are confident that solutions are on the horizon. Lastly, whilst financial institutions are enthusiastic about financing the energy transition and are recognising the demand and returns on investments that the industry can generate, they will need to display more agility and flexibility in their bankability requirements to enable the growth of this sector. In a nascent sector, requiring off-takers to commit to long-term, fixed-price off-take arrangements is not feasible.

Q: Where do you expect demand for the green hydrogen produced in Oman to come from -- which countries or industries?

At OQ Alternative Energy, we expect to witness a growing and consistent demand for green hydrogen and green ammonia. Global analysts are projecting that by 2050 the energy produced by green hydrogen could replace 10.4 billion barrels of oil, with exports reaching USD 300 billion per year. In our initial stages, our focus will be foreign markets. Where we anticipate seeing demand is Europe, Japan and Korea. Europe for example, has the largest number of projects stemming from the demand side, owing to its ambitious decarbonisation targets and policies. Japan and Korea are potential markets because there is a growing interest in imports of green hydrogen and green ammonia to replace conventional fuels. We are also keeping an eye on China’s industrial infrastructure planning and are watching how they will be using green hydrogen domestically. In terms of the industries of potential buyers, we have been in discussions with sectors such as power, industrial, petrochemical, oil refining and steel manufacturing.

Q: OQ is involved in several large-scale green hydrogen projects. When do you expect a final investment decision to be taken on a project and does this depend on securing off-take contracts?

OQ Alternative Energy has already advanced through several potential low-carbon molecule projects that are projected to generate about 30 GW of renewable energy in Oman for industrial and commercial uses by producing green hydrogen and its derivatives. We expect the investments we are driving into these projects to pass the final investment decision (FID) stage over the next few years (before 2030), with advanced projects expected to reach FID around that same period. These strategic green hydrogen projects are expected to be nonrecourse project financed and thus will require an off-take contract prior to FID. Today, OQ Alternative Energy, with OQ’s trading arm (OQT) is evaluating potential markets and opportunities. These strategic Green Hydrogen projects include:

HYPORT Duqm: a joint project with DEME with a renewable capacity of 1.3 GW in wind and solar in the Special Economic Zone in Duqm.

Green Energy Oman (GEO): A joint project between InterContinental Energy, EnerTech Holding Company and Shell. It has a renewable capacity of 25 GW in wind and solar to be developed over multiple phases and is in Al Wusta Governorate.

SalalaH2: A joint project with Marubeni, Linde and Dutco. It has a renewable capacity of 3.5 GW in wind and solar energy and is in Dhofar Governorate.

Q: OQ has been mandated by the Omani government to support the decarbonisation of the local oil and gas industry. Can you give more details about the progress on the Liwa Solar and Block 60 Solar Projects?

OQ is firmly committed to the government’s decarbonisation mandate. As an organisation, we are working towards reducing carbon dioxide from the atmosphere by focusing our efforts on reducing the carbon footprint of our existing assets while optimising the energy intensity of our portfolio. While OQ’s core business is within the hydrocarbons sector, the Group’s energy mix will be changing. Most importantly, OQ’s Alternative Energy business unit was set up to be the cornerstone of OQ’s position as a leading sustainable integrated energy company and a new avenue for sustained, long-term growth. In addition to our clean energy portfolio, and our green hydrogen projects in the pipeline, we are continuously exploring new and innovative ways to reduce and manage our carbon footprint. Given that CO2 and other greenhouse gases are released from burning hydrocarbon fuels, we see projects such as low-carbon hydrogen, wind, solar and Carbon Capture Usage and Storage (CCUS), as the future of Oman’s energy landscape. OQ Alternative Energy is progressing well into the development of clean energy projects to supply power from renewables to its own assets as part of its decarbonisation journey. Liwa Solar Power (LSP) and Block-60 solar are progressing as scheduled with FIDs and commercial operation dates forthcoming. These projects shall provide clean energy to Liwa Plastics Industrial Complex (LPIC) in Suhar and Bisat field in block-60, respectively. Furthermore, OQ Alternative Energy is also working on developing several similar projects, including a project pipeline of 2 GW by the end of this decade, to supply clean energy to other oil and gas operators and Oman’s industrial clusters.