New IEA report presented to Omani Minister shows how rich renewable resources and vast land expanses could make Oman a competitive low-emissions hydrogen supplier by 2030
IEA Analysis
According to a new IEA report released today, Oman’s high-quality renewable energy resources and vast tracts of available land position it well to produce large quantities of low-emissions hydrogen – a fledgling industry today that can attract investment to diversify and expand the country’s export revenues while reducing natural gas consumption and emissions.
During a roundtable meeting with senior IEA officials and analysts at the Agency’s headquarters in Paris, IEA Executive Director Fatih Birol presented the new research, Renewable Hydrogen from Oman: A Producer Economy in Transition, to Oman’s Minister of Energy and Minerals Salim Al Aufi. It is the first IEA analysis of its kind to examine renewable hydrogen possibilities in a country that produces fossil fuels. The analysis relies on the IEA’s ongoing technical cooperation with Oman to help the country transition to a clean energy future.
Oman aims to produce at least 1 million tons 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 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.
“Oman is an oil and gas producer country that is taking an enlightened approach to its energy future, with a clear long-term vision and strong net zero ambitions. Thanks to its huge potential for low-cost solar and wind, renewable hydrogen is set to bring multiple benefits to Oman. The IEA is very pleased to be working with Oman on policy and technical matters as the country moves ahead on its journey to a net zero economy and shows other producer countries what is possible,” said Dr. Birol.
“From an energy perspective, Oman is better known for being an oil and gas developer, however it is also blessed with globally competitive solar and wind energy resources, and the most economically rational action for us is to embark on using this as the most viable and sustainable energy of tomorrow, including decarbonising the power generation, local industry and hydrogen production for export. We’re pleased to be working with the IEA on key aspects of our transition and are very encouraged by the insights offered by this report,” said Minister Al Aufi.
Oman’s exports
Oil and gas now account for over 60% of Oman’s export income, and domestic natural gas accounts for more than 95% of the country’s electrical output. Oman established a target of net zero emissions by 2050 in 2022 and began reducing fossil fuel consumption in its domestic energy mix. According to an IEA estimate of the present worldwide project pipeline, Oman is on course to become the sixth largest exporter of hydrogen globally, and the largest in the Middle East, by 2030.
Oman’s hydrogen projects will use electrolysers powered by renewable electricity to extract hydrogen from desalinated sea water. Oman benefits from high-quality solar PV and onshore wind resources, as well as vast amounts of available land for large-scale projects. It is also conveniently situated along important market routes between Europe and Asia, with existing fossil fuel infrastructure that can be used or repurposed for low-emissions fuels. Oman has extensive expertise in handling and exporting both LNG and ammonia that is directly applicable to renewable hydrogen and hydrogen-based fuels.
Oman is putting tangible steps in place to meet its lofty goals. In 2022, the government formed Hydrogen Oman (HYDROM) as an independent body to lead and administer its hydrogen policy. So far, 1 500 square kilometres of land have been set aside for development by 2030, with up to 40 times more territory identified for potential long-term production. Six projects for renewable hydrogen have already been given land in the country’s first such auction process.
According to the article, Oman’s renewable hydrogen exports will most likely be carried in the form of ammonia at first. While Oman already exports around 200 000 tonnes of ammonia per year, if it wants to become a significant international hydrogen supplier by 2030, its ammonia export capacity would need to be 20 to 30 times higher, requiring significant and timely investment, particularly in storage tanks and dedicated deepwater jetties.
Meeting Oman’s hydrogen ambitions will necessitate a tremendous increase in renewable energy, with about 50 terawatt-hours of electricity required to reach the 2030 target, which is larger than the entire country’s current electricity grid. This is expected to increase cost reductions while also benefiting the country’s electricity system. Based on recently awarded bid pricing in the region, utility solar PV and wind are likely already competitive with natural gas-fired electricity generation in Oman. According to the IEA report’s estimate, Oman can accomplish its targets of renewables reaching 20% of the country’s electricity mix by 2030 – and 39% by 2040 – at a low cost.
Scaling up production of renewable hydrogen in Oman to 1 million tonnes by 2030 would require cumulative investment of around USD 33 billion. An additional USD 4 billion would be required to bring renewables’ share of the national electricity mix to 20%, the report says. Achieving its targets and using one-third of renewable hydrogen for domestic uses would significantly contribute to Oman’s clean energy transition. The benefits would include reducing domestic use of natural gas by 3 billion cubic metres a year and avoiding 7 million tonnes of carbon dioxide emissions.
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Source: IEA
