Published: 08 December ,2022:

Oman said it had received plenty of interest from international energy companies for two green-hydrogen concessions that will be awarded early next year and which may require around $10 billion of investment.

The government plans to choose winning bidders by the end of March for the blocks near the port of Duqm. Investors will develop the areas with solar panels and wind turbines to power massive electrolyzers and create green hydrogen, a fuel seen as crucial for the global transition to cleaner energy.

Oman is one of several Middle Eastern countries, including Saudi Arabia, Egypt and Morocco, seeking to become major exporters of green hydrogen in the next decade. The fuel doesn’t emit any planet-warming gases when burned, though it is still far more expensive to produce than oil and natural gas.

More than 40 companies, including TotalEnergies SE and BP Plc, have purchased request-for-qualification documents for the Omani blocks, an early step before formally bidding.

“All the big names are on the list, Energy Minister Salim al-Aufi said in an interview in Muscat, the capital. “What makes Oman attractive is the co-existence of solar and wind resources and the vast land that’s available. That makes the cost of producing renewable energy in Oman as cheap as it can possibly be.

$140 billion goal

Each project may require $4 billion to $5 billion of investment in the electrolyzers — which split water into hydrogen and oxygen — and renewable-energy facilities, he said.

The two facilities will probably increase Oman’s overall power generation capacity by 6-8 gigawatts from 12GW.

Another round of bids will begin in April for land near the southern city of Salalah.

The country aims to make at least 1 million tons of green hydrogen a year by 2030, rising to around 8 million by 2050. The government estimates it will take $140 billion of investment to reach that target.

Oman will require at least 20 percent of the Duqm blocks to be offered to state-owned companies of the government’s choosing. It will look more favorably on investors that show they have agreements in place with potential buyers. Green hydrogen can be used to power factories, electricity plants and vehicles including planes.

The government also wants some of the hydrogen to be used by local businesses to help the country neutralize carbon emissions by 2050.

“The priority will be those who have already an agreed off-taker,” al-Aufi said. “We’re relying on the investors and the developers to bring with them the market. We need to see that line of sight.”

Maxed Out on LNG

Oman is the biggest exporter of liquefied natural gas in the Middle East after Qatar, according to data compiled by Bloomberg. Demand for LNG has soared as Europe looks to replace flows cut off by Russia. Oman is producing at its full capacity of around 11 million tons a year and expects that to continue throughout 2023, al-Aufi said.

It may look at building another liquefaction plant to add to the three it has. But that will only happen if it can pump more gas from its fields or get domestic industries to switch to other forms of energy to free up some for exporting, he said. The plants, known as trains in the industry, typically cost billions of dollars to construct.

“If we think there is capacity for an additional train, we will definitely look into it,” the minister said.

“Nothing has been confirmed.”