Oman’s high-quality renewable energy resources and vast tracts of available land make it well placed 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 its natural gas consumption and emissions, according to a new IEA report released today.
IEA Executive Director Fatih Birol presented the new report, Renewable Hydrogen from Oman: A Producer Economy in Transition, to Oman’s Minister of Energy and Minerals Salim Al Aufi during a roundtable meeting with senior IEA leaders and analysts at the Agency’s headquarters in Paris. It is the first IEA report of its kind that analyses renewable hydrogen potential in a fossil fuel producer country. The analysis builds on the IEA’s ongoing technical cooperation with Oman to support the country’s clean energy transition.
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,” said Dr Birol. “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.”
“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,” said Minister Al Aufi. “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.”
Oil and gas today represent around 60% of Oman’s export income, and domestic natural gas accounts for over 95% of the country’s electricity generation. In 2022, Oman announced a target to achieve net zero emissions by 2050 and began reducing fossil fuel use in its domestic energy mix. Based on IEA analysis of the current global project pipeline, Oman is on track 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 implementing concrete measures to achieve its ambitious targets. In 2022, the government established an independent entity, Hydrogen Oman (HYDROM), to lead and manage its hydrogen strategy. So far, 1 500 square kilometres of land has been put aside for development by 2030 – and up to 40 times more land has been identified for potential production in the long term. Six projects have already been allocated land for renewable hydrogen in the country’s first such auction process.
Oman’s renewable hydrogen exports are likely to be transported initially in the form of ammonia, the report says. While Oman already exports around 200 000 tonnes of ammonia a year, its ammonia export capacity would need to be 20 to 30 times higher by 2030 if it wants to become a significant international hydrogen supplier in that timeframe, requiring significant and timely investment, especially for storage tanks and dedicated deepwater jetties.
Meeting Oman’s hydrogen targets will require a massive increase of renewable power, with around 50 terawatt-hours of electricity needed to meet the 2030 target, greater than the current size of the country’s entire electricity system. This is expected to further accelerate cost reductions and benefit the country’s power system as well. Based on recently awarded bid prices in the region, utility solar PV and wind are likely already competitive with electricity generation from natural gas in Oman. The IEA report’s analysis indicates that Oman can cost-effectively achieve its targets of renewables reaching 20% of the country’s electricity mix by 2030 – and 39% by 2040.
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.