Oman could be the sixth-largest exporter of green hydrogen in the world by 2030 — and the largest in the Middle East, representing 61% of the expected 1.1 million tonnes of renewable H2 exported from the region, according to a report by the International Energy Agency (IEA).

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The Paris-based organization expects that the country could export more than 670,000 tonnes of hydrogen, mostly in the form of ammonia, by the start of the next decade.

The Gulf state targets at least one million tonnes of renewable hydrogen production by 2030, increasing to 3.75 million tonnes by 2040 and 8.5 million tonnes by mid-century. The IEA estimates that the 2040 target represents 80% of the country’s LNG exports today in energy-equivalent terms, “while achieving the 2050 target would almost double them”.

However, while the IEA lists ten projects with a start date in or before 2030, none have yet taken a final investment decision (FID), with only six even at the feasibility study stage.

The IEA also cautions that just 17% of the planned export projects even have “potential offtakers”, with no firm contracts yet in place.

The agency also estimates that it would cost $33bn to install enough renewable energy capacity, electrolysers and ammonia synthesis facilities to meet Oman’s 2030 production target. And this does not include the vast expansion of export infrastructure needed for the Gulf state to allow international trade in hydrogen and green ammonia.

Oman currently produces over two million tonnes of grey ammonia a year, most of which is further processed into the chemical urea, a key ingredient in fertilisers that can be transported as a solid bulk cargo. The Gulf state only exports around 200,000 tonnes a year of ammonia, with only two terminals in operation at the ports of Sur and Salalah.

If all of Oman’s renewable hydrogen were to be exported as ammonia, the IEA calculates this would be equivalent to six million tonnes, requiring 20-30 times more export capacity than the country has today.

While the agency expects that Salalah’s newly commissioned ammonia export terminal will be able to accommodate up to 700,000 tonnes a year, it anticipates that the port of Duqm will need to install new storage capacity and dedicated jetties to annually export 2.8 million tonnes of green ammonia. Storage across Oman’s ports would have to increase to 400,000 tonnes. And the IEA estimates the country would need 12-14 large tankers dedicated to transporting the chemical to its customers year-round.

However, the agency also expects that Oman will be able to produce renewable ammonia at the relatively low cost of $400/kg. And the it an extra $50 per tonne for transporting the chemical over 10,000km.

“This would make Oman a competitive supplier of renewable ammonia, with supply costs comparable with the higher end of ammonia market prices over the period of 2010-20, and well below the record levels of more than $1,000/tonne experienced globally in 2022 due to price hikes of natural gas,” says the IEA report.

Eye on LNG

Even if an international market for hydrogen or green ammonia never develops, Oman may still seek to pursue development for domestic use to free up fossil gas for export.

The Gulf state currently produces around 43.6 billion cubic metres of natural gas, of which it exports nearly 14 billion cubic metres as LNG — making it the third-largest exporter in the Middle East and North Africa, behind Qatar and Algeria. And oil & gas export revenues are a cornerstone of Oman’s wealth, representing around a quarter of the country’s GDP of $79bn.

The country currently uses fossil gas to produce around 1.1 million tonnes of hydrogen, with around 350,000 tonnes used in oil refining and 640,000 tonnes for ammonia, urea and methanol feedstock.

The IEA estimates that if Oman meets its 2030 target to generate 20% of its electricity from renewables and replaces fossil hydrogen in refining with green options, it would save three billion cubic metres of domestic gas consumption — equivalent to 20% of its current LNG exports.

The agency also notes that in addition to directly displacing grey hydrogen, renewable H2 could be used to substitute or be blended into gas for firing high-temperature industrial processes. However, this switch would require gas prices to exceed $15 per gigajoule (approximately 25.5 m3) or a carbon price of $155 per tonne of CO2.