Oman may be able to produce renewable hydrogenat $1.60/kg by 2030 and could account for more than half of the Middle East's hydrogen exports by then, according tothe IEA.
Omani production costs could be among the lowest globally by the end of the decade, the IEA said in its Renewable Hydrogen from Oman report on 12 June. The predicted production cost of $1.60/kg would mark a steep decline over the coming years, withArgus calculating prevailing costs for hydrogen production in Oman from dedicated solar and wind assets at $5.43/kg, including capital expenditure.
Declining renewable power production costs and decreases in capital costs for electrolysers are expected to improve production economics. The IEA assumesthat capital costs for electrolysers could fall below $500/kW by 2030 from over $1,400/kW currently, based on expected increases in capacity deployment to over 130GW and historical data on cost declines for solar photovoltaic (PV) modules.
Bringing production costs down to $1.60/kg could allow Oman to export renewable ammonia at around $450/t over a distance of 10,000-20,000km — including production, conversion and transport — the IEA estimates. This could make its supply competitive with conventional ammonia in key markets, such as northwest Europe or northeast Asia.
Based on the country's project pipeline, Oman could become the largest exporter in the Middle East and the sixth largest globally by 2030. The country could ship some 1.1mn t/yr of renewable hydrogen to other countries — primarily as ammonia — accounting for 61pc of total Middle East exports. This would be followed by the UAE with 20pc and Saudi Arabia with 16pc, the IEA projects.
While the focus will probably be primarily on exports, Oman could also use renewable hydrogen to decarbonise domestic processes. The country currently uses some 350,000 t/yr of fossil fuel-based hydrogen in refining processes which could be substituted. Renewable power and hydrogen could cut domestic natural gas use by around 3bn m³/yr by the end of the decade.
Oman has set targets to produce 1mn-1.25mn t/yr of green hydrogen by 2030, expanding further to 3.25mn-3.75mn t/yrby 2040 and eventually to 7.5mn-8.5mn t/yr by 2050. Assuming the country reaches its 2040 target, Oman's renewable hydrogen production would be equivalent to 80pc of current LNG exports in terms of energy content, the IEA said.
Several renewable hydrogen production projects have been announced across the country. State-owned Hydrogen Oman (Hydrom) recently signed three agreements on land use for hydrogen projects, including one plot that was awarded as part of an auction process. Large swathes of land have already been earmarked for further project developments.
But building out the hydrogen economy will require major investments. In order to reach the 2030 targets, some $20bn would be needed for renewable power capacity dedicated to hydrogen production and $13bn for the actual electrolysis capacity and ammonia conversion, the IEA estimates. Oman's minister of energy and minerals Salim Al Aufi recently projected that reaching the 2050 targets would require total investments of $150bn.
Required infrastructure additions include larger ammonia export facilities, which could be located at the ports of Duqm and Salalah, according to the IEA. The country may require at least 400,000t of ammonia storage by 2030, while some 12-14 large ammonia tankers would have to be dedicated year-round to transporting ammonia from Oman, the organisation estimates. The groundwork for such expansions will need to be laid soon, given prevailing lead times for infrastructure projects, the IEA said.
