Oman LNG signs deal with Shell to ship Middle East's first carbon-neutral LNG cargo

Oman LNG has signed an agreement with Shell to deliver the sultanate's first carbon-neutral LNG cargo, the company announced in a series of Tweets June 8.

The shipment will be made from Oman LNG's export facility in Qalhat, Sur.

"The cargo is the first carbon-neutral LNG from the Middle East using nature-based carbon credits to offset full lifecycle CO2 emissions generated across the LNG value chain," the company said.

Oman LNG did not provide details on which company is responsible for offsetting the carbon by planting trees, or where this project would be located.

"When CO2 emissions are hard to abate, they can be compensated through offset from projects that are independently verified to capture or reduce CO2 emissions and create carbon credits, which can be retired to demonstrate an amount of CO2 emissions have been compensated for," Oman LNG said.

In April, Shell announced it would spend $300 million over the next three years to plant 5 million trees in the Netherlands and Spain, as well as supporting forest regeneration in Australia. It has argued this plan would reduce its net carbon footprint by 2% to 3% by offsetting its emissions.

However, questions remain about the effectiveness of such plans. For instance, it can take decades for trees to be absorb sufficient carbon to have a material impact. Additionally, if the trees were to die, the carbon may be released back into the ecosystem.

"The concept of carbon offsetting is problematic as it does not tackle the core issue of carbon emission and is most often used as a form of greenwashing," said Dania Cherry, a spokesperson for Greenpeace Mena, in a recent statement to S&P Global Platts. "Planting trees and waiting for more than a decade till they accumulate enough biomass to become net carbon emitters and hoping they remain despite the increased prevalence of drought, forest fires and disease due to climate change is not a solution."

Oman LNG has been undergoing debottlenecking activities in the past two years to raise the capacity of its current facilities. Omani LNG exports were essentially at full capacity 2018-2020, when they averaged at about 12 Bcm/year, according to Platts Analytics. However, the debottlenecking will allow Omani LNG exports to expand by about 2 Bcm/year. Platts Analytics expects Omani LNG exports at around 14 Bcm/year over the coming five years.