Oman announces winning bidders of round 2 hydrogen block auctions

Hydrogen Oman, the sultanate's green hydrogen orchestrator, has signed two new green hydrogen projects for Dhofar worth $11 billion, with offtake discussions part of the bid submissions, the company said.

The signings followed the successful completion of Hydrom's second round of auctions and bring the total planned hydrogen production in Oman to 1.38 million mt/year by 2030.

The first agreement was signed with a consortium consisting of France's EDF and its subsidiary EDF Renewables, Japan's J-Power and and UK-based hydrogen developer Yamna, according to Hydrom. The second agreement was signed with Actis, a leading global investor in sustainable infrastructure, and Fortescue, a global integrated green energy, metals and technology company.

The deals were announced at an April 29 signing ceremony at Oman Sustainability Week in Muscat attended by Omani Energy Minister Salim al-Aufi and Hydrom Managing Director Abdulaziz al-Shidhani.

"The race is on, may the best man win," Aufi said at the ceremony. "We don't like to be under the spotlight but in the hydrogen space, we found ourselves there and we accept it."

In all, the eight hydrogen consortiums now involved in Oman's hydrogen plans will invest $49 billion in the country by 2030, with Oman footing an additional bill for the infrastructure such as the land, new roads and warehousing. Their goal is to have renewable power capacity of 34.8 GW for 1.38 million/year of hydrogen by 2030.

Oman plans to install 40 million solar panels and import some 6,000 wind turbines over the next six years to more than double the country's existing power capacity as part of plans to produce more than 1 million mt/year of green hydrogen by 2030, Aufi said.

A "significant" part of the now eight consortiums involved in Oman's green hydrogen plans has initiated offtake discussions as part of their bid submissions, but no offtake agreements have been made, Shidhani said. Costs being considered are competitive with blue hydrogen from natural gas, he said. While he declined to give cost estimates because they were confidential, the results of the second public auction showed "the appetite we got is very positive," he said. "The interest that we got is more than 200 companies registered in our platform. That by itself is the right signal to the market."

The results of the second public auction add to six deals in the Duqm and Dhofar's Salalah regions signed last year that call for $38 billion of investment, 25.8 GW of renewable power capacity and 925,000 mt/year of hydrogen production by 2030. Legacy developers involved in four projects include Shell, BP, Samsung C&T, InterContinental Energy and GEO. Two projects in the first public auction were awarded in June to companies including Engie, Blue Power Partners, Al Khadra, Posco Holdings, Samsung and PTTEP.

Three areas selected for the hydrogen projects are Duqm, Dhofar and Al Jazir with a total area of about 50,000 sq km of land. Oman is expected to be among the top 10 hydrogen exporters by 2030, according to a February presentation by Hydrom, citing the International Energy Agency.

Platts, part of S&P Global Commodity Insights, assessed hydrogen from alkaline electrolysis, including capital expenditure, at $5.22/kg on April 26. The assessment jumped after Platts updated the capital costs on March 1.

'Too costly'

Gulf oil ministers along with Saudi Aramco CEO Amin Nasser have noted the cost challenges of green hydrogen projects in recent days.

Europe, a key policy driver for green hydrogen, is seen as struggling to meet its 2030 green hydrogen targets and hydrogen currently costs around $250-$300/boe, Saudi energy minister Prince Abdulaziz bin Salman said April 28 during the World Economic Forum Special Meeting on Global Collaboration, Growth and Energy for Development.

Platts assessed the Dated Brent crude oil benchmark at $89.94/b on April 26.

Nasser said April 22 at the World Energy Congress in Rotterdam that hydrogen as an alternative "was still too costly" to scale up and displace conventional hydrocarbons.

Aramco, which has said it is aggressively ramping up its hydrogen sector, has sought offtake agreements of $200/b of oil equivalent for blue hydrogen and $400/boe for green hydrogen, but has found few takers, he said.

Aramco aims to produce up to 11 million mt/year of blue ammonia that can be used for power generation by 2030, tapping into its vast gas resources, which have been supported by recent finds, including the Jafurah Field and its 200 Tcf of unconventional reserves.

The ammonia is produced from hydrogen that Aramco makes by steam reforming natural gas and capturing the carbon emissions. It has shipped a few pilot cargoes of blue ammonia to Japan.

The EU is aiming to produce 10 million mt/year of green hydrogen and import another 10 million mt/year by 2030 but a dearth of final investment decisions on new projects is seen as a major hurdle to achieving the targets.