The rise of Oman: A frontrunner in green hydrogen production

Endowed with sunshine, wind, and a strategic location, Oman is deemed to become a major exporter of clean, green hydrogen. This leadership bid stems from a confluence of factors that grant Oman a significant competitive advantage: abundant natural resources, existing infrastructure, and a first mover advantage.

Oman boasts some of the world's most suitable locations for solar and wind power generation, key ingredients for producing low-cost green hydrogen through electrolysis. This green hydrogen can then be transported through Oman's existing 4,000-kilometer gas pipeline network, significantly reducing infrastructure costs compared to starting from scratch. Furthermore, Oman's extensive experience in processing and exporting liquefied natural gas (LNG) and ammonia translates directly to efficiently managing green hydrogen and its derivatives.

To execute on its potential, the Omani government aims to produce over 1 million tons of green hydrogen annually by 2030, a figure that is projected to rise to as high as 8.5 million tons by 2050, exceeding even today total hydrogen demand of Europe (IEA analysis, 2023). Oman's commitment is further underscored by significant investment deals secured in March 2023 for green hydrogen projects across the country, for a total of $51 billion. These investments are the results of almost a decade of negotiations and tech development, which now give Oman a big regional first mover advantage. Among the top partnership agreements secured in 2023, the most remarkable included Belgium, Germany, India, Japan, Kuwait, the Netherlands, Singapore, the UAE and the UK.

These projects, coupled with Oman's strategic location along key trade routes between Europe and Asia, position it to become the world's sixth largest and the Middle East's biggest exporter of hydrogen by 2030, potentially holding a 61% share of the region's hydrogen exports (IEA analysis). Furthermore, the Credit Rating Fitch believes Oman is very competitive in green hydrogen production, reflecting its low renewable-energy costs, available export infrastructure through Hydrom and the under-utilized Duqm port, and a clear and low taxes.

However, Oman's path to becoming a green hydrogen leader is not without challenges. The success of its plans hinges on the global market's appetite for this clean energy source. Favorable carbon pricing particularly in Europe for instance, would incentivize countries to import green hydrogen. Additionally, Oman faces competition from other green hydrogen producers, including Saudi Arabia and the UAE, making cost competitiveness a crucial piece of the Omani advantage.

Let's break it down in terms of renewable energy investment needed to achieve its ambitious hydrogen production goals. Everyone agrees that Oman needs a massive increase in renewable energy capacity. This translates to investment estimated at $33 billion by 2030 for hydrogen production alone. Fortunately, Oman is well-positioned for this transition, with recent project bids indicating that renewable energy generation is already cost-competitive with traditional sources like natural gas, and investment in renewables is outstripping even that of oil in the wider region.

In conclusion, Oman is an early mover in the green hydrogen revolution and its abundant resources, existing energy infrastructure, and a green-growth focused government position the country for success. By continuing to attract investment and promote a rapid transition to Netzero, Oman can consolidate its market position as a green hydrogen powerhouse potentially becoming the 6th largest exporter of green hydrogen by 2030 (World Economic Forum). While it execute its vision and strategy, the country is quietly positioning itself as a market friendly, low tax and sustainable focused marke place. Additionally, it relatively low oil and gas endowment have been leverage to its advantage avoiding the complacency that is typcal of market leader that are over relying on oil and gas as Saudi Arabia and UAE might have done.