Oman secures the fuel of the future with $30 billion: green hydrogen

Oman secures the fuel of the future with $30 billion: green hydrogen
Oman secures the fuel of the future with $30 billion: green hydrogen
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Major fluctuations in the global energy market due to the Russian-Ukrainian war made the trend towards green hydrogen a focus of intense interest among many governments around the world, as an alternative fuel for the future, free of carbon emissions, which was evident in the accelerated pace of its projects in the Sultanate of Oman during the recent period.

Green hydrogen results from a chemical process in which an electric current from renewable sources is used to separate hydrogen from oxygen in water, and it acts as a chemical energy carrier, such as oil or gas, and stores three times the energy per unit mass as conventional gasoline, and when it burns in air it combines with oxygen to produce water again, thus producing energy without emitting carbon dioxide into the atmosphere, which causes global warming.

In view of these unique properties, a large number of countries decided to increase green hydrogen production capacities locally, such as Canada, France, Japan, Australia, Norway, Germany, Portugal, Spain, Chile, China and Finland, while the European Union launched a strategic plan to invest in its production in July 2020.

As for the Sultanate of Oman, it has allocated an area estimated at 50,000 square kilometers for renewable energy and green hydrogen projects, distributed in the governorates of Al Wusta and Dhofar, including two plots of land within the first batch in November of last year, provided that agreements for the use and development of projects are signed by the quarter The first of this year, according to the Oman News Agency.

The Sultanate’s government will also offer between two and four plots of land in the Dhofar Governorate for public bidding, to be awarded for green hydrogen projects during December 2023.

The area of ​​each piece of land allocated for these projects is estimated at about 320 square kilometers, which will be put up for bidding through the “Hydrom” company, which is wholly owned by Energy Development Oman and is subject to the supervision of the Ministry of Energy and Minerals.
The investment value of each piece of land is about 4 to 5 billion dollars, according to the Omani Agency, according to the Acting Executive Director of Hydrom, Firas bin Ali Al Abdwani, indicating that the number of companies and institutions that have registered their interest in green hydrogen projects has reached more than 180 entities.

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Hydrome aims to operate at least 6 projects in the green hydrogen sector by 2030 in the Al Wusta and Dhofar governorates, producing at least one million tons annually, equivalent to 20 gigawatts of clean energy, with an expected investment of about $30 billion.
According to Omani economist Yousef Al Balushi, green hydrogen projects would increase non-oil revenues and achieve the financial sustainability that the Sultanate seeks, stressing that the government’s economic success in the next stage is linked to the success of private sector companies, which requires redoubling efforts to overcome the obstacles it faces, especially the problems related to it. At the cost of obtaining labor and its quality, according to Oman newspaper.

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Al-Balushi explained in press statements that providing capital at cost and appropriate conditions for financing is one of the most important priorities that must be focused on to enhance economic growth in the Sultanate, as the cost of capital is still very high locally. Due to the limitations of local banks and their high requirements for financial security, which limits the ability of individuals and companies to obtain the financing required to establish projects.

The Sultanate’s government will offer between two and four plots of land in the Dhofar Governorate for public bidding, to be awarded for green hydrogen projects.

The intensification of green hydrogen projects would also enhance the contribution of non-oil revenues to Oman’s budget for the year 2023, according to the Omani electronic newspaper Atheer, quoting the Undersecretary of the Ministry of Finance, Abdullah Al Harthy, indicating expectations for the growth of non-oil activities in the Sultanate by 2.9%.

This contribution has a weighty role in the Sultanate’s economy, which continued the recovery path during 2022, supported by an increase in non-hydrocarbon revenues and a financial surplus of 1.146 billion riyals ($2.98 billion) during the period from January to October 2022, compared to fiscal deficit last year, despite spending rising 9.5% year-on-year over the same period.

The global production of various types of hydrogen is currently estimated at about 70 million tons, used by industries, the most important of which are: ammonia fertilizer and chemicals such as methanol, and the removal of impurities during oil refining, while global expectations suggest that the production ceiling will reach 400 million tons annually by 2050, including 200 million tons of green hydrogen.

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