OQ’s hydrogen ambition
Dr. Salim Al Huthaili, Chief Executive Officer, Alternative Energy – OQ, speaks to Insight Express about the company’s hydrogen ambitions and plans to contribute to the development of Oman’s hydrogen economy
Can you tell us more about your green fuels mega projects? What do they consist of and what sort of new opportunities will then open up for OQ?
OQ is at the forefront of the development of the hydrogen economy in Oman. So far, we have announced the development of three large green hydrogen projects with renowned international partners. The large hydrogen projects include a 25-GW project using solar and wind to produce green hydrogen and another two similar projects of a smaller size, but at gigawatts scale in Duqm and Salalah.
Oman is blessed with favorable wind and solar resources, the ‘surface’ has become what used to be called the ‘subsurface’. Having such resources along with large areas of unoccupied lands and ready infrastructure of ports put Oman in the forefront to export green hydrogen. We have great resources of wind and solar in the coastal areas near Duqm all the way to Dhofar, where two of the largest industrial ports in the region are being built with a close proximity to Asia and the world away from the Strait of Hormoz which makes us one of the best places for green energy production and export.
You said in a recent statement that the planned green fuels mega project will transform Oman into a world leader in green hydrogen and green ammonia. How is OQ planning to leverage its experience in the full supply chain along with integrated petrochemicals facilities to achieve this?
OQ will leverage its large portfolio of assets across the entire energy value chain and its successful partnerships with renowned regional and international players, which can be added to the excellent world class infrastructure and excellent renewable resources in Oman. This is positioning OQ as a leader in the development of Oman’s green economy. We have already unique opportunities and synergies through the entire value chain and integrating green molecules, and green hydrogen into OQ’s system is a true transition story to pave the path towards decarbonization. For instance, we have announced a development of a green hydrogen project utilizing OQ’s cluster in Salalah where LPG, methanol and ammonia are already bringing great synergies and the addition of green hydrogen is gearing up the integration.
How are you planning to secure the skills base and technical expertise needed in the transition to clean energy production? Are you planning any training and development initiatives tailored to developing the local workforce in Oman?
We believe AE projects will help transform Oman’s skills base and technical expertise in the renewable energy domain and capitalize on the skills and expertise that have been developed for more than 50 years. These renewable projects will produce a significant number of high value and highly skilled jobs and development initiatives aimed at supporting the local workforce. Additionally, these projects would provide excellent opportunities to diversify the economy, attract new industrial sectors and investment, as well as provide training and high tech jobs.
Green hydrogen is expected to grow into a USD 2.5 trillion market by 2050. But some experts are sceptical about the timeframe. What would be some of the challenges in your opinion to harness the potential of hydrogen production and development in the region, e.g., cost of production, storage, investment in infrastructure, policy development, etc.?
We are optimistic about the timeframe for growth since we believe demand will continue to come from various sectors. Our projects are well positioned to be able to offer a secure and reliable supply of green fuels into markets at a highly competitive price. Every project is bound to have its own set of challenges; and we believe we will be able to overcome them as they come.
Which industries and markets do you anticipate will drive demand for blue and green hydrogen and why?
The shipping sector, the aviation sector, heavy industries and power generators will drive the demand. The shipping sector requires green ammonia for its significant decarbonization needs. The aviation sector will adopt synthetic fuels made from green hydrogen. The heavy industry located in areas such as North West Europe will use green hydrogen to fuel their industrial processes including the production of steel. Power generators in countries across North Asia with a legacy reliance on coal-fired power and gas turbines have committed to transition to green ammonia in order to reduce their carbon emissions.
What policies or strategic imperatives do Oman’s policy makers need to focus on to remain competitive as other countries have already begun investing in green hydrogen?
Oman is already focusing on well thought out policies to remain competitive. Green hydrogen production is a natural fit to attain the economic objectives set out in Oman’s 2040 Vision which sets out a goal of more than 90% non-oil share in GDP by 2040 and a top 20 ranking in the global innovation index. Not only does green hydrogen contribute to diversifying economic activity beyond oil-related sectors, it also majorly boosts Oman’s environmental and innovative performance profile while building on existing supply chains and infrastructure. Oman Vision 2040 sets a target of 35 to 39% of the total energy consumption to be from renewables. The novelty of using hydrogen and its further derivatives such as ammonia as a carrier of green energy, creates the potential for Oman to become a world player in a future commodity market by moving fast and anchoring a robust market presence.
In the new reality post-COVID-19, what would be some of the key enablers for creating a resilient, purpose-driven and high-performing organization?
If COVID-19 has taught us anything, it is the need to always be agile. I believe that the changes we make to our business now will put us in a position of strength as we focus on the future. The COVID crisis has brought home the need for quicker response times in the event of a crisis. A company’s ability to respond to critical contingencies is crucial for business leaders in the perspective of continuing business. Organisations must be always ready to cope with emergencies and critical events to keep their reputation, be more resilient, and ensure continuity.
Integration as the key to ambitious growth
Oman in 2019 integrated its state-owned oil company OOC, refiner Orpic and seven other domestic energy firms and plans to invest over USD 28bn in the next 10 years. OQ was set up in 2020 to integrate the operations of the companies. OQ comprises OOC, Orpic, OOC’s upstream arm OOCEP, Oman Gas, OQ8, Salalah Methanol, Oman Trading International, oxo intermediates and derivatives producer Oxea and Salalah Liquified Petroleum Gas. Consolidation has been a major theme for Mideast Gulf petrochemical producers since 2019, with similar integrations occurring in Saudi Arabia and Qatar. The integration allows Oman to combine the financial and commercial capabilities of its upstream and downstream companies, utilize networks in both sectors to boost its commercial presence globally, as well as ensure feedstock security and increases cost competitiveness of its downstream oil and petrochemicals products.
Oman boosts its plastics production
LPIC has boosted Oman’s plastics production significantly, positioning OQ as a global producer, which sells domestically and exports its products to various regions. The new 880,000 t/yr LLDPE/HDPE swing plant at the Liwa complex is its first PE plant. Its new 300,000 t/yr PP plant adds to the 340,000 t/yr PP plant in Sohar, which obtains its feedstock from the Sohar refinery. The PE plant uses Univation’s Unipol technology, while the PP plant adopts LyondellBasell’s Spheripol technology. The LPIC project is expected to contribute to the nation’s economy through polymers exports and job creation.
OQ has offices worldwide with operations in 17 countries including the US, Brazil, Germany, Turkey, UAE, China, India and Singapore. The integrated producer exports its fuels and chemicals to more than 60 countries globally. OQ exports its polymers across the Gulf Cooperation Council region, Turkey and Asia and is looking to increase exports to other regions.
But the rapid growth in Asian PE and PP capacity in 2020-21 exerted pressure on global polymers producers, during a time of unprecedented global economic uncertainty caused by the Covid-19 pandemic. Container shipping bottlenecks have continuously led to shipment delays, making long-haul imports less attractive during periods of extreme price volatility. This shifted buyers’ preference for regional or prompt polymer supplies, making it challenging for Oman and other Mideast Gulf producers.
OQ8 suspended the design plans for a 1.6mn t/yr petrochemicals plant in late 2020. The petrochemical plant was earlier planned to be integrated with the Duqm refinery. The petrochemical complex will include a 1.6mn t/yr steam cracker, a butadiene extraction unit, an aromatics unit, an ethylene oxide/ethylene glycol unit, a 480,000 t/yr PE plant and a 280,000 t/yr PP plant, which was scheduled to come on line in 2026 before the project was put on hold for further assessment.
OQ also produces more than 70 oxo intermediate and oxo derivatives that are used in a range of industries for various applications.