As hydrogen projects face rising costs and a growing list of cancellations globally, new data from DNV’s Oil and Gas Decarbonisation in the Gulf Region report underscores why the technology remains strategically central in the Middle East.
The region’s oil and gas producers are not treating hydrogen as a speculative transition option but as a necessary tool to preserve market access as carbon intensity thresholds tighten across international energy trade.
The stakes are structural. Since 2005, GCC countries have supplied nearly 18 percent of global oil and gas output, a share expected to rise as investment continues to favor low cost and resource advantaged producers. With global demand growth increasingly concentrated in Asia, the Gulf’s geographic position and production economics reinforce its role as a preferred supplier. At the same time, emissions performance is becoming a decisive factor in long term competitiveness, particularly for LNG, refined products, and emerging low carbon fuels.
DNV’s analysis highlights carbon capture utilization and storage as the backbone of this strategy. More than 98 percent of CCUS projects planned or operating across the Middle East and North Africa are located in the GCC, led by national oil companies integrating capture infrastructure into existing industrial clusters. This concentration reflects both geology and policy alignment. In January, the UAE’s Supreme Council for Financial and Economic Affairs introduced a dedicated carbon capture policy, signaling that CCUS is now embedded in national decarbonization planning rather than treated as a pilot technology.
Captured CO₂ volumes in the region are projected to reach around 250 million tonnes per year by 2060, including CO₂ removal. That would represent roughly 8 percent of regional energy related and industrial emissions. While this level falls short of full neutrality, it materially alters the emissions profile of Gulf hydrocarbons and downstream products. The scale matters because marginal reductions are unlikely to satisfy future import standards in Europe and parts of Asia, where lifecycle emissions metrics are increasingly embedded in procurement and regulation.
Hydrogen enters this equation as both an emissions mitigation tool and a value preservation mechanism. According to DNV, integrating hydrogen production with renewable power, CCUS, and existing industrial infrastructure allows Gulf producers to lower the carbon intensity of both domestic energy use and export oriented fuels. This integration is critical as hydrogen produced without access to low cost renewables or storage has struggled to reach final investment decisions elsewhere. In the GCC, the co location of solar resources, gas infrastructure, and storage sites partially offsets today’s unfavorable hydrogen economics.
CO₂ removal technologies further extend the region’s decarbonization envelope. By 2060, bioenergy with carbon capture and direct air capture combined are expected to remove around 81 million tonnes of CO₂ annually. These volumes are modest relative to total emissions but strategically important for offsetting sectors that remain hard to abate, including aviation, shipping, and parts of heavy industry. Their inclusion signals that Gulf strategies increasingly assume residual emissions rather than absolute elimination.
The report also points to a reconfiguration of domestic energy systems. GCC countries are accelerating renewable deployment, electrifying transport and buildings, and improving efficiency to reduce oil and gas consumption at home. The objective is not displacement of hydrocarbons but liberation of volumes for export and for conversion into higher value, lower carbon products such as blue hydrogen, ammonia, and decarbonized petrochemicals. This shift is already reshaping export profiles away from crude oil toward more complex energy carriers.
