A consortium led by Posco Holdings, a prominent Korean company, has emerged victorious in a deal to build the world’s largest hydrogen plant in Duqm, Oman. The deal marks a significant win for the global hydrogen industry and a leap forward in the push for sustainable energy.
Posco announced on Thursday that the consortium had signed a deal with Hydrom, Oman’s national entity for green hydrogen development. The agreement secures an exclusive right for the consortium to lead the hydrogen project in Duqm for the next 47 years. This deal represents the largest overseas green hydrogen project won by a domestic Korean company. While unconfirmed by the company, the investment size for the project is reported to be approximately $6.7 billion.
The Posco-led consortium includes several industry heavyweights: Samsung Engineering, state-run Korea Southern Power, Korea East-West Power, France’s Engie, and Thailand’s PTT Exploration and Production Public. According to local reports, the four Korean companies hold a combined 64 percent stake in the consortium, with Posco Holdings maintaining the majority at 28 percent.
The project’s main component is a green hydrogen plant with an impressive annual capacity of 220,000 tons. The consortium plans to break ground on the plant, which will be situated on an approximately 340-square-kilometer (131-square-mile) site in Duqm, in 2027. The target for completing construction is set for 2030.
Green hydrogen, an eco-friendly alternative produced using renewable energy sources such as solar and wind power, has remained elusive due to technological and geographical limitations. Especially in Korea, producing green hydrogen to meet demand is currently unfeasible. However, this project represents a major step towards overcoming these obstacles.
The hydrogen produced at the new facility will be converted into ammonia and transported to Korea. Cho Ju-ik, head of Posco Holdings’ hydrogen business division, emphasized the strategic importance of Oman, given its rich renewable energy resources, in establishing a stable hydrogen supply chain for Posco.
As part of its long-term objectives, Posco Holdings plans to achieve an annual hydrogen production capacity of 7 million tons by 2050. This latest project brings the company one step closer to this ambitious goal.
New Land Auctions For Hydrogen Projects Underway
In a bid to boost its green energy profile, Oman has launched the second round of land block auctions for green hydrogen projects. This move comes shortly after the successful conclusion of the first round, which saw the awarding of five contracts worth a combined total of $30 billion.
Oman’s Minister of Energy and Minerals, Salim Al Aufi, unveiled the news during a live broadcast on Hydrom’s Youtube channel. The initial round of auctions, involving two land blocks, began in November 2022 and concluded in June 2023. The second round, which Al Aufi mentioned will entail the awarding of up to three land blocks in the Dhofar region, has ignited significant interest.
“The registration system will be open tomorrow (Thursday),” Al Aufi declared. The Request for Qualification (RFQ) process will remain open for approximately two and a half months. Subsequently, the Request for Proposal (RFP) is expected to be launched by September 2023. According to Al Aufi, the second round should be concluded by the end of the first quarter of 2024, at the latest.
Speaking on the process, the Minister said, “We signed two commercial agreements last year with two consortiums outside the auction process. This year we will go there with an auction system.” This shift towards an auction-based approach indicates a move towards a more structured and competitive process for awarding contracts.
Moreover, Al Aufi highlighted that Hydrom, Oman’s national green hydrogen development entity, has initiated discussions with local partners, including the Ministry of Energy and Minerals and consultants, to develop the necessary infrastructure in Duqm and Salalah areas. “We will be surveying the routes and looking into the most optimum options to bring the total cost of producing hydrogen as low as possible and make the projects that are producing green hydrogen and ammonia in Oman as competitive as they can be,” he noted.
The first and second rounds of auctions form part of Phase A of Hydrom’s plan, aiming to achieve a production target of one million tonnes per annum of green hydrogen by 2030. As countries worldwide shift towards more sustainable energy solutions, Oman’s initiatives provide a blueprint for how nations can harness renewable resources effectively.