BP and Oman in pact to deliver renewable energy and hydrogen project by 2030

Integrated development will include wind, solar and green hydrogen production

BP extended well test projectm Block 61 in Oman, 2011.  In December 2013, the Government of the Sultanate of Oman and BP signed a gas sales agreement and an amended production sharing agreement for the development of the Khazzan Project in the south of Block 61. Block 61 is operated by BP Oman (60%) in partnership with Oman Oil Company Exploration and Production (40%). The full field development of the Khazzan Project will involve a drilling programme of around 300 wells over 15 years to deliver plateau production of one billion cubic feet (28.3 million cubic meters) of gas per day. This volume is equivalent to an increase of around a third of Oman’s total daily gas supply. Construction work on Khazzan has commenced and first gas is expected in late 2017.  Photo Courtesy BP *** Local Caption ***  BP Extended Well Test Project in Block 61.jpg

BP signed a pact with Oman on Monday to deliver a “multiple gigawatt world-class” renewable energy and hydrogen project by 2030.

The Strategic Framework Agreement between the British energy company and the sultanate will see the development of an integrated plant set to include wind, solar and green hydrogen production.

The pact, signed by Mohammed Al Rumhy, Oman's Minister of Energy and Minerals, and Stephen Willis, BP's senior vice president in the Middle East, could trigger “significant investment” in Oman, according to BP and support the creation of new industries and skilled jobs.

“Today’s agreement represents what BP is able to offer as an integrated energy company,” said Bernary Looney, chief executive of BP.

“These projects will build on our gas business, and bring wind, solar and green hydrogen together in a distinctive and integrated way supporting Oman’s low carbon energy goals.”

The deal marks the first significant agreement between Oman and a British company since the two countries signed a Sovereign Investment Partnership deal last week to work more closely on increasing high-value investment into both countries.

The new pact between the UK’s Office for Investment and the Oman Investment Authority was signed in London with the aim of strengthening economic ties between the UK and Oman.

“Following the signing last week of the UK-Oman Sovereign Investment Partnership, this investment by bp into Oman’s renewable energy sector is a shining example of our countries’ joint ambition to facilitate strategic and commercial bilateral investment,” the UK’s Minister for Investment Lord Gerry Grimstone said on Monday.

“The project demonstrates our shared vision for future prosperity through clean growth, further strengthening the partnership between the UK and the Sultanate of Oman.”

As part of the agreement between BP and Oman, the energy company will capture and evaluate solar and wind data from 8000 square kilometres of land — an area more than five times the size of Greater London.

The research will help the Oman government approve future renewable energy hubs at sustainable locations in that area, with the potential for development of green hydrogen, targeting both domestic and global export markets.

“We’re not just investing in energy. We are investing in Oman to create and develop infrastructure, support local supply chains and cultivate the skills and talent needed to usher in this next generation of energy leaders,” said Mr Looney.

“We look forward to working closely with the Omani government to take this forward.”

UK companies have a long history of investment in Oman, with foreign direct investments from the UK accounting for nearly 50 per cent of the foreign investment into the sultanate in recent years.

The two countries share a trading relationship worth nearly £979 million in the year to the end of the second quarter of 2021.

Mr Al Rumhy described the deal “as a proud moment for Oman and a significant step towards delivering our 2040 Vision”, which was approved at the end of last year and acts as a blueprint for growth and economic development.

“In partnership with BP, we will progress the development of new, world-class solar and wind resources — generating renewable power for the grid and powering the manufacture of green hydrogen to supply domestic demand and to export to global customers,” said Mr Al Rumhy.

“Over the past 50 years, we’ve advanced our hydrocarbon production. Today’s agreement signals the next step in our energy journey — unlocking the potential for Oman as a low-carbon energy hub.”

The new pact will also see BP and Oman collaborate on a renewables strategy, regulation, the establishment of a renewable energy hub and the development and reskilling of the local workforce.

Oman is a relatively small crude producer compared with its Gulf neighbours and is now looking to become a leading low-carbon energy hub as it strives to diversify the economy and bolster investment.

Meanwhile, BP is looking to build on its 15-year history in Oman, where it operates Block 61, which produces a third of the country’s gas demand.

In 2020, BP’s Oman business spent $610 million with Omani-registered companies — 90 per cent of its total spend — while in 2021 the energy firm joined Oman’s national hydrogen alliance, Hy-Fly, to promote the hydrogen sector in the country.

Updated: January 17, 2022, 10:05 AM
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