Oman is drawing up plans to expand its renewable energy sector, setting a target of generating 11% of its electricity from clean energy sources by 2023. Getty Images
Oman is drawing up plans to expand its renewable energy sector, setting a target of generating 11% of its electricity from clean energy sources by 2023. Getty Images
Oman is drawing up plans to expand its renewable energy sector, setting a target of generating 11% of its electricity from clean energy sources by 2023. Getty Images
Oman is drawing up plans to expand its renewable energy sector, setting a target of generating 11% of its electricity from clean energy sources by 2023. Getty Images

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Energy

Germany’s Uniper joins Oman green hydrogen project

The sultanate aims to add 30% of clean energy to its power mix by 2030

Jennifer Gnana
Jennifer Gnana

July 19, 2021

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German energy trading company Uniper will join Oman’s planned green hydrogen project as an off-taker and will help it secure financing.

Uniper will provide engineering services and negotiate an offtake agreement for green ammonia derived from the hydrogen to be produced at the plant located within the Duqm free zone.

An offtake agreement is an arrangement between a producer and a customer to purchase or sell portions of the producer's goods.

The project will use 250 to 500 megawatts of clean energy capacity to produce green ammonia in the first phase, with a planned expansion of up to 1.3 gigawatts of renewable power generation from wind and solar sources, Uniper said on Monday.

The German company signed the agreement with the project’s shareholders, DEME Concessions and OQ Alternative Energy.

The green ammonia produced at the Duqm unit will be used to help Germany with its energy transition goals. “One way of achieving this is to import green ammonia and convert it into hydrogen,” Niek den Hollander, chief commercial officer at Uniper, said. “Germany will be heavily dependent on imports if we want to use hydrogen to help us achieve our climate goals.”

Oman is drawing up plans to expand its renewable energy sector, setting a target of generating 11 per cent of its electricity from clean energy sources by 2023. The sultanate, which signed the Paris climate agreement in 2016, also aims to add 30 per cent of clean energy into its power mix by 2030.

Many Gulf oil exporters have already started prioritising investments in building a hydrogen economy to decarbonise their energy systems and diversify revenue. Earlier this month, the Abu Dhabi National Energy Company, also known as Taqa, and Abu Dhabi Ports announced plans to develop a 2GW green ammonia project in the UAE.

The planned facility will tap a 2GW solar photovoltaic plant to power an electrolyser to produce green hydrogen, which will in turn be processed into liquid ammonia.

The green ammonia will be used in ships as bunker fuel and for export from Abu Dhabi Ports through gas carriers.

Other entities in the UAE, such as the Khalifa Industrial Zone Abu Dhabi, also plan to develop a $1 billion green ammonia project.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: July 26, 2021, 1:08 PM
Oman