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.