Acwa Power teams up with Oman’s OQ and Air Products to develop green hydrogen ammonia unit

The project in Oman's Salalah Free Zone is expected to be equally owned by the three companies

Oman is developing new renewable energy projects, including solar and wind power. Getty Images

Riyadh utility developer Acwa Power is teaming up with Oman’s OQ energy company and New York-listed Air Products industrial gas supplier to create a multi-billion-dollar green hydrogen-based ammonia production unit in Oman's Salalah Free Zone.

This move comes as Oman seeks to tap the clean fuel for energy.

The new joint development agreement on the project follows a preliminary deal signed by three companies in December, Acwa Power said in a statement on Thursday.

The project will be equally owned by three partners and will involve the integration of renewable power from solar, wind and storage, production of hydrogen by electrolysis, production of nitrogen by air separation and production of green ammonia. The timeline for the project is not revealed.

“We are delighted … to work with the government of Oman to develop this multibillion-dollar project, which would be similar to the world-scale green hydrogen project we are implementing with our partners in Neom in the kingdom of Saudi Arabia,” Air Products president and chief executive Seifi Ghasemi said.

In 2020, Air Products signed a $5 billion deal with Acwa Power and Neom to build the world’s largest green hydrogen-based ammonia production unit in the kingdom's $500bn futuristic city Neom.

“The project fits well with the sultanate's renewable energy strategy and fosters investments in alternative energy resources, both of which contribute to Oman Vision 2040,” OQ chairman Mulham Al Jarf said.

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

Some of the biggest renewable energy projects in Oman include the $125 million 50-megawatt Dhofar wind farm, which was developed by Abu Dhabi's clean energy company Masdar and funded by the Abu Dhabi Fund for Development.

“Our investment in developing and building water desalination and power production plants in Oman started in 2011, and we continue to expand our robust portfolio in the sultanate,” Acwa Power chairman Mohammad Abunayyan said.

Ammonia is used to manufacture plastics, pesticides, dyes and many household and industrial cleaning agents. Green hydrogen is produced using clean electricity generated by renewable energy, which electrolyses water, separating hydrogen from oxygen.

The UAE and other countries around the broader Mena region are also pursuing plans to incorporate hydrogen into their energy mix and tap into the clean fuel’s potential for different industrial applications.

Last year, Adnoc announced plans to build a blue ammonia plant in Ruwais, while Abu Dhabi Ports-owned Kizad said it would invest $1bn in a green ammonia plant.

The UAE is also looking to export hydrogen as demand for clean fuel increases globally amid the energy transition. It aims to capture 25 per cent of the global hydrogen market share.

Hydrogen is projected to account for 12 per cent of global energy use and 10 per cent of carbon dioxide emissions reductions by 2050, driven by climate change urgency and countries’ commitments to net zero, according to the International Renewable Energy Agency. It comes in various forms ― including blue, green and grey hydrogen. Blue and grey are derived from natural gas while green is produced using renewable sources.

Oman also plans to build a $1.4bn waste-to-hydrogen plant.