Oman's Hydrom has signed agreements worth $10 billion to develop two new green hydrogen projects with a Posco-Engie consortium and the Hyport Duqm consortium.
The contracts are expected to yield a total production capacity of 250 kilotonnes per annum from more than 6.5 gigawatts of installed renewable energy capacity at the sites, state news agency ONA reported on Wednesday.
The projects will be located in Al Wusta province, the ONA reported.
“We are pleased to witness the signings of these new agreements with such prestigious international companies,” said Salim Al Aufi, Oman’s Energy Minister.
“The fast-paced efforts behind the announcement of these new projects reflect Oman’s commitment to reinforce its leading position in the global green hydrogen sector in line with its energy transformation strategy,” Mr Al Aufi said.
Oman, the largest non-Opec oil producer in the Middle East, aims to produce at least a million tonnes of renewable hydrogen a year by 2030 before ramping up capacity to 3.75 million tonnes by 2040 and 8.5 million tonnes by 2050.
In October, the sultanate set up Hydrom to oversee the development of hydrogen projects in the country.
The country has earmarked two blocks in the southern port city of Duqm and another four blocks in Salalah to be tendered for the development of green hydrogen projects.
Separately, on Thursday, French energy company Engie and South Korea’s Posco said the hydrogen produced from the project would be converted into about 1.2 million tonnes per annum of green ammonia for export.
Operations are expected begin by 2030, the companies said.
“This venture marks a significant leap forward in its worldwide dedication to expediting the transition to low-carbon energy,” said Frederic Claux, Engie's managing director responsible for flexible generation and retail in the Asia-Pacific, Middle East and Africa.
“By joining forces with our consortium partners, we aim to unlock Oman's extraordinary renewable energy potential while capitalising on their expertise and capabilities.
“Ultimately, this collaboration propels Engie towards its global ambitions of attaining a hydrogen capacity of 4 gigawatts by 2030.”
Hyport Duqum, which consists of Oman's state energy company OQ and Belgium’s DEME Group, aims to produce more than 50 kilotonnes per annum of green hydrogen by 2029 in the project’s first phase.
Hydrom, which also launched the second bid round of its green hydrogen auction process, aims to award up to three land blocks in the Dhofar region by the end of the first quarter of 2024.
Earlier this month, Hydrom signed agreements worth $20 billion with Amnah, Green Energy Oman, and BP Oman to establish three major green hydrogen projects in Al Wusta province.
“The signing of these agreements reflects Oman’s commitment towards stimulating the growth of its green hydrogen sector and cementing its leading position regionally and globally,” said Abdulaziz Al Shidhani, managing director of Hydrom.
“These accelerated steps [are] aimed at achieving the national objective of producing more than one [million tonnes per annum] of green hydrogen by 2030.”
The International Energy Agency has said that Oman could become one of the largest producers of hydrogen in the world by the end of the decade, thanks to ample renewable energy sources and vast tracts of available land.
Hydrogen, which can be produced from renewable energy and natural gas, is expected to become a critical fuel as economies and industries transition to a low-carbon world.
It comes in various forms, including blue, green and grey. Blue and grey hydrogen are produced from natural gas while green is derived from splitting water molecules through electrolysis.
French investment bank Natixis estimates that investment in hydrogen will exceed $300 billion by 2030.
Your rights as an employee
The government has taken an increasingly tough line against companies that fail to pay employees on time. Three years ago, the Cabinet passed a decree allowing the government to halt the granting of work permits to companies with wage backlogs.
The new measures passed by the Cabinet in 2016 were an update to the Wage Protection System, which is in place to track whether a company pays its employees on time or not.
If wages are 10 days late, the new measures kick in and the company is alerted it is in breach of labour rules. If wages remain unpaid for a total of 16 days, the authorities can cancel work permits, effectively shutting off operations. Fines of up to Dh5,000 per unpaid employee follow after 60 days.
Despite those measures, late payments remain an issue, particularly in the construction sector. Smaller contractors, such as electrical, plumbing and fit-out businesses, often blame the bigger companies that hire them for wages being late.
The authorities have urged employees to report their companies at the labour ministry or Tawafuq service centres — there are 15 in Abu Dhabi.
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.”
UAE currency: the story behind the money in your pockets
