Interview: Steve Phimister
What are the main investment opportunities in the domestic oil and gas segment?
STEVE PHIMISTER: The appetite for investment in oil and gas in Oman is positive in 2023 and will remain so in the long term. Local players are working to increase productivity, security and affordability while reducing emissions. Similar targets are shared by neighbouring countries.
To that end, investment in decarbonisation technologies is expected to facilitate an abatement of emissions in the air and water, particularly in Oman. In the decade following 2023 the oil and gas segment will become one of the most digitally advanced industries as it seeks to utilise technology for efficiency gains– a shift that will provide significant opportunities for investment.
Where do you identify the main priorities to further Oman’s transition towards sustainable energy?
PHIMISTER: One of the main priorities revolves around the country’s net-zero by 2050 strategy while diversifying the economy away from fossil-fuel dependency, in line with Oman Vision 2040. The oil and gas sector is critical to solving these challenges and finding solutions to the energy trilemma of security, affordability and sustainability. Investment frameworks and incentives will play a decisive role in this sense.
As the sultanate’s largest oil and gas producer, PDO has developed plans to sustainably grow oil and gas production while also delivering against its decarbonisation roadmap, and to organically diversify revenue from carbon capture and utilisation (CCUS), and low-carbon fuels in the future. The roadmap lays out a path to reaching the net-zero emissions goal by setting annual greenhouse gas (GHG) targets, establishing energy management and GHG governance, and developing dedicated pathways to tackle major GHG sources.
One key aspect of the strategy is executing carbon competitiveness plans to not only meet the 2050 goal, but also to halve emissions by 2030 against a 2019 baseline. Indeed, competitiveness is now measured by both cost and carbon as it is becoming crucial for companies to fulfil their socio-economic obligations.
The development of large-scale renewable projects – especially solar, wind and wave – and their associated supply chains is critical to reach Oman’s sustainability targets. Indeed, it is expected that PDO will derive 30% of its power capacity from such sources by 2025 and 50% by 2030. Since oil and gas will remain important for years to come, we need to produce them more sustainably and efficiently. This requires investment in low-carbon fuels, CCUS, power to liquids, and flare and methane emission abatement techniques, as well as strong energy-efficiency practices.
To what extent is hydrogen a viable long-term energy option, and where do you identify the most pressing challenges in developing this segment?
PHIMISTER: It is expected that there will be significant growth in global demand for clean hydrogen, and Oman is well positioned to be a hydrogen leader given its access to competitive fossil fuels, renewable energy resources and financing, as well as its strategic location. This will spur domestic demand for hydrogen, benefitting from economies of scale and kick-starting a low-carbon green product and service sector in Oman.
While the longer-term objective is to boost green hydrogen production for both export and local use, there is ample opportunity to benefit from lower costs, early market demand and technology maturation of blue hydrogen. Establishing blue hydrogen infrastructure would facilitate a more efficient transition to green hydrogen and allow revenue optimisation until mid-2030, when green hydrogen technologies are expected to become more mature and affordable as the cost curve of electrolysers continues to drop.
To realise this goal, complex project delivery, as well as integrated assets operations and management, is required to maximise renewable energy sources, facilitate the use of blue hydrogen and increase CCUS.