Interview: Talal Al Awfi
What projects are in the pipeline to achieve decarbonisation and fulfil Oman’s energy transition strategy? Which are the main priorities?
TALAL AL AWFI: Oman’s National Energy Strategy is closely aligned with its long-term economic vision. The country aims to generate at least 30% of its power from renewables by 2030. Renewables are playing a larger role in the energy mix, with rapid growth seen in solar and wind power. Given that the cost of energy produced from renewables is slightly higher than from fossil fuels in the Gulf, the challenge is to strike a balance between optimising resources and protecting the environment.
Conventional energy sources represent an important component of the regional economy and a major revenue source, Oman can continue to invest in renewables without cutting oil production. At the same time, the country can use conventional energy sources to finance renewable energy projects – such as solar energy plants and wind energy in certain regions – to gain a long-term competitive advantage. Four green hydrogen projects are in various stages of development, with the potential for more than 30 GW of renewable energy to produce hydrogen and its derivatives. More than $40bn in investment is earmarked for these projects, and we expect them to pass the final investment decision stage over the next decade. These projects include Hyport Duqm, H2Oman, SalalaH2 and Green Energy Oman.
There are opportunities in the renewable and innovative energy fields that could become realities when considering the current state of the global economy, as well as the strong international competition in these fields. Hydrogen, for instance, has been around for years; however, its production cost is high when compared to conventional sources, so it has not yet been able to replace the wide-scale use of other, lower-cost energy sources. The government is currently working to take full advantage of these investment opportunities by improving the country’s business environment and scaling back the bureaucratic barriers facing investors.
How might elevated oil prices affect long-term growth opportunities in green energy?
AL AWFI: The higher price of oil could potentially help finance green or alternative energy projects. However, the majority of funding for such endeavours depends on the profitability of other conventional activities. For Oman, rising oil prices could accelerate those opportunities in the future, especially when it comes to multibillion-dollar projects, such as a large-scale hydrogen production plant, for instance. I believe strong oil and gas prices will help raise and secure the necessary funds to achieve this transition to greener energy sources.
Starting this energy transformation is an important step for the sultanate, and it is probably the most critical variable for the future. Investors are mindful of where they invest, and we have seen a shift in the investment policies of major groups in recent years, as they are increasingly putting their money into renewable energy sources. It will likely take several years for Oman to become more competitive in this area, as there is a transition period that comes along with the development of the necessary technology.
Where do you see the potential opportunities for Oman regarding the greater usage of natural gas on the international market?
AL AWFI: We have strong domestic and international demand for liquefied natural gas. Although the global community is shifting towards more sustainable energy sources, oil and especially gas will remain important components of the global economy, as has been evidenced by the recent gas supply issues in Europe. Gas will continue to be a key commodity for generating electricity for the foreseeable future, which means that there are likely to be opportunities for Oman.
The challenge is to support the sultanate’s energy transition to greener alternatives by developing the necessary infrastructure, optimising procedures and adapting its regulatory framework to fit the sector.
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