Talal Al Awfi, Group CEO of OQ,
and the OQ Leadership Team
How the energy sector can capitalise on renewables in support of Oman Vision 2040
In this Global Platform video, Talal Al Awfi and the OQ Leadership Team discuss Oman’s net-zero goals and outline the country’s potential to boost power generation from renewable resources, including wind, solar and hydrogen. Core strategies are presented to emphasise how boosting clean energy usage aligns with the outcomes of Oman Vision 2040, the country’s long-term economic development framework.
The world needs energy via reliable, affordable and clean fuel. Oman has been ranked at the top globally when it comes to potential for renewables. We have started looking at optimizing the system and changing any conventional energy production to renewable production. This is something that has been our focus recently.
We have certain areas of Oman that are blessed with significant solar and wind potential, and we want to capitalize on this to produce energy and use that energy to produce things such as green hydrogen.
The main trends that are shaping the oil and gas sector globally affect Oman and the rest of the GCC. These include the energy transition and decarbonization, and the global underinvestment in the oil and gas industry, as well as the issue of energy security. Most countries are now looking to ensure they have a local or diversified supply of energy. Lastly, the rapid technological development and the significant investment in renewable and green technologies are important.
Oman is one of the countries that has set a net-zero target, which is by 2050. It is looking to reduce emissions by 25% by 2030. This is one of the main aims of Oman Vision 2040, which includes both renewable energy generation and diversifying our economy away from oil and gas products.
When you look at alternative energy, now that the world is moving towards decarbonization and looking at energy diversification and securing energy, Oman is in a prime position where it has the natural resources to venture into alternative energy. By venturing into alternative energy, that opens up a whole new sector for Oman to play in that is outside of oil and gas but still in the energy sector. High yields of solar and wind resources year-round in Oman allow you to produce hydrogen through electrolysis. It is a whole new ecosystem that Oman can embrace to ensure the diversification of its economy and to create employment opportunities.
Environmental, social, and governance (ESG) standards have always been an important subject within the energy sector and especially as it relates to the environment.
What we are seeing is that service providers, whether they are lenders, banks, or even insurance providers, want to understand what our ESG strategy is, what initiatives we are taking, what targets we are setting for ourselves, and how we are going to go about achieving those targets and further developing an ESG mindset. Organizations that are developing their ESG strategy and are actively working towards achieving their initiatives and their targets are getting incentives or further support and funding from the market, with more banks willing to lend to them. When those targets are met, there is a direct or even an indirect impact on the cost of funding. When it comes to sustainability and renewable projects that are up for proposal, they will want to come with a very clear ESG contribution.
In terms of Oman's target for net zero by 2050, the oil and gas sector is a major contributor to that target. In terms of technology and linking that to ESG, we will look into some of the best practices when it comes to gas flare reduction and the automation of a lot of processes that would make our operations safer and more cost-effective. Today things are changing very rapidly, which requires a complete change in leadership. We need to be able to make decisions much faster, which means we need to be more agile, and at the same time, we need to improve our risk appetite to take risks on where we think the market is headed. Finally, we need to look at how we manage data. Data is a very important part of any business today. It is able to tell us current market trends and customer preferences so that we can adapt to these changes, capitalize on these benefits, and mitigate any risks that come up.
Governance is an evolving spectrum, and oil and gas, specifically, is a mature sector when it comes to governance, very much linked with the direction of Vision 2040 in terms of economic growth, talent development, education, research and development, investment, and innovation.
The future energy mix will not be limited to hydrocarbons or alternative energy. We expect hydrocarbons to drive the transition into alternative energy sources, such as wind and solar, and traditional energy sources, such as coal and nuclear. The downstream segment is working in parallel with the upstream one to ensure that alternative energy is well-augmented with what it needs in order for it to become an energy choice in the future in Oman.
On the roadmap for developing our downstream industries in Oman, we are capitalizing on our wealth of expertise and knowledge and the revenue coming from the hydrocarbons industry to start fueling green industries and alternative energies and develop our talent pool in order to take the lead going forwards in this energy transition.
As a country, we have set ourselves a net-zero target by 2050. We are looking at decarbonization, but equally, we are looking at advanced hydrogen, whether it is blue hydrogen or green hydrogen, all in anticipation that, at the right time, we will make sure that we have the right energy mix for security, affordability, and sustainability as well.