Shell To Lead The Green Energy Oman Consortium

Shell joins the Green Energy Oman consortium as lead operating partner taking a 35% stake in the renewable hydrogen project.

Shell is the latest company to invest in a megaproject in Oman as it seeks to diversify and capitalise on the energy transition, according to a report.

According to the report, Shell has joined the Green Energy Oman consortium as a lead operating partner, taking a 35% stake in the renewable hydrogen project, bringing the oil major's scale, financial clout, and local expertise to the group, developer InterContinental Energy's Middle East head Tony Nieman told S&P Global Commodity Insights in an interview.

"The deep experience and expertise that Shell provides is a major step towards bringing our 25-GW megaproject to the next phase," Nieman said.

The project's 14 GW of electrolyzers will be backed by 25 GW of solar and wind power across the Al Wusta governorate in Oman to produce 1.8 million mt/year of hydrogen.

Nieman started working for InterContinental Energy (ICE) in April 2022. He had worked in the oil and gas industry in the Middle East for a long time, including for Shell.

As the report mentioned, ICE is conducting discussions with potential off-takers across the group's global portfolio, which also includes projects in Australia and Saudi Arabia, Nieman said.

Nieman also mentioned ICE's focus on ammonia production from its hydrogen plants as an export opportunity and saw "clear interest" in the future green ammonia market, particularly in Asia and Europe.

Platts, part of S&P Global, assessed green ammonia delivered to Europe from the Middle East at $747.31/mt on Jan. 16, well below conventional "gray" ammonia prices of $965/mt at CFR Northwest Europe.

According to Nieman, Shell brought experience in developing green energy projects in wind, solar, and hydrogen, as well as its decades-long experience of operating in Oman.

He added that large international oil companies also brought experience in large-scale project execution and vast resources to such projects.

"Many oil companies around the world have said they want to be a part of the energy transition."

Oman's energy company, OQ, and Kuwait government-backed clean energy investor and developer EnerTech are also partners in the GEO consortium, as mentioned in the report.

The company's model focuses on regions with high wind and solar resources in sparsely populated areas, providing a strong renewable power profile to feed large-scale electrolyzers at low cost.

Nieman highlighted that the Oman project would benefit from the economies of scale provided by the model and noted that large-scale green ammonia production could be competitive with fossil-fuel-derived production coupled with carbon capture and storage, given the exposure of gas-based production to volatile gas prices.

"Considering the scale and quality of the resource base, we expect green ammonia across our portfolio to be competitive against blue ammonia over time, while also offering price stability advantages," he said.

The Green Energy Oman project has already done concept feasibility studies, energy yield assessments, and an environmental impact assessment to show that the site has a lot of potential for solar and wind power.

The deal with Shell follows ICE's partnership with BP in 2022 on its 26 GW Australian Renewable Energy Hub (formerly the Asian Renewable Energy Hub) in Western Australia, under which BP took a 40.5% stake in the project and became an operator.

report concluded, AREH plans to produce 1.6 million metric tonnes of hydrogen per year at full scale. ICE is now the second-largest shareholder in AREH, which is situated in the Pilbara. The project also aims to supply renewable power to local customers in the mining belts and produce renewable hydrogen and ammonia for domestic and export markets.