Will The World’s Largest Oil Region Become A Hydrogen Hub?
The biggest oil-exporting region in the world, the Middle East, has set its sights on becoming a major clean energy exporter of green hydrogen.
The largest oil producers in the Arab Gulf have jumped on the hydrogen bandwagon — especially its so-called green variety produced from water electrolysis using electricity from solar or wind — as it gains momentum with governments and the world’s largest international oil companies.
Hydrogen is expected to play a prominent role in lowering carbon emissions from energy-intensive industries. And the Middle East doesn’t want to miss out on this opportunity.
On the one hand, it wants to show the world it can export clean energy—not only crude oil—as the global energy transition accelerates. On the other hand, the oil-dependent economies of some of OPEC’s largest producers are determined to diversify into green energy exports and away from oil.
This past week, two announcements of green hydrogen projects in the Middle East made headlines: Dubai launched the first industrial-scale green hydrogen project in the region, while Oman announced plans to build one of the largest green hydrogen plants in the world.
Dubai, one of the emirates of the United Arab Emirates (UAE), which is currently OPEC’s third-largest oil producer, launched the first industrial-scale, solar-powered green hydrogen facility in the Middle East and North Africa in collaboration with Siemens Energy, Dubai Electricity and Water Authority (DEWA), and Expo 2020 Dubai.
During the day, the plant uses some of the photovoltaic electricity from the Mohammed bin Rashid Al Maktoum Solar Park to produce green hydrogen via electrolysis. At night, the green hydrogen is converted into electricity to power the city with sustainable energy, Siemens Energy says.
The Solar Park is expected to generate as much as 5 gigawatts (GW) of clean energy by 2030 as the largest single-site solar park in the world.
Companies in the region, international technology partners, and analysts believe that Dubai and the whole of the Middle East have a bright future in solar power generation, considering the abundant sunshine in the region.
“Against the background of low costs of electricity for solar PV and wind power in the region, hydrogen has the potential to be a key fuel in the energy mix of the future and could open up energy export opportunities for those areas with access to abundant renewable energies,” Siemens Energy said.
The UAE could become an exporter of hydrogen, Siemens Energy CEO Christian Bruch told CNBC’s Dan Murphy in an interview this week.
“I do believe it must be, it will be, it should be, one of the key future commercial models in the UAE and the wider region, to be also, in future, an energy exporter for the world,” Bruch told CNBC.
Another oil producer in the Middle East, Oman—not an OPEC member but part of the OPEC+ alliance—also made a major announcement involving green hydrogen this week.
Oman’s state-held energy company OQ, Hong-Kong-based green fuels developer InterContinental Energy, and Kuwait’s government-backed clean energy investor and developer, EnerTech, announced a plan for one of the biggest facilities of green hydrogen in the world. The plant will be powered by 25 GW of renewable energy and could cost as much as US$30 billion.
“Given the site’s strategic location between Europe and Asia, as well as excellent solar irradiance and wind resource facing the Arabian Sea, the development is well-positioned to offer a secure and reliable supply of green fuels globally at a highly competitive price,” InterContinental Energy said.
“Alternative energy is a key driver for OQ’s long-term growth and a cornerstone of its strategy. It is also in line with the country’s ambitious Oman Vision 2040 that aims to diversify the nation’s resources and maximize the financial value derived,” said Salim Al Huthaili, CEO Alternative Energy at OQ.
The region’s top oil producer and the world’s largest oil exporter, Saudi Arabia, is also eyeing green hydrogen projects and a share of the emerging clean hydrogen market.
NEOM, the future sustainable city promoted by Saudi Crown Prince Mohammed bin Salman, signed last year a deal with Air Products and Saudi ACWA Power for a $5 billion green hydrogen-based ammonia production project, which will export the product.
All these plans suggest that the oil powerhouse Middle East is not immune to the energy transition and growing global demand for clean energy products.