17 Nov Pioneering the pivot to clean energy
Oman’s oil and gas industry is paving the way for the nation’s diversification plans as it prepares for its energy transition
Renowned for its abundant oil and gas reserves, the energy sector has been at the backbone of Oman’s economy for the last 60 years. Accounting for a significant portion of the country’s revenue, attracting significant foreign direct investment and providing employment opportunities across a variety of fields, it continues to play a vital role in the economic development of the Sultanate.
However, the government has been actively working on the diversification of the economy in recent years and efforts have been made to reduce the country’s reliance on oil and gas. In a bid to create a more sustainable and resilient economy, one area that is being explored is renewable energy, especially in the form of solar and wind.
The country has set a target to generate 30% of its electricity from renewable sources by 2030 as it looks to expand its energy mix. With an overall aim of reducing its carbon emissions to virtually zero by 2050, Oman is committed to transitioning to cleaner and more sustainable energy sources.
“Oman can definitely reach net-zero emission levels by 2050. However, while it is not an impossible mission, it is not without challenges, including in some cases a lot of funding, explains Salem bin Nasser Al Aufi, Minister of Energy and Minerals. “The government began by understanding baselines and what sectors have the most carbon emissions. Around 95% of emissions come from the four following sectors: power, oil and gas, mobility and industry. We devised a strategy for each of these sectors and a lead public entity for each one. For example, The Ministry of Energy and Minerals leads the oil, gas and electricity segments. While we could potentially electrify the whole country using renewable energy, challenges still exist during the night and when the wind is not blowing. We need to address issues regarding energy storage and reliable power supply. We are also working on carbon capture technology for challenging industries. Direct air capture is a potential opportunity, and we are working with some industries to move in this direction.”
Oman has already made investments in various renewable energy projects such as the Dhofar Wind Power Project and the Miraah Solar Plant. Oman Electricity Transmission Company has also signed a long-term power purchase agreement with renewable energy developers and a host of energy efficiency initiatives have been introduced in recent years. This commitment demonstrates the potential Oman has to become a hub for renewable energy and Al Aufi believes the country could play a significant role on the global stage.
“In terms of real potential using today’s technology, we can produce around fourteen times what we currently generate through renewable energy. With the potential of using renewables to produce and export hydrogen and ammonia, Oman could play a significant role in the global energy transition. It is an area we are pursuing aggressively,” he states.
“From March 2022 onwards, we began identifying primary concession areas for potential renewable energy generation, putting commercial structures in place, dividing areas into sizable blocks and inviting entities to begin competing for these concessions on a sequential basis. We began working on the infrastructure required to transport water to electrolysis facilities and hydrogen to ammonia facilities.
“We need to ensure that the grid connecting these facilities is in place so that we can support investors. Many urban planning works took place last year, which allowed us to proceed with putting our first two blocks on offer. We have begun discussing the commercialization of some projects with the goal of producing one million tons of green hydrogen and its derivatives by 2030. This target will likely be achieved, if not doubled. If we work on all the areas we identified, achieving our target of producing eight million tons of hydrogen by 2050 will be an underestimation of our total potential.”
As well as the huge amount of work being carried out by the government, pivotal players within Oman’s energy sector are also doing their part. The oil and gas industry is an integral part of the Vision 2040 strategy to diversify the economy and one of the most influential companies within this sector is Petroleum Development Oman (PDO), the leading oil and gas exploration and production company in the Sultanate.
Delivering the majority of the country’s crude oil production and natural gas supply, PDO is set to play a hugely important role if Oman is to reach its goal of achieving net-zero carbon emissions.
“We are now growing our energy system by increasing sustainability in the oil and gas industry, addressing our existing emissions and investing in new technologies to utilize new forms of energy,” reveals Steve Phimister, Managing Director, PDO. “We have developed a new strategy which is to build a sustainable and low-carbon future to maximize value for Oman. PDO has been an integral part of the country’s planning for a net-zero 2050 strategy since the journey began a few years ago. PDO not only has a plan in place to reduce its own emissions in-line with the country’s net-zero commitment, but it also has a nearer term aspiration to halve its emissions by 2030 based on a 2019 baseline. The PDO strategy involves sustainably growing our business in both a cost and carbon competitive manner. This requires us to rise to the challenge of growing oil production beyond 700,000 bopd whilst halving our emissions,” explains Phimister. “Currently more than 60% of PDO’s emissions come from power generation. Burning natural gas to generate power is a starting point in reducing emissions. We are moving from gas-fired power generation to renewables such as solar and wind. Today, about 10% of PDO’s power generation comes from renewable sources, including the 100-megawatt Amin dedicated solar park, and we have an ambition to reach 50% renewable power by 2030. We are also exploring the use of CO2 for enhanced oil recovery with a pilot this year. This led to us recently signing a memorandum of understanding with Shell to provide CO2 storage facilities in support of their blue hydrogen plans.”
Fuelling a culture of safety
Modernization of Oman’s oil and gas industry puts safety as first call of action
Traditionally one of the biggest drivers of economic growth, the oil and gas industry has played an important role in the development of Oman. Not only have companies within this booming sector contributed significantly to the GDP but they have been crucial to improving safety standards and developing a new generation of highly-skilled workers. One of the leading players in the industry, CC Energy Development focuses on technology and innovation to be a sustainable and low-cost contributor to Oman’s long-term hydrocarbon vision. The company employs a non-compromising attitude towards health, safety and protecting the environment, and aims to enable growth and development within the communities in which it operates.
This understanding that safety is of paramount importance and that energy companies have a responsibility to give back to the community has been crucial to the success of CC Energy Development. It has also helped to dictate how the company plans to grow in the years ahead. “The following three things are valuable to us as a business: being a low-cost producer, having a low environmental footprint and being valued by the communities we work with,” states Walter Simpson, Managing Director of CC Energy Development. “These segments are interlinked; a company can only be a low-cost producer if it has an educated, efficient and capable workforce that understands the environment and gets support from the community through local companies. Our strategy has always been to hire the best people and make sure they are trained effectively and gain the same level of experience available in international markets. Fortunately, the Omani education system is excellent so when we advertise graduate positions, we receive several thousand graduates applying for each job. The graduates we select are comparable to anywhere else in the world; they are magnificent. We have a moral responsibility as international operators to develop our country and help people get educated. It is also in our best interest to develop local companies and capabilities and use these services to improve our operations. For example, it is far more cost-effective for us to buy electrical cables from a manufacturer in Oman than importing products from China, the US or India. “
“We also prioritize safety. It is critical that people understand we are looking after them. After the COVID-19 pandemic, we set up a mental health campaign. Many people were isolated, and we received feedback that people felt that life was not the same. We worked with our in-house doctors and medical teams to help manage stress levels and address mental health issues.”
In addition to supporting the community, implementing strict safety protocols and promoting a culture of safety throughout the organization, CC Energy Development is also taking measures to protect the environment. This aligns with Oman’s target of achieving net-zero emissions by 2050.
“Internally, we will achieve zero flaring by 2027 along with a significant reduction in greenhouse gas emissions. Additionally, we are constantly looking at how we can manage our water and waste more effectively,” reveals Simpson. “Environmental stewardship is not only about addressing greenhouse gas emissions. We have directly engaged with our staff, with some of our best ideas coming directly from the team such as exploring technology used to treat saline water and composting our food waste. By using waste products, we can achieve a better environment for people to live and work in. While these investments do not always bring in considerable returns, they significantly raise the morale of those working at the sites and help workers be more efficient. There are countless ideas and technologies emerging that can be beneficial; it is down to us as prominent organizations to make sure these ideas get a fair hearing and are tried out.”