Oman has signed clean energy agreements with UK/Dutch Shell covering liquefied natural gas (LNG), green hydrogen and liquified synthetic gas.

The first of these agreements was a term sheet deal between Oman LNG and Shell, as part of which Shell will buy LNG for 10 years, starting from 2025, according to Walid Hadi, senior vice-president and Oman country chair of the UK/Netherlands-headquartered company.

Shell has been a shareholder in Oman LNG since the company’s inception in 1994, holding a 30 per cent stake. The majority shareholder in Oman LNG is the sultanate’s Ministry of Energy & Minerals (MEMR), which has a 51 per cent stake. The other foreign shareholders are France’s TotalEnergies (5.54 per cent); South Korea’s Korea LNG (5 per cent); Japan’s Mitsubishi Corporation (2.77 per cent); Japan’s Mitsui & Company (2.77 per cent); Thailand’s PTTEP, following the acquisition of Portuguese firm Partex (2 per cent); and Japan’s Itochu Corporation (0.92 per cent).

Shell signed a second agreement to join the Green Energy Oman (GEO) consortium. The consortium is progressing with a project to optimise around 25GW of wind and solar power generation in the Al-Wusta and Dhofar governorates to convert into green hydrogen, as well as the production, storage and export of green ammonia.

The GEO project consortium comprises Omani state energy holding company OQ – through its subsidiary Oman Energy Development, Singapore-based green fuels developer InterContinental Energy (ICE), Kuwait government-backed clean energy investor and developer Enertech Holding Company KSCC and Golden Wellspring Wealth Trading. 
 
Shell has also signed a letter of intent with MEMR to explore the deployment of liquefied synthetic gas (LSG) in Oman.

LSG is produced when renewable hydrogen is combined with captured carbon dioxide to produce natural gas, which is then liquefied. This low-carbon gas can be directly introduced to existing gas networks and infrastructure, including LNG plants such as Oman LNG, all the way to the point of use.

Blue ammonia production

These important agreements with Omani stakeholders come just over a month after Shell was reported to be exploring opportunities in blue ammonia production in the sultanate with MEMR.

Hadi was quoted by Omani media as saying that Shell plans to exploit gas resources from Oman’s hydrocarbon blocks 10 and 11, mainly the Mabrouk field, to produce blue ammonia.

The planned project may progress from the evaluation stage to detailed engineering studies in 2023, but a final investment decision will only be taken if the project is found commercially feasible, Hadi told the privately-owned local WAF News Agency.

Separately, Salim al-Aufi, the sultanate’s new energy and mineral resources minister, told WAF that Shell is considering locations for the project, with the options being Sur, Sohar or Duqm, among other aspects such as cost of development and whether the gas will be used to produce ammonia or hydrogen only or both.

Gas blocks 10 and 11

Oman’s Ministry of Energy & Minerals signed a concession agreement in December 2021 with a consortium led by Shell’s Oman subsidiary, Shell Integrated Gas Oman, to develop and produce natural gas from Block 10 of the Saih Rawl gas field.

The Shell-led consortium comprises Omani state energy enterprise OQ and Marsa Liquefied Natural Gas (LNG), a joint venture of TotalEnergies and OQ. The concession agreement establishes Shell as the operator of Block 10, holding a 53.45 per cent working interest, with OQ and Marsa LNG holding 13.36 per cent and 33.19 per cent stakes, respectively.

Production from Block 10, located adjacent to Block 11, is planned to start in 2024. The block is expected to reach a peak production capacity of 500 million cubic feet of gas a day.

In September, the Omani energy ministry signed an exploration and production agreement with Shell and TotalEnergies to develop Block 11, which is understood to be rich in natural gas reserves.

Shell and TotalEnergies will own 67.5 per cent and 22.5 per cent stakes in Block 11, respectively, with OQ holding the other 10 per cent. Shell will be the operator with the majority stake in the concession.

Image courtesy: Walid Hadi via LinkedIn

MEED's January 2023 report on Oman includes:

• COMMENT: Oman restores the faith of investors
• GOVERNMENT & ECONOMY: Muscat's outlook rises with energy receipts
• ECONOMY: Oman’s economic recovery gains traction
• BANKING: Oman’s banking sector enjoys revived profitability
• POWER: Green hydrogen to revitalise Oman's utility sector
• OIL & GAS: Oman secures its hydrocarbons future
• CONSTRUCTION: Oman construction looks to shift gear