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Sohar Port and Freezone: breaking new ground in green hydrogen

Sohar Port and Freezone: breaking new ground in green hydrogen



Moving towards green hydrogen hub

Sohar Port & Freezone’s aspiration to turn the industrial port into a large-scale green hydrogen generation hub, just got a boost with the signing of the first green hydrogen plant

01 June 2022

Early this year in April, as Sohar Port & Freezone, a deep-sea port and freezone in the Sultanate of Oman, signed an agreement with Hydrogen Rise and Jindal Shadeed Iron & Steel to evaluate the development of the first green hydrogen plant at Sohar, it set the ball rolling to move towards creating the first green hydrogen hub in Oman.

As the three major companies signed the agreement, Mark Geilenkirchen, CEO of Sohar Port and Freezone, commented: “Sohar is ideally-positioned to become a major exporter of green steel across the world and lead the way in facilitating the production, transportation, and utilisation of clean hydrogen. This agreement is the first major step towards developing a viable alternative to gas, which will promote sustainable practices for all industries operating within Sohar and attract new businesses to our clusters. We look forward to working with Jindal Shadeed and Hydrogen Rise on this project and to break new ground in the transition towards renewable sources of energy.”

Green hydrogen is endorsed by the International Energy Agency (IEA) as one of the best alternatives to gas for industry and helps countries around the world to meet environmental targets. The potential of establishing a completely sustainable production procedure to produce and export green steel can transform Oman’s economy and create brand new industries, both in metals and in the production, storage, and export of the hydrogen itself.

 

Jindal Shadeed: expert in steel production

Jindal Shadeed: expert in steel production

Green hydrogen hub plan

Oman’s leading business hub after all, has been exploring the potential to host a large-scale green hydrogen generation hub powered by solar power plants for some time now.

In a white paper, Gielenkirchen has outlined how green hydrogen has the potential to decarbonise a range of heavy industries long associated with carbon emissions.

“The planned facility will create carbon-free hydrogen from low-cost solar power, stored for use on demand,” he declared in the  white paper.

The potential to produce green steel with renewable hydrogen could be a revolution in innovation and an option for Oman to invigorate manufacturing by creating a multi-billion-dollar export industry.

Sohar is working in collaboration with the Port of Rotterdam, as well as Hydrogen Rise, and other research institutes worldwide, to identify cost-competitive solutions for the adoption of hydrogen as an alternative to natural gas.

In August 2021, The Port of Sohar joined a national hydrogen alliance led by the Ministry of Energy and Minerals (MEM) – known as Hy-Fly – to place Oman firmly on the map for the development and deployment of clean hydrogen. Hy-Fly is made up of 13 key public and private organizations – the Authority for Public Services Regulation, Petroleum Development Oman, Energy Development Oman, OQ, Oman LNG, BP Oman, Oman Shell and Total Energies Oman, Sultan Qaboos University, GUTech and the ports of Sohar and Duqm – and facilitated by PDO’s Energy Renewal unit.

Despite a global downturn, Sohar Port and Freezone has reported solid performance in 2021

Despite a global downturn, Sohar Port and Freezone has reported solid performance in 2021

Hydrogen is believed to have a significant potential to cut greenhouse gases in the sectors responsible for global emissions. The alliance will work together to support and facilitate the production, transport and utilisation of clean hydrogen for domestic use and export, as well as promoting clean hydrogen through investments, technologies, policies, and expertise across the whole hydrogen supply chain.

This alliance is a milestone in Oman’s drive to diversify its energy mix while addressing the mounting climate change realities by supporting national energy security, decarbonization, and ultimately a successful transition to the green economy.

Sohar has also engaged with leading Italian energy companies including Eni, Saipemn, Snam, Magaldi and Ansaldo Energia to explore cooperation between the two countries in the development of green hydrogen and renewable energies. An agreement with Italian companies will offer Oman access to cutting-edge technology in the field of alternative energy sources already in development in Europe.

The Port of Rotterdam is actively exploring the creation of a complete hydrogen value chain with carbon-free and low-carbon hydrogen. The Port is currently in the process of agreeing on MOUs and joint partnerships with potential exporters, including Sohar. By using the Port’s solar PV development on-site for further development of hydrogen production, Oman is widely seen to have the potential to become a net exporter of green hydrogen fuel and Sohar is ideally placed to become a leader in this industry.

In the latest development, Hydrogen Rise, Jindal Shadeed Iron & Steel, and Sohar Port and Freezone signed an agreement to evaluate the development of the first green hydrogen plant at Sohar, which will decarbonize the steel production process at Jindal Shadeed´s steel manufacturing plant.

The partners will assess the potential to produce steel in a completely sustainable manner to reduce emissions, lower the complex’s carbon footprint and preserve gas reserves for other applications across the country. After conducting techno-economic feasibility studies, the first phase will include the operation of a 35MW electrolyzer capacity by mid-2024, paired with a solar renewable energy plant. Following this first phase, an upscaling path to a potential 350 MW electrolysis capacity will be evaluated.

The production of green steel has the potential to provide a huge boost to Oman’s industries and the economy as the global demand for decarbonized steel products is expected to increase significantly in the coming years.

Hydrogen Rise, based in Oman and Germany will develop, build and operate the green hydrogen facility at Sohar supplying green hydrogen to Jindal Shadeed’s steel manufacturing facility.

Jindal Shadeed’s expertise in steel production can see the company become an early pioneer in utilising innovative decarbonisation technologies and in substituting natural gas with green hydrogen in the steel manufacturing process to become a major producer in the fast-developing global market for green steel.

As the demands of a growing economy increase, Sohar continues to experience a rapidly-rising demand for energy, much like all ports around the world. This was anticipated and Sohar has joined forces with Shell to co-develop onsite solar power projects to harness solar power within a dedicated 600-hectares solar PV project area and create long-lasting economic value for the Sultanate and the companies in the Freezone.

 

$30BN INVESTMENTS

As one of the fastest-growing ports in the world, Sohar Port and Freezone continues to leverage on its strategic location and enhance its services, positioning itself as a key logistics hub within the region and across the world.

The Port is focused on providing top-class maritime services to its clients, partnering with local SMEs to develop a full-service ecosystem to further build Sohar into a service hub. Contributing around 2.8 per cent of Oman’s GDP, increasing In-Country Value (ICV) remains a high priority within the Port and Freezone operations.

A powerful combination of the expertise of the Port of Rotterdam and the government of Oman, represented by Asyad, it is earmarked as one of the sultanate’s mega-projects, home to logistics, petrochemicals and metal clusters, as well as the region’s first dedicated agro-terminal.

To date, the company has attracted close to $30 billion in investments by serving diverse industries including metals, raw materials, and plastics to name a few.

Open 24 hours a day, seven days a week, the port and freezone is one of the world’s fastest-growing complexes of its kind and significant developments within its industrial and food clusters are currently underway. The company is also exploring investment in green and renewable energy in order to make the complex more efficient and environmentally conscious for the benefit of tenants, clients, the community and the environment.

Despite a global downturn in trade and supply chain disruption, Sohar Port and Freezone reported solid performance in the first nine months of 2021. The port’s performance saw an overall increase of 6.1, wheeled cargo increased by 46 per cent year-on-year and liquid bulk increased by 7 per cent, dry bulk increased by 4.3 per cent, while breakbulk remained the same. Ship to ship cargo saw impressive growth of 59 per cent.

The freezone’s performance has been stellar with a 16 per cent increase in land occupancy and a 14 per cent increase in throughput compared with the same period last year. The complex also saw an 8 per cent increase in exports.

Last year, the Port of Sohar stepped up its capacity by 14 per cent (18 million tonnes) during the second quarter of this year, compared to the corresponding period last year. The volume of liquid commodities rose by 13 per cent to 4.5 million metric tonnes, while dry goods volume went up by 12 per cent to 10.5 million metric tonnes, Oman News Agency (ONA) reported.

The port posted a hefty 168 per cent increase in handling vessel-mounted mobile goods, but it dealt with 190,000 standard container units (ITUs) by the end of the second quarter this year, 2.3 per cent less than the corresponding rate in 2020. As many as 804 vessels dropped anchor at Sohar Port, 18 per cent more than the number of vessels berthed there during the second quarter last year.

The Free Zone at Sohar saw a rise in land occupancy (First Phase) during the second quarter, up by 10 per cent, while it registered 503,000 tons of exports. Production capacity touched 545,000 tons in the free zone where 45 countries have investments.

Omar Mahmood Al Mahrazi, CEO of Sohar Free Zone and Deputy CEO of Sohar Port, said that total investments at Sohar Free Zone touched $799 million and that the number of workers there stood at 2,866.

Sohar Free Zone has an area of 4,500 hectares, said Al Mahrazi, affirming that steps are underway to implement the second phase of the zone’s development—an area of 1,203 hectares.  




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