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Oman green hydrogen projects cancelled

8 December 2025

Hydrogen Oman (Hydrom), France’s Engie and South Korea’s Pohang Iron & Steel Company (Posco) have cancelled plans to move forward with the $6.7bn HyDuqm green hydrogen project.

In a joint statement, the firms said they had reached a decision to end the scheme by mutual consent following an “in-depth assessment” of global renewable hydrogen offtake dynamics and investment frameworks.

The HyDuqm scheme was one of the largest green hydrogen projects awarded under Oman’s first auction round in 2023.

The proposed development included around 5GW of combined solar and wind capacity, supported by battery energy storage, to power an electrolysis plant producing hydrogen for conversion into green ammonia.

The facility was expected to deliver up to 1.2 million tonnes of green ammonia a year by 2030, with Posco as the main offtaker to support the decarbonisation of its steel operations.

The consortium, led by Posco (28%) and Engie (25%), had secured a 47-year concession with the state-owned Hydrom to develop a 320-square-kilometre site near the Port of Duqm.

Samsung Engineering, Korea Southern Power and Korea East-West Power had a 12% stake, with Thailand’s PTTEP holding the remaining 11%.

As recently as May, the partners were still targeting a final investment decision in 2027, subject to detailed economic and technical feasibility assessments.

Separately, a second hydrogen project in the same area, owned by the UK’s BP, has also been cancelled. BP withdrew its plans for the Duqm green hydrogen project, which had secured land rights for the 1.5GW facility.

Hydrom managing director, Abdulaziz Al-Shidhani, told the 2025 Green Hydrogen Summit in Oman last week that only seven of the nine original projects that won land tenders were progressing.

Wider slowdown

The cancellations come amid a broader slowdown in green hydrogen development globally. Several major schemes have been postponed, scaled back or withdrawn as project economics have tightened.

In Europe, more than one-fifth of planned hydrogen projects had been stalled or cancelled by the end of 2024, according to research and consultancy firm Westwood Global Energy, largely due to high costs, uncertain demand and slow progress securing long-term offtake.

A similar trend has emerged in the GCC, where Saudi Arabia’s flagship Neom green hydrogen project has also faced offtake and market pressures despite reaching an $8.4bn financial close in 2023.

The 4GW scheme, designed to produce about 1.2 million tonnes a year of green ammonia, has reportedly struggled to secure multiple international buyers, with only limited offtake confirmed to date.

Hydrogen production costs

Global green hydrogen production costs also remain significantly higher than conventional alternatives, typically in the range of $3-$8 a kilogram compared with roughly $0.5-$2/kg for hydrogen produced from fossil fuels, leaving large export-oriented projects exposed to pricing and demand uncertainty.

The combination of elevated capital costs, slow offtake development and evolving policy frameworks has created headwinds for investment decisions across the sector.

In the joint statement, however, Hydrom said it is committed to “developing a competitive hydrogen-centric economy” aligned with Oman’s Vision 2040.

It added that projects awarded in the first two auction rounds are progressing on schedule towards the country’s target of producing more than one million tonnes a year of green hydrogen by 2030.

The company also highlighted continued international interest in the sector, noting that the third auction round is under way with strong foreign participation.

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Mark Dowdall

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