POSCO-led consortium wins $6.7 bn green hydrogen deal from Oman

A consortium led by South Korean steelmaker POSCO Group won a $6.7 billion deal to build the world’s largest green hydrogen plant in Duqm, a port town in east-central Oman, sources familiar with the matter told The Korea Economic Daily on Friday.   

The Omani authorities will hold a signing ceremony on June 21 in the presence of its energy and minerals minister. The consortium's six companies are discussing details of the project in the Persian Gulf nation, a source said.

The consortium consists of four Korean companies, a French firm and a Thai corporate. POSCO holds a 28% equity in the group, followed by Samsung Engineering Co.’s 12% and the two Korean state-run power companies’ 24%. 

French energy services group Engie SA holds 25% and Thai’s PTT Exploration and Production Public Company Ltd. (PTTEP), a national petroleum company, takes up the remaining 11%.

POSCO is sharpening its competitive edge in the hydrogen business. The steel giant develops hydrogen production facilities, storage tanks, and pipelines; builds terminals; and trades the chemical element.

The group aims to produce carbon-neutral steel using hydrogen instead of fossil fuels such as coal and natural gas, with an annual capacity of 300,000 tons, at its pilot facility at the Pohang steel complex starting in 2026. 

POSCO Holdings Inc., the steelmaker's investment holding firm, will lead the project and manage the plant-building processes in Oman.

Samsung Engineering, a construction unit of Samsung Group, will take charge of the engineering, procurement and construction (EPC) of the facilities. The other firms in the consortium will either produce or sell the green hydrogen generated by the factory.

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Green hydrogen is produced by splitting water molecules into their component parts of hydrogen and oxygen.

The element is touted as eco-friendly as the production process doesn’t generate carbon, while the manufacture of gray and blue hydrogen produces some carbon. Commercialization of green hydrogen is still at an early stage due to high production costs.

The global green hydrogen market is forecast to expand to $1.4 trillion by 2050 from $642 billion in 2030, according to Deloitte Korea. 

Oman, the world's 14th-largest petroleum gas exporter, set a goal last October to reach net zero emissions by 2050. The country is on track to become the sixth-largest exporter of hydrogen globally — and the largest in the Middle East — by 2030, according to International Energy Agency analysis.

Oman’s undersecretary of the energy and minerals ministry Moshin bin Hamad bin Saif Al Hadhrami visited Korea in late May and discussed securing energy supply chains with Kang Hyung-sung, Korea’s second vice minister of trade, industry and energy. 

As part of efforts to boost the eco-friendly energy industry in Oman, the undersecretary visited hydrogen producer Approtium’s Ulsan plant and POSCO’s Pohang steel manufacturing facilities. 

Write to Hyung-Kyu Kim at khk@hankyung.com
Jihyun Kim edited this article.