From Transitional Pathways to a Competitive Green Hydrogen Ecosystem

Sohar Port & Freezone (SIPC) represents the largest integrated industrial cluster in the Sultanate of Oman, contributing approximately three percent of national GDP and hosting energy-intensive sectors including steel, aluminum, methanol, petrochemicals, urea, polysilicon, and advanced manufacturing. These industries form the backbone of Oman’s export economy and industrial value chains. Sohar also constitutes the country’s largest hydrogen consumption hub, with an estimated demand of approximately 0.35 million tonnes per annum—nearly one-third of national hydrogen consumption. At present, the majority of this hydrogen is produced through natural gas-based steam methane reforming (SMR), creating exposure to gas price escalation, carbon risk, and increasing international competitiveness pressures, particularly in export markets such as Europe.

While national strategic plans envision Sohar as a future green hydrogen hub by 2040, the transition from today’s grey hydrogen production to fully green hydrogen requires a structured, phased pathway. Majan Council’s Hydrogen Transition Strategy provides a comprehensive economic, regulatory, and system-level assessment of this pathway, examining how low-carbon hydrogen—including transitional models such as grid-based (yellow) hydrogen—can serve as a catalyst to accelerate infrastructure readiness, industrial adaptation, and ecosystem formation.

The analysis evaluates the Levelized Cost of Hydrogen (LCOH) under multiple electricity pricing scenarios, including evolving CRT structures, and assesses sensitivity to gas price escalation and potential carbon policy impacts. It examines electrolyzer utilization rates, hybrid energy sourcing strategies combining renewable energy and grid supply, and the feasibility of progressively replacing existing SMR-based hydrogen consumption across different industrial sectors. Beyond pure cost comparison, the study assesses industrial replicability and the strategic implications of hydrogen substitution within export-oriented value chains.

From a policy and regulatory perspective, the strategy identifies critical alignment requirements with MEM, Hydrom, and Oman’s National Hydrogen Strategy. It evaluates tariff design, grid pricing exposure, land allocation frameworks, cluster-level coordination, and export positioning under emerging carbon border mechanisms. The role of Carbon Capture, Utilization, and Storage (CCUS) is examined as both a transitional bridge and a structural enabler within Oman’s industrial decarbonization architecture.

Technically, the assessment analyzes electrolyzer sizing, phased deployment scenarios, oxygen by-product valorization, and energy sourcing configurations, while identifying infrastructure constraints in hydrogen transport and storage systems. The study underscores that cluster-based infrastructure planning—rather than isolated project development—is essential to unlock scalable hydrogen deployment within Sohar’s industrial ecosystem.

Ultimately, this Hydrogen Transition Strategy reframes hydrogen not merely as a future export commodity but as a strategic instrument of industrial transformation. By integrating economic modelling, regulatory reform pathways, gas market dynamics, infrastructure planning, and system engineering analysis, the strategy establishes a pragmatic roadmap in which transitional hydrogen solutions help build the ecosystem required for competitive green hydrogen in the long term. In doing so, Sohar is positioned not only as a future hydrogen hub, but as Oman’s first scalable industrial hydrogen transition cluster—anchoring competitiveness, decarbonization, and long-term industrial resilience.