The Rise of the Gulf’s Hydrogen Economy: Oman, Saudi Arabia, and the UAE’s Path to Global Leadership
By Mark Achkar; Edited by Andrew Ma
Introduction
The global energy landscape is undergoing a seismic shift as countries seek cleaner, more sustainable alternatives to fossil fuels. Hydrogen has emerged as one of the most promising solutions, capable of decarbonizing industries, replacing natural gas, and powering the world’s future energy networks. As the global race for hydrogen leadership accelerates, the Gulf states—Oman, Saudi Arabia, and the UAE—are stepping up as major players in this emerging economy.
Traditionally known for their vast oil and gas reserves, these nations are leveraging their abundant solar and wind resources, deep industrial expertise, and strong financial backing to position themselves at the forefront of hydrogen production. With billions of dollars in planned investments, groundbreaking projects like NEOM’s green hydrogen plant, and ambitious national strategies, the Gulf is set to become a key supplier of green and blue hydrogen to global markets.
However, hydrogen is not just an economic opportunity but a strategic necessity. As the world moves away from fossil fuels, Gulf nations must diversify their energy exports or risk economic stagnation. This article explores the state of the hydrogen economy in the Gulf, and examines the national hydrogen strategies, flagship projects, and long-term vision of Oman, Saudi Arabia, and the UAE.
The Middle East’s Emerging Role in the Global Hydrogen Economy
Global hydrogen production by region in 2023 (in kilotons) highlights the Middle East’s current output. Blue hydrogen (from fossil fuels with carbon capture) dominates today’s production mix, while green hydrogen (from renewables) remains nascent. The Middle East produced an estimated 622 kilotons of low-carbon hydrogen in 2023—almost entirely blue hydrogen—but plans to increase output through new projects exponentially.
The Middle East is rapidly scaling up hydrogen initiatives and is poised to become a key player in the global hydrogen market over the next two decades. Planned hydrogen capacity in the region has more than doubled in the past year, reaching 83 announced low-carbon or renewable hydrogen projects with a combined output of about 9 million metric tons per year. For perspective, in late 2022, there were only 37 regional projects totaling 4.2 million tons, which demonstrates the surge in hydrogen investments.
Looking ahead, S&P Global forecasts that Middle Eastern producers will supply 18 million tons of hydrogen annually by 2030, with about 1 million tons available for export as clean fuel. By 2040, the Middle East is projected to lead all other regions with 28 million tons of clean hydrogen output, including over 6 million tons for export. This figure demonstrates how central the region could become in meeting global hydrogen demand.
Several Middle Eastern countries have declared ambitions to be top hydrogen suppliers. Saudi Arabia has explicitly stated its goal to become "the top supplier of hydrogen in the world", and the UAE is similarly targeting about 25% of the global hydrogen fuel market by 2030. Oman, though smaller in population, has enormous renewable energy potential and aims to be a leading green hydrogen exporter as well. Beyond these three countries, others in the broader region (such as Qatar, Egypt, and Morocco) are also investing in hydrogen. However, Oman, Saudi Arabia, and the UAE are arguably at the forefront of large-scale hydrogen developments.
With their strategic location between energy-hungry Europe and Asia, Middle Eastern producers are situated to become major exporters, creating new “green fuel” corridors to markets like the EU, Japan, South Korea, India, and China. In fact, a new trade route announced at the 2023 G20 summit envisions hydrogen pipelines linking India, the Middle East, and Europe as part of a broader economic corridor–highlighting the region’s importance in future energy supply chains.
National Hydrogen Strategies and Major Projects in Oman, Saudi Arabia, and the UAE
Each of the Gulf countries under review – Oman, Saudi Arabia, and the UAE – has launched national strategies and megaprojects to develop their hydrogen economies. These initiatives span both green hydrogen (leveraging solar and wind power) and blue hydrogen (leveraging natural gas with carbon capture). Below, we examine the major projects, investments, and government policies in each country.
Oman: Ambitious Green Hydrogen Hubs
Oman is pursuing an aggressive green hydrogen strategy as part of its Vision 2040 economic plan. The Omani government sees green hydrogen as a key “vector” for decarbonization and
economic diversification, given Oman’s abundant solar and wind resources and large expanses of available land. In late 2022, Oman committed to net-zero emissions by 2050 and established a dedicated entity, Hydrom, to oversee hydrogen project development and infrastructure. Oman’s targets are among the most ambitious in the world: at least 1 million tons of renewable hydrogen per year by 2030, ramping up to 3.75 million tons by 2040 and 8.5 million tons by 2050. To put this in context, 8.5 million tons of hydrogen contains almost double the energy of Oman’s current liquified natural gas exports, illustrating the scale of change envisioned.
At the launch of Oman’s national hydrogen strategy, Energy Minister Salim Al Aufi emphasized the dual importance of climate and economic goals: “Oman is committed to decarbonise and help the world decarbonise. The pathway to net zero is an opportunity for Oman to create economic value, increase industrial competitiveness and attract investments to help diversify and strengthen the country’s economy.”
In line with these goals, Oman has attracted major international partnerships. By 2023, the government had signed agreements for six large green hydrogen projects near the Duqm and Salalah ports with developers including BP, Shell, ACME (India), and international consortiums. These projects – often combining gigawatt-scale solar and wind farms – aim to produce green hydrogen that will be converted to green ammonia for export. For example, the Green Energy Oman (GEO) project plans a massive 25 gigawatts of renewables in Al Wusta and Dhofar to generate around 1.8 million tons of green hydrogen and 10 million tons of green ammonia per year at full capacity. Oman’s state-owned companies and royalty have also backed projects like Hyport Duqm, which will use wind and solar power to produce green hydrogen for ammonia at the Duqm Special Economic Zone. According to Omani officials, achieving the 2030 green hydrogen target alone may require up to $50 billion of investment in new infrastructure and facilities. To facilitate this, Royal Decree 10/2023 was issued to allocate land specifically for renewable and hydrogen projects and grant Hydrom the authority to auction land blocks to developers. Hydrom has already completed two bidding rounds (awarding land in Salalah to consortia led by EDF/Japanese partners and by India’s ACME/Fortescue) and is preparing a third round in early 2025. Oman is also investing in hydrogen infrastructure, such as a planned liquid hydrogen storage facility at the Port of Salalah (announced 2024) to enable international shipments. Notably, Oman intends to build a 1,000 km hydrogen pipeline backbone from its southern region to the north, which would be one of the world’s longest hydrogen pipelines and underscores a commitment to internal infrastructure for this new industry.
Saudi Arabia: Hydrogen Mega-Projects and Vision 2030
Saudi Arabia, the world’s top oil exporter, has made clean hydrogen a pillar of its strategy to remain an energy superpower in a carbon-constrained future. Under Vision 2030–the kingdom’s diversification blueprint – Saudi Arabia seeks to leverage hydrogen to expand industrial value chains and reduce reliance on oil exports. Although an official hydrogen roadmap was under development as of 2022, various high-level statements give more insight into Saudi targets. The country reportedly aims for 2.9 million tons of clean hydrogen per year by 2030, rising to
4 million tons by 2035. In the near term, Saudi Arabia is focusing on blue hydrogen (and ammonia) produced from its vast natural gas resources with carbon capture. In September 2020, the Kingdom marked a milestone by completing a pilot shipment of 40 tons of blue ammonia to Japan, establishing the world’s first international demonstration of a blue ammonia supply chain.
This project, led by Saudi Aramco and SABIC, showed that existing hydrocarbon infrastructure can be adapted to produce and ship low-carbon fuels. Saudi Aramco has since pursued agreements to supply blue ammonia to South Korea and other markets and is exploring innovations like sending liquefied petroleum gas to South Korea for conversion to hydrogen and then shipping the captured CO₂ back to Saudi Arabia for storage. These efforts align with Saudi Arabia’s advocacy of a “Circular Carbon Economy” approach – reducing and reusing emissions through technologies like CCUS (carbon capture, utilization, and storage).
Conceptual rendering of Oxagon in NEOM, Saudi Arabia–the site of the world’s largest green hydrogen plant under construction. The NEOM Green Hydrogen Company’s facility will use 4 GW of solar and wind power to produce 600 tonnes of green hydrogen daily (in the form of ammonia) by 2026. Saudi Arabia’s NEOM project exemplifies the scale of investment Gulf states are committing to green hydrogen as part of efforts to lead in the global energy transition.
On the green hydrogen front, Saudi Arabia is home to one of the world’s most iconic projects: the NEOM Green Hydrogen Project. Located in the planned futuristic city of NEOM on the Red Sea coast, this $8.4 billion project (jointly owned by NEOM, ACWA Power, and Air Products) is slated to be the largest green hydrogen plant globally once operational. It will integrate up to 4 gigawatts (GW) of solar and wind power to produce 600 tons of carbon-free hydrogen per day by 2026, all of which will be converted into green ammonia for export under a 30-year offtake agreement. This equates to roughly 220,000 tons of hydrogen per year, or about 1.2 million tons of green ammonia annually – a volume “roughly equivalent to 5 million barrels of oil per year in energy terms.” The NEOM venture reached financial close in mid-2023, and construction is well underway. Beyond NEOM, Saudi Arabia is investing in renewable power (targeting 58 GW by 2030) to support more green hydrogen and exploring domestic hydrogen usage in transport. For instance, pilot fleets of hydrogen fuel cell vehicles (such as Toyota Mirai cars and Hyundai buses) have been tested in the country, and plans are afoot to localize fuel cell vehicle manufacturing in Saudi Arabia. Saudi companies are also partnering with foreign firms to potentially produce green steel (using hydrogen to make low-carbon steel) and other industrial products, indicating a broader hydrogen ecosystem in development.
United Arab Emirates: Hydrogen Roadmap and Investments
The UAE, leveraging its status as a Gulf energy leader and host of COP28, has launched a National Hydrogen Strategy to become a major producer and exporter of low-carbon hydrogen. In 2021, the UAE announced its Hydrogen Leadership Roadmap, aiming to capture approximately 25% of the global hydrogen market by 2030. This pledge was backed by more than seven hydrogen projects already in planning at that time, targeting key export markets such as Japan, South Korea, Germany, India, and other nations in Europe and East Asia. By 2023, the UAE approved its detailed National Hydrogen Strategy 2050, which set specific production milestones: 1.4 million tons per annum (mtpa) of hydrogen by 2031 (of which 1 mtpa green and 0.4 mtpa blue), 7.5 mtpa by 2040, and 15 mtpa by 2050. Reaching 1.4 mtpa by 2031 would not only support exports but also serve an estimated local demand of 2.7 mtpa for low-carbon hydrogen in the UAE (for use in hard-to-mitigate sectors). To achieve these goals, the strategy emphasizes creating “hydrogen oases” (industrial hubs for hydrogen), developing regulations and incentives, and building international partnerships.
In terms of projects, the UAE’s focus spans both blue ammonia and green hydrogen. Abu Dhabi National Oil Company (ADNOC), known for its oil and gas operations, has become a champion of hydrogen, repurposing its expertise in hydrocarbons toward low-carbon fuels. ADNOC, together with fertilizer producer Fertiglobe (a joint venture with OCI), is constructing a world-scale blue ammonia plant at TA’ZIZ (Ruwais) with a capacity of 1 million tons per year of ammonia. This project, expected to come online mid-decade, will hydrogenate natural gas, capture the CO₂, and produce ammonia for export to markets like Asia and Europe. ADNOC has already executed pilot shipments: it sold several cargoes of blue ammonia to Japan and South Korea in 2021-2022 for use in power and industry. On the green hydrogen side, the UAE inaugurated the region’s first solar-powered green hydrogen pilot plant in 2021. This project –by Dubai Electricity & Water Authority (DEWA), Siemens, and Expo 2020 Dubai – produces hydrogen using solar photovoltaic technology at the Mohammed bin Rashid Solar Park. Building on this, Masdar, the UAE’s clean energy company, has forged partnerships to develop utility-scale green hydrogen. Masdar and France’s ENGIE formed a $5 billion alliance aiming to deploy at least 2 GW of green hydrogen capacity by 2030 in the UAE.
The first project under this alliance is a 200 MW green hydrogen plant in Ruwais (expected by 2025), where the hydrogen will supply Fertiglobe to make green ammonia. Masdar is also targeting 1 million tons of green hydrogen production per year globally by 2030 (including international projects), aligning with the UAE’s vision to be a top supplier. Additionally, the UAE is exploring hydrogen use domestically – for example, Emirates Steel has undertaken a pilot using green hydrogen instead of natural gas in iron reduction to produce “green steel,” the first project of its kind in the Middle East. Government-owned entities like ADQ and Mubadala are co-investing in the hydrogen value chain, and new regulations are being drafted to support hydrogen vehicle fueling, ammonia bunkering at ports, and other uses. By integrating hydrogen into its Net Zero 2050 strategy (the UAE was the first Gulf state to pledge net-zero emissions), the UAE is ensuring that hydrogen becomes a core component of its future energy and export portfolio.
Conclusion
The rise of hydrogen in the Gulf represents a pivotal moment for the region’s energy future. Countries that once dominated the global oil market are now aiming to dominate the hydrogen economy to ensure they remain central players in the world’s energy system in a post-carbon era.
With their vast renewable energy potential, industrial infrastructure, and commitment to large-scale investments, the Gulf states have the resources and ambition to become the world’s leading hydrogen producers and exporters. Projects like Oman’s Duqm Green Hydrogen Hub, Saudi Arabia’s NEOM initiative, and the UAE’s blue and green hydrogen projects illustrate a clear commitment to hydrogen-driven economic transformation.
Yet, challenges remain. Hydrogen production requires massive infrastructure investments, international trade agreements, and technological advancements to lower costs and improve efficiency. The success of the Gulf’s hydrogen ambitions will depend not only on financial and industrial capacity but also on policy frameworks, global demand, and geopolitical cooperation.
In the coming decade, Oman, Saudi Arabia, and the UAE will be tested on their ability to transition from oil powerhouses to hydrogen leaders. If they succeed, the Gulf will not just be an energy hub of the past—it will define the future of global clean energy markets.
