S. PENSON, Gulf Energy Information, London, England

Oil major bp and French energy company Engie have both withdrawn from significant green hydrogen (H2) projects in Oman, which has ambitions to be a leading global supplier, amid concerns over the development of demand. 

bp has cancelled the 1.5-GW Duqm Green Hydrogen Project in the Special Economic Zone at Duqm, which had been expected to produce 150,000 tpy but was at an early stage of development. 

In the same region, Engie has halted the 1.3-GW HyDuqm green-H2-to-ammonia project it was developing with Oman’s state H2 agency Hydrom and South Korean steelmaker Posco. Engie cited demand as a direct factor. “The decision follows an in-depth assessment of global renewable hydrogen offtake dynamics and investment frameworks,” a spokesperson said. 

bp’s move must also be seen within the context of its recent strategic shift away from renewables to its core oil and gas business, as investors demand higher returns. 

The retreat from clean H2 has been overseen by CEO Murray Auchincloss, who has wasted no time in unwinding the clean energy position taken by his predecessor Bernard Looney. 

The Oman decision is “in line with bp’s global strategy to high-grade projects in hydrogen, investing with discipline in projects that meet our long-term strategy,” a spokesperson said. However, the company remains the operator and 49% shareholder in a separate Oman green H2 project, HYPORT Duqm.  

Elsewhere, bp recently dropped H2Teesside, one of the UK’s largest blue H2 projects, citing a “deteriorating” demand outlook. The company also lost out on a data center in the planning process. In March 2025, bp pulled the plug on another major UK project, the 500-MW Hygreen Teesside. 

The company remains invested in the 100-MW LGH2 project at the Lingen refinery in northwest Germany, from which it aims to begin production in the second half of 2027. The refinery will be an anchor offtaker for the plant, but the strength of demand from other industries in the region remains to be seen. bp invited potential offtakers to register their interest in a process it conducted throughout summer 2025, the results of which have not been made public. 

Both Engie and bp were keen to stress their confidence in Oman’s strategy, which has ambitions to be a world leader in green H2 and is developing trading corridors to ship exports to Europe and Southeast Asia. The Gulf state, which is the biggest Middle Eastern oil producer outside of OPEC, is allocating 50,000 km² of land for green H2 projects to help produce as much as 3.75-MMtpy by 2040 and 8.5 MMtpy by 2050. Its H2 strategy continues to attract significant international interest. 

“Hydrom, ENGIE and POSCO value the collaboration established through the HyDuqm project and reaffirm their shared commitment to supporting the growth of Oman’s hydrogen ecosystem, exploring future opportunities for partnership within the country’s evolving renewables landscape,” the company said. 

The awarded projects from the first two rounds are progressing on schedule to achieve the country’s green H2 production targets of > 1 MMtpy. Engie said, “The third auction round is currently underway, with continued international participation reflecting strong confidence in Oman’s competitive framework.” 

bp said it remains supportive of Oman’s Vision 2040 focused on advancing energy transition initiatives to meet the nation’s growing energy demand.   

Challenging year. The exits of bp and Engie form their respective Oman projects capped a challenging year for the clean H2 sector. A shakeout of projects has accelerated globally, with no region or production process immune. More than 50 projects have been shelved during the past 18 mos, according to industry group the Hydrogen Council. Economies of scale are not insulating projects from the harsh realities that offtakers remain very reluctant converts to clean H2.  

“Despite the rhetoric, there are very few companies out there willing to pay a premium for low-carbon products,” said ExxonMobil CEO Darren Woods in October 2025—the U.S. oil major paused its Baytown blue hydrogen project in Texas (U.S.) in late 2025, the largest of its type in the world.