A global consortium led by South Korea’s POSCO Holdings Inc. will invest more than 8 trillion won ($6.15 billion) to build a large-scale green hydrogen plant in Oman.

POSCO Holdings announced Thursday that it signed an agreement with Oman’s state-run enterprise Hydrogen Oman LLC (Hydrom) to exclusively develop and produce green hydrogen in Duqm, a port town in central-eastern Oman, for the next 47 years.

Under the agreement, a consortium led by POSCO Holdings will construct a 5-gigawatt renewable energy complex on a site of 340 square kilometers in the Duqm economic zone to produce 220,000 tons of green hydrogen per year.

Construction of the plant and related equipment will begin in 2027 and be completed in 2030.

Six companies from three countries have joined the consortium - four Korean companies (Samsung Engineering Co., Korea Southern Power Co., and Korea East-West Power Co) and two companies each from France (Engie SA) and Thailand (PTT Exploration and Production Public Co.)

Green hydrogen has been receiving spotlight as an environmentally-friendly energy source as it uses energy produced from renewable energy to dissolve water. The cost for green hydrogen production is relatively cheap in the Middle East as the region has plenty of sunshine.

Industry insiders note that the latest deal was possible partly as the POSCO consortium proposed to import green hydrogen produced in Oman to Korea, which will allow Oman to secure a reliable buyer for the project.

The consortium plans to use part of the green hydrogen produced in Oman by compounding it with ammonia for use in hydrogen reduction steelmaking and clean, carbon-free electricity production.

POSCO Holdings, with the largest stake in the consortium, will lead the project, and Samsung Engineering will be in charge of engineering, procurement, and construction.

The project is part of POSCO Group’s goal to secure 7 million tons of hydrogen production system by 2050.

By Oh Soo-hyun and Han Yubin

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