Oman sets up new energy company to raise capital

DUBAI: Oman has set up a new state energy company which will own part of the Gulf nation's largest oil block and will have the ability to raise debt, as the cash-strapped country seeks to offset the impact of lower oil prices.

The new company, called Energy Development Oman, will have a shareholding in Petroleum Development Oman, a state-owned oil and gas exploration and production company, and an interest in Block 6, according to the country's Official Gazette.

Block 6 is Oman's largest oil and gas operation, according to energy consulting firm Wood Mackenzie.

Oman, rated sub-investment grade by all major credit rating agencies, faces a widening deficit and large debt maturities in the coming few years. It has recently embarked on a new fiscal plan to wean its dependence off crude revenues.

Energy Development Oman will work on oil and gas exploration as well as on renewable energy projects in Oman, according to the Gazette.

It will also "borrow or raise money and/or financing of any nature" and use "defined or identifiable cash flows, revenues, receivables or assets (including those which are Shariah compliant) to issue securities in one or more tranches to investors in Oman and/or other countries," it said.

The authorised and issued share capital of the company is 500,000 Omani rials, divided into 500,000 shares, the Gazette added.

Low oil prices and the economic slowdown caused by the new coronavirus outbreak are straining the finances of Oman, a relatively small energy producer.

New ruler Sultan Haitham bin Tariq al-Said has shaken up the government and state entities, and in October approved introducing value-added-tax in April to boost state revenues.