DUBAI (Reuters) – Oman has set up a new state energy company which will own part of the Gulf nation’s largest oil block and be able to raise debt, as the cash-strapped country seeks to offset the impact of lower oil prices.
The new company, called Energy Development Oman (EDO), 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’s energy ministry said EDO is 100% government-owned and that it will collect oil and gas revenues and pay capital and operating costs.
This means Petroleum Development Oman’s oil and gas expenditures will be excluded from the state budget, giving the company financial independence, the energy ministry said in the statement carried by state media.
Oman, rated sub-investment grade by all major credit rating agencies, faces a widening deficit and large debt maturities in coming few years. It has recently embarked on a new fiscal plan to wean itself off its dependence on crude revenues.
EDO 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 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.
Reporting by Davide Barbuscia; additional reporting by LIsa Barrington; Editing by Elaine Hardcastle and Nick Macfie