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04 December 2016 ARCHIVES  |  SEARCH  |  POST ADS  |  ADVERTISE  |  SUBSCRIBE  |  LOGIN  |  CONTACT US

Oil firms seeking $4.35bn loans

Middle East Business

Dubai: Two major Omani state-owned oil companies are in negotiations regarding loan facilities worth a combined $4.35 billion, sources aware of the matter said yesterday, as the duo turn to bank markets for finance in the wake of lower oil prices.

Petroleum Development Oman (PDO), majority-owned by Oman but with stakes held by Royal Dutch Shell, Total and Partex Oil and Gas, is seeking a $2.5bn loan to fund its projects, two sources aware of the matter said.

Meanwhile, state energy investment firm Oman Oil Company has contacted banks about amending the terms of an existing $1.85bn loan originally signed in September 2014, primarily aimed at increasing the length of the facility, according to one of the two sources, plus two further sources.

In the year to November 2015, Oman’s budget deficit was 4.07bn rials ($10.57bn), compared with a 233.4 million rial surplus a year earlier, according to the latest official data.

This situation is forcing state-owned companies which had traditionally relied on the Omani government for funding to turn to international markets.

Minister of Oil and Gas Mohammad bin Hamad Al Rumhy said in February that PDO will in future borrow abroad if it needs to finance projects rather than ask for more funds from its shareholders.

Meanwhile, Oman Oil is already speaking with banks about raising a $1bn loan for its exploration and production subsidiary, its chief executive said last month.

The $1.85bn loan which Oman Oil is seeking to revise was its first borrowing from international loan markets and was supported by 16 banks, according to a statement at the time.

PDO is the sultanate’s top oil and gas exploration and production company, accounting for 70 per cent of the crude oil production and nearly all of the country’s natural gas supply, according to its website. 

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