Page 14 - DMEA Week 49

DMEA POLICY DMEA

Oman launches new company,

prepares to tap debt markets

OMAN THE government of Oman has set up a new state management of the oil and gas sector, while the
energy company that will take on the state’s hold- gazette noted that PDO’s oil and gas expenses
The new company ing in the sultanate’s largest oil and gas producer would no longer be included in the ‘general
will be independent of and seek to raise debt to ease the strain on Mus- budget’, therefore giving the company financial
Oman’s state budget. cat amid low oil prices. independence.
Royal Decree No. 128/2020 stipulated that In November, Bloomberg quoted sources
the government’s stake in Block 6, Oman’s larg- working with the government as saying
est oil and gas concession, would be transferred that Muscat is being advised on the process
from Petroleum Development Oman (PDO) to by JPMorgan Chase & Co., adding that the
the newly formed Energy Development Oman company plans a $3bn bond sale during the
(EDO). The state owns a 60% stake in PDO, with first half of 2021, based on the reserves held
Royal Dutch Shell (34%), Total (4%) and Partex in Block 6, making it the Middle East’s first
(2%) holding the remainder. The new company reserves-backed raise. Block 6 is estimated to
is expected to tap global financial markets by way hold more than 75% of the sultanate’s remain-
of a bond or an initial public offering (IPO) in ing oil reserves.
order to ease the government’s debt burden. The 900,000-square km Block 6 has a total
According to Oman’s official gazette, EDO production capacity of around 650,000 barrels
will carry out oil and gas exploration as well as per day (bpd). The move would mark another
developing renewable energy projects in the attempt by the state to leverage Block 6 follow-
country. ing its ill-fated 2019 licensing round. The auc-
It added that the new firm could “borrow or tion covered five previously explored blocks in
raise money and/or financing of any nature [and the south-west of the country, numbered 58,
use] defined or identifiable cash flows, revenues, 73, 74, 75 and 76, as well as Block 70 in Central
receivables or assets (including those which are Oman, all of which were carved out of the giant
Shariah compliant) to issue securities in one concession.
or more tranches to investors in Oman and/or Meanwhile, Muscat has recently announced
other countries.” plans to impose VAT of 5% from April 1, 2021
EDO has been set up with an authorised and and plans to impose a new income tax on the
issued share capital of the company of 500,000 country’s highest earners from 2022 as it seeks to
rials ($1.3mn), divided into 500,000 shares. increase economic stability and build resilience
Oman anticipates EDO improving the beyond its energy sector. ™

P14 www. NEWSBASE .com Week 49 10•December•2020