Page 9 - MEOG Week 17 2021

MEOG FINANCE & INVESTMENT MEOG

Oman and Qatar use NOCs

to tap bond markets

OMAN/QATAR FOLLOWING the recent success of regional it would not renew the Qatargas Liquefied Nat-
powerhouses Abu Dhabi National Oil Co. ural Gas Company Ltd (QG1) joint venture (JV)
(ADNOC) and Saudi Aramco in cashing in on when its concession expires at the end of next
investor appetite, Oman and Qatar are set to year, at which point the state-owned firm will
launch bond sales via state energy firms OQ and take full control.
Qatar Petroleum (QP). The current JV arrangement with super-ma-
The two countries are both at the lower end jors Total (10%) and ExxonMobil (10%), as well
of the Middle East oil production spectrum but as Marubeni (7.5%) and Mitsui (7.5%), expires
have different reasons for the bond offerings, on December 31, and QP will assume full own-
with Qatar intending to use the funds raised to ership on January 1, 2022, up from its current
process a giant gas field expansion project, while 65% holding.
Muscat seeks to ease the government’s debt
burden. Oman
For Oman, the move comes as Muscat prepares
Qatar to issue an estimated $3bn worth of bonds
QP is seen raising $7-10bn via its debut dol- through the newly formed Energy Development
lar-denominated bond offering on international Oman (EDO) to which it has transferred Petro-
capital markets, purportedly to partly finance leum Development Oman (PDO’s) majority
the $29bn North Field Expansion (NFE) project shareholding in the massive Block 6 concession.
to solidify Qatar’s position as the world’s largest Block 6 is home to an oil production capac-
LNG exporter, according to reports that cited ity of around 650,000 barrels per day (bpd) and
sources close to proceedings. more than 75% of the Sultanate’s remaining oil
The world’s largest natural gas exporter has reserves.
reached out to global investment banks to help Muscat is understood to have been advised
arrange the deal. The multi-tranche long-dated on the process by JPMorgan Chase & Co. and
bond offering will have maturities of five, 10 and EDO is expected to go to market during the next
30 years. few months with the $3bn target based on the
The company took a final investment deci- reserves held in Block 6, making it the Middle
sion (FID) on the project in early March and has East’s first reserves-backed raise.
since proceeded to hand out billions of dollars This week an investors’ note showed that state
of engineering, procurement and construction oil firm OQ, formerly Oman Oil Co., has hired
(EPC) contracts for NFE and the subsequent eight banks to work on a seven-year, dollar-de-
North Field South (NFS) expansion phase. nominated bond. Calls were due to begin shortly
NFE will underpin the expansion of Qatar’s after with Citi, HSBC, JPMorgan, First Abu
LNG production capacity from 77mn tonnes Dhabi Bank, MUFG, Natixis, SMBC Nikko and
per year currently to 110mn tpy following the Societe Generale for a “benchmark” bond issu-
start-up of four new mega-trains with NFS ance, which is expected to be at least $500mn.
expected to launch in 2027, bringing Qatar’s Following the news, Fitch Ratings has
LNG production capacity to 126mn tpy. assigned the proposed Global Medium Term
The Qatari government issued a $10bn Note an unsecured BB-(EXP) rating in line with
bond a year ago which was four and a half times OQ’s BB- long-term issuer default rating (IDR).
oversubscribed. It added that “the negative outlook on OQ’s
Meanwhile, last month QP announced that rating mirrors that on Oman’s rating”.™

Week 17 28•April•2021 www. NEWSBASE .com P9