Page 9 - MEOG Week 49

MEOG POLICY MEOG

Oman launches new company,

prepares to tap debt markets

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

Week 49 09•December•2020 www. NEWSBASE .com P9