Oman state oil firm to sell assets to fund $7.9bn spending

Energy company OQ plans to reduce its reliance on Oman’s strained finances by selling assets, issuing bonds and refinancing debt to fund a $7.9bn spending plan over the next five years.

State-owned OQ will shift focus from reinvesting in the company to achieving funding self-sufficiency, according to a bond prospectus seen by Bloomberg News. OQ is tapping the international bond market for the first time in an issuance aimed at raising at least $500m.

Oman’s government, which has pumped $8.6bn into the company, is looking to shore up its finances after lockdowns and falling oil prices battered the economy last year. Its budget deficit climbed to about 17 per cent of gross domestic product, according to the International Monetary Fund.

The government is not expected to inject any more equity into OQ, according to the prospectus. OQ’s operating losses totaled OMR1.58bn ($4.1bn) in 2020, largely due to a OMR1.34bn impairment charge which the company attributed to the impact of the pandemic and low oil prices.

Major impairment losses were registered at two of its biggest companies: a refinery business previously known as Oman Oil Refineries and Petroleum Industries Co. SAOC, or Orpic, and OQ’s upstream unit, formerly known as Oman Oil Co. Exploration & Production.