Oman sultanate has established a new state-owned energy firm named Energy Development Oman (EDO) which will own part of the largest oil block of the Gulf country and be able to raise debt.
According to the reports, the new firm will have a stake in the state-owned oil and gas exploration and production company, Petroleum Development Oman (PDO), and an interest in Block 6, which contains 75 percent of the region’s crude oil reserves.
EDO is completely government-owned and will raise oil and gas revenues and fund capital and operating expenses, said the energy ministry of Oman. This implies that the oil and gas expenses of PDO would be exempt from the state budget, granting the company financial independence, the ministry added in the statement.
Oman, ranked by all major credit rating agencies as a sub-investment grade, may confront a widening deficit and broad debt maturities in the coming few years. It has recently entered into a new fiscal strategy to wean its reliance on crude revenues from itself. EDO will work on oil and gas exploration and renewable energy projects in Oman.
According to the reports, “it will also “borrow or raise money and/or financing of any nature” and use “defined or identifiable cash flows, revenues, receivables or assets (including those which are Shariah-compliant) to issue securities in one or more tranches to investors in Oman and/or other countries. The authorized and issued share capital of the company is $1 million (500,000 Omani riyals), divided into 500,000 shares.”
Low oil prices and the economic downturn triggered by the outbreak of coronavirus are straining the finances of the relatively smaller energy producers in Oman. Sultan Haitham bin Tariq al-Said, the new ruler has approved the implementation of value-added tax from April next year to raise state revenues.