Oman’s investment authority approves $5.19 billion sale of OQ

The Oman Investment Authority (OIA), the integrated sovereign wealth fund of the Sultanate of Oman, says it has given the green light to an “exit plan” submitted by wholly-owned energy and petrochemicals subsidiary OQ Group, envisaging sales totaling between RO 1, 5 billion and RO 2 billion.

The OIA made the revelation in its first annual report covering financial and operational results for the period June 2020 to December 2021, published earlier this week.

“(The authority) approved an exit plan worth between RO 1.5 billion and RO 2 billion by selling some shares to the private sector or offering them for subscription to the public capital market and bringing in strategic partners to benefit from their knowledge and improve performance,” it said.

No details were shared about the OQ-owned or related assets lined up for full or partial sale. But in a statement released last month, the OIA revealed that it is preparing two OQ projects, among other ventures from across the Authority’s significant portfolio, for listing on the Muscat Stock Exchange (MSX) through an initial public offering (IPO).

Recent divestments undertaken by OQ during the period under review include its stakes in India-based Bharat Oman Refineries Limited (BORL) and Portuguese energy sector Redes Energéticas Nacionais (REN).

In other key financial and operational highlights of the past year, OQ transferred its shareholding in Oman Shipping Company to the Oman Investment Authority. OQ also issued bonds worth RO 288 million in “international capital markets at a competitive price, with significant participation from major investors and financial institutions,” the OIA said in its annual report.

Developments in the renewable energy and green hydrogen space are also significant, according to the report. In addition to launching an alternative energy division focused on supporting green hydrogen and ammonia initiatives, OQ has also signed a number of agreements with international companies to develop green energy projects in Duqm SEZ and Dhofar province.

Another key highlight of the year was the successful conclusion of a number of agreements with the Ministry of Energy and Minerals, Oman Shell and TotalEnergies related to the development of gas and condensate reserves in Block 10 in central Oman. Production, which will start flowing from mid-2023, will eventually be directed to Marsa LNG, a new green LNG project due to come up at Sohar port to provide LNG as bunker fuel for marine shipping. Marsa LNG is a joint venture between TotalEnergies and OQ.

In Block 60, wholly owned and operated by OQ’s Upstream unit, the company recently reported a fivefold increase in production from the Bisat field. In addition, the successful completion of the Bisat B project also enabled the doubling of production over capacity, it said.

Earlier this week, international rating agency Fitch Ratings Fitch Ratings affirmed OQ’s long-term issuer rating (IDR) at ‘BB-‘ with a stable outlook.

Fitch also revised OQ’s standalone credit profile (SCP) to ‘b+’ from ‘b’ to ‘reflect the successful execution of the project in both the upstream and downstream segments, together with stronger financial performance in a more high oil and gas prices as well as refining and petrochemical margins leading to lower net leverage expectations. OQ’s SCP also reflects its solid business profile with integrated operations spanning exploration and production (E&P), refining, marketing, chemical and petrochemical segments,” the rating agency added.

OQ Group, with total assets of $27.6 billion as of June 30, 2021, owns and operates businesses across the entire oil and gas value chain. OQ reported a profit of RO 701.664 million for the year ended December 31, 2021, after recording a loss of RO 1716.944 million in the previous year. Total revenue rose to RO 8.768 billion in 2021 from RO 5.393 billion in 2020. Operating profit rose to RO 958.791 million from an operating loss of RO 1.575 billion in 2020.

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