State-owned Petroleum Development Oman (PDO) will in future borrow abroad if it needs to finance projects rather than ask for more funds from its shareholders, the Sultanate’s Minister of Oil and Gas Mohammad bin Hamad al-Rumhy told reporters on Monday.
PDO, Oman’s top oil and gas exploration and production company, accounts for over 70% of the country’s crude oil production and nearly all of its natural gas supply.
The company is owned 60% by the government of Oman, 34% by Royal Dutch Shell, 4% by Total and 2% by Partex Oil and Gas, according to its website.
Rumhy’s comment underlined the financial pressures faced by Oman because of low oil prices. The reduction in the government’s oil revenues has pushed it into deficit, and its domestic borrowing has started to strain liquidity in the local banking system.
That means the government and state-owned firms will increasingly have to borrow abroad to finance themselves. The government plans to borrow between $5bn and $10bn abroad, Central Bank of Oman’s executive president Hamood Sangour al-Zadjali said last week.
Rumhy, also chairman of PDO, said the company had not postponed any projects despite low oil and gas prices.
“The only project that got delayed due to the need for further study and the current situation is the pilot project for the Habhab field,” he said, referring to a potential oilfield.
Rumhy also said the engineering, procurement and construction (EPC) contract for a subsea Iran-Oman gas pipeline was expected to be awarded before the end of this year. He did not elaborate.
In 2013, the two countries signed an agreement for Iran to supply natural gas to Oman in a deal valued at $60bn over 25 years. The project was then stalled, partly because of international sanctions on Iran. But the lifting of sanctions last month has raised hopes that it will go ahead.
