Petroleum Development Oman (PDO), the country's top oil and gas E&P company, has obtained a $4 billion loan from international banks, part of a rush of foreign borrowing by Oman as low oil prices strain state finances.
The five-year pre-export facility is the company's first international loan, and it was priced at 160 basis points over the Libor rate, state-owned PDO said on June 29.
"This competitive new source of funding will enable us to reduce reliance on government funding, so that it can redeploy resources to other areas of the economy," said Raoul Restucci, PDO's managing director.
The loan will help to finance new oil and gas facilities in Oman, PDO said, adding that it planned to invest more than $20 billion in the next five years.
Its projects include the Rabab Harweel facility, which will develop 240 million barrels (MMbbl) of oil and 100 MMbbl of condensate while exporting 1 trillion cubic feet of non-associated gas when production starts in 2019.
In previous years, state companies in Oman and other Arab Gulf oil-exporting countries largely financed such projects from state revenue. But state finances have been squeezed by low oil and gas prices, forcing companies and the governments that own them to seek alternative financing, while reduced petrodollar flows are tightening domestic banking liquidity and forcing borrowers to look further afield.
The PDO deal is expected to clear the way for other state-linked Omani companies to take international loans, including a proposed $1.35 billion facility by Oman Oil for its E&P subsidiary and a $250 million loan for Oman Shipping, bankers said.
The pricing and size of PDO's loan indicate the country is still able to attract demand for its debt. PDO initially considered raising about $3 billion, but increased that because of heavy demand, bankers said.
Nevertheless, the loan's pre-export structure, in which funds are advanced based on proven orders, gives lenders more security than a plain sovereign loan.
HSBC Bank Oman advised PDO on the deal. The senior phase of the facility, before it went to general syndication, involved Bank of China, HSBC Bank, ING Bank, Intesa Sanpaolo, JPMorgan, National Bank of Abu Dhabi, Natixis, Societe Generale, Standard Chartered Bank and Sumitomo Mitsui Banking Corp.
Recommended Reading
Texas LNG Export Plant Signs Additional Offtake Deal With EQT
2024-04-23 - Glenfarne Group LLC's proposed Texas LNG export plant in Brownsville has signed an additional tolling agreement with EQT Corp. to provide natural gas liquefaction services of an additional 1.5 mtpa over 20 years.
US Refiners to Face Tighter Heavy Spreads this Summer TPH
2024-04-22 - Tudor, Pickering, Holt and Co. (TPH) expects fairly tight heavy crude discounts in the U.S. this summer and beyond owing to lower imports of Canadian, Mexican and Venezuelan crudes.
What's Affecting Oil Prices This Week? (April 22, 2024)
2024-04-22 - Stratas Advisors predict that despite geopolitical tensions, the oil supply will not be disrupted, even with the U.S. House of Representatives inserting sanctions on Iran’s oil exports.
Association: Monthly Texas Upstream Jobs Show Most Growth in Decade
2024-04-22 - Since the COVID-19 pandemic, the oil and gas industry has added 39,500 upstream jobs in Texas, with take home pay averaging $124,000 in 2023.
Shipping Industry Urges UN to Protect Vessels After Iran Seizure
2024-04-19 - Merchant ships and seafarers are increasingly in peril at sea as attacks escalate in the Middle East.