Oman’s State Oil (PDO) Raises $4-B or Projects
$JPM, $HHBC, $ING
The amount raised will be used to finance construction of new facilities
Petroleum Development Oman (PDO), the country’s top Oil & Gas exploration and production company, has obtained a $4-B loan from international banks, as low Crude Oil prices strain state finances.
The 5-year pre-export facility is the company’s 1st international loan and was priced at 160 bpts over the London interbank offered rate (Libor), state-owned PDO said Wednesday.
“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-B in the next 5 years.
Its projects include the Rabab Harweel facility, which is to develop 240-M bbl of Cruede Oil and 100-M bbl of condensate while exporting 1-T cubic feet of non-associated Nat Gas when production starts in Y 2019.
In previous years state companies in Oman and other 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 petro-dollar 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-B facility by Oman Oil for its exploration and production subsidiary and a $250-M loan for Oman Shipping, bankers said.
The pricing and size of the PDO’s loan indicate the country is still able to attract demand for its debt. PDO initially considered raising about $3-B 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 (NYSE:HSBC) Bank, ING Bank (NYSE:ING), Intesa Sanpaolo, JPMorgan (NYSE:JPM), National Bank of Abu Dhabi, Natixis, Societe Generale, Standard Chartered Bank and Sumitomo Mitsui Banking Corp.
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