Oman considering $8 billion sale of natural gas assets, sources say

(Bloomberg) – Oman is looking to sell a stake in natural gas assets valued at about $8 billion, according to people familiar with the plan, as the sultanate seeks to raise cash to shore up its state finances and fund investments. 

State-owned firm Energy Development Oman SAOC is seeking partners for a minority stake in the fields contained in Block 6, which also holds the country’s most prized oil assets, the people said, asking not to be named because the plans are private. Besides bringing in funds for Oman, a sale would also help spread the billions of dollars of costs needed to develop and operate the fields, which consultant Wood Mackenzie Ltd. values at about $8.2 billion.

A successful transaction would add to a string of asset sales in Oman aimed at bolstering public finances which have long been among the weakest in the Arab Gulf region. The drive has resulted in a flurry of IPOs of state-owned entities as it also looks to finance projects aimed at diversifying the economy away from oil.

EDO didn’t respond to an email seeking comment. Talks are ongoing for the sale, and the plans could still change, people familiar with the move said.     

The prolific Block 6 was spun off from Oman’s biggest oil producer, Petroleum Development Oman, in 2020 into the newly formed EDO. The company owns 60% of the block’s oil and 100% of the gas concession. The government had intended to issue bonds through EDO, but those plans were delayed several times because of weak global financial markets.

“Block 6 is Oman’s largest and most-valuable oil and gas asset,” said Dalia Salem, a senior research analyst at Wood Mackenzie. It contains around 10.7 trillion cubic feet of proved and probable non-associated gas reserves and produces more than 2 billion cubic feet a day, she said.

Oil generates four times more revenue for Oman than gas but the balance is shifting as investment has trended toward gas projects in response to growing global demand for the fuel. 

TotalEnergies SE and Oman’s OQ SAOC are building a facility to supply LNG to ships while the government has approached international energy majors such as bp and Shell Plc to invest in a new LNG train at Qalhat that will increase the country’s export capacity by 25%.