Oman Gas secures 1.1 bn to fund network expansion

Muscat: Oman Gas Company (OGC), Oman Oil Company’s energy infrastructure vertical, inked an agreement with seven international and local financial institutions to secure funding for the capex requirements under new business model for its gas network. The signing ceremony took place yesterday under the patronage of Salim bin Nasser al Aufi, the Undersecretary of Ministry of Oil and Gas and was attended by key OOC group representatives, Governmental representatives from Ministry of Oil and Gas, Ministry of Finance, and representatives from the signing banks.

Given the mandate to develop and invest in the sustainable growth of the national energy infrastructure, OGC invests heavily in domestic gas, power and oil infrastructure projects to support the growing domestic energy demand and maximising the value of Oman’s hydrocarbon resources. In order for OGC to (eventually) be financially independent and be able to finance the acquisition of government asset and expand its network, it needs to reform the means by which its revenues are determined. A new framework was agreed with government (based on a Regulatory Asset Base). RAB is a system of long-term tariff design aimed primarily at encouraging investments in the expansion and modernization of infrastructures, such as gas networks.  The new Regulatory Asset Base (RAB) will help OGC to successfully refinance the bank bridge through the Debt Capital Markets resulting in implementation of a longer-term capital structure. A total of USD 1.1bn of financial efforts have been adopted to build the Bridge to Bond Financing Strategy.

“As the Sultanate’s investment arm in the energy and related sectors; Oman Oil Company is playing a pivotal role in driving the country’s economic diversification and growth to maximise the value of local natural resources. This initiative is a major milestone for us as a group of companies. By adopting this new structure, we are reflecting the actual cost of transmission and allowing for more transparency in pricing, as well as easing the process of expansion and funding. This will in turn help OGC become more financially independent, which is the direction that we are all heading towards.” Stated Eng. Isam Al Zadjali, OOC CEO.

“The new structure is the first project of its kind in the Sultanate and will allow OGC to operate independently with appropriate financial and operational incentives to encourage efficiencies by consolidating, owning and operating all government gas transmission assets. This would in turn provide a solid basis upon which the wider Omani gas sector can be further developed. In addition, Oman Gas Company has started  transforming into a leading midstream company focusing in Gas, Oil, Power (conventional and renewable) infrastructure said Sultan bin Hamad al Burtmani, OGC Acting Executive Managing Director.