S&P affirms OQ Gas Networks’ BBB- rating

BUSINESS REPORTER
MUSCAT, AUGUST 21
S&P Global Ratings has affirmed its ‘BBB-’ long-term issuer credit rating on OQ Gas Networks (OQGN), Oman’s sole natural gas infrastructure operator, citing its monopoly position, strategic importance to the national economy and the stability of the country’s regulated gas transmission framework.
The ratings agency also maintained a stable outlook on OQGN, reflecting the outlook on its parent, OQ SAOC, which is itself rated ‘BBB-’ with a stable outlook. S&P said OQGN’s strong business risk profile is supported by its low-risk utility operations and predictable revenue model, despite the company’s relatively concentrated geographic footprint and limited scale.
OQGN operates under a 50-year gas transportation concession from the government of Oman extending to 2070, making it the monopoly provider of gas transmission services in Oman. The company is regulated by the Authority for Public Services Regulation (APSR) under a regulated asset base (RAB) framework designed to provide a stable return on assets while allowing recovery of operating and capital expenditure.
S&P said the framework provides OQGN with high revenue visibility and shields it to a significant degree from fluctuations in gas transportation volumes, as transmission tariffs are based on booked capacity rather than actual volumes transported.
S&P expects OQGN’s financial metrics to remain consistent with its ‘BBB-’ rating despite planned investments to expand its pipeline network. It forecasts funds from operations (FFO) to debt of 20%-24% in 2026, compared with 23.7% in 2025, before moderating to 16%-20% in 2027. The agency expects adjusted EBITDA of RO 110 million-125 million in 2026 and RO 100 million-115 million in 2027.
The company is projected to invest RO 45 million-60 million annually in 2026 and 2027, including RO 10 million-15 million in maintenance capital expenditure and RO 25 million-40 million in growth capex.
These investments are aimed at supporting rising natural gas demand and Oman’s medium-term gas production targets. OQGN expects to increase gas transportation capacity to 80.3 billion cubic metres (bcm) by 2027, from 76.3 bcm, while expanding its pipeline network to 4,717 km from 4,368 km.