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Energy Development Oman (EDO), the wholly state-owned energy company set up to represent the government’s majority stake in Petroleum Development Oman (PDO) – the Sultanate’s biggest oil and gas producer – is expected to formally begin shouldering its fiscal responsibilities towards the energy sector starting from next month.
Established by Royal Decree last December as an Omani joint stock company, EDO’s remit is to invest in conventional as well as renewable and alternative energy resources within and outside the Sultanate.
Its most significant asset is the government’s 60 per cent shareholding in PDO, which owns the license to operate Block 6 – the country’s largest concession contributing the bulk of the country’s hydrocarbon production.
The company has also been tasked with overseeing the collection of oil and gas revenue, payment of all capex and opex associated with the annual production of hydrocarbons (60 per cent of oil activities and 100 per cent of gas activities), and the overall development of the oil and gas sector.
The latter fundraising role will formally commence in September, according to the Ministry of Finance.
It said in its latest bulletin on Oman’s fiscal performance that it had ‘covered’ for EDO in the financing of the state’s Oil & Gas sector responsibilities for the first half of this year.
Consequently, it had shouldered RO 702.7 million in energy sector funding on behalf of EDO as part of the 2021 state budget.
“In light of Energy Development Oman (EDO) is still in the process of being established, the Government continued to cover the expenses of oil and gas sectors, which amounted to RO 702.7 million as of end-June 2021. Such expenses appear as an additional allocation in the 2021 budget. The EDO is expected to commence funding its operations starting from upcoming September,” the Ministry noted in its bulletin.
In a recent interview to S&P Global Platts, a leading provider of information and analysis on the energy and commodities markets, Dr Mohammed bin Hamad al Rumhy, Minister of Energy and Minerals, said EDO was focused on putting together a five-year fiscal programme to cover PDO’s capex and opex (up to 60 per cent), as well as 100 per cent for gas based investment and expenditure.
"We are looking at the first tranche being around $5 billion, and there will be a second and third tranche," he said, noting that the $5 billion would cover EDO's funding obligations for PDO and Oman's gas projects for two years.
Importantly, EDO is also set to play a key role in driving Oman’s energy transition.
On Thursday, the company was among 13 energy firms, as well as ports and other public sector organisations, that came together under the banner of ‘Hy-Fly’ – the Oman National Hydrogen Alliance – with a mission to drive Oman’s future economy around green hydrogen.
Together with PDO, the holding company is also exploring project opportunities in renewable and alternative energies.
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