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IPO-candidate OQ Gas Networks posts revenue of $400m in 2021

Robust performance: Value of gas pipeline-based asset base climbs to $2.5 billion
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MUSCAT: State-owned OQ Gas Networks (OQGN) – part of Oman’s global integrated energy group OQ – posted revenues of around $409 million and EBIDTA (Earnings before interest, taxes, depreciation, and amortization) of around $200 million in 2021 – figures that underscore the entity’s “robust financial performance’, company officials have stressed.

A candidate for privatization via an Initial Public Offering (IPO) on Muscat Stock Exchange (MSX), OQ Gas Networks owns and operates the country’s sizable gas pipeline grid, which is over 4,000 km long. As the sole supplier of natural gas to the country’s power plants, industrial clusters, free zones, LNG complex, oilfield customers and other end-users, it also represents a critical lifeline of the Omani economy.

At an investor forum hosted by MSX recently, key officials of OQ Gas Networks shared insights into the company’s nationwide gas transportation infrastructure, its business model and the Regulated Asset Base (RAB) framework under which it operates.

According to Mansoor Ali al Abdali, Managing Director, OQ Gas Networks currently owns assets worth an estimated $2.5 billion, comprising not only gas pipelines, but also gas supply stations and other facilities distributed across the length and breadth of Oman.

Gas delivery grew at a CAGR of around 4.5 per cent in the last two decades, reaching 118 million standard cubic metres per day (mmscm/d) and delivered to around 60 customers in 2021. In all, around 37 billion standard cubic metres of gas was delivered in 2021 – a new supply milestone for the company, he said.

The increase in gas delivery volume was driven by, among other factors, the commissioning of Marafiq’s power and water plant in Duqm, the Duqm refinery, and addition of Fahud NGL and OQ LPG as rich gas consumers. Additionally, the recent acquisition of the low-pressure gas networks that supply industrial customers within Madayn’s industrial cities has contributed to volumes growth, he noted.

Earlier in 2018, OQ Gas Networks secured a landmark 50-year concession to operate the country’s gas pipeline system for a 50-year period through to 2067 – the longest concession ever to be granted in the Sultanate of Oman, Al Abdali stated.

Khalid al Qassabi, Vice President Finance, OQGN, said the company’s operations are regulated by the Authority for Public Services Regulation (APSR). Backed by an independent regulatory framework with a proven track record, OQGN generates reliable and predictable cash flows in proportion to its regulated asset base and approved cost of capital set. This predictable cash flow profile, coupled with an equity of $1.4 billion, has enabled the company to secure efficient long-term funding, he added.

OQ Gas Networks is among a number of subsidiaries indirectly owned by sovereign wealth fund Oman Investment Authority (OIA) that are named as candidates for full or partial privatization via listings on the Omani bourse. Also identified for privatization under OIA’s ‘exit strategy’ are Abraj Energy Services (OQ Group), a manufacturing project directly owned by OIA, two Asyad Group projects, and some OMRAN hotels and resorts.

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