OQ, the Sultanate’s wholly government-owned integrated energy group, says it has embarked on a five-year-long “transformative phase” that will position it for robust growth as a global energy player.
The transformative phase, spanning the 2020-2024 timeframe, follows on from a landmark integration exercise — also known as the Nakhla Programme — that saw the erstwhile Oman Oil & Orpic Group transform into a $28 billion worth energy conglomerate integrating nine business streams and entities across, among others, upstream, midstream, downstream, trading, and renewable and alternative energy resources.
“For the period from 2020 to 2024, OQ expects to be in a transformative phase characterised by integration, growth and new business development, such as alternative energy, retail and the gas business. This growth and development path ultimately aims to transform OQ into a global energy company, that delivers sustainability and business excellence,” said OQ in its maiden Sustainability Report for the year 2019, issued here recently. The transformative phase identifies eight different objectives that OQ seeks to achieve over the ensuing five years.
Notable is a commitment to completing and delivering a string of mega projects that are critical to ensuring that “OQ is on track to deliver financial returns”, said the state-owned giant.
These mega schemes include the $6.4 billion Liwa Plastics petrochemicals complex, which is due to come into operation at Sohar Port next month; the $826 million Salalah LPG project also due for launch imminently at Salalah Free Zone; the $8.2 billion Duqm Refinery development (slated for commissioning in Q1 2022), the Bisat Oilfield Development Programme in Block 60, the ambitious Greater Barik scheme, and Project Samharam.
Also proposed during the transformative phase is the rationalisation of OQ’s investments in non-core and non-integrated businesses, totalling around $2.9 billion. “It is part of our strategy to rationalise our portfolio of non-core assets and to maximise the value of those assets over the medium term, using any cash generated to fund further growth aspirations,” said OQ.
Furthermore, the strategy envisages a revamped approach to securing the group’s funding needs, according to the group.
“Funding will be managed at the OQ level across the integrated core companies with a view to optimising both sources of funding and funding opportunities. Where appropriate, project finance and other debt may still be raised at an entity level, although the intention is to develop a capital structure that fits a more integrated business,” it noted.
Other objectives set out in the 2020- 2024 transformative strategy call for, among other things, consolidation of the integration programme; developing new businesses, principally targeting alternative energy, retail and asset-backed trading; achieving downstream operational and commercial excellence, in refining in particular; and enhancing digital opportunities across the group.
Crucially, it also calls for OQ to be ready for privatisation with a view to enabling its shareholders to ‘partially’ monetise the group’s shareholding.