Omani State Energy Firm EDO Aims to Sell Debut Bond This Year

(Bloomberg) -- Energy Development Oman, the state-backed company that controls one of the Middle East’s largest oil blocks, wants to sell a debut bond as soon as this year.

EDO planned to issue at least $1 billion through a sukuk in 2022. That was put on hold because of rising borrowing costs as the US Federal Reserve and other central banks raised interest rates to bring down inflation.

“The days of cheap money are over,” but EDO is preparing to issue bonds when rates come down, Chief Executive Officer Mazin Al-Lamki said in an interview. “We want to do it this year.”

Oman’s public finances have long been among the weakest in the Gulf region. Through EDO, the government intended to leverage its prize oil-producing asset, known as Block 6, to fund new investment without leaning too heavily on state funds. Since becoming the country’s leader three years ago, Sultan Haitham bin Tariq has taken drastic measures to trim burgeoning costs associated with over-employment in the state sector and manage sovereign debt.

The size of EDO’s bond will be roughly the same as previous plans, but it may be backed by other assets in addition to Block 6, Lamki said. He added EDO is looking at ways to cut production costs and produce more natural gas. This may mean Oman needs to build more liquefaction plants and EDO would consider investing in these, he said.

Fellow Middle Eastern state oil companies Saudi Aramco and Adnoc have monetized some of their energy infrastructure, including oil and gas pipelines.

Oman is “following suit in terms of looking at different options to finance projects,” Lamki said. Besides bonds, EDO is also assessing asset-backed facilities and export credit agency funding.

“Oman has been deprived from the growth that we see in neighboring countries because it deprived itself of raising debt for many, many years but that outlook is changing,” he said. “The realization has sunk in that we need to be more active in the financial side of our economy.”

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