In a major move toward privatization, Oman’s state-run oil and gas company, OQ, has announced its intention to make an initial public offering of its exploration and production business. This follows similar moves by other regional giants such as Saudi Aramco and Abu Dhabi National Oil Co. The offering could potentially raise billions of dollars and provide a boost for the Muscat Stock Exchange. OQ plans to offer up to 25% of shares in its exploration and production arm, with potential values for the deal estimated at around $8 billion, making the stake being put up worth approximately $2 billion.
OQ CEO Ashraf Hamed Al Mamari expressed the company’s commitment to unlocking new growth opportunities for both the company and the sultanate of Oman through the IPO. The listing is scheduled to take place in October, pending regulatory approvals, with plans to issue dividends of $150 million for the first two quarters following the IPO, and an annual dividend of $600 million, plus a performance-linked dividend. OQ was founded in 2009 and is the third-largest firm in Oman’s oil industry, following the state-owned Petroleum Development Oman and U.S. firm Occidental Petroleum.
Oman, situated on the eastern edge of the Arabian Peninsula, is a key member of the OPEC+ coalition, producing around 1 million barrels of oil per day, with China as its top client for crude. The late Sultan Qaboos bin Said leveraged oil revenues to modernize the nation, transforming it from a country with only three schools and strict laws to a more developed state. Sultan Qaboos passed away in January 2020, and his successor, Sultan Haitham bin Tariq, has focused on stabilizing Oman’s finances while maintaining its diplomatic role as a key mediator between Iran and the West.
The privatization of OQ’s exploration and production arm marks a significant step in Oman’s economic reforms, as the sultanate seeks to diversify its economy and attract foreign investment. The IPO is expected to generate significant interest from local and international investors, with potential implications for the energy sector in the region. The move aligns with broader trends of state-owned energy companies seeking to access capital markets and unlock value for shareholders, while also promoting transparency and accountability in the industry.
The announcement of OQ’s IPO comes at a critical time for Oman, as the country grapples with economic challenges exacerbated by the COVID-19 pandemic and fluctuating oil prices. The sultanate’s efforts to attract investment and stimulate growth in key sectors like energy reflect a broader strategy of economic reform and modernization. The successful execution of the IPO could position Oman as a more attractive destination for investors, while also supporting the government’s broader vision for sustainable development and diversification of the economy.
Overall, OQ’s decision to pursue an IPO for its exploration and production business represents a significant milestone in Oman’s economic transformation and privatization efforts. The move is expected to have far-reaching implications for the energy sector in the region, as well as positioning Oman as a more competitive and dynamic player in the global market. With a strong commitment to growth and innovation, OQ aims to capitalize on the opportunities presented by the IPO, while continuing to contribute to Oman’s development and prosperity.
