Oman Oil Company to divest stakes in affiliates this year

Muscat: State-owned Oman Oil Company (OOC) plans to divest stakes in its affiliates through Initial Public Offerings (IPOs), a top-level official at the Ministry of Oil and Gas confirmed.
In an interview with the Times of Oman at PDO’s graduation ceremony, Dr. Mohammed Al Rumhy, the minister of Oil and Gas, said a few companies under the holding firm will offer shares to the public this year and confirmed the process is under study.
“Oman Oil Company plans to launch IPOs for at least one or two companies under it before the end of the year. It is still under study but we will have the details soon,” the minister said, without naming the companies for which the IPO is planned.
According to Al Rumhy, the proceeds of the share offer will be used for funding expansion programmes in the energy sector, rather than contain the budget deficit.
“We are launching this IPO because we want the funds to fuel other activities in the oil and gas sector and not to balance the deficit. We will privatise to raise money to start another project. My idea is to privatise one company, and fund the start of a new company and that process continues, creating more opportunities,” he said.
Al Rumhy added that shares would be offered to both local and foreign investors and the new company formed would function in the oil and gas sector, but did not specify whether it would serve the upstream or downstream industry.
“As part of divestment program, Oman is looking at IPO options for several of its Oil & Gas assets during the coming months. We see the initial set of IPOs in few of the state owned down-stream energy companies. Overall this would be a positive move for the enhancement of the domestic equities market and also benefit the economy in terms of bringing in foreign direct investments to the country. In terms of timing, we believe the Government is already preparing the list of companies which would be ready for an IPO and we see these offers in the market over the next 12 to 15 months, this would bring in remarkable changes aiming towards further development of local capital market.,” Kanaga Sundar, Head of Research at Gulf Baader Capital Markets said.
Sundar suggested that share offers should start from companies operating in the downstream sector and gradually move to upstream companies. He also said an IPO is expected to be successful considering OOC operates as a major revenue generator.
Earlier reports suggested that OOC was seeking strategic advice from banks abroad to follow its larger peer, the Saudi Aramco, which plans to launch the world’s biggest IPO soon.
However, the minister has denied that the company itself will be privatised, but instead have companies under it that will receive private investment. Commenting on details of the IPO, the minister said it was under study and variables, such as percentage of offerings, will be determined by the size of the company assets and market conditions.
OOC holds stakes in the Oman Gas Company and Hungary’s Mol Nyrt, among others. It recently acquired Oxea GmbH from Advent International Corporation to boost its refining capabilities.