Muscat: Oman Gas Company (OGC), signed an agreement with seven international and local financial institutions to secure US$1.1 billion funding for the capacity expansion (capex) requirements under the new business model for its gas network.
The signing ceremony took place under the patronage of Salim bin Nasser Al Aufi, the Undersecretary of the Ministry of Oil and Gas, and was attended by key Oman Oil Company representatives, governmental representatives from the Ministry of Oil and Gas, Ministry of Finance, and representatives from the signing banks.
Given the mandate to develop and invest in the sustainable growth of the national energy infrastructure, OGC, Oman Oil Company’s energy infrastructure vertical, invests heavily in domestic gas, power and oil infrastructure projects to support the growing domestic energy demand and maximise the value of Oman’s hydrocarbon resources.
In order for OGC to be financially independent and be able to finance the acquisition of government assets and expand its network, it needs to reform the means by which its revenues are determined. A new framework was agreed with the government (based on a Regulatory Asset Base (RAB)).
RAB is a system of long-term tariff design aimed primarily at encouraging investments in the expansion and modernisation of infrastructure, such as gas networks. The new RAB will help OGC successfully refinance the bank bridge through the capital markets, resulting in the implementation of a longer-term capital structure. A total of $1.1 billion of financial efforts have been adopted to build the Bridge to Bond Financing Strategy.
"As the Sultanate’s investment arm in the energy and related sectors, Oman Oil Company (OOC) is playing a pivotal role in driving the country’s economic diversification and growth to maximise the value of local natural resources," Eng. Isam Al Zadjali, OOC CEO, said.
"This initiative is a major milestone for us as a group of companies. By adopting this new structure, we are reflecting the actual cost of transmission and allowing for more transparency in pricing, as well as easing the process of expansion and funding. This will in turn help OGC become financially more independent, which is the direction that we are all heading towards,” he added.
“The new structure is the first project of its kind in the Sultanate and will allow OGC to operate independently with appropriate financial and operational incentives to encourage efficiencies by consolidating, owning and operating all government gas transmission assets," said Sultan bin Hamad Al Burtmani, OGC Acting Executive Managing Director.
"This would in turn provide a solid basis upon which the wider Omani gas sector can be further developed. In addition, Oman Gas Company has started transforming into a leading midstream company focusing on gas, oil, power (conventional and renewable) infrastructure," he added.