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Global Oil Market Surprisingly Oversupplied

Global Oil Market Surprisingly Oversupplied

Despite OPEC oil production cuts…

Oman Oil To Take $1B In Loans

Muscat

Oman’s state energy firm Oman Oil expects to close a pre-export financing (PXF) loan worth some US$1 billion within the next two months, Reuters reported on Wednesday, citing a source close to the matter.

Oman Oil has hired Natixis and Societe Generale to lead the PXF loan transaction, in which commodity producers raise money based on confirmed orders for their output.

The loan is expected to be around US$1 billion, but the final sum may be higher, according to Reuters’ source.

Just last week, a source told Reuters that Oman Oil had completed a US$2-billion loan financing as part of the Omani government efforts to raise international financing to relieve the strain on its budget that is suffering from low oil prices.

In the US$2-billion loan financing, Oman Oil signed a five-year revolving credit facility worth US$1.15 billion, and tweaked some terms of an existing US$850-million revolving loan due in 2019, according to Reuters’ source.

In June last year, Petroleum Development Oman (PDO), another state-run firm, successfully raised US$4 billion from a group of international financial institutions in the form of a five-year pre-export facility—a similar loan structure to the latest Oman Oil loan. Back then, PDO said it would use the money to finance construction of major new oil and gas facilities in an environment of continued low global oil prices. 

Related: World’s Biggest Oil Traders Zero In On Shale Hot Spots

Just last week, Oman signaled that it would support OPEC output cuts past March 2018 to prop up oil prices.  

According to the IMF, the combination of lower oil prices and higher spending has resulted in a widening of Oman’s budget deficit to around 22 percent of GDP. Oman has an ambitious target to cut that deficit to 12 percent of GDP in 2017.

“We expect overall growth will remain flat in 2017, as the oil production cuts agreed with OPEC will fully offset the 2.5 percent growth in the non-hydrocarbon sector, which is expected to slow due to planned fiscal consolidation,” says the IMF, which expects Oman’s real economic growth at 0.4 percent this year, and at 3.8 next year. 

By Tsvetana Paraskova for Oilprice.com

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