Oman's biggest oil and gas producer, Petroleum Development Oman, has announced that it has closed a deal to borrow US$4 billion from a number of international banks in order to fund its local expansion.
The loan, priced at 160 basis points (bp) above Libor, will mature in five years. Among the lenders that took part in it were Italy's Intesa Saopaolo, JPMorgan, Standard Chartered Bank, HSBC, Bank of China, and Societe Generale. The initial size of the loan was set at US$3 billion but due to significant interest from banks, PDO decided to increase it.
This is the first foreign loan for PDO, and it is seen as a positive sign for other local entities in need of fresh funds by bankers: now that PDO has made a trail, international lenders may be willing to also fund companies such as Oman Oil, which said it needs US$1.35 billion for its production subsidiary, and Oman Shipping, which has proposed a US$250-million loan.
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PDO will use the facility to finance new production projects and reduce its reliance on government funding, its managing director Raoul Restucci said.
Among the projects that will benefit from the loan is the Rabab Harweel oil and gas refinery that will have a capacity to process 240 million barrels of crude and 100 million barrels of condensate once it becomes operational in 2019. The facility also includes export infrastructure with a capacity for 1 trillion cubic feet of non-associated gas.
By Irina Slav for Oilprice.com
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