Oman Oil seeking $1bn loan for subsidiary: Report

State-owned company seeks funds for Oman Oil Company Exploration and Production to develop the Khazzan gas field

Oman Oil signed an agreement with BP to develop the second phase of Khazzan.
Oman Oil signed an agreement with BP to develop the second phase of Khazzan.

State-owned Oman Oil Co, the national petroleum investment company, is seeking a $1bn loan from banks for a subsidiary, chief executive officer Issam al-Zadjali has told Reuters.

Banks in Oman have also been active in the loan market in the past few months, potentially a sign that liquidity is becoming tighter due to low oil prices.

Oman Oil would use the funds mainly to finance one of its subsidiaries, Oman Oil Company Exploration and Production, including for the development of the country's Khazzan natural gas field, he said.

The company last month signed an agreement with BP to develop the second phase of Khazzan, taking the estimated investment in the project to $16bn.

Oman Oil was talking to both local and international banks about the loan, Zadjali said. He said the term of the loan was not yet decided.

Sources familiar with the matter told Reuters that the loan talks were at an early stage.

Oman Oil was last in the market for a $1.85bn two-part loan, signed in September 2014. Last month, the CEO said the company would restructure to support expansion and improve efficiency.

Reuters earlier reported that Bank Muscat was speaking to a small group of banks about raising a loan, expected to be in the range of $250mn and $300mn.

In January, Oman's Bank Dhofar raised a $250mn three-year loan to be used for general funding.

The oil industry contributes around 44% to Oman's economy, according to government estimates.

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