Al-Rumhy: Newly endorsed “EDO” envisioned to be Oman’s money generator

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هذه الصفحة متوفرة بهذه اللغة: العربية

16 April 2020

MUSCAT (WAF) Sultan Haitham bin Tariq has recently approved the concept of setting up a new holding company to secure funding to the development of the oil and gas sector without relying on the government’s annual funding, Dr Mohammed al-Rumhy, Oman’s Minister of Oil and Gas, told WAF News.

In an online address to company employees last week, Raoul Restucci Managing Director of Petroleum Development Oman (PDO) announced the Sultan’s blessings of forming a parent holding company under a proposed name of Energy Development Oman (EDO). “The entity will effectively be the holding company of PDO and a number of investments,” Restucci said.

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Al-Rumhy stressed that the full details and objectives are still being alined among different stakeholders. Yesterday, the stakeholders -including the Ministry of Oil and Gas, the Ministry of Finance, PDO, and Tawazon Program- initiated the process of discussing “the legal side, the financial side, the structure, and the governance,” he added. Yet the goal is clear to unburden the state budget. 

The immediate objective from the ministry’s point of view is “to create an entity that will fund PDO’s requirements instead of (the) Ministry of Finance” according to al-Rumhy, who is also the Chairman of PDO. 

“We (the sector) are one of the big spenders in the country, and we want to take that burden ourselves to (secure) what is needed for both oil and gas”, the Minister said. 

In 2020, the oil and gas production expenses are estimated to reach 1.85 billion Omani Rials. And while he admits that the task to raise the needed annual funding for the sector -which is currently paid by the ministry of finance through PDO- is not easy, al-Rumhy trusts the country’s ability to reach the goal as soon as next year. PDO will be taking the help of its international partners “to build trust and understand the concept”.

Talking about the proposed structure, al-Rumhy explained that alongside PDO, new entities would be “added as needed in the near future”.

New Hold-Co Vs. OQ

Asked about the difference objective-wise between the newly endorsed concept and the consolidated OQ group which he chairs as well, al-Rumhy explained that for now, the new holding would not focus on downstream operations, unlike OQ. 

The new holding company will be “dedicated to exploration, development and production. Anything that goes down (downstream), goes to OQ”.

Al-Rumhy told WAF that “there is a very good justification” to have two state-owned holdings in the oil and gas sector. He added that the two entities would follow “commercial distancing”. 

OQ will continue focusing on industrial-based growth in the downstream sector. And its aim to grow industries and to create jobs will not be changed. While the new holding company is envisioned to be the “cash generator for the country”. 

According to official data by the Ministry of Commerce and Industry, the oil and gas sector attracts 56.6 % of Oman’s direct investments (FDI). And most of these investments go to upstream related developments.