Oman’s OQEP IPO: A Record-Breaking Step Toward Economic Diversification and Gulf Privatization

On September 9, the Sultanate of Oman’s OQ Exploration and Production (OQEP) announced its plans for an initial public offering (IPO) on the Muscat Stock Exchange. This constitutes this year’s largest IPO in any Gulf Cooperation Council (GCC) member-state, and the largest such offering in Oman’s history. 

The sale’s joint global coordinators are the Oman Investment Bank, Sohar International Bank SAOG, HSBC Holdings Plc, and Natixis SA. There is much optimism within Oman’s business community that this IPO will serve to add momentum to the Sultanate’s economic development and diversification in line with its Vision 2040 economic plan.

Founded in 2009, OQEP is a subsidiary of Oman’s state-owned energy investment firm, OQ (formerly known as the Oman Oil Company). It is the Sultanate’s largest pure-play oil and gas exploration and production business, and the OPEC Plus member’s only wholly state-owned upstream oil and gas operator. Over the past 15 years, OQEP has partnered with other global energy companies, including BP, TotalEnergies, Shell, and Eni for developments in Oman. Between 2009 and 2023, its domestic production expanded almost 14-fold, benefitting from the Sultanate’s oil and gas resources and strategic location, which is within close proximity to some of the world’s most important logistics hubs and shipping routes. 

This IPO—selling 25 percent of OQEP, or 2 billion total shares— has the potential to raise roughly $2 billion for the Omani government, according to knowledgeable sources. OQEP’s plan is to channel the proceeds towards sustainable practices and value creation in Oman’s oil and gas sector, with OQ retaining a majority 75 percent stake in its subsidiary. The shares are divided by class: 800 million for institutional investors (priced between $0.96 and $1.01), 400 million for anchor investors, and 800 million for retail investors. Several major institutions in the Sultanate, including Bank Dhofar SAOG and Al-Hosn Investment Co. SAOC, have pledged approximately $405 million for share purchases. OPEQ has plans to pay out annual dividends worth $600 million until 2026, as part of a plan to attract additional investors.

The OQEP IPO “allows investors an opportunity to buy into the oil and gas in the country without the state giving up control of firms that in many cases represent what are essentially their economic crown jewels,” explained Colby Connelly, a senior analyst at Energy Intelligence, a Washington-based energy information company, in an interview with the Forum. “OQ is still going to retain a wide majority of 75 percent stake in OQEP, but this will allow them to raise a lot of money to fund their new operations.”

A Trend in the Gulf

Oman is following in the footsteps of the United Arab Emirates (UAE) and Saudi Arabia, which have both recently held their own high-profile IPOs. Last year’s listing of the Abu Dhabi National Oil Company (ADNOC)’s gas subsidiary, ADNOC Gas Plc, raised billions of dollars for further investments. In Oman, Abraj Energy Services SAOG (OQ’s oil-drilling unit), OQ Gas Networks (OQ’s gas pipelines business), and other OQ subsidiaries have also already had their own listings. Therefore, the OQEP IPO is not a new model in the Gulf sub-region, nor even in Oman, but it signals further solidification of this existing trend of the Gulf Arabs seeking to further monetize their oil and gas sectors.

“There’s debate about how long of a runway there is to continue monetizing some of these oil and gas assets, and how long they’re going to remain attractive to investors. But [many] countries in the region clearly see now as a good time to do this,” Connelly told the Forum. “One of the things that it does is it opens up a new way of raising cash to fund new and existing operations that isn’t dependent on either revenue from oil prices and those exports or sales, or the firm having to go and tap debt markets and become increasingly leveraged.”

The OQEP IPO fits into the grander privatization efforts on the part of OQ, which are important to Oman’s request to reduce national debt and achieve greater economic diversification.

“Since our inception in 2009, we have worked tirelessly to pursue growth opportunities and strengthen our market position,” explained Ahmed Al-Azkawi, the CEO of OQEP, on the day in which the entity announced plans for this IPO. OQEP is a reliable partner for 13 reputable international companies, owing to our significant growth trajectory, robust portfolio of assets, and record-breaking production of nearly 14 times higher since inception.”

Al-Azkawi emphasized that OQEP’s strategic goals were strategically aligned with Vision 2040, with a focus on monetizing the Sultanate’s oil and gas resources, supporting Oman’s energy transition, and fueling economic growth and local levels. 

Throughout the GCC states, particularly the UAE and Saudi Arabia, there is a major privatization drive which has recently gained a tremendous amount of momentum. Through its recent actions, Oman has demonstrated that it is clearly a part of this drive. Although it is too early to determine whether the OQEP IPO will prove successful or not, it will be the GCC’s largest since ADNOC Gas Plc’s IPO in February 2023. Set on upgrading from frontier to emerging market status, Oman’s largest IPO on record will be important to the Gulf country’s pursuit of this goal. 

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.