OQ Exploration and Production (OQEP), Oman’s state-owned upstream energy giant, is pushing ahead efforts to decarbonise its operations, with solar energy expected to play a central role in driving its sustainability agenda.
The company recently announced its intent to divest 25% of its equity via an Initial Public Offering (IPO) on the Muscat Stock Exchange (MSX), positioning itself as a key player in Oman’s energy transition.
As part of its decarbonisation strategy, OQEP has partnered with OQ Alternative Energy (OQAE) to develop a 35 MW solar power project aimed at reducing greenhouse gas (GHG) emissions across its operations.
The solar project is expected to support OQEP’s transition to more sustainable practices as part of the company’s broader goal of achieving net-zero emissions by 2050.
While OQEP’s portfolio cuts across multiple operational and non-operational assets across Oman, the company’s primary target for decarbonisation efforts is Block 60.
The concession currently produces around 60,000 barrels of oil equivalent per day (boe/day). To ensure sustainable growth, OQEP plans to implement a robust exploration strategy, aimed at identifying and tapping into additional reservoirs within Block 60.
Alongside the solar initiative, OQEP is working on a critical project to connect Block 60 to Oman’s national electricity grid.
Scheduled for completion by mid-2025, this linkage will enable Block 60 to transition away from gas and diesel-powered electricity, reducing its carbon footprint and enhancing its environmental sustainability.
A path to Net-Zero by 2050
In a recent media briefing, OQEP officials outlined the company’s plan to reach net-zero GHG emissions for its Scope 1 and 2 emissions by 2050. This commitment extends to all of the company’s operated assets, including Block 60, Block 8, and the Musandam Gas Plant.
As part of this strategy, OQEP aims to eliminate routine gas flaring by 2027, significantly curbing emissions.
OQEP has already made notable progress in reducing its carbon intensity. By switching from diesel to gas for power generation and employing modern technology, the company has reduced its GHG intensity to below 15kg CO2/boe across its operated assets.
This achievement puts OQEP ahead of the targets set by the Oil & Gas Climate Initiative (OGCI), a key global effort to combat climate change.
OQEP has also deployed a smart Fugitive Methane Leak Detection tool, which has helped the company further minimise emissions by identifying and repairing methane leaks.
Over the next decade, OQEP plans to roll out various GHG reduction initiatives, including flare reduction, energy efficiency projects, process optimisation, and renewable energy integration. Collectively, these efforts are expected to reduce OQEP’s Scope 1 and 2 emissions by up to 40% from a 2021 baseline.
IPO to fuel expansion
In tandem with its environmental efforts, OQEP is preparing for the sale of up to 25% of its shares through an IPO. According to sources, the IPO could raise up to $2 billion, making it the largest offering in Oman’s history.
The funds from the IPO will be used to further expand OQEP’s operations, as the company continues to explore new opportunities in the oil and gas sector.
Global financial institutions HSBC, Natixis, Oman Investment Bank, and Sohar International will jointly coordinate the IPO process, with Sohar International also serving as the issue manager.
The IPO is expected to attract significant investor interest, bolstered by OQEP’s commitment to pay out $600 million in annual dividends from 2024 to 2026. The company further plans to implement a performance-linked dividend policy, with payouts equalling 90% of cash flow after investments in 2025 and 2026.
This approach mirrors the strategy adopted by Saudi Aramco, which has implemented a similar profit distribution model to enhance investor returns. If successful, OQEP’s IPO would be the largest in the Gulf region since Abu Dhabi’s Adnoc Gas Plc went public in February 2023.
Oman’s privatisation strategy
OQEP’s IPO comes as part of a broader privatisation drive by Oman’s government, aimed at expanding the country’s capital markets.
OQEP is already one of Oman’s largest energy companies, with a production portfolio of 14 upstream oil and gas assets and a daily production rate of 249,000 boe/d in 2023, representing 14% of the country’s total output.
Oman is also pursuing additional listings across a variety of sectors. The government’s wealth fund is reportedly planning a series of IPOs for other state-owned entities, including its methanol and liquefied petroleum gas unit, the state power utility, and a logistics firm.
Shares in OQEP are set to begin trading on the Muscat Stock Exchange in October, with the IPO expected to boost Oman’s capital markets and attract a wave of new investments.
