OQ Exploration and Production (OQEP), the premier upstream energy company of the Sultanate of Oman, has officially established a robust $2 billion sukuk issuance programme. The strategic move, which was widely reported by Muscat Daily, marks a significant step forward in the company’s long-term financial planning and capital management strategies.
According to financial reports, S&P Global Ratings has assigned preliminary ‘BBB-‘ and ‘gcAA-‘ ratings to the newly created framework. Company representatives have clarified that the initiative functions strictly as a foundational framework for potential future sukuk issuances rather than an immediate financing drawdown. By putting this structure in place, OQEP is proactively positioning itself to tap into international debt capital markets efficiently whenever market conditions prove favorable and funding requirements dictate.
What OQEP Announced
The overarching objective of the newly established $2 billion programme is to significantly broaden OQEP’s financing alternatives while simultaneously enhancing its institutional readiness to access global debt markets. Based on details outlined in the initial reports, any sukuk instruments issued under this framework could potentially be listed on the International Securities Market (ISM) of the London Stock Exchange. However, any such listing or subsequent issuance remains subject to the company’s precise funding needs, prevailing macroeconomic and market conditions, and the receipt of all necessary regulatory approvals. Furthermore, corporate officials emphasized that the mere establishment of this multi-billion-dollar framework does not alter or modify OQEP’s pre-approved capital expenditure budget or its core business plan.
OQEP maintains a substantial operational footprint within the Sultanate of Oman, where it oversees and manages several critical hydrocarbon concessions. According to industry data published by the Oman Observer, the company actively operates Blocks 60, 10, 65, 9, 53, and 61. Through efficient field management and sustained operational excellence, OQEP’s aggregate production reached approximately 224,000 barrels of oil equivalent per day by the close of the 2025 financial year, underscoring its pivotal role in the region’s energy sector.
How the Sukuk Are Structured
Under the mechanics of the newly unveiled framework, any future sukuk issuances will be channeled through OQEP Sukuk Ltd., a dedicated special-purpose vehicle established for this precise purpose. The structural mechanics governing the potential issuances dictate that at least 55 percent of the total proceeds generated from any future sale will be utilized to purchase tangible assets directly from OQEP under a formalized purchase agreement. Meanwhile, no more than 45 percent of the aggregate proceeds will be allocated toward the acquisition of a carefully curated portfolio of commodities, commonly referred to in Islamic finance as murabaha assets. The capital raised through these mechanisms is ultimately earmarked for corporate refinancing initiatives, ongoing capital expenditures, and general corporate funding requirements.
Ratings Context From July
The preliminary credit ratings assigned to the sukuk programme arrive on the heels of strong issuer ratings secured by OQEP earlier in the year. In July, S&P Global Ratings awarded OQEP a ‘BBB-‘ long-term global-scale issuer rating accompanied by a stable outlook, alongside a ‘bbb-‘ standalone credit assessment and a ‘gcAA-‘ GCC regional-scale rating. Concurrently, Fitch Ratings assigned the OQEP enterprise a ‘BBB-‘ long-term global-scale rating with a stable outlook.
Reflecting on these achievements earlier in the year, Mahmoud bin Abdullah al Hashmi, Chief Executive Officer of OQEP, noted the profound significance of the development. He stated that obtaining investment-grade credit ratings from two of the world’s most prestigious international rating agencies represented a major milestone in the company’s continuous growth trajectory and financial maturation. It is worth noting, however, that these earlier announcements pertained specifically to the overarching issuer credit ratings rather than the sukuk framework itself.
Nine-Month Financial Results and the OQGN Precedent
Alongside the announcement of the sukuk programme, financial disclosures for the nine-month period ending September 30 painted a picture of robust fiscal health for OQEP. The company reported a substantial 25.1 percent increase in net profit, which climbed to RO 296.3 million. Total revenues similarly experienced healthy growth, rising by 10.5 percent to RO 700.4 million, up from RO 633.8 million during the corresponding period of the previous year.
Operational efficiencies also contributed positively to the bottom line. The cost of sales contracted by 1 percent to RO 434.4 million compared to RO 438.7 million previously, while operating expenditures were successfully maintained at levels below $9 per barrel. Although other income saw a decline of 27.7 percent—falling from RO 41.8 million to RO 30.3 million—the overarching financial performance demonstrated strong operational resilience and disciplined cost management.
OQEP’s establishment of a sukuk programme closely mirrors a parallel move by a sister entity within the broader OQ corporate family. Earlier in October, OQ Gas Networks (OQGN) formally established its own $1 billion sukuk issuance programme. Similar to OQEP’s framework, OQGN’s initiative did not involve an immediate capital raising exercise or debt drawdown at the time of its announcement. At that juncture, Eng Mansoor bin Ali al Abdali, Chief Executive Officer of OQGN, reiterated that the creation of the programme did not trigger any immediate modifications to the company’s approved capital expenditure plans or corporate strategy, highlighting a disciplined, preparatory approach to capital market access across the entire OQ group of companies.
What Happens Next
Looking ahead, the actual execution of any sukuk issuance under OQEP’s new framework remains entirely contingent upon the company’s strategic funding requirements, prevailing conditions within international financial markets, and the acquisition of all requisite regulatory clearances. Should market conditions align favorably with the company’s financial objectives, the potential listing of the instruments on the London Stock Exchange’s International Securities Market remains a viable avenue for execution. Until such a time, the framework serves as a versatile financial instrument designed to enhance OQEP’s long-term liquidity management and corporate finance flexibility.