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Thu 24 Mar 2016 04:21 PM

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Oman Oil in talks with banks on $1bn loan for subsidiary

State-owned firm says funds would be used to finance development of the Khazzan natural gas field

Oman Oil in talks with banks on $1bn loan for subsidiary

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

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

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 Britain's BP to develop the second phase of Khazzan, taking the estimated investment in the project to $16 billion.

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

Sources familiar with the matter said the loan talks were at an early stage.

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

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

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

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