LONDON: The outlook for Oman’s banking sector was cut to negative by Moody’s Investors Service to reflect a reduction in the government’s ability to support the country’s banks, weaker economic growth and tightening liquidity.
“The Omani government has a reduced capacity to support banks in case of need, owing to fiscal deterioration,” said the credit ratings agency in a statement on Tuesday.
“We expect a softening in Oman’s operating environment, with fiscal consolidation amid prolonged oil price weakness weighing on economic growth,” said Mik Kabeya, analyst at Moody’s.
“This will weigh on credit growth, which we forecast to fall to five percent in 2017, down from 10.1 percent in 2016.”
The change from stable comes after Moody’s last month cut the rating of the sultanate to the second-lowest investment grade, saying its progress toward addressing structural vulnerabilities to a weak oil price environment has been more limited than expected.
A halving of crude prices since 2014 left Oman with a budget gap of almost 22 percent of economic output in 2016, according to the International Monetary Fund.
Slower economic growth will drive a marginal weakening in problem loans to around 3 percent of gross loans in 2017-18, from 2.1 percent at end-March 2017, according to the rating agency.
“Funding and liquidity conditions will remain tight, as high domestic government borrowing limits funds available to lend to the wider economy,” Moody’s added.
Nonetheless, the government’s international bond issuances, slower credit growth and higher oil prices will moderate the pressure.
Oman in August signed an agreement for $3.5 billion in loans from Chinese financial institutions and in May raised $2 billion through an Islamic bond sale, which lured orders for more than three times the issue size.
Moody’s cuts Oman banking outlook on weaker govt support, poor growth
Moody’s cuts Oman banking outlook on weaker govt support, poor growth
Saudi Aramco, ExxonMobil, Samref ink deal to study Yanbu refinery upgrade
RIYADH: Energy giants Saudi Aramco, ExxonMobil, and Samref have signed a venture framework agreement to upgrade the Yanbu refinery and expand it into an integrated petrochemical complex.
As a part of the deal, the companies will explore capital investments to upgrade and diversify production, including high-quality distillates that result in lower emissions and high-performance chemicals, according to a joint press statement.
The agreement will also see the parties explore opportunities to improve the refinery’s energy efficiency and reduce environmental impacts from operations through an integrated emissions-reduction strategy.
Samref is an equally owned joint venture between Aramco and Mobil Yanbu Refining Co. Inc., a wholly owned subsidiary of Exxon Mobil Corp.
The refinery currently has the capacity to process more than 400,000 barrels of crude oil per day, producing a diverse range of energy products, including propane, automotive diesel oil, marine heavy fuel oil, and sulfur.
“This next phase of Samref marks a step in our long-term strategic collaboration with ExxonMobil. Designed to increase the conversion of crude oil and petroleum liquids into high-value chemicals, this project reinforces our commitment to advancing Downstream value creation and our liquids-to-chemicals strategy,” said Aramco Downstream President, Mohammed Y. Al Qahtani.
He added that the deal will help position Samref as a key driver of the Kingdom’s petrochemical sector’s growth.
The press statement further said that companies will commence a preliminary front-end engineering and design phase for the proposed project, which would aim to maximize operational advantages, enhance Samref’s competitiveness, and help to meet growing demand for high-quality petrochemical products in Saudi Arabia.
The firms added that these plans are subject to market conditions, regulatory approvals, and final investment decisions by Aramco and ExxonMobil.
“We value our partnership with Aramco and our long history in Saudi Arabia. We look forward to evaluating this project, which aligns with our strategy to focus on investments that allow us to grow high-value products that meet society’s evolving energy needs and contribute to a lower-emission future,” said Jack Williams, senior vice president of Exxon Mobil Corp.
