DUBAI/LONDON (Reuters) - Energy trader Gunvor is arranging a commercial loan for up to $3 billion for Oman to be backed by the Arab state’s long-term oil export contracts, sources familiar with the matter said.
The Gulf producer, which was hit hard when oil prices slumped in 2014, has increasingly raised finance through selling bonds and funds provided by banks over the past few years.
Oman, a relatively small regional producer with output of more than 600,000 barrels per day, has used so-called pre-export financing loans in the past to raise debt for state-controlled oil firms Oman Oil and Petroleum Development Oman.
The new loan being arranged by Gunvor would involve repayments linked to Omani crude deliveries, three sources told Reuters. Two others confirmed Gunvor was arranging a loan.
The size of the new financing was between $2.5 billion and $3 billion, one of the sources said, adding that the deal was being marketed to international banks.
One source familiar with the Omani government’s plans said terms of the deal were not yet finalised. The source added that other commodity traders could also be involved in the deal.
Gunvor declined to comment and Oman’s oil ministry did not respond to a request for comment.
Oman said at the start of the year it expected its budget deficit to be 2.8 billion rials ($7.3 billion) this year, or 9 percent of gross domestic product. It said it would cover about $6 billion of that through local and foreign borrowing.
Trade finance structures such as pre-payment and pre-export loans, where the borrower raises funds based on confirmed orders for output, provide more security to lenders amid low oil prices and serve oil buyers by guaranteeing access to future shipments.
Engaging Geneva-headquartered Gunvor to organize the financing allows junk-rated Oman to partly offset increasingly expensive costs it faces in the debt markets.
The Gunvor pre-export financing is likely to have a maturity longer than two to three years, a banking source familiar with the matter said.
Reporting by Davide Barbuscia, Dmitry Zhdannikov, Rania El Gamal, Julia Payne; Editing by Edmund Blair