Oman's Energy Giant OQ to List Its Methanol and Ammonia Division

Oman’s state-owned energy company, OQ, plans to proceed with an initial public offering (IPO) for its subsidiary, OQ Base Industries, the country’s exclusive producer of methanol, ammonia, and liquefied petroleum gas, as reported by several media reports. This listing will take place on the Muscat Stock Exchange and is part of a broader trend of IPOs by the energy major. OQ plans to offer up to 49 percent of its shares to the public, with trading for OQ Base Industries expected to commence in December following the subscription period that begins this month, according to a company statement released on Monday.

OQ Base Industries joins a series of OQ subsidiaries that have recently been listed, including OQ Exploration and Production, which achieved a record $2 billion in its IPO, as well as OQ Gas Networks and Abraj Energy Services, which focuses on gas drilling. "This offering represents a significant milestone in advancing OQ’s growth and reflects our ambition to expand our product reach in global markets," remarked Ali Al Lawati, chairman of OQ Base Industries. He added that this IPO presents an opportunity for local, regional, and international investors to engage with a key Omani asset poised for substantial growth in the global market.

The subsidiary’s CEO, Khalid Khalfan Al Asmi, emphasized the company's commitment to determining a fair share price with guidance from their advisors and bankers. He noted that initial discussions have generated significant interest, stating, "Investors are approaching us about joining this IPO journey." The company is targeting both retail and anchor investors from local and international backgrounds. "We believe we can attract investors who resonate with our narrative, considering our past and looking forward to the future," Mr. Al Asmi added.

Since its inception in 2010, OQ Base Industries has expanded its operations from one plant to three, indicating rapid growth and aspirations for even greater expansion. "The IPO is just one chapter in our broader vision," Mr. Al Asmi remarked. The anticipated listing is timely, as the market is actively seeking IPOs, aligning with the government’s efforts to boost the Muscat stock exchange.

Located near the Port of Salalah, OQ Base Industries exports all of its methanol and ammonia production and 87 percent of its LPG products. Its strategic position along the main East-West shipping route enables quick access to the Middle East, the Indian subcontinent, and East Africa—regions experiencing fast-growing demand for its products. Market forecasts suggest a significant rise in demand by 2030, with methanol demand projected to increase by 21 million tonnes, ammonia by five million tonnes, and LPG by 39 million tonnes.

The demand for ammonia exports, particularly from African countries seeking fertilizers, and the rising interest in methanol as a fuel for shipping vessels, underscore the company’s growth potential. OQ Base Industries is also exploring green and blue ammonia production, leveraging Oman’s natural resources. The company reported revenues of $510 million and an adjusted EBITDA margin of 43.1 percent for the year ending December 2023. It anticipates distributing approximately 24.5 million Omani rials ($63.6 million) in dividends for the first nine months of 2024 and an additional 8.2 million rials by April. For the first half of the year, revenue exceeded $500 million with EBITDA surpassing $200 million. OQ Base Industries is on track to maintain strong financial performance in 2024, with all proceeds from the IPO allocated to the selling shareholders.