OQ Group’s Historic S&P ‘BBB-’ Rating: What It Means for Investors and Businesses in Oman

• By Oman Market
• July 31, 2025July 31, 2025
• credit rating energy sector OQ Group
• With 0 comments

MUSCAT, July 31 — International credit rating agency S&P Global Ratings has assigned OQ SAOC, Oman’s fully government-owned integrated energy group under the Oman Investment Authority (OIA), a global issuer credit rating of ‘BBB-’ and a Gulf Cooperation Council (GCC) regional scale rating of ‘gcAA-’.

This is the first public rating awarded to OQ Group by S&P. In a statement on July 31, 2025, OQ emphasized that the rating confirms its status as a national energy leader dedicated to long-term resilience and value creation. The company highlighted its strong liquidity, disciplined capital structure, and crucial support for Oman’s economic diversification and energy transition aligned with Vision 2040.

S&P’s evaluation of OQ’s business risk profile recognizes its vertically integrated operations spanning the hydrocarbon value chain, along with ongoing efforts to diversify and expand its asset base. In 2024, the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) were composed of 60% from upstream activities, 37% from downstream, and 3% from other segments such as alternative energy, marketing, manufacturing, and corporate functions.

Most of OQ’s assets are located within Oman, a country rated BBB-/Stable/A-3, benefiting from strong energy infrastructure that ensures feedstock security, particularly for refining and petrochemical operations. A well-established trading arm supports both upstream and downstream units by managing production off-take and feedstock sourcing, enhancing operational flexibility.

OQ’s downstream capacity saw a significant boost with the April 2025 completion of the 230,000-barrel-per-day Duqm (OQ8) refinery. This facility, developed as a 50:50 joint venture with Kuwait Petroleum (Europe), marks a major strategic milestone for the group.

The rating agency also noted OQ’s government-backed mandate to drive economic diversification and investment in Oman. Through its subsidiary, OQ Alternative Energy, the company is actively investing in renewable energy projects, many of which will be developed in partnership with private sector players, with OQ retaining ownership stakes of up to 50%. Final investment decisions for several projects are anticipated in 2025 and 2026.

Since 2021, OQ has substantially strengthened its balance sheet by reducing gross debt by over 45%, from RO 5.3 billion to RO 2.9 billion by the end of 2024. This deleveraging was supported by strong operating cash flows and nearly RO 2 billion in proceeds from initial public offerings and divestments between 2022 and 2024, reinforcing OQ’s solid credit profile despite expectations of a weaker market environment in 2025–2026. S&P forecasts that funds from operations (FFO) to debt will remain robust at 50%–53% in 2025 and 54%–57% in 2026.

Even with planned capital expenditures of RO 700–800 million annually in 2025 and 2026, which include maintenance and alternative energy investments, OQ is projected to generate positive free operating cash flow (FOCF) ranging from RO 125–175 million in 2025 and RO 150–200 million in 2026. This is underpinned by strong liquidity, including RO 3 billion in cash and equivalents, primarily held in interest-bearing short-term deposits.

OQ adheres to a conservative financial policy, targeting net debt to EBITDA ratios of 2.0x–2.5x and maintaining FFO to debt above 55%. The company plans annual dividend payments of RO 289 million, with potential additional distributions tied to divestment proceeds. From 2026 onwards, dividend payments are expected to balance performance, leverage, and investment priorities, according to S&P.

Special Analysis by Omanet | Navigate Oman’s Market

OQ’s inaugural S&P Global Ratings BBB- credit rating underscores its financial resilience and strategic role in Oman’s Vision 2040 economic diversification and energy transition. For businesses, this signals stability and growth potential in Oman’s integrated energy sector, especially as OQ invests heavily in downstream capacity and renewables. Smart investors should monitor OQ’s continued balance sheet strengthening, renewable energy projects, and expanding joint ventures, which present opportunities aligned with Oman’s long-term energy and sustainability goals.