Oman's Abraj Energy Services, a subsidiary partially owned by the state-run energy giant OQ, secured a significant financial boost on Monday. The oil and gas field services provider signed a Sharia-compliant Islamic financing facility worth $104 million with Alizz Islamic Bank.
This financing package, totaling 40 million Omani rials (OMR), will propel Abraj Energy's operations forward. According to a company statement released on the Muscat Stock Exchange, OMR 30 million will be directed towards financing Kuwaiti drilling rigs, bolstering Abraj Energy's equipment portfolio. The remaining OMR 10 million will provide much-needed working capital, ensuring smooth day-to-day operations.
The embrace of Sharia-compliant financing reflects Abraj Energy's strategic shift towards aligning its financial practices with Islamic principles. Sharia-based financing prohibits activities like interest accrual, instead relying on profit-sharing or leasing structures. This move signifies Abraj Energy's commitment to diversifying its funding sources while catering to a growing Islamic finance market in Oman and the region.
This financial injection comes at an opportune time for Abraj Energy. The oil and gas industry is experiencing a period of renewed activity, driven by rising global energy prices. By bolstering its equipment and operational capabilities, Abraj Energy positions itself to capitalize on this upswing in the market. The company can leverage its enhanced capacity to secure new contracts and expand its service offerings within the oil and gas sector.
The financing agreement also presents a win for Alizz Islamic Bank. Partnering with a reputable oil and gas services company like Abraj Energy strengthens Alizz Islamic Bank's position within the Islamic finance sector. This collaboration showcases the bank's ability to cater to the financial needs of major players in Oman's key industries while adhering to Sharia principles.
The deal's impact extends beyond the immediate financial benefits for both parties. It serves as a testament to the growing prominence of Islamic finance in Oman. As Islamic finance principles gain wider acceptance, it's expected to play an increasingly crucial role in financing Oman's economic development endeavors.