Oman's Green Energy Push and OQEP's $2 Billion Hunt: What It Means for the Economy

Oman is making significant strides in diversifying its energy sector, actively advancing studies into its geothermal energy potential. Simultaneously, state-owned OQ Exploration and Production (OQEP) has established a $2 billion sukuk program to expand its financing options and support ambitious growth targets. These twin efforts highlight Oman's strategic push to secure its economic future beyond traditional hydrocarbons and attract global investment.

What is Oman doing with geothermal energy?

Oman is exploring geothermal energy, which harnesses heat from within the earth, to diversify its power sources. The Ministry of Energy and Minerals, in collaboration with the Oman Investment Authority (OIA) and global technology company SLB, is developing a national strategy for these resources (Slb). This initiative aligns with Oman Vision 2040 and the country's National Energy Strategy, which aim for net-zero emissions by 2050 (Slb). Eng. Salim bin Nasser al Aufi, Oman's Minister of Energy and Minerals, stated in November 2022 that this collaboration “is in line with Oman's efforts to decarbonize the energy sector, achieve its Net-Zero goal, and implement Oman Vision 2040” (Slb).

Nama Power and Water Procurement Company (Nama PWP) is also spearheading a “Hot Springs Geothermal Project,” having recently invited bids for consultancy services for its second and third phases (Utilities-me). Initial studies in the Batinah Plain estimated underground reservoir temperatures between 66 and 103 degrees Celsius, at depths of approximately 400 metres to 1.9 kilometres (Preprints). While Oman has historically focused on solar and wind for renewables, geothermal offers a stable, baseload power source that can also support energy-intensive applications like desalination and building cooling during hot summers (Preprints). The next phase involves detailed technical studies and economic feasibility assessments, with bids for Phases 2 and 3 due by November 30, 2026 (Utilities-me).

Why OQEP is seeking $2 billion

OQEP, Oman's state-owned upstream energy company, has established a $2 billion sukuk program, which is a Sharia-compliant bond. This program provides a framework for potential future issuances, giving OQEP greater flexibility to tap international debt capital markets (AGBI). The funds raised from future issuances are earmarked for refinancing existing debt, capital expenditure, and general corporate purposes (AGBI). These sukuk may be listed on the London Stock Exchange's International Securities Market, subject to market conditions and approvals (AGBI).

This move follows OQEP's successful $2.03 billion Initial Public Offering (IPO) in October 2024, which was the largest in Oman's history and the biggest in the Gulf Cooperation Council (GCC) for that year (AGBI). The company's growth strategy aims to boost its net output of hydrocarbons (oil, gas, and condensates) by 34% to 300,000 barrels of oil equivalent per day (boe/d) by 2030, up from 230,000 boe/d at the end of 2024 (AGBI). Mahmoud Al Hashmi, CEO of OQEP, noted in February 2026 that the company's 2030 strategy “adopts a balanced growth model centred on domestic development, complemented by selective international expansion” (AGBI). The sukuk program supports this ambition without altering the company’s approved business plan (AGBI).

What this means for Oman's energy future and your money

Oman's proactive exploration of geothermal energy offers a crucial step towards diversifying its energy mix away from a heavy reliance on natural gas, which is projected to last only another 10 to 20 years (Preprints). Geothermal provides a consistent, low-carbon power source that can complement intermittent solar and wind power, contributing to the country's net-zero by 2050 target (Slb). This diversification also creates new opportunities for technology and infrastructure investment, potentially attracting foreign capital into green energy projects (Gh2).

For investors, OQEP's $2 billion sukuk program signifies the company's commitment to growth and its readiness to access global markets. This financial flexibility supports OQEP's ambitious production targets, which could translate into stable returns for shareholders through its policy of returning substantially all distributable free cash flow after growth investments (AGBI). The program also contributes to the Omani government's broader privatisation efforts, which aim to reduce national debt and foster greater economic diversification by generating value from its state-owned assets (AGBI).

What to watch next

Keep an eye on the progress of Nama PWP's Hot Springs Geothermal Project, particularly as bids for the next phases are due in late 2026 (Utilities-me). The completion of economic feasibility studies for geothermal prospects identified in collaboration with SLB will also be a key indicator of future development (Slb). For OQEP, actual sukuk issuances will depend on market conditions and the company's specific funding needs (AGBI). Investors should monitor OQEP’s operational performance and progress towards its 300,000 boe/d production target by 2030, as well as the outcomes of new exploration agreements in blocks 36, 66, and 43A (AGBI). These developments will collectively shape Oman's energy landscape and economic trajectory in the coming years.

The bottom line

Oman is strategically investing in both renewable energy and its hydrocarbon assets to secure its economic future. The advancement of geothermal energy studies and OQEP's $2 billion sukuk program are pivotal steps in diversifying the country's energy mix and funding its growth ambitions. These initiatives underscore Oman's commitment to Vision 2040 and net-zero goals, creating new avenues for economic development and investment.

This article is for information only and is not financial advice.