Oman has decided to liquidate a solar power company it funded together with Shell because of the persistent depression in oil prices, Reuters reports, citing Omani media.
The decision to liquidate GlassPoint Solar was taken last week, ending the ambition of Petroleum Development Oman and Shell to replace natural gas in enhanced oil recovery with solar power to produce steam that would then get injected into oil wells.
The company was in charge of the Miraah project in Oman: a 1.021 GW solar farm built at the Amal field in southern Oman. The project was estimated to have a cost of $600 million. The funding for GlassPoint Solar came in at $30 million from Petroleum Development Oman, Shell, and a group of private equity firms.
“We regret that GlassPoint Solar Inc has gone into liquidation at a time of considerable global business distress and uncertainty resulting from the COVID-19 pandemic,” Petroleum Development Oman said in a statement. The company had a 31-percent stake in GlassPoint Solar.
Oman is among the oil producers most vulnerable to oil price shocks, the International Monetary Fund said in February this year in an analysis on the resilience of Gulf state economies. That analysis, which focused on the long-term outlook of the region, predated the start of the global pandemic, which has certainly aggravated matters for those already vulnerable to low oil prices.
Moody’s also sees Oman as one of the most vulnerable oil producers in terms of credit profiles. Fitch Ratings also placed Oman among the oil producers, “where weaker balance sheets and policy buffers will limit governments’ capacity to respond to the oil price slump without putting pressure on their ratings.”
Oman’s break-even price – the oil price required to balance the government budget, all else being equal – is $82 a barrel Brent crude, according to Fitch Ratings.