Engie closes refinancing for two Oman gas plants through 2043

Summary

• Engie completed financial close on Barka 3 and Sohar 2, each around 744 MW.
• Both plants' power purchase agreements were extended 15 years earlier this year.
• The deal is Oman's longest PPA extension to date, securing supply through 2043.

The latest

Two combined-cycle gas plants in Oman with roughly 744 MW of capacity each have reached financial close on their refinancing, Engie said. The French energy group said the transaction follows 15-year extensions to the power purchase agreements for Barka 3 and Sohar 2, aligning the projects' debt profile with contracts that now run to 2043.

Details

• The assets: Barka 3 and Sohar 2 are combined-cycle gas turbine plants, each with approximately 744 MW of generation capacity, according to Engie. Both sit within Oman's electricity system, and the company described them as critical assets whose continued operation the extended contracts are designed to secure.
• The contracts: The power purchase agreements were signed with Nama Power and Water Procurement Company, extending both plants for 15 years from April 1, 2028. Engie said this is the longest PPA extension achieved to date in Oman, pushing the commercial life of both assets out to 2043.
• The financing structure: Engie said the transaction aligns the projects' debt profile with the extended PPA term, establishing what it called a strong long-term financing framework. The company did not disclose the size of the refinancing, the lenders involved, or the pricing on the debt.
• Capital spending: The refinancing is intended to support future capital expenditure needs at both sites, according to Engie. That includes refurbishment works the company said are aimed at improving the reliability and long-term performance of the two plants over the remaining contract period.
• The grid argument: Engie framed the plants as complements to renewables rather than competitors. A company spokesman said the two assets continue to support reliable supply, grid stability and "the flexibility needed to complement growing renewables" as Oman's energy system evolves.
• The timing gap: The extensions take effect on April 1, 2028, meaning the current contractual arrangements run for more than two years before the new 15-year term begins. Engie did not set out a timetable for the refurbishment works or specify which units would be addressed first.
• The counterparty: Nama Power and Water Procurement Company is the single buyer for electricity in Oman's main system, making it the sole offtaker on both agreements. Engie did not publish the commercial terms of the extended contracts.
• The announcement: The financial close was disclosed by Engie in a post on LinkedIn, which the company described as a significant refinancing milestone for the two plants. No separate statement on the transaction's value was issued alongside it.

Background

Oman's power sector runs on a single-buyer model, with Nama PWP contracting generation capacity through long-term purchase agreements. Gas-fired combined-cycle plants supply the bulk of the country's electricity, while renewable capacity has been expanding in recent years.

Between the lines

The length of the extension is the signal. Locking two gas plants into contracts running to 2043, and matching their debt to that horizon, implies Oman expects dispatchable gas capacity to remain central well past 2030. Engie's own framing of the plants as providing flexibility to complement renewables points in the same direction: more solar and wind on the grid raises, rather than removes, the need for plants that can be switched on.

What's next

Watch for the start of refurbishment works at both sites, any disclosure of the refinancing's value or lender group, and whether Nama PWP agrees similar long-term extensions with other gas plants approaching the end of their contracts.

Source: Gulf Daily News / TradeArabia