Two of Oman’s state-owned oil companies are looking to raise loans worth a combined $4.35bn as they turn to bank finance for future growth amid slumping state revenues on the back of sliding oil prices.

Petroleum Development Oman (PDO), a company majority-owned by the sultanate, is seeking a $2.5bn loan to fund its projects, according to news agency Reuters, which cited sources aware of the matter. Royal Dutch Shell, Total, and Partex Oil and Gas also hold stakes in PDO.

Government-controlled energy investment firm Oman Oil Company (OOC) is separately negotiating with banks to amend the terms of an existing $1.85bn loan, which was originally signed in September 2014. The company aims to increase the length of the facility.

Oman Oil declined to comment, while PDO did not respond to a request for comment by the news agency.

A drop in oil prices from a mid-2014 peak has dented revenues for Gulf states, which rely heavily on sale of hydrocarbons for revenues. The GCC accounts for about a third of global oil reserves. Oman in particular is feeling the squeeze as it lacks the huge fiscal reserves of some of its neighbours.

In the year to November 2015, Oman’s budget deficit was RO4.07bn ($10.57bn), compared with a RO233.4m surplus a year earlier, according to the latest official data. This has forced government companies, which had traditionally relied on state funding, to look for alternative funding solutions. The government of Oman is considering the issuance of a Eurobond in the first half of 2016, according to Hamoud Sangour al-Zadjali, governor of the Central Bank. Al-Zadjali plans to issue RO600m ($1.56bn) of domestic debt this year as well. 

Minister of Oil and Gas Mohammad bin Hamad al-Rumhy told reporters in February that PDO will in future borrow abroad if it needs to finance projects rather than ask for more funds from its shareholders.

Oman Oil is already speaking with banks about raising a $1bn loan for its exploration and production subsidiary, its chief executive told Reuters last month.

The $1.85bn loan that Oman Oil is seeking to revise was its first borrowing from international loan markets and was supported by 16 banks, according to a statement at the time. 

PDO is the sultanate’s top oil and gas exploration and production company, accounting for 70 per cent of the crude oil production and nearly all of the country’s natural gas supply.