National petroleum investment company Oman Oil is seeking a $1bn loan from banks for its subsidiary, according to reports.

Chief executive Issam al-Zadjali told Reuters that the company would use the funds to finance Oman Oil Company Exploration and Production including the development of the Khazzan natural gas field.

This follows an agreement the company signed last month with BP to develop the second phase of the field. Investment in the project is estimated at $16bn.

He said the company was speaking to local and international banks about the loan and the term was not decided.

It previously signed a two-part loan in September 2014 for $1.85bn.

Oman’s banks have also been active in the loan market in recent months, suggesting liquidity was becoming tighter, according to the newswire.

Bank Muscat was speaking to a group of banks about raising a loan in the $250m-$300m range, according to reports this week.

Bank Dhofar also raised $250m in January for general funding.