Saudi Arabia’s Acwa Holding and the US’ Air Products secured $1.7bn in Islamic financing for the Jizan air separation unit (ASU)/oxygen supply package on 1 July.

Saudi Aramco awarded Acwa and Air Products the $2bn package in April 2015.

A group of ten local and international banks provided the syndicated debt. The international lenders include Japan’s Mizuho, Sumitomo Mitsui Banking Corporation and Bank of Tokyo Mitsubishi, France’s Societe Generale, and Abu Dhabi’s First Gulf Bank.

It was the last package for the planned 400,000 barrels a day refinery and adjoining 4,000MW integrated gasification combined-cycle (IGCC) power plant at Jizan Economic City.

When completed in 2018, the facility will be the world’s largest industrial gas complex and will supply 20,000 tonnes a day (t/d) of oxygen and 55,000 t/d of nitrogen.

Air Products will execute the deal on a build-own-operate-transfer (BOOT) basis over 20 years. Air Products will provide the technology and be responsible for the design and build as well as retain a 25 per cent stake. Acwa is the investor and will own 75 per cent. 

King & Spalding advised Acwa on the deal, which set a precedent for Islamic project finance.

“This is the world’s largest industrial gases project and the first to be financed on an Islamic project financing basis,” said Leroy Levy, partner at King & Spalding. “This financing and the involvement of international lenders shows just how significant – and genuinely global – the Islamic finance market has become. The appetite of conventional lenders for Islamic finance and Shari’ah-compliant projects is also growing and this project is a major boost for the finance markets.”

Saudi Aramco decided to outsource the project, despite the higher costs, to avoid having to pay for the entire project on an engineering, construction, procurement basis.