Saudi Aramco and the US’ Dow Chemical Company are planning to start approaching export credit agencies (ECAs) for financing their more than $15bn Jubail petrochemicals project in late July.

Commercial banks are then expected to be approached before the end of 2011, in what will be one of the largest project finance deals to occur in the Middle East region in the 2011-12 period.

Sources close to the project say that the joint venture partners are now keen to push ahead with the project, which was hit by delays following the global financial crisis, and the decision to shift the project from its originally planned location at Ras Tanura.

“The bulk of the financing is expected to come from ECAs, and once they have been approached and there is some clarity on their levels of commitment, then the commercial banks will be approached,” says a source close to Aramco.

Another source involved in the project says Aramco and Dow are hoping to achieve financial close on the project in early 2012.

If they hit that deadline, it is likely to be the biggest project financing in the region since Aramco’s Jubail refinery project, a joint venture with France’s Total, which raised about $14bn in late 2010.

The exact breakdown of the financing requirements is still unclear at this stage, but is understood that Aramco and Dow hope to get around half of the debt required from ECAs, with a preference for direct loans rather than guaranteed facilities that are funded by banks.

It is expected that around seven or eight ECAs will be formally approached in July, and preliminary meetings with several of them are understood to have already occurred.

Although the scheme still has large financing requirements, the decision to move to the Jubail Industrial City 2 is understood to have significantly reduced the costs of the developing the project, because much of the other infrastructure around the plant in already present in Jubail. It will also be close to the currently under construction Jubail refinery, meaning that Aramco will not have to build additional refining capacity to feed the new petrochemicals project.

The move to push ahead with the financing comes despite a Dow executive saying that a final decision on the project has yet to be made.

“We are going through front-end engineering and design, so the project is being reviewed at the moment, and a decision will be made sometime this year as to whether it goes on or not,” said Steven English, global vice president vice-president of polyurethanes at the Gulf Petrochemical and Chemicals Association (GPCA) Plastics Summit in Dubai on 5 April.

However, a Riyadh-based source says it was always the plan of the partners to make a final investment decision in late 2011 once there was more clarity on the development costs of the project, potential contractors were in place and ECA financing was close to being agreed. “Generally the final investment decision is just a formality,” adds the source.

Prequalification for EPC contractors is now is advanced stages for all of the packages and most are expected to be tendered by the end of the second quarter (MEED 7:1:11).

The project will involve development of hydrogen, carbon monoxide and ammonia plants; polymeric methylene diphenyl diisocyanate (PMD) and toluene diisocyanate (TDI) production facilities as part of a move to produce more specialty chemicals in Saudi Arabia.

The Aramco Dow project has been cited as a vitally important part of the kingdom’s industrial diversification plans by officials. An industrial cluster is being planned to be built adjacent to the complex that will utilise much of the 8 million tonnes a year output.

MEED reported that the two firms were considering moving the project from Ras Tanura in March 2010 (MEED18:03:10). It was later confirmed by Aramco and Dow in August 2010 (MEED 04:08:10).