Aramco launches financing for $20bn Sadara scheme

15 May 2012

Region’s largest project finance deal launched to market

The Sadara Chemical Company, a joint venture of Saudi Aramco and the US’ Dow Chemical will start approaching banks to raise financing for its almost $20bn petrochemicals plant on 15 May, according to sources close to the company.

Non-disclosure agreements will be sent to banks on that date, followed around two weeks later with the detailed financing request.

The impending launch of the financing, one of the largest project finance deals in the Middle East, follows the successful conclusion of negotiations with the nine export credit agencies (ECAs) that are funding the project. Talks with the ECA group, which includes the local Public Investment Fund (PIF), were concluded in late April.

It is unclear exactly the breakdown of the financing, but sources close to the project confirm it will rely heavily on local banks and ECAs, with potentially as much as $13bn coming from ECA and bank debt. The funding plan also includes tapping the international bond market and the Saudi riyal sukuk (Islamic bond) market. The project company will also be listed on the Saudi Stock Exchange (Tadawul).

“The two big things supporting this project are a large ECA component and the significant Saudi bank liquidity,” says one source close to the deal.

One Saudi banker adds, “No other banks have any money, so there will be a very big Saudi component for this deal.”

The partners behind Sadara are planning to complete the financing for the project before the end of the year. The UK’s Royal Bank of Scotland and Riyad Bank are acting as advisers on the deal.

The project has been planned for several years. It was originally going to be in Ras Tanura when it was launched in 2008, but by 2010 was relocated to Jubail, a move that resulted in substantial savings on the cost of development of the scheme.

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