Aramco to launch sukuk for Jubail refinery in October

23 August 2011

The $1bn Islamic bond issue will fund new refinery

A long awaited $1bn sukuk (Islamic bond) issue to fund the Saudi-French Saudi Aramco Total Refining and Petrochemical Company (Satorp) is due to be issued around October, according to bankers close to the deal.

The sukuk issue, planned since early 2010, will be the final part of the financing for the $14bn project, which is being developed at Jubail. Bankers in Saudi Arabia say the sukuk is in the final stages of approval from the Capital Market Authority (CMA), the Saudi regulator. The regulator is expected to give its final approval of the deal in September, allowing the company to go ahead with the issue in the following month.

The sukuk has faced long delayed because of complications faced in structuring the deal to be Sharia-compliant. The sukuk is expected to be the first in Saudi Arabia to be used to finance a project development.

The local Samba and Germany’s Deutsche Bank are the two lead arrangers on the deal (MEED 09”02:11).

Once in place, the proceeds from the sukuk will be used to scale back the bank loans on the project, which will cost a total of $14bn to develop and includes nearly $3.5bn of commercial bank loans. At one stage, the project was also expected to include an international bond tranche, but this has now been dropped.

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