Bahrain National Gas Company (Banagas) has begun syndication with local and international banks for a loan of about $500m.
The loan will finance a 350 million cubic-feet-a-day (cf/d) gas plant and associated facilities.
The tenor has been reduced to less than 10 years, and there will be no government guarantee on the debt.
MEED reported in March that the local GIB Capital was the financial adviser.
This is the fourth major syndicated loan to go ahead in Bahrain in 2016.
Banagas parent company, National Oil & Gas Holding Company (Nogaholding), sealed a $570m Islamic finance deal in the first quarter. This was followed by Aluminium Bahrain closing a $1.5bn loan in October, while Bahrain LNG is still working on closing a project finance deal worth more than $600m.
Pricing for the loans is thought to have been in the 300-400 basis points over London interbank offered rate (Libor) range.
Banagas awarded Japans JGC two packages to expand the gas plant in 2016. The main contract worth $355m was for engineering, procurement and construction. The gas processing train will recover high-value-added products contained in the associated gas, such as propane, butane and naphtha with a capacity of 350 million cf/d.
The other deal, worth $99m, involved a gas pipeline system and storage facilities with 200,000 barrels of capacity for propane and 100,000 barrels for butane, and associated works.
The project is scheduled for commissioning in 2018.