Banks have been working on the debt package throughout a bitter dispute between two Saudi conglomerates that defaulted on debts worth a total of $20bn, and the fallout from Dubai’s 25 November announcement that it would seek a standstill on $27bn worth of Dubai World debt.

Both these problems have made it harder for banks to lend money to state-backed companies in the Gulf. The prospect of making writedowns on Dubai World debt has alerted bankers’ to the risks of lending money in the Gulf market.

Despite these problems, Aramco and its partner in the project, France’s Total, have been able to force down the cost of borrowing to the lowest level in the Middle East project finance market for more than 12 months.

While this is good news for the Jubail refinery project, it bodes less well for the banks.

Aramco is keen to use Jubail as a model for the financing of its future refinery projects. This means banks can be expected to be squeezed further in 2010, when Aramco seeks finance for the Yanbu refinery, another deal needing potentially more than $10bn of debt.

If a Saudi riyal sukuk (Islamic bond) issue and a proposed conventional bond planned for 2010 are successful, that may drive down pricing still further.

Given the complexity of the financing and the desire to cut the cost of borrowing, it is little surprise that Aramco and Total’s timetable has slipped into the new year – they had planned to secure the funding this year. But that should not detract from what should be one of the most successful deals of 2010.