Banks line up for Core Venture 3 IWPP

09 November 2001

International and regional banks in mid-November were drawing up proposals for the advisory role on what is likely to be the first independent water and power project (IWPP) in Saudi Arabia.

The banks that were understood to be preparing bids include HSBC Investment Banking, Citibank, ABN AMRO, Fuji Bank, Royal Bank of Scotland, with Gulf International Bank, and BNP Paribas, with Arab Banking Corporation.

They were to bid for the advisory role on the IWPP that forms part of Core Venture 3 in the gas initiative. A consortium headed by the Royal Dutch/Shell Group,and including France's TotalFinaElfand the US' Conoco, will be working on the exploration of blocks in the Rub al-Khali zone, in the southeast of the kingdom, and the development of gas in the Kidan and Shaybah fields, also in the country's far southeast. Included in the project is the construction of gas pipelines, a petrochemical complex at Jubail and the IWPP (MEED 12:10:01).

The request for proposals (RFP) issued to the banks asked for offers to be submitted by 23 November. Banks were expecting to be invited to meetings in London in late November at which their proposals would be discussed.

'Although banks like HSBC, Citibank and ABN will benefit from having good contacts in the country through their affiliates [ Saudi British Bank, Saudi American Bank(Samba)and Saudi Hollandi Bank, respectively], the RFP seems to focus on track record. They want to hear about experience of IWPPs gained elsewhere in the region,' said a banker preparing a bid. 'It is significant that there is no right to first refusal on the lead arranging position for the adviser.'

Bankers said the RFP also stipulates that close relations with major Saudi corporates such as Saudi Basic Industries Corporation (Sabic) and Saudi Electricity Companywill be viewed as advantageous. 'It seems to be saying that there is a possibility that the advisory role could later be expanded to include the petrochemical project included in the core venture,' said the banker.

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