In the first quarter of the year Saudi Aramco looked close to being able to pull off a major coup in the project finance community. It had managed to secure around $20bn of project finance commitments for two refinery projects, almost simultaneously.

More than anything else, it seemed to show that the Saudi Arabia project market was back after a tough 2009. But Aramco’s stellar achievement is now encountering some difficult times.

The first of these deals, the Jubail project, now looks set to be completed by the end of June, about seven months behind schedule. Still impressive considering the $10bn size of the deal, but the numerous delays have undoubtedly been a frustration for the project sponsors.

More seriously, the second refinery at Yanbu, is unlikely to be financed until early 2011 while Aramco tries to determine how to respond to its partner on the project, the US’ ConocoPhillips, walking out on the deal in the last stages.

At present there seems to be no clear answer to the question. While Aramco is said to be keen to capitalise on the low bids from contractors to develop the Yanbu project by pushing ahead regardless of the ConocoPhillips decision, making up the space left by the walkout of the US energy company is not easy.

Aramco has the resources to do the project on its own, but given its other development plans may decide to find a new partner. Sources in the kingdom say the decision about how to proceed is now being lifted to the highest levels.

In the meantime, banks which had offered to fund the deal could have to redo some of their internal procedures to take account of the changes in the project sponsors. Project documentation could also have to be reworked. With plans to also issue a sukuk to fund the deal the new documents may also need approval from a Sharia scholar. All this will weigh on the timeline for a project that bankers had until recently talked about being financed before Ramadan.

Unless a decision on how to proceed with the Yanbu project is made quickly, financing may not come until even later in 2011.