The larger of the two agreements is a one-year wakala (Islamic agency) facility worth $50 million for ENOC Supply & Trading. The second agreement, worth $20.5 million and valid for 12 years, was signed with ENOC Real Estate. Under the terms of the musharaka financing, the funds will go against three landmark buildings in Dubai, owned and operated by ENOC Real Estate.
The agreements are the first Islamic financing agreements that ENOC has entered into. The company has, until now, borrowed under non-Islamic and conventional methods.
ENOC signed two financing agreements in 2000. The first was a $100 million facility arranged by Credit Agricole Indosuez to part-finance oil imports from National Iranian Oil Company. The facility was made up of $80 million in letters of credit and $20 million in short-term loans, all of which had tenor of less than a year (MEED 17:3:00).
This was followed by a $25 million loan from Standard Chartered Bank for Eppco International (EIL), a joint venture between ENOC and the US’ Caltex. The eight-year facility was used to fund the expansion of EIL’s petroleum storage capacity (MEED 16:6:00).