The past 12 months will be remembered as the year when the Middle East’s rapid economic growth came to an abrupt halt and funding all but dried up.

The most notable casualty was Dubai and its overheated real estate sector. But across the region, foreign and domestic banks sharply curtailed their lending.

In particular, project finance dried up considerably. However, the signs of a much better year in 2010 are already emerging.

The financing of state oil giant Saudi Aramco’s Jubail refinery is on track to close in the early months of this year. Already, close to $10bn of funding has been secured at margins of 100-200 basis points over the London interbank offered rate (Libor), from a series of domestic and international banks, export credit agencies and others.

“Assuming it goes ahead, the deal should demonstrate that long-term lending for projects is available once more”

Assuming it goes ahead, the deal should demonstrate that long-term lending for projects is available once more. It will also prove a useful pricing benchmark for other deals in the year ahead.

Jubail has all the features that bankers look for in a successful financing, not least a strong project sponsor in Saudi Aramco. Few companies carry as much weight in the market as Aramco and its partner on the Jubail project, French oil giant Total.

Other project sponsors will have to accept higher costs for their debt. Even so, if they can take a realistic attitude to the cost of borrowing, more deals should follow in 2010, as banks regain their confidence and start lending again.

It will be a fine line to tread for all concerned. Many projects are lining up to seek funding in 2010, and banks will continue to be selective about how much they lend and to whom. But there is more reason for optimism now than there has been at any other time over the past 12 months.