The project financing for the $10bn Jubail refinery in Saudi Arabia is due to close in mid-June, finally bringing an end to the long-running financing that was initially launched in June 2009.

A sukuk issue, which will be sold in riyals to local investors, is still being planned, but the bank finance is due to close regardless of progress on the capital markets funding. The sukuk has been held up by issues concerning the Islamic structuring of the deal.

Sources close to the project say that the original intention of project sponsors Saudi Aramco and France’s Total, to complete both the bank and bond deals simultaneously has now been dropped.

The bank commitments on the Jubail refinery are due to expire at the end of June, and although an extension is possible, it has been decided to try and close the deal instead and then complete the sukuk separately. The sukuk is expected to be around $1bn, denominated in riyals.

One local banker says, “Everything will be in place by mid-June, and if necessary the sukuk will come later.”

Saudi banks have already agreed to terms on dollar lending to the project, which totals $790m. They are, however, still awaiting confirmation from the project sponsors about their Saudi riyal denominated allocations to the deal, which is the final part of the financing to be confirmed.

Another source says, “It has been a long process with a lot of moving parts, but we are now looking to close the financing in June.”

France’s Credit Agricole (CIB) and its local affiliate Banque Saudi Fransi are acting as financial advisers on the project. When the financing was launched in mid-2009 the financial advisers had talked optimistically of completing the deal before the end of that year. Although it quickly became oversubscribed, the size and complexity of the transaction has meant progress was slower than anticipated.