Saudi Arabia’s Islamic Development Bank (IDB) will provide a $120m loan to state oil giant Saudi Aramco and France’s Total to help build their joint venture $10bn refinery at Jubail.

The project is being financed by Saudi commercial banks including Saudi Industrial Development Fund and Public Investment Fund, as well as a mix of international banks including the UK’s Barclays, the US’ JPMorgan, Germany’s Deutsche Bank, the UK’s HSBC, France’s BNP Paribas and the US’ Citigroup.

Funding for the refinery will include a sukuk issue, which could be more than $500m, according to a project director at Saudi Aramco Total Refining and Petrochemical Company (Satorp).

Salem Shaheen, chief executive of Satorp, says financing deals for around $8bn of the total cost of the refinery will be completed in the second quarter of the year.

The 400,000 barrel a day oil refinery was originally scheduled to start production in mid-2013, but this has since been delayed to late 2013.

Aramco currently owns 62.5 per cent of the plant, while Total holds the rest. An initial public offering is scheduled to take place by 2013 would leave Aramco with an equal stake to Total.

The Jubail refinery was the biggest project finance deal to be launched in 2009 and is likely to become a model for funding future refinery schemes. It is one of several new plants that Saudi Arabia is planning as it looks to boost domestic refining capacity.