Saudi Aramco Lubricating Oil Refining Company’s (Luberef) is planning to close its $1bn loan deal before the end of the year, according to sources close to the company.

A group of banks offered around $4bn in commitments to the deal in May, but there has been little movement on the transaction since then. Luberef is now back in talks with banks and is aiming to start work on documentation for the deal and finalising terms over the next few weeks.

The loan benefits from Luberef’s ties to state oil firm Saudi Aramco, which is a joint venture partner in the Yanbu-based refinery with the local Jadwa Industrial Development Company.

Proceeds from the deal, which will have a 10-year tenor, will be used to finance the development of a new hydrocracker at the Yanbu site. Saudi banks have offered both riyals and dollars to the company and the state-owned Public Investment Fund is also expected to make a significant contribution to the firm’s expansion plans.

Bankers in the kingdom say they had expected the deal to be wrapped up before Ramadan, but after financing offers were made in May communication with the firm dried up.