Saudi Aramco has submitted its application to issue a $2bn sukuk (Islamic bond) that will be used to fund its $20bn Sadara Chemical project to market regulator the Capital Market Authority (CMA).

The sukuk will be issued once it has approval from the CMA, which is expected before the end of March and Aramco’s focus will then shift to closing the rest of the $12.4bn debt financing for the project.

One banker involved in the project says, “Everything has been waiting for the sukuk to move forward as Aramco want to close that first so they know how much they need from the banks.” That is in contrast to the way Aramco financed its last major project, the Saudi Aramco Total Refining and Petrochemical Company (Satorp), where a sukuk was issued last and used to pay off some of the bank debt.

The sukuk will be arranged by the local Riyad Bank, Bank Albilad and Alinma Bank, and Germany’s Deutsche Bank.

If market appetite is strong enough, the sukuk could be increased in size, meaning the $1.5bn commercial bank tranche will be even smaller. Banks submitted commitment letters for this tranche in mid-February after agreeing pricing on the debt in early December.

The rest of the funding for the project will come from a $6.7bn export credit agency tranche and $2.3bn from two Saudi government investment funds.

Sadara Chemical is a joint venture between Aramco and the US’ Dow Chemical and is being developed at Jubail. The complex will produce several speciality chemicals aimed at pushing Saudi Arabia’s petrochemicals industry further downstream. It is the largest petrochemicals complex ever constructed in one single phase anywhere in the world.