The companies behind the planned $9.6bn Jubail refinery have agreed the terms of financing for the project with international and local banks, according to bankers close to the deal.

Saudi Aramco and its joint venture partner, France’s Total, have also finalised the amounts that each international bank will provide. The allocations for the Saudi bank tranche will be completed following the issue of a riyal-denominated Islamic bond (sukuk), which is expected in the near future.

“The bank tranches are effectively completed now,” says one Saudi-based banker. “Allocations have been made and the deal should be able to be reach financial close once the sukuk is completed.”

Saudi Aramco & Total Refining & Petrochemical Company (Satorp), the joint venture company set up to run the scheme, had hoped to complete the deal before the end of 2009.

However, bankers close to Satorp say the deal should now reach financial close by the end of the first quarter.

Aramco has offered the Saudi banks a margin of less than 100 basis points over the Saudi interbank offered rate (Sibor) for the first three years, and 150 basis points after that. The international banks have been offered 150-200 basis points above the London interbank offered rate (Libor).

Under Satorp’s original plans, the $8.3bn debt for the project was split into a $1.4bn international bank tranche, a $1.4bn Saudi bank tranche, and a $2.2bn loan guaranteed by several export credit agencies. Satorp also planned to borrow a total of $3.3bn from the Saudi Industrial Development Fund, the Public Investment Fund and international export credit agencies.

However, it is now likely that the international tranche will be decreased in size to around $1bn and the Saudi tranche and the sukuk will make up the rest.

Germany’s Deutsche Bank, along with the local Samba and Banque Saudi Fransi have been appointed to arrange the sukuk issue (MEED 18:12:09).