Saudi Arabia approves $1bn Satorp Islamic bond

24 August 2011 14:06  [Source: ICIS news]

LONDON (ICIS)--The Saudi Arabian and French partners behind a major new refinery project in Saudi Arabia have been given approval to issue an estimated $1bn (€690m) Islamic bond, or sukuk, as part of the financing arrangements for the scheme, they said on Wednesday.

Saudi Arabia’s Capital Markets Authority approved plans for the bond on 14 August, the partners said, although they did not announce the decision for another 10 days. It will be the first time a sukuk has been used to directly finance a project, according to the partners.

State energy giant Saudi Aramco and France’s Total are the 62.5-37.5 joint venture partners behind Saudi Aramco Total Refining and Petrochemical Company (Satorp), the firm set up to develop and run the refinery at Al-Jubail on the kingdom’s southern Gulf coast.

Satorp plans to open discussions with potential investors on 10 September and hopes to have closed the deal by the end of September. A final value for the bond has not yet been decided, the partners said, although bankers in the kingdom expect it to be around $1bn.  

In June 2010, Satorp signed $8.5bn of financing facilities with international banks and investors for the project. In total, the scheme will cost in excess of $10bn.

When the refinery comes on stream in 2013 it will process 400,000 bbl/day of heavy crude oil and produce 700,000 tonnes/year of paraxylene, along with other basic chemicals.

Total and Saudi Aramco are considering building a cracker unit next to the Satorp refinery.

Saudi Aramco is working with US firm Dow Chemical on a huge $20bn petrochemicals project at an adjacent site, and other related petrochemicals projects are also being mooted.

($1 = €0.69)

By: Peter Salisbury
+44 20 8652 3214

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