Feb 10 - Aramco, Total May Issue Sukuk to Help Fund Jubail Refinery

Source Press
Company Saudi Aramco 
Tags Financing
Date February 21, 2010

(By BI-ME and Bloomberg)

Saudi Aramco and France's Total hired banks to sell Islamic bonds to help fund the construction of a US$12 billion oil refinery, reported Bloomberg, citing two bankers familiar with the transaction.

The 400,000 barrel per day Jubail export refinery is a joint venture between Total and Saudi Aramco.

Aramco and Total appointed Deutsche Bank, Samba Financial Group and Calyon to manage the mainly domestic bond sale, said the bankers, who declined to be identified as the details are private.

The lead managers will start investor meetings late next month or at the beginning of the second quarter, they said.

The size of the issue may be around US$1 billion, one banker said.

The joint-venture is also discussing the possibility of issuing an international conventional bond after raising funds from the Islamic market as the companies seek to reduce dependence on short-term bank financing, he said.

The sukuk may be the biggest Islamic issue from the Gulf region this year.

The Aramco-Total joint venture last month borrowed US$6 billion through loans and plans to sign the loan agreement by the end of the first quarter, two bankers said on January 29.

Contracts worth US$9.6 billion were signed in July to build the 400,000 barrel per day Jubail export refinery.

The Jubail refinery is seen as a key part of Saudi Arabia's plan to boost overall capacity.

But the joint venture had suffered delays as the two companies looked to capitalize on lower construction costs and bring the overall price tag down.

The 400,000 barrel per day world-class, full-conversion refinery in Jubail plans to be fully operational by the second half of 2013 and will be one of the most advanced refineries worldwide, transforming Arabian heavy crude into high specification products, intended to meet the ever-increasing demand for eco-friendly fuel

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