Aramco, Dow joint venture gets SAR 10.5b riyal financing

Riyadh:

Sadara, the $19.3 billion petrochemical joint venture between state oil giant Saudi Aramco and Dow Chemical Co. (DOW), said on Monday it has signed loan facilities worth 39.375 billion Saudi riyals ($10.5 billion) to provide additional financing for its giant chemical plant in Jubail on the Gulf coast.

The bank facilities agreement was signed on Sunday with Export Development Bank Canada, Islamic Development Bank, the Saudi Public Investment Fund and export credit agencies, the firm said in a statement posted on the Saudi bourse website.

The loans will run until June 30, 2025, with the first draw of financing expected during the third quarter of this year.

In April, Sadara said it had increased the size of an Islamic bond, or sukuk, to 7.5 billion riyals from the initial offering size of SAR5.25 billion due to strong demand. The total aggregate amount of financing to be obtained for the project will now be around 46.88 billion riyal, Sadara said.

The Sadara complex, one of the world’s largest chemicals plants, is expected to produce more than 3 million tons of petrochemicals each year once it is completed in 2016.

Khalid Al Falih, Chief Executive of Saudi Aramco, said in 2011 that Sadara would require large amounts of debt finance, and it was considering various options.

Saudi Arabia is pouring billions of dollars into developing its petrochemical industry to add value to its vast hydrocarbon resources and create jobs for its young and growing population.

The Sadara project represents Aramco’s second major investment in a large-scale petrochemical complex in the kingdom. It is already involved in a joint venture with Sumitomo Chemical Co. in Rabigh on the Red Sea.