Saudi Aramco and Total SA expect to raise US$8 bln in debt financing for a joint refinery and petrochemical project for Satorp in the “coming months”. The US$8 bln debt package includes the sale of Islamic bonds, or sukuk. The 400,000 bpd refinery in Jubail will cost more than US$12 bln. The cost, including financing expenses, will also be funded by Saudi Arabia, which will contribute over US$1 bln to the project and by the partners’ equity. The project Satorp is expected to start operation in mid-2013.
Aramco is investing in refining capacity even though returns are currently poor. Globally, refiners have postponed expansion projects and idled plants as the global recession eroded demand and squeezed profit margins. The company is likely to develop integrated refining and petrochemical plants for all future projects to add value by using products from refining for chemical production. Aramco may sell part of its stake in the project in an initial public offering in 2011 or 2012, so that 25% of Satorp will be publicly traded. Aramco and Total would then hold equal 37.5% stakes.