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Jubail refinery poses big questions
11 September 2009
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[saudi aramco]
[jubail refinery]
[project finance]
Saudi Aramco and Total's $12 billion Jubail refinery deal (Satorp) has received a lukewarm reception from project banks. Both sponsors were engaged in one-on-one talks with prospective lenders in London and Paris late July, following the release on 9 July of the request for proposals (RFP) for an $8.3 billion financing. Calyon and Saudi Fransi are financial advisers.
The deadline for responses to the RFP has been pushed back from 9 September to 18 September. The deal is a large and testing credit given the bullish market projections in the model and the refinery margin risk banks are being asked to shoulder.
The 400,000 barrels per day project is fed by crude at market prices, so banks are being asked to take a view on crude prices and projected prices for the refined products at a time when refinery margins have turned negative or near-zero. The refinery will produce...
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