Aramco seeks $5bn loan for Yanbu refinery- report

Funds will be used to replace some of the capital Aramco invested when it built the plant

Aramco owns 62.5% of the plant, while Sinopec’s share is 37.5%.
Aramco owns 62.5% of the plant, while Sinopec’s share is 37.5%.

Saudi Aramco is seeking to raise a $5bn loan related to its Yanbu refinery, Reuters reported on Monday.

The funds will be used to replace some of the capital Aramco invested when it built the plant together with China’s Sinopec, freeing up cash for use in other projects, the report said quoting sources familiar with the matter.

The Saudi oil giant has already sent an invitation to a group of local and international banks, indicating it wants to borrow $5bn over a ten-year period, according to one of the sources.

The source, who is an infrastructure banker, added that Aramco had asked for the loan pricing, inclusive of margin and fees, to be "double digits in all", a level which the source described as extremely aggressive.

Another source said the fact that Aramco is seeking funds now -- almost nine months after the refinery shipped its first products, as opposed to when the initial agreement was struck to build the refinery in January 2012 -- should mean it gets cheaper pricing, Reuters reported.

This is because the refinery has some financial track record which banks can base a lending decision against and the risk around construction and getting the project off the ground has dissipated, he said.

The 400,000 barrel per day (bpd) refinery is a joint venture between Aramco and China's Sinopec and run by Yanbu Aramco Sinopec Refining Company known as Yasref.

Aramco owns 62.5% of the plant, while Sinopec’s share is 37.5%. The refinery produces 263,000 bpd of diesel and 90,000 bpd of gasoline, according to its website.

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