Achieving a multi-source project financing for the Duqm Refinery project was a major milestone for the project.
Speaking on the occasion, the president of Kuwait Petroleum International and chairman of Duqm Refinery, Nabil Bourisli, said: “This achievement reflects the strength and stability of the Omani and Kuwaiti economies. It also reflects the trust and confidence of local, regional and international financial institutions in our economic ties that are deeply rooted in history. Our vision is aiming at maximising the value of our natural resources and driving the two countries toward expanding their economic potential that leads to balanced economic growth.”
Hilal Al Kharusi, vice chairman of the board of directors of Duqm Refinery commented on the occasion: “This is indeed a very important milestone for the project. It reflects the trust that financial institutions have placed in the project, which with no doubt will be one of the key economic drivers for SEZAD. Setting up Duqm Refinery and Petrochemical Industries Company is an important milestone for petrochemical industries and key to establishing new downstream industries and the creation of job opportunities.”
Khalid Al Mushaileh, vice president of Kuwait Petroleum International, stated: “Kuwaiti banks were effectively involved in financing the project achieving 32% of the total loan amount. This is driven by the importance of the project as well as the strategic partnership between the two brotherly countries. This project is in line with Kuwait Petroleum Corporation 2040 strategy and it is at the same time a great opportunity to involve skilled Kuwaiti workforce to be part of these external investments.”
“The $4.6bn multi-sourced financing signed for the project is not only the largest project financing in the Sultanate of Oman, it also includes the largest sharia-compliant facility awarded to a greenfield project in the country provided by a consortium of Islamic financing institutions,” said Mubarak Al Naamany, chief financial officer of Duqm Refinery.
Al Naamany further stated: “Facilities have been provided by 29 reputed financial institutions from 13 countries and guarantees from three major ECAs. He concluded that achieving a debt-to-equity ratio of 55% with uncovered facilities of 70% of total debt is a testament of confidence placed by international, regional, and local lenders on the Sultanate of Oman, the shareholders, and the project.”
The $4.6bn senior debt facilities comprise of seven agreements that includes (i) a $1.43bn international commercial facility; (ii) a $490mn onshore commercial facility; (iii) a $890mn Islamic facility; (iv) a $700mn UKEF covered facility; (v) a $500mn CESCE covered facility; (vi) a $600mn K-EXIM covered facility; and (vii) a K-EXIM direct facility. Regional banks have played a big role in this deal with funding from Kuwaiti and Omani banks representing 43% of total debt.
National Bank of Kuwait, Kuwait Finance House, Crédit Agricole, Corporate and Investment Bank, KfW IPEX-Bank, Société Générale, Sumitomo Mitsui Banking Corporation, Bank Muscat, Boubyan Bank, Banco Santander, Bank of Tokyo-Mitsubishi UFJ, Ltd, BNP Paribas, Commercial Bank of Kuwait, ICBC, Bank Dhofar, APICORP, Natixis, Standard Chartered Bank, National Bank of Oman, Warba Bank, Korea Development Bank, Credit Suisse, HSBC, Intesa Sanpaolo, UBI Banca, Ahli United Bank Kuwait, Bank Sohar, and Ahli Bank Oman are the banks providing facilities to the Duqm Refinery project.
A number of specialist advisers were engaged to support the financing of the Project, which include Crédit Agricole Corporate and Investment Bank as financial adviser to Duqm Refinery, Allen & Overy as international legal counsel to Duqm Refinery, and Latham & Watkins as international legal counsel to lenders.
The refinery project comprises the development, construction, ownership and operation of the refinery, on-site utilities, infrastructure and storage, together with offsite facilities, including crude tank storage facilities in Ras Markaz, a crude oil pipeline to the refinery and a product export terminal at Port of Duqm.
The refinery is designed to be able to process a range of blended crude oils and configured as a full-conversion hydrocracker/coking facility, which will utilise advanced technology, commercially proven at the scale of the project, supplied by leading technology licensors. Engineering, procurement and construction of the project is being undertaken under three lump sum turn-key contracts with world-class contractors. Formal notice to proceed was issued to the EPC contractors in June 2018.
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