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• 
  Petrofac collapse could impact $5.83bn of Mena projects

  28 October 2025

  

   

  On 27 October, Petrofac announced that it had applied to appoint administrators, a move that has potentially put thousands of jobs at risk and increased uncertainty for projects worth billions of dollars in the Middle East and North Africa (Mena) region.

  The total value of projects awarded to Petrofac and under construction in the region is $5.83bn, according to information recorded by the regional project-tracking service MEED Projects.

  Petrofac also has bids under evaluation for 15 projects in the region worth a total of $19.28bn, according to MEED Projects data.

  Over recent years, Petrofac has aggressively sought to win new contracts in the Mena region, bidding on a range of projects in an effort to improve its financial situation.

  Some of the tender processes in which Petrofac is currently participating could ultimately be disrupted due to the company’s financial problems, especially when there is only one other bidder for the contract.

  Regional impact

  The UAE is potentially the most exposed to disruption from Petrofac filing for administration. It is executing major projects worth $2.87bn in the UAE.

  Algeria is second in the region in terms of exposure to contracts under execution, with $1.8bn in projects.

  Petrofac also has projects in Oman, Bahrain and Iraq, worth $483m, $353m and $320m, respectively.

  UAE projects under execution

  In the UAE, Petrofac has five active projects, all awarded by Abu Dhabi’s state-owned Adnoc Gas.

  The biggest of these is a $1.2bn project for the planned Das Island gas liquefaction facility, which was awarded in June this year and expected to be completed by the fourth quarter of 2027.

  The second-biggest contract that Petrofac has in the UAE is a $700m contract as part of Adnoc Gas’ project to upgrade its sales gas pipeline network across the UAE.

  The scope of the package is focused on developing a new compressor plant at the Habshan gas compressor facility.

  This contract was awarded in June 2023 and was previously expected to be completed before the end of next year.

  The other significant contracts that Petrofac has in the UAE include a $615m contract for a carbon capture, utilisation and storage (CCUS) facility at the Habshan site, as well as a $335m contract to upgrade the Habshan gas processing complex.

  Adnoc Gas awarded the CCUS contract in October 2023, and the upgrade contract was awarded in January this year.

  In addition to the projects Petrofac has won in the UAE, it has bids currently under evaluation worth $6.6bn in the country.

  Petrofac in Algeria

  Petrofac’s largest ongoing project in the Mena region is the $1.5bn project that it is executing to develop a major petrochemicals project in Algeria.

  The Scotland-based company is executing the project in partnership with China Huanqiu Contracting & Engineering Corporation (HQCEC) in Algeria’s Arzew region.

  Petrofac and HQCEC signed the engineering, procurement and construction (EPC) contract for the Algerian petrochemicals project in June 2023.

  HQCEC is a subsidiary of China National Petroleum Corporation.

  In July 2024, MEED reported that concerns about the project’s future were increasing due to Petrofac’s financial difficulties.

  The project is being developed in the Arzew Industrial Zone, west of Algiers, and the contract was signed with STEP Polymers, a wholly owned subsidiary of Algeria’s national oil company, Sonatrach.

  When the contract was signed, Petrofac said that its portion of the project was valued at about $1bn.

  The project’s scope includes the design and construction of two major integrated processing units.

  It includes the delivery of a new propane dehydrogenation unit and polypropylene production unit, as well as associated utilities and infrastructure for the site.

  It is expected to produce 550,000 tonnes of polypropylene a year.

  Petrofac has been active in Algeria since 1997, when it opened its first office in Algiers. The company has since developed some of the country’s most significant oil and gas assets.

  On top of the projects under execution in Algeria, Petrofac has bids under evaluation for projects worth $7.19bn in the country.

  Petrofac in Oman, Bahrain and Iraq

  Petrofac is working on a range of strategic upstream projects across Oman, Bahrain and Iraq.

  These contracts include a $370m project to expand the central processing facility (CPF) at Iraq’s Majnoon field.

  In August this year, MEED reported that Petrofac was pushing to complete the project contract.

  The EPC contract for the project was awarded to Petrofac by Basra Oil Company (BOC) in 2018.

  Originally, the contract had a 34-month time period, but, like many other projects awarded at a similar time, the project was delayed due to complications related to the Covid-19 pandemic.

  In August, MEED reported that the final part of the project that needed to be addressed was an issue relating to a single unit of the expansion project.

  The oil processing trains were mechanically complete in October 2022 and were ready for startup in late 2023.

  The facility then started operating in 2024. However, due to issues related to product specifications, it was taken offline.

  Majnoon is Iraq’s fourth-biggest oil field and is estimated to contain 12.6 billion barrels of oil.

  Petrofac does not currently have any bids under evaluation in Iraq or Oman, but it has submitted bids for projects worth $900m in Bahrain.

  Over recent years, Petrofac has been attempting to expand in Kuwait, Saudi Arabia and Libya.

  In these countries, it currently has bids under evaluation for projects worth a total of $4.63bn.

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  Wil Crisp
• 
  Petrofac files for administration

  28 October 2025

  The UK-based engineering company Petrofac, which is active across much of the Middle East and North Africa (Mena) region, has filed for administration amid escalating financial challenges.

  In a statement, the company said that its directors had “applied to the High Court of England and Wales to appoint administrators”.

  The statement added: “This is a targeted administration of the group’s ultimate holding company only.”

  Petrofac is actively working on projects in the UAE, Algeria, Kuwait and Bahrain. Projects in the UAE include an engineering, procurement and construction management contract awarded by Adnoc Gas in June.

  The company’s collapse followed the termination of an offshore electricity transmission contract by Netherlands-based TenneT, derailing a restructuring plan.

  The group’s operations will continue to trade, and options for alternative restructuring, as well as potential solutions such as mergers or acquisitions, are being explored, the company said.

  It added: “When appointed, administrators will work alongside executive management to preserve value, operational capability and ongoing delivery across the group’s operating and trading entities.”

  Petrofac has suffered from high debt levels for several years and was negatively impacted by shutdowns during the Covid-19 pandemic.

  Its financial problems led to the suspension of its shares from the London Stock Exchange in May.

  Petrofac collapse could impact $5.83bn of Mena projects

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  Wil Crisp
• 
  Region sees evolving project finance demand

  27 October 2025

  

   

  The GCC remains in the grip of an infrastructure supercycle that requires project sponsors to seek out the most efficient funding solutions. This places project finance firmly in the frame, with interest piqued by developers’ preference for financing models that match long-term concessions with long-term debt. 

  Deal advisers note the buoyancy of the Gulf projects market. 

  “There is a collective appreciation for international capital and international resources and skills that is creating healthy competition in the region, which has not been seen before. This is fuelling some of the project finance boom,” says Andrej Kormuth, head of law firm Bracewell’s Middle East projects practice.

  Deferring costs

  Non-recourse lending – in which lenders rely on a project’s cash flow – remains a popular method of deferring costs in the Middle East, and one that has grown in volume and size. The availability of long-term offtake agreements with creditworthy counterparties has helped to reinforce investor confidence.

  “Gulf states have recognised the budgetary benefit of not having to pay for infrastructure up front or in short order, but rather deferring these costs over a period of time – allowing a bit more budgetary flexibility in relation to critical spending,” says Kormuth.

  GCC governments have seen project financing deliver value over the long term, helping them as they map out their long-term economic transformation programmes.  

  “The procurers have seen how well the project finance deals in the Gulf have been run. They have seen the benefit of having international skills come in that would not historically have been locally available, and of running these assets for the long term,” says Kormuth.

  

  Shifting asset classes

  While traditional sectors such as power continue to dominate – according to ratings agency S&P Global, utilities alone accounted for 75% of project finance loans over the past five years – new sectors have come to the fore that are suitable candidates for project finance, including battery storage. 

  “Over the last 12-18 months, one of the new developments has been the introduction of the new asset class of battery storage projects in jurisdictions such as Abu Dhabi and Saudi Arabia,” says Oliver Irwin, head of project finance at Bracewell.

  “These projects are being developed on a very large scale, which gives rise to new challenges from a financing perspective, in terms of considerations for things like split procurement and battery degradation, which are not necessarily features of wind and solar project financings.”

  Alongside the almost 90GW of renewable energy that Saudi Arabia will install over the next five years, the kingdom is also planning 48 gigawatt-hours of storage battery capacity by 2030.

  There has also been a significant refocusing on the mining sector and digital infrastructure in the region, according to Munib Hussain, a partner at Milbank LLP, a project finance specialist.

  “Mining [is seeing increased interest] because of factors such as the energy transition, and the rush to try and secure the minerals that support the energy transition, and as another means of diversifying economies. There is a real drive in the GCC at the moment to try and build out the midstream processing infrastructure for those critical minerals.” 

  These projects are proving highly adaptable for non-recourse lending structures, backed by the preferred model of a long-term contract with a single offtaker. 

  Data centres are another area of growth where project finance is likely to make a mark in the GCC, though this may require a steeper learning curve for lenders.

  “In the digital space, there are still some challenges to [closing] large-scale project financing,” says Hussain. “But we know there are hyperscalers that are expected to come in with slightly longer-term leases or MSAs [master service agreements] that can support a project financing.”

  These may have tenors of around 10-15 years, which Hussain points out is not particularly common, but he says the hyperscalers “see the opportunity to have a foothold there – and so they may be committing for slightly longer tenors”.

  While renewable energy and data centres present new avenues for project lending, advisers point out that the Gulf has a surfeit of conventional infrastructure projects that are in need of funding – gas-fired independent power projects, for example, have seen a revival, as have water desalination and water reservoir storage projects. 

  Ancillary infrastructure around Saudi Arabia’s gigaprojects is also keeping lenders busy. Saudi Power Procurement Company plans to add about 7GW of combined-cycle gas turbine capacity annually over the next five years.    

  “The energy sector is quite buoyant,” says Bracewell’s Kormuth. “Two years ago, it was almost entirely dominated by renewables. Now, we are seeing quite a significant shift towards conventional, gas-fired baseload power stations.”

  

  International re-entry

  In newer sectors such as battery storage, international banks have built up their experience levels and are looking to replicate that in the GCC. 

  “A lot of the international banks that are supporting the new wave of battery storage projects in the region have experience of financing battery projects in Europe and elsewhere. 

  “So, while it might be new for the region, it is not necessarily new for those banks,” says Bracewell’s Irwin.

  The re-entry of international lenders has changed the pricing equation, too.  

  “The international commercial banks have become even more competitive, coming into domestic GCC projects, often outpricing the regional banks, which was not the case for the last five years or so,” says Hussain.

  Whereas regional banks used to be much more competitive than international banks, various liquidity constraints have meant that the international banks are now coming in at much tighter pricing than ever before. 

  So, while recent years have witnessed much liquidity and risk appetite from the local and regional banks that have started to play a prominent role in the financing of major infrastructure and energy projects, Bracewell’s Irwin says that in the last 12 months, there has been “a resurgence of sorts from the traditional international banks, leading to Middle East project deals, in particular in Saudi renewables projects”.

  New sectors have come to the fore that are suitable candidates for project finance, including battery storage

  Financing structures

  Refinancing has been a feature of GCC project financing arrangements for many years. The so-called soft mini-perm structure, which involves margin step-ups and cash sweeps that give an incentive to refinance debt over time, retains popularity among sponsors. 

  “The primary and preferred method for project financings in the region is a soft mini-perm. It is a proven model that works very well for the region and continues to attract a deep pool of financiers that are willing to lend to the region’s large pipeline of energy and infrastructure projects,” says Irwin.

  Export credit agency (ECA) and Islamic tranches remain prominent features of project loans, sometimes in combination. This was the case with UK Export Finance’s guaranteeing of a $700m Islamic Murabaha financing facility to finance the construction of the Six Flags Qiddiya City theme park in Saudi Arabia. 

  “We continue to see that Islamic financing is a key tool for project sponsors. If you are looking to diversify your funding base, it is now very normal to have an Islamic finance tranche alongside a conventional tranche, as well as an ECA tranche,” notes Irwin.  

  Capital market instruments are another innovation identified by Gulf deal advisers. Saudi Arabia’s Greensaif pipeline transaction with BlackRock and Saudi Aramco in 2024 was a pipeline monetisation deal that saw BlackRock take a 49% interest in Aramco’s gas pipelines in Saudi Arabia. 

  “There was a $13.4bn acquisition/stapled financing associated with that, which needed to be refinanced within a certain period of time,” says Hussain.

  BlackRock went to various funding sources, including the conventional bank market, the international bond market and the sukuk (Islamic bond) market.

  “The bonds and sukuk issued in connection with Greensaif are project bonds, because underlying the payment of the coupon on both was the revenue from the underlying project contracts with Saudi Aramco. These issuances were some of the largest project bonds issued in the region in recent times,” says Hussain. 

  The Gulf’s pull for project financiers shows no signs of petering out. Lenders have developed a taste for regional risk, and international banks are particularly keen to get back in the game. The mood music is positive. 

  “We have seen that different types of banks get priced out of the market from time to time, but they invariably look to return to the market because Middle Eastern projects are generally well-structured financings with very robust revenue streams. That gives rise to a lot of enthusiasm to support these projects,” says Irwin. 

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  James Gavin
• 
  Fujairah F3 power plant begins commercial operations

  27 October 2025

  State offtaker Emirates Water & Electricity Company (EWEC) and project partners have announced the start of full commercial operations at the 2.4GW Fujairah F3 independent power producer project.

  Located in Qidfa, the $1.14bn Fujairah F3 project is the UAE’s largest natural gas-fired combined-cycle power plant.

  Developed between the existing Fujairah F1 and F2 facilities, the plant can supply electricity to about 380,000 homes. Ewec is the sole procurer of electricity from the project under a long-term power purchase agreement.

  Fujairah Power Company F3, a special purpose company, is developing the project.

  It is jointly owned by Abu Dhabi National Energy Company (Taqa, 40%), Japanese firms Marubeni Corporation (20.4%) and Hokuriku Electric Power Company (19.6%), and the UAE’s Mubadala Investment Company (20%). 

  Financial close was reached in mid-2020 through a consortium of international lenders, including Japan Bank for International Cooperation, Mizuho Bank (Japan), Sumitomo Mitsui Banking Corporation (Japan), BNP Paribas (France) and Standard Chartered (UK).

  South Korea’s Samsung C&T was awarded the engineering, procurement and construction contract, while engineering consultancy was provided by Austria’s ILF Consulting and Germany’s Fichtner Consulting.

  The facility is equipped with three Mitsubishi Power M701 JAC gas turbines, each weighing more than 500 tonnes, integrated with heat recovery steam generators. 

  Mitsubishi Power was operating under the name Mitsubishi Hitachi Power Systems at the time of the contract award, before Hitachi exited the joint venture in 2021.

  Construction of Fujairah F3 was completed in late 2024.

  

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  Mark Dowdall
• 
  Mena LNG infrastructure spending rises

  27 October 2025

  This package also includes: Gulf LNG sector enters a new prolific phase

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  The Gulf states – in particular Qatar, Oman and the UAE – are dominating the liquefied natural gas (LNG) production and export race in the Middle East and North Africa (Mena) region, as well as globally. 

  With the energy transition gaining momentum worldwide, and driven by a need to increase the share of gas in their energy mixes, other regional countries are also investing in building LNG import infrastructure.

  Kuwait’s state-energy conglomerate, Kuwait Petroleum Corporation (KPC), is going through the final approval processes for a planned project to add a natural gas reliquefaction unit to Kuwait’s permanent LNG import facility.

  The final investment decision for the project was approved by KPC subsidiary Kuwait Integrated Petroleum Industries Company (Kipic) in January. The front-end engineering and design (feed) study for the project was completed in November 2024, according to Kipic.

  This project is being developed to eliminate the flaring of boil-off gas, which occurs when supply rates from LNG import facilities drop below minimum design thresholds. The new unit will reliquefy natural gas through cooling processes and return it to storage tanks in liquid form.

  Importing gas

  Iraq is presently reliant on imported gas from Iran in order to address its domestic needs. The country has sufficient gas reserves to meet its domestic demand, but it has failed to develop the necessary infrastructure to capture, process and transport the gas to end-users.

  However, in October, US-based Excelerate Energy announced that it had won a contract to develop an integrated floating LNG (FLNG) import terminal in Iraq. Development of the project will be led by Excelerate in coordination with the Iraqi government.

  The FLNG facility will be developed at Khor Al-Zubair port in Basra and will have a capacity of 500 million standard cubic feet a day (cf/d).

  Plans are also under way to build further LNG reception infrastructure, including a jetty and a floating storage and regasification unit (FSRU), at Iraq’s Al-Faw Grand Port. 

  Jordan, which also relies heavily on natural gas for its power and industrial needs, has pushed ahead with plans to increase LNG imports by developing a new LNG terminal.

  In August 2024, Jordan’s Aqaba Development Corporation (ADC) awarded the main contract for a project to develop the Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah LNG onshore regasification facility at the port of Aqaba.

  The contract was won by a consortium of Singapore-based AG&P and South Korea’s Gas Entec, along with their local partner, Jordan’s Issa Haddadin. AG&P has majority ownership of Gas Entec and ADC is owned by the Government of Jordan and the Aqaba Special Economic Zone Authority.

  The facility will have the capacity to process 720 million cf/d of natural gas. The project is scheduled to be completed, commissioned and delivered within 22 months, with the project due to be commissioned by the second quarter of 2026. 

  The new permanent LNG import terminal is expected to replace an existing FSRU located in Aqaba port that began operations earlier this year.

  Jordan … has pushed ahead with plans to increase LNG imports by developing a new LNG terminal

  Building infrastructure

  Egypt already has two LNG export terminals, located at Idku and Damietta. The facilities enable the export of LNG from domestic fields and from regional partners.

  The country is now exploring plans for an LNG terminal in Port Said, according to a recent statement from the Petroleum & Mineral Resources Ministry. Karim Badawi, the petroleum & mineral resources minister, has met with the chairman of the Suez Canal Authority, Osama Rabie, to discuss the establishment of the terminal, which will supply the authority’s vessels.

  In Algeria, national oil and gas company Sonatrach has brought a processing train back online at the Arzew-Bethioua LNG terminal as part of a major project to upgrade the facility.

  The Arzew-Bethioua terminal is one of the oldest operational LNG export terminals. The train, known as T-300, became operational after a new main cryogenic heat exchanger (MCHE) was commissioned.

  The upgrade is part of a contract with US-based Honeywell to replace four MCHEs at the facility. Originally signed with Air Products, Honeywell acquired the contract when it bought Air Products’ LNG process technology and equipment business in September 2024.

  The work on the Algerian LNG terminal is being led by state-controlled Societe de Maintenance Industrielle d’Arzew (Somiz). As part of the upgrade, each of the train’s existing capacities of 75,000 tonnes a year (t/y) is being increased to 1.3 million t/y. A total of 5.2 million t/y of LNG capacity is set to return once all four units are fully back online.

  Meanwhile, Morocco’s Energy Transition & Sustainable Development Ministry is progressing with an LNG infrastructure project that includes an import terminal, pipelines and a gas power station. Located at Nador West Med Port, the terminal is expected to have the capacity to import 500 million cf/d.

  The scope of the LNG terminal portion of the project includes the design, construction, equipment, operation and maintenance of all offshore and onshore infrastructure elements of the terminal. It also includes all high-pressure gas systems.

  A dedicated berth is expected to be developed at the port. The terminal will either be an FSRU or a floating storage unit that has the regasification element developed on the jetty.

  Nador West Med Port is currently under construction and is expected to achieve commissioning by the end of 2026.

  Gulf LNG sector enters a new prolific phase 

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  Indrajit Sen