Meed | Liquidity drives project finance appetite

Liquidity drives project finance appetite

27 October 2023

This report on project finance and PPP also includes: PPP activity rebounds in 2023

Activity in the Gulf region has triggered a boom in the project finance market, with Saudi Arabia leading the way on the back of schemes linked to its Vision 2030 strategy.

Deals are fanning out from power and water and infrastructure schemes into unexplored territory: hydrogen projects and ever-larger solar power plants have opened up opportunities for international and regional banks that are awash with liquidity and looking for long-term means to deploy it.

Deal advisers attest to the vibrancy of Saudi Arabia, the largest regional projects market with $1.2tn-worth of known work in the pipeline. The kingdom has seen the largest project financing this year, a facility worth at least $6bn arranged for the Neom green hydrogen project.

“Saudi Arabia is a market that really is firing on all cylinders,” says Rob Harker, a partner at law firm DLA Piper, which advised Neom Green Hydrogen Company in connection with its green hydrogen and ammonia project in Saudi Arabia.

“That demand is not limited to utility sector projects. In addition to the very large solar and wind projects – including a Saudi solar deal that is 1.1GW – we are also seeing a large volume of social infrastructure projects being procured across the GCC, including in education, healthcare, social accommodation and transport,” he adds.

“Bank debt – both regional and international – is still the principal source of financing for these projects. However, robustly structured projects should also be attractive, particularly on a refinancing, to a capital markets issuance.”

Robust liquidity support

There is increased liquidity in the regional banking market, notes John Dewar, partner in international law firm Milbank’s global project, energy and infrastructure practice, which advised the export credit agencies (ECAs) and commercial banks in connection with Project Lightning, Abu Dhabi National Oil Company’s offshore power transmission project.

“With the bullish medium-term oil price outlook, there is significant liquidity in the Saudi and UAE bank markets, with these banks looking to on-lend their petrodollar deposits on a longer-term basis.”

This still poses some challenges. Analysts note that despite the bountiful credit availability, things can change.

“There is still a lot of liquidity in the system in the GCC, but some have voiced concerns that liquidity in the banking market could dry up in the future if they have to compete with projects that are much larger in scale,” says Christiane Kuti, a director at Fitch Ratings.

“Overall liquidity in the market could get tight at some point, although we are not there at the moment.”

Even then, notes Kuti, a lower oil price could add impetus to the need to develop frameworks to make projects more bankable, and provide an opportunity for the capital market to play a bigger role.

Most of the larger deals are witnessing a heterodox mix of local and international banks participating. For example, a consortium of five local and international banks has agreed to provide $545m of financing for the Rabigh 4 independent water producer project in Saudi Arabia, with Standard Chartered Bank lining up alongside Bank of China and the local trio of Saudi National Bank, Riyad Bank and Saudi Investment Bank.

The Chinese bank presence is a pointer. “We have seen Chinese banks participating in project finance deals, and that is set to continue as they are not as constrained as some of the regional banks in terms of the tenor on which they can lend. Their ability to lend on a longer-term tenor is sometimes attractive for sponsors and developers,” a source tells MEED.

The flipside of this is that Chinese lenders are less knowledgeable about the market.

Global uncertainties

Despite the robust oil price climate, project financings across the Middle East and North Africa (Mena) region have had to cope with a choppy global interest rate environment, with inflationary pressures also impinging.

Higher interest rates have militated against the use of capital market instruments in some regional deals. For Abu Dhabi’s subsea transmission system deal, which reached financial close earlier this year, higher interest rates were responsible for adding $200m to the $3.8bn deal.

This has implications for other projects that are seeking refinancing on the capital market. In Saudi Arabia, BlackRock-led investors in Saudi Aramco’s gas pipeline network attempted early in 2023 to raise $4.5bn from a sale of bonds to refinance a multibillion-dollar loan. The 10-year mature sukuk (Islamic bond) tranche spread placed it about 120 basis points above where Aramco bonds maturing in October 2030 were trading, according to Reuters’ calculations.

Another consortium led by US-based energy infrastructure investment firm EIG Global Energy Partners had also looked to the bond markets to refinance.

“The EIG and BlackRock-led consortiums investing in Saudi Aramco’s oil and gas pipelines infrastructure have been looking to refinance more than $20bn of acquisition debt,” says Dewar.

“Both have been active in the bond market, but the interest rate environment has moved against bonds, so there has been an increasing focus by borrowers on accessing other longer-term liquidity sources, particularly from the highly liquid regional banks.”

Capital market instruments

For the moment, capital market instruments are largely confined to refinancing rather than greenfield projects. However, once some of these projects are financed, it could encourage others to lend on that basis.

“Once a project has been up and running, and it has got consistent revenue from the offtaker of the electricity or the water, and they are paying an index-linked revenue stream that is 100 per cent take or pay and insulated from the erosion of any inflationary pressures, that is very attractive for bondholders, pension funds and other institutions that want stable revenues,” says one industry insider.

Beyond the Gulf, Egypt has managed to attract project finance for its renewable energy schemes, with significant ECA support. In March 2023, a $690m non-recourse financing was arranged for the 500MW Gulf of Suez Wind 2 project in Egypt.

The renewable energy push has continued after Cairo’s hosting of the 2022 Conference of the Parties of the UN Framework Convention on Climate Change (Cop27). The drive has included the Amunet wind and Abydos solar projects closed by Amea Power, as well as the Gulf of Suez Wind 2 project sponsored by Engie, TTC-Eurus and Orascom.

“They are both important deals in a global context because they mark the first occasions on which the Japanese ECAs have co-financed with the International Finance Corporation and the European Bank for Reconstruction & Development, respectively, opening up important new financing opportunities in emerging markets,” says Dewar.

Support from ECAs is particularly valued in Egypt, given the economic challenges the country is facing.

A planned polypropylene complex due to be developed in Egypt’s Suez Canal Economic Zone has been put on hold, with the $1.7bn project developed by Red Sea Refining & Petrochemical Company having been affected by the depreciation of the Egyptian pound.

More regional financing

Another emerging theme will be for the larger Mena banks to play a bigger role in regional project financings.

The likes of First Abu Dhabi Bank have been active across GCC borders, including in Saudi Arabia. Given their healthy liquidity profiles, the biggest banks in the GCC are better positioned for longer-tenor project finance deals than ever before.

Not that it will be plain sailing. Structural impediments will still have to be overcome.

For example, most Saudi banks still need to get consent from the Saudi Arabian Monetary Agency (Sama) to participate in dollar loans. “That can constrain their ability to operate outside the kingdom,” says Dewar.

“There is a regulatory preference for them to make Saudi riyal loans rather than dollars. But because of the increase in dollar liquidity, there is much more availability in the Saudi market than there was a year ago.”

Project finance will remain a critical part of the funding mix in the Mena region. As Fitch Ratings notes, the significant growth needed to achieve the GCC’s investment requirements cannot be attained using traditional financing channels, such as on-balance-sheet funding by governments. Instead, there is a need to broaden the investor base, including through project financing.

The likelihood of a more benign global interest rate environment in 2024 should pave the way for a reassertion of capital market-based deals, making the next few months busy ones for banks and deal-makers across the Mena region.

PPP activity rebounds in 2023

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James Gavin

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Houthi escalation targets Saudi airports
12 October 2026

Yemen’s Houthis have placed Saudi Arabia’s civil aviation infrastructure at the centre of their campaign against the kingdom. Two strikes on King Khalid International airport in Riyadh over the weekend killed 13 people and injured 320.

The deadlier attack hit a passenger terminal on the afternoon of 10 October. The General Authority of Civil Aviation (Gaca) said it killed 12 people, including four Saudi citizens, and injured 309. Airport operations were suspended pending a damage assessment.

A second strike hit Terminal 4 on the afternoon of 11 October, sparking a fire that killed a Pakistani resident and injured 11 others, according to Gaca. The Saudi-led coalition reported intercepting a cruise missile near the airport that afternoon. Gaca also reported an attack on King Fahd International airport in Dammam that evening, following a coalition report of a projectile falling near the facility the previous night.

The weekend strikes followed attacks on Abha International airport on 6 October and on King Khalid International airport on 7 and 8 October, the last of which included a strike on a Saudia aircraft. Gaca figures put the toll from the week’s attacks on Saudi airports at 19 dead and more than 350 injured.

The Houthis said they would continue operations inside the kingdom and that all Saudi airports were potential targets, with the exception of those serving the holy cities. The group says it is acting in response to Riyadh’s support for Yemeni government forces and a Saudi air strike on Sanaa airport. It has also claimed attacks on Saudi oil facilities, which Saudi authorities have not confirmed.

Aviation exposure

The attacks strike a sector central to the kingdom’s diversification plans. King Khalid International airport’s existing terminals are to be absorbed into King Salman International airport (KSIA), a 57-square-kilometre development with six parallel runways targeting a capacity of 120 million passengers by 2030 and 185 million by 2050.

Procurement on KSIA has gathered pace this year. In July, a joint venture of China Civil Engineering Construction Corporation and Dammam-based Mofarreh AlHarbi & Partners won an estimated SR800m ($213m) contract for enabling and substructure works on Terminal 6, which will add capacity for 40 million passengers. Turkish contractor IC Ictas and Saudi Arabia’s Al-Rashid Trading & Contracting recently secured a SR800m ($213m) contract for the airport’s Private Aviation Terminal.

Government-owned Saudi Royal Aviation set 8 October as the bid deadline for an estimated SR3bn ($800m) contract to build an aviation complex within the KSIA masterplan, the same day the Houthis struck King Khalid International airport and a Saudia aircraft.

Airlines have already adjusted. Flydubai cancelled flights to Riyadh and Yanbu up to 10 October and to Abha up to 11 October, and Etihad Airways reported extended delays on its Abu Dhabi to Riyadh service after the airport closed on 8 October. The UK Foreign Office has advised against all travel to areas within 10km of the Yemeni border.

Market reaction

The Saudi stock market’s response has been muted so far. The Tadawul main index fell 15.54 points to close at 10,360.74 on 11 October, the first trading session after the Saturday attack, with turnover of SR2.6bn ($693m). The session closed before the second strike on King Khalid International airport and the attack on Dammam, and Monday’s trading will be the first to reflect the full weekend.

The weekend also brought a separate maritime incident. UK Maritime Trade Operations said an oil tanker was struck by an unidentified projectile in the Strait of Hormuz on 11 October, with its crew reported safe.

Diplomatic response

The coalition described the 10 October attack as a war crime and said it would respond decisively. It said on 10 October that it had destroyed 136 military targets in Houthi-controlled areas and was working to dismantle the group’s ballistic missile network.

Egypt, Pakistan and Turkiye joined Saudi Arabia in an R4 group statement condemning the attacks and supporting measures taken by the kingdom in response. The Arab League also voiced its support for Saudi Arabia. On 11 October, Iran’s foreign minister spoke by telephone with his Saudi counterpart, Prince Faisal Bin Farhan, to discuss the escalation. The US and UK have also signalled the possibility of further support for the kingdom.

The escalation comes against the backdrop of the regional conflict, which has drawn Saudi Arabia into a renewed Yemen front after several years of relative calm following the 2022 ceasefire. The extent of the damage at King Khalid International airport, which Gaca is still assessing, and the speed at which international carriers resume full schedules will determine how far the attacks disrupt the kingdom’s aviation programme.

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Colin Foreman
Egypt and Saudi Arabia sign oil and gas deal
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Egypt and Saudi Arabia have signed an agreement to strengthen cooperation in the oil, natural gas and petrochemicals sectors, according to a statement from Egypt’s Ministry of Petroleum & Mineral Resources.

The memorandum of understanding (MoU) was signed in Riyadh by Karim Badawi, Egypt’s minister of petroleum and mineral resources, and Abdulaziz Bin Salman, Saudi Arabia’s minister of energy.

Under the agreement, both sides will enhance cooperation in trading, transporting, storing and distributing crude oil, petroleum products and natural gas.

They will also expand cooperation on developing the infrastructure and logistics services that support these activities.

In its statement, Egypt’s Ministry of Petroleum & Mineral Resources said: “These efforts will contribute to improving energy market efficiency, enhancing the resilience and reliability of supply chains, and strengthening energy security.”

The MoU also provides for expanded cooperation in exchanging expertise and best practices in operating and developing fuel stations, as well as in transporting and tracking petroleum products and liquefied petroleum gas cylinders.

Additionally, the agreement seeks to explore investment opportunities in joint projects and promote exports.

The latest agreement comes as Egypt becomes an increasingly important export route for Saudi Arabia.

Due to disruptions and security risks affecting shipments through the Strait of Hormuz, Saudi Arabia has been redirecting crude exports via its East-West Pipeline to Yanbu on the Red Sea.

Meanwhile, the Bab El-Mandeb Strait, at the southern end of the Red Sea, has also become a security concern due to military activity in Yemen. Egypt offers an alternative route through the Sumed pipeline, which runs from Ain Sokhna on the Red Sea to Sidi Kerir on the Mediterranean.

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Wil Crisp
JGC yet to return evacuated workers to Basra refinery
12 October 2026
Japan’s JGC has yet to bring evacuated workers back to the Basra refinery project in Iraq, according to industry sources.

JGC evacuated its personnel from the site in the southern oil hub of Basra following the start of the regional conflict on 28 February, when the US and Israel attacked Iran.

The evacuation halted work on the project, which was in its final construction stage.

On 14 August 2026, Iraq’s Ministry of Oil announced that it had signed an agreement with JGC to resume work on the fluid catalytic cracking (FCC) project at Basra refinery.

One source said: “Even though the agreement to bring the evacuated workers back was signed about two months ago, there is still no sign of the evacuated workers on the project site.

“It is possible that they will return soon, but it is hard to tell what will happen next in the current security environment.”

Earlier this month, Iraq’s Ministry of Oil said it met with Japanese officials to discuss plans to commission the FCC unit under the Basra refinery upgrade project.

The statement did not say when the evacuated JGC workers would return to the project site.

Strategic project

Iraq’s state-owned South Refineries Company (SRC) sent JGC notice of the main contract award for the FCC package of the Basra refinery upgrade project in August 2020.

JGC was awarded the contract in consortium with South Korea’s Hyundai E&C.

The official contract signing ceremony was held in Baghdad on 1 October 2020.

The contract awarded to JGC, which uses the engineering, procurement, construction and commissioning model, was worth $3.78bn.

The FCC package is part of a broader project to upgrade the Basra refinery.

The project site is located about 12 kilometres east of Iraq’s southern city of Basra.

The wider upgrade project involves installing new facilities on land adjacent to the existing Basra refinery, including a vacuum distillation unit and a diesel desulphurisation unit.

In April 2021, France’s Axens won a contract in Iraq to provide four process technologies to SRC for the Basra refinery upgrade project.

The technologies that SRC selected are:
- Diesel hydrotreatment unit (Prime-D)
- Vacuum gasoil (VGO) hydrotreating unit
- VGO fluid catalytic cracker unit
- Oligomerisation unit (polynaphtha)
In addition, Axens is providing catalysts and adsorbents, proprietary equipment, training and technical services.

MEED’s latest report on Iraq includes:

> COMMENT: Iraq’s reform window narrows
> GOVERNMENT: Al-Zaidi takes Iraq’s premiership under US shadow
> BANKING: Financial challenge tests Iraq’s resolve
> ECONOMY: Iraq enters era of resilience, reform and rising risks
> OIL & GAS: Iraqi oil and gas sector in crisis
> POWER & WATER: Focus shifts to delivery of Iraq utilities expansion
> CONSTRUCTION: Momentum builds in Iraq’s post-war construction sector

To see previous issues of MEED Business Review, please click here
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Wil Crisp

Contractors prepare Jordan stadium prequalification

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Contractors are preparing to submit prequalification statements on 14 October for a contract to build Jordan’s Al-Hussein Bin Abdullah II International Stadium, located east of the capital, Amman.

The project is part of the first phase of the Amra City development masterplan and is being implemented by Jordan Cities & Facilities Development Company, a Jordan Investment Fund-owned company.

Main works are expected to begin early next year, with the stadium slated for completion in 2029.

The project will cover about 1 million square metres, and the stadium will seat 50,000 spectators.

The stadium is being built within the Amra City development, which is located about 40 kilometres (km) from downtown Amman and 35km from Zarqa and Queen Alia International airport.

MEED reported that preliminary excavation and site preparation began in June.

The project forms part of Jordan’s Economic Modernisation Vision (EMV) 2023-25.

The EMV – Amman’s flagship reform programme – aims to increase real income per capita by an average of 3% annually, create 1 million jobs and more than double the country’s GDP over the next decade.

The strategy envisages a leading role for the private sector, which is expected to account for 73% of the estimated $58.8bn investment required.

READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:

> AGENDA: Oxagon takes centre stage at Neom

> MARKET FOCUS: Saudi projects hold steady

> INDUSTRY REPORT: MEED’s 2026 GCC power developer ranking

> POWER: AI is creating a grid capacity problem

> LEGAL: What IFAD’s wind-down means for Gulf commodity markets

> OIL: Oil companies focus on North Africa amid Hormuz crisis

> LEADERSHIP: The future city does not need to hang above the ground

To see previous issues of MEED Business Review, please click here

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Yasir Iqbal

Abu Dhabi plans Mussafah road upgrades

12 October 2026

Abu Dhabi’s Department of Municipalities and Transport (DMT) has announced plans to upgrade roads in Mussafah, improving links between the industrial area, Mohamed Bin Zayed City and Zayed City.

The scheme covers about 13 kilometres of roads on the E30 and 8th Street. It aims to reduce congestion, improve road safety and cut journey times.

The works include a new three-lane highway in each direction along 8th Street, with parallel three-lane service roads on both sides providing access to local businesses and facilities.

The upgraded corridor is expected to accommodate up to 4,000 vehicles an hour.

Other works include upgrades to four E30 interchanges, improved links to 8th Street and the E20, and modifications to nine junctions.

The DMT also plans to build two bridges connecting Mussafah and Mohamed Bin Zayed City, along with a pedestrian bridge.

Abu Dhabi is planning major investments to upgrade its road network across the emirate.

Last week, it disclosed plans for a major new transport corridor in the capital, comprising a 37km coastal route linking Al-Hudayriyat Island with the E11 at Al-Nouf.

It is planned to have three lanes in each direction and will include a tunnel, about 7km of marine bridges and about 4km of causeways.

The scheme will provide a direct connection between Al-Dhafra, Al-Hudayriyat Island and Abu Dhabi Island via Halat Al-Bahrani, Al-Futaisi and Al-Aryam islands.