meed-logo

line1 line2 line3
SIGN IN / REGISTER

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 

https://image.digitalinsightresearch.in/uploads/NewsArticle/11227315/main.gif
James Gavin

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Dubai seeks contractors for Metro Gold Line

    20 May 2026

     

    Register for MEED’s 14-day trial access 

    Dubai's Roads & Transport Authority (RTA) has invited contractors to express interest in a contract to build the new Gold Line, as part of its expansion of the Dubai Metro network.

    The notice was issued in mid-May with a submission deadline of 13 June.

    Dubai officially announced the launch of the new Gold Line in April.

    In a post on social media site X, Sheikh Mohammed Bin Rashid Al-Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, said the project will cost about AED34bn ($9.2bn).

    The Gold Line will increase the total length of the Dubai Metro network by 35%.

    The project is scheduled for completion in September 2032.

    The Gold Line will be a fully underground network covering more than 42 kilometres, with 18 stations.

    It will pass through 15 areas in Dubai, benefiting 1.5 million residents.

    The project is expected to provide connectivity to over 55 under-construction real estate development projects.

    The Gold Line will start at Al-Ghubaiba in Bur Dubai and end at Jumeirah Golf Estates.

    It will be connected to Dubai Metro’s existing Red and Green lines and will integrate with the Etihad Rail passenger line.

    The contractor will be responsible for the design and build of all civil works, electromechanical equipment, rolling stock and rail systems.

    The selected contractor will also be required to assist in the systems maintenance and operations during an initial three-year period.

    In October last year, MEED exclusively reported that the RTA had selected US-based engineering firm Aecom to provide consultancy services for the Dubai Metro Gold Line project.

    Stage one covers concept design, stage two covers preliminary design, stage three covers the preparation of tender documents, stage four encompasses construction supervision and stage five covers the defects and liability period.

    MEED’s May 2026 report on the UAE includes:

    > COMMENT: Conflict tests UAE diversification
    > GVT &: ECONOMY: UAE economy absorbs multi-sector shock
    > BANKING: UAE banks ready to weather the storm
    > ATTACKS: UAE counts energy infrastructure costs
    > UPSTREAM: Adnoc builds long-term oil and gas production potential
    > DOWNSTREAM: Adnoc Gas to rally UAE downstream project spending
    > POWER: Large-scale IPPs drive UAE power market
    > WATER: UAE water investment broadens beyond desalination
    > CONSTRUCTION: War casts shadow over UAE construction boom
    > TRANSPORT: UAE rail momentum grows as trade routes face strain

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16919605/main.png
    Yasir Iqbal
  • Iraq oil exports drop by 89% in April

    20 May 2026

    Register for MEED’s 14-day trial access 

    Iraq exported 10 million barrels of crude in April, an 89% drop compared to the 93 million barrels that were exported the month before the Iran conflict, according to the country’s new Oil Minister, Basim Mohammed Khudair.

    Oil exports generated just over $1bn in April, down from $6bn in February, according to a separate statement from the ministry.

    The decline in export volumes and revenues is due to the disruption to shipping through the Strait of Hormuz in the wake of the US and Israel’s war with Iran, which started on 28 February.

    The country is exporting crude by sea through the Strait of Hormuz, as well as from Kirkuk through the Iraq-Turkiye Pipeline (ITP).

    Iraq has plans to increase flows through the ITP to 500,000 barrels a day (b/d), according to Khudair.

    The minister said an increase in crude output from the north of the country depends on the return of global oil companies to the Kurdistan region.

    “The government is treating the energy file in the Kurdistan region as a priority,” he said.

    Many international companies in the Iraqi Kurdistan region suspended their operations in the wake of the US and Isreal attacking Iran on 28 February.

    Khudair said Iraq is currently producing a total of 1.4 million b/d of crude.

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

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the May 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16913742/main.jpg
    Wil Crisp
  • Iraq risks defaulting on payments for $10bn oil project

    20 May 2026

     

    Register for MEED’s 14-day trial access 

    Iraq’s state-owned upstream operator Basra Oil Company (BOC) risks defaulting on payments for the $27bn Gas Growth Integrated Project (GGIP) due to fallout from the US and Israel’s war with Iran.

    Phase one of the GGIP is expected to be worth about $10bn and BOC holds a 30% stake in the project, while its partners France’s TotalEnergies and QatarEnergy hold 45% and 25%, respectively.

    The consortium formalised the investment agreement with the Iraqi government in September 2021.

    As part of the investment agreement, BOC was expected to make payments to fund the development of the project and the money from these payments was expected to come from oil revenues.

    Due to disruption to the shipping of oil via the Strait of Hormuz in the wake of the US and Israel’s war on Iran, which started on 28 February, BOC’s revenues from oil have declined significantly, impacting the company’s ability to provide funds for the project.

    BOC could default on payments for the project within four to six months if disruption to shipping through the Strait of Hormuz continues, according to industry sources.

    BOC has already informed TotalEnergies and QatarEnergy that it is going though liquidity problems because it is unable to export normal volumes of oil, sources said.

    When contacted about the project’s financial issues, TotalEnergies referred MEED to comments made by the company’s chief executive Patrick Pouyanne on 29 April.

    He said: “We have maintained a team in Iraq, in Basra, of 20 TotalEnergies’ staff, who are supervising the progress of the GGIP projects on the ground, with around 5,000 workers there.”

    He added: “This conflict immediately has some impact on TotalEnergies' operations. And we have been, by the way, very transparent, since day one, to disclose all the impacts on our activities.”

    TotalEnergies declined to answer questions about potential changes to the schedule for the GGIP and whether there are alternative plans in place that provide for a situation where BOC could not deliver agreed funds.

    GGIP masterplan

    The GGIP programme is focused on developing four major projects in Iraq.

    These are:

    • The Common Seawater Supply Project (CSSP)
    • The Ratawi gas processing complex
    • A 1GW solar power project for Iraq’s electricity ministry
    • A field development project at Ratawi, known as the Associated Gas Upstream Project (AGUP)

    The CSSP is designed to support oil production in Iraq’s southern oil and gas fields – mainly Zubair, Rumaila, Majnoon, West Qurna and Ratawi – by delivering treated seawater for injection, a method used to boost crude recovery rates and improve long-term reservoir performance.

    China Petroleum Engineering & Construction Corporation (CPECC) won a $1.61bn contract in May to execute engineering, procurement and construction (EPC) work for the gas processing complex at the Ratawi field development.

    CPECC’s project team based in its Dubai office is performing detailed engineering work on the project.

    In August last year, TotalEnergies awarded China Energy Engineering International Group the EPC contract for the 1GW solar project at the Ratawi field. A month later, QatarEnergy signed an agreement with TotalEnergies to acquire a 50% interest in the project.

    The 1GW Ratawi solar scheme will be developed in phases, with each phase coming online between 2025 and 2027. It will have the capacity to provide electricity to about 350,000 homes in Iraq’s Basra region.

    The project, consisting of 2 million bifacial solar panels mounted on single-axis trackers, will include the design, procurement, construction and commissioning of the photovoltaic power station site and 132kV booster station.

    Separately, in June, TotalEnergies awarded China Petroleum Pipeline Engineering an EPC contract worth $294m to build a pipeline as part of a package known as the Ratawi Gas Midstream Pipeline.

    Also, TotalEnergies awarded UK-based consultant Wood Group a pair of engineering framework agreements in April 2025, worth a combined $11m, under the GGIP scheme.

    The agreements have a three-year term under which Wood will support TotalEnergies in advancing the AGUP.

    One of the aims of the AGUP is to debottleneck and upgrade existing facilities to increase production capacity to 120,000 barrels a day of oil on completion of the first phase, according to a statement by Wood.

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

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the May 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16913732/main.jpg
    Wil Crisp
  • Contractors submit best offers for major Adnoc Onshore project

    20 May 2026

     

    Register for MEED’s 14-day trial access 

    Contractors have submitted revised commercial offers to Adnoc Onshore, a subsidiary of Abu Dhabi National Oil Company (Adnoc Group), for a project involving the tie-in of several wells in the Bab and North East Bab oil field developments in Abu Dhabi.

    Located 84 kilometres southwest of the city of Abu Dhabi, the Bab field has been in production since 1960 and is the emirate’s first oil-producing asset. The North East Bab cluster comprises the Al-Nouf, Rumaitha and Shanayel fields. 

    The One Tie-In project at the Bab and North East Bab field developments is integral to Adnoc Onshore’s contribution to its parent company Adnoc Group’s objective of achieving an oil production capacity of 5 million barrels a day (b/d) by 2027 – a campaign known as Accelerated Integrated Programme 5. The Abu Dhabi energy giant currently has a spare capacity of 4.85 million b/d.

    According to sources, the following contractors are understood to be among those bidding for the project:

    • Galfar Emirates (UAE branch of Oman’s Galfar Engineering & Construction)
    • Jereh (China)
    • Kalpataru Projects International (India)
    • Matrix Construction (UAE)
    • Robt Stone Middle East (UAE)
    • Target Engineering Construction Company (UAE)

    Adnoc Onshore is understood to have started the tendering process for the Bab and North East Bab One Tie-In project last year, with contractors submitting technical and commercial bids this year.

    Following the evaluation of bids, Adnoc Onshore sought best commercial offers from the bidders, which contractors submitted earlier in May, sources told MEED.

    Adnoc Onshore’s budget for the project is estimated to be $1.2bn, according to sources.

    The broad scope of work on the project covers residual engineering, procurement of any material not part of free issued material, construction, site survey, installation, inspection and testing, pre-commissioning and commissioning support, to include new wellsite facilities, including a new mini-pad, well bay and cluster at the Bab and North East Bab field developments.

    Adnoc Onshore has divided the scope of work on the Bab and North East Bab One Tie-In project into 18 packages, which are as follows:

    Bab asset

    Package 1:

    Off-pad – Demolition and construction of existing oil producing wells as per high hydrogen sulphide (H2S) standard package.

    Package 2:

    Off-pad – Construction of new oil producing wells as per high H2S standard package.

    Package 3:

    On-pad – Demolition and construction of existing oil producing wells as per high H2S standard package.

    Package 4:

    On-pad – Construction of new oil producing wells as per high H2S standard package.

    Package 5:

    On-pad – Construction of facilities at mini-pad, pad or well bay for tie-in new oil producing wells as per high H2S standard package.

    Package 6:

    Off-pad – Construction of new oil producing wells (low H2S) as per standard package.

    Package 7:

    • Construction of water supply, disposal and injection wells as per standard package;
    • Construction of off-pad water injection wells;
    • Construction of on-pad water injection wells and water injection manifold.

    Package 8:

    Off-Pad – Digitalisation of existing wells.

    Package 17:

    • Well bay: On-pad wells, flowline, common facilities (PSS, CI skid, WHCP), overhead line;
    • Mini-pad: On-pad wells, transfer line, blow down header, common facilities (PSS, manifold-OIL, MPFM, CI SKID, WHCP, drain oil network, pig launcher, receiver, potable water system), overhead line;
    • Off-pad: Gas lift oil producer well;
    • On-pad: Gas lift oil producer;
    • Electrical submersible pump (ESP) well: on-pad;
    • ESP well: off-pad.
    North East Bab asset

    Package 9:

    Cluster-based – Construction of new oil producing wells at Al-Nouf.

    Package 10:

    Cluster-based – Construction of new water alternating gas (WAG) injection wells at Al-Nouf.

    Package 11:

    Remote – Construction of oil producing wells.

    Package 12:

    Remote – Construction of WAG wells.

    Package 13:

    Cluster-based – Construction of oil producing wells at Rumaitha and Shanayel.

    Package 14:

    Cluster-based – Construction of WAG wells at Rumaitha and Shanayel.

    Package 15:

    Cluster-based – Construction and/or modifications of oil production/test manifold, gas injection/gas test manifold, let down gas manifold well head control panel, gas supply connection for injection, gas supply connection for gas lift. Chemical injection skid, water injection manifold, maintenance flare package. Installation of new pig traps, installation of hot tap and extension of cluster plot.

    Package 18:

    • Al-Nouf cluster: Common facilities (ETR, ITR, vent stack, overhead line, oil manifold, test manifold, gas lift manifold, drain oil tank, common pipe rack, etc.), gas lift oil producer wells, WAG injection wells;
    • Rumaitha cluster: Common facilities (ETR, ITR, vent stack, overhead line, oil manifold, test manifold, gas lift manifold, drain oil tank, common pipe rack, etc.), gas lift oil producer wells, WAG injection wells.
    Bu Hasa asset

    Package 16:

    Off-pad – Digitalisation of existing wells.

    Adnoc Onshore is Adnoc Group’s largest oil-producing subsidiary, accounting for 2 million b/d and about 7 billion cubic feet a day of associated gas production from four main onshore hydrocarbons field developments in Abu Dhabi – namely Bab, Bu Hasa, North East Bab and South East.

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

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the May 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16911726/main.jpg
    Indrajit Sen
  • Majid Al-Futtaim to develop $17bn Dubai South community

    19 May 2026

    Register for MEED’s 14-day trial access 

    Dubai-based developer Majid Al-Futtaim has signed an agreement with Dubai South to develop a AED62bn ($17bn) mixed-use community in the Dubai South area of the city.

    The 22-million-square-foot development will include residential and retail components, anchored by a shopping mall.

    Further project details and a construction timeline have yet to be disclosed.

    In October last year, Majid Al-Futtaim announced new investments in Saudi Arabia and the UAE.

    It signed an agreement with Saudi gigaproject developer Diriyah Company to introduce a Vox Cinemas multiplex and seven retail brands to Diriyah Square, part of the Diriyah project in Riyadh.

    The retail outlets will cover approximately 5,534 square metres (sq m), while Vox Cinemas will occupy about 7,632 sq m.

    The developer will bring international brands to Diriyah, including Shiseido, Lululemon, Crate & Barrel, Abercrombie & Fitch, AllSaints, CB2 and Hollister.

    In Dubai, Majid Al-Futtaim also announced plans to launch Ghaf Woods Mall within its Ghaf Woods residential community in Dubailand. 

    According to an official statement, once completed, Ghaf Woods Mall will be the 30th mall in the developer’s portfolio and its 19th in the UAE.

    In April last year, Majid Al-Futtaim revealed plans to develop a mixed-use project in Riyadh at an estimated cost of about SR17.5bn ($4.6bn).

    According to media reports, the development will cover an area of 850,000 sq m and will include residential, commercial, office and entertainment components.

    In the same month, the firm said that it will invest AED5bn ($1.4bn) to upgrade Dubai’s Mall of the Emirates with new retail, dining, wellness and entertainment facilities.

    According to an official statement, the 20,000 sq m expansion will add 100 new stores.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16909504/main5915.jpg
    Yasir Iqbal