meed-logo

line1 line2 line3
SIGN IN / REGISTER

Region remains global project finance hotspot

25 October 2024

 

This package also includes: PPP activity eases back but remains strong

While the Middle East and North Africa (Mena) region has recently become the focus of global attentions for all the wrong reasons – amid surging conflict in the Levant – advisers continue to see the adjacent Gulf as a standout market for project finance.

“The Middle East market has been buoyant compared to the project finance market in many other parts of the world,” says Matthew Escritt, a partner at the UAE office of law firm Pinsent Masons, who has advised on large regional financings. 

“By far and away, the Middle East is the place to be if you want to do big-ticket project finance.”

Major deals such as the $6.1bn financing for Neom Green Hydrogen Company, which closed in 2023, affirm the region’s continued affinity with large and sometimes complex transactions that involve senior and mezzanine facilities and bring numerous financial institutions into the mix.

The use of project finance structures across a widening array of sectors – from hard and soft infrastructure, to newer asset classes such as green energy – suggests that the Middle East will remain a hotspot for funding activity.

Ratings agency S&P Global has forecast that alongside the energy sector, the region will see significant investments in transport and social infrastructure, as well as in digitalisation, with large outlays on connectivity and a doubling of data centre capacity as the region’s population continues to grow.

Regional reconfiguration

While the Mena region as a whole has seen an uptick in activity, the picture is not even.

“Activity in Saudi Arabia has seen something of a slowdown after it became clear that some of the kingdom’s more ambitious plans were being recalibrated,” says Escritt.

“Liquidity has become tighter and we’re finding that procurers are taking longer to announce their preferred bidder.”

Appetite among international banks has been weaker for some sectors, such as social infrastructure. 

Neom’s large green hydrogen financing of 2023 remains a standout rather than the norm, although local lenders appear ready to step into the breach when circumstances allow. For example, in April of this year, when Neom secured a $2.7bn revolving credit facility to cover short-term financing requirements, it was nine local banks that ended up providing the financing.  It was, according to Neom CEO Nadhim Al-Nasr, a “natural fit” within the company’s wider funding structure.

International banks’ interest remains fixed on energy sector and infrastructure projects. Outside of these, says Escritt, the project finance market is dominated by large local banks. This, he says, has contributed to a tighter liquidity environment as these financial institutions run up against exposure limits. “The key to unlocking that market’s undoubted potential is to create conditions that improve the appetite of foreign lenders for Saudi Arabian credits,” says Escritt.

International lenders’ comfort zones were once largely focused on massive financings such as the kingdom’s Sadara petrochemicals project, which in 2013 drew commitments of $12.5bn.  

“Frankly, the days of the Sadara blockbuster-type projects are over. But there’s still some substantial projects out there,” says John Dewar, a partner at international law firm Milbank, which specialises in energy and infrastructure financings.

Dewar points out that there are still a fair number of $2bn-$4bn projects in the region, but that it is more challenging to syndicate larger scales of debt. Even export credit agency (ECA) support is not a given in the Mena region.

“Even if they’ve got large export content in them, it’s still more difficult to get them mobilised into oil and gas financings, for example. The ECAs are pulling back from those types of deals,” says Dewar. “Petrochemicals is slightly easier, but nonetheless, over the next couple of years we will see fewer agency lenders involved in the petrochemicals sector than we have at the moment.”

The UAE – Abu Dhabi in particular – remains a bright spot in the region.  

 “Abu Dhabi has shown that it is very good at getting things done,” says Escritt, whose team helped bring the Khalifa University student accommodation public-private partnership project to financial close – another significant social infrastructure project in the UAE capital. 

“There’s a strong appetite among the major project finance players for Abu Dhabi risk – they like it. 

“You are also now seeing the larger local banks stepping into this space, with Abu Dhabi Commercial Bank and First Abu Dhabi Bank in particular showing appetite for these credits,” says Escritt.

The Qatari market has proved more sluggish, although the Al-Wakra and Wukair independent sewage treatment plant project – the country’s first – has seen progress this year with a $540m financing on a 75:25 debt-to-equity ratio basis, including a soft mini-perm structure.

Emergent energy markets

Energy has traditionally been a magnet for project financing in the Mena region and should support one of the emerging areas within that segment – carbon capture and storage (CCS), which is an area of focus for regional oil companies.

Saudi Aramco’s first phase of its Accelerated Carbon Capture and Sequestration project is expected to be the world’s largest CCS hub upon completion. Aramco aims to transport and capture 9 million tonnes a year of emissions by 2027 in its first phase.

Carbon-capture financing could prove an attractive opportunity for banks, swelling the liquidity that is already there for hydrogen schemes.

Lender appetite has increased for these new energy schemes. “[Saudi Arabia] had a large splash on solar power recently with Acwa Power financings, while Saudi Aramco will have relatively large financing requirements for its energy transition projects. The [kingdom is] now still very much focused on project finance transactions,” says Dewar.

With Oman pushing green hydrogen projects in Duqm and Dhofar, and Egypt backing an ambitious renewables programme under a structure that investors have found to be attractive and bankable, project financing should make more headway in the low-carbon space across the region. 

In renewables, there is more depth in the market and more lenders willing to participate, although as law firm AO Shearman has noted, there remains a deficiency in bankability and unpredictable development costs in green hydrogen schemes.

This piqued interest in non-fossil fuel project funding contrasts with the reduced appetite globally among banks for traditional hydrocarbons schemes. “If you’re looking at oil and gas financing, then it’s increasingly a struggle outside of some of the Chinese banks,” says Dewar. “That’s not to say that in the Middle East there aren’t still a number of local and regional banks that are happy to participate in the market.”

Government support will remain critical in getting centrepiece financings under way in areas such as green hydrogen. And, as AO Shearman notes, given the nature of the supply chain for green hydrogen projects, there is value in including ECA-supported debt in the financing mix. In particular, where Mena projects involve key equipment coming in from outside the region, ECAs have an important role to play in building confidence.

ECAs remain a mainstay in traditional Gulf downstream sectors such as petrochemicals. For example, South Korea’s Hyundai Engineering & Construction has tapped $1bn of project financing support from the Export-Import Bank of Korea for the Amiral petrochemicals project in Saudi Arabia. As the lone South Korean contractor deployed on the estimated $7bn scheme, it therefore enjoys sole access to this project financing facility.

Project sponsors will also be looking to capital market instruments, despite these losing favour in recent years as the global
interest-rate environment rendered proposed bond components in project financings less appealing to many.

With the US Federal Reserve in a gradual monetary easing cycle, however, the use of project-related bonds may begin to revive.

For example, Saudi Aramco has managed to complete some large gas pipeline financings using acquisition facilities that were refinanced in the bond and sukuk markets.

“As the interest-rate environment changes, that’s going to get more people thinking about bond refinancing activity. We’ll see a bit more in a year’s time, when interest rates have come down and investors readjust and start to look for more attractive yields,” says Dewar.

With a different interest-rate climate in place, and more lenders and project backers gaining experience in the new energy schemes that are emerging in the Gulf and the wider Mena region, the hope is that banks will be dipping back into the region with transactions that will maintain its status as the global project finance hotspot for a while longer.

https://image.digitalinsightresearch.in/uploads/NewsArticle/12678172/main.gif
James Gavin

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

Click here to register
Exclusive from Meed
Related Articles
  • Contractors submit bids for Saudi gas processing plant project

    8 May 2026

     

    Contractors have submitted bids to Saudi Aramco subsidiary Aramco Gulf Operations Company (AGOC) for a project to build an onshore gas processing plant in Saudi Arabia’s Khafji that will draw and process gas from the Dorra offshore gas field, located in waters of the Saudi-Kuwait Neutral Zone.

    MEED previously reported that AGOC had divided the engineering, procurement and construction (EPC) on the Khafji gas plant project into seven packages, and issued the main tenders for those last year.

    Contractors were initially set deadlines of 24 October for technical bid submissions and 9 November for commercial bids. AGOC later extended the bid submission deadline to 22 December, and then until 22 April. A final deadline of 30 April was set, with contractors submitting bids by that date, according to sources.

    The seven EPC packages cover works including open-art and licensed process facilities, pipelines, industrial support infrastructure, site preparation, overhead transmission lines, power supply systems and main operational and administrative buildings, with their breakdown as follows:

    • Package 1 – Open-art facilities
    • Package 2 – Licensed facilities
    • Package 3 – Industrial support facilities
    • Package 4 – Pipelines
    • Package 5 – Site preparation
    • Package 6 – Overhead transmission lines plus power supply (from Saudi Electricity Company)
    • Package 7 – Headquarters complex

    Saudi Arabia and Kuwait have been pressing ahead with their plan to jointly produce 1 billion cubic feet a day (cf/d) of gas from the Dorra gas field.

    The two countries have been producing oil from the Neutral Zone – primarily from the onshore Wafra field and offshore Khafji field – since at least the 1950s. With a growing need to increase natural gas production, they have been working to exploit the Dorra offshore field, understood to be the only gas field in the Neutral Zone.

    Discovered in 1965, the Dorra gas field is estimated to hold 20 trillion cubic metres of gas and 310 million barrels of oil.

    The Khafji gas plant project is one of three multibillion-dollar projects launched by subsidiaries of Saudi Aramco and Kuwait Petroleum Corporation (KPC) to produce and process gas from the Dorra field that has advanced in recent months.

    Dorra field facilities project

    Al-Khafji Joint Operations (KJO), which is jointly owned by AGOC and KPC subsidiary Kuwait Gulf Oil Company (KGOC), has divided the scope of work on the Dorra field facilities project into four EPC packages – three offshore and one onshore.

    India’s Larsen & Toubro Energy Hydrocarbon (L&TEH) won the contract for package one of the Dorra facilities project, which covers the EPC of seven offshore jackets and the laying of intra-field pipelines. The contract awarded by KJO to L&TEH is estimated to be valued at $140m-$150m, MEED reported in October.

    Additionally, Italian, Indian and Spanish contractors have emerged as the lowest bidders for the other three EPC packages that form part of the Dorra facilities project.

    A consortium of Italian contractor Saipem and L&TEH is understood to have submitted the lowest bid for offshore packages 2A and 2B, according to sources. The only other consortium understood to have submitted bids for packages 2A and 2B comprises Abu Dhabi-based NMDC Energy and South Korea’s Hyundai Heavy Industries.

    The EPC scope of work for package 2A includes Dorra gas field wellhead topsides, flowlines and umbilicals. Package 2B involves the central gathering platform complex, export pipelines and cables.

    Spanish contractor Tecnicas Reunidas is understood to have emerged as the lowest bidder for onshore package three, sources told MEED. Package three covers the EPC of onshore gas processing facilities.

    KGOC onshore processing facilities

    The third component of the overall Dorra gas field development programme is a planned onshore gas processing facility to be built in Kuwait, which has been undertaken by KGOC.

    KGOC had been progressing with the front-end engineering and design (feed) work on the project, before the destabilising impact of the US-Israel conflict with Iran compelled the operator to put the project on hold, MEED reported in April.

    The proposed facility, estimated to be worth $3.3bn, will receive gas from a pipeline from the Dorra offshore field, which is being separately developed by KJO. The complex will have the capacity to process up to 632 million cf/d of gas and 88.9 million barrels a day of condensates from the Dorra field.

    The facility will be located near the Al-Zour refinery, owned by another KPC subsidiary, Kuwait Integrated Petroleum Industries Company.

    A 700,000-square-metre plot has been allocated next to the Al-Zour refinery for the gas processing facility and discussions regarding survey work are ongoing. The site could require shoring, backfilling and dewatering.

    The onshore gas processing plant will also supply surplus gas to KPC’s upstream business, Kuwait Oil Company, for possible injection into its oil fields.

    Additionally, KGOC plans to award licensed technology contracts to US-based Honeywell UOP and Shell subsidiary Shell Catalysts & Technologies for the plant’s acid gas removal unit and sulphur recovery unit, respectively.

    France-based Technip Energies has carried out a concept study and feed work on the entire Dorra gas field development programme.

    Progress has been hampered by a dispute over ownership of the Dorra gas field. Iran, which refers to the field as Arash, claims it partially extends into Iranian territory and asserts that Tehran should be a stakeholder in its development. Kuwait and Saudi Arabia maintain that the field lies entirely within their jointly administered Neutral Zone – also known as the Divided Zone – and that Iran has no legal basis for its claim.

    In February 2024, Kuwait and Saudi Arabia reiterated their claim to the Dorra field in a joint statement issued during an official meeting in Riyadh between Kuwaiti Emir Sheikh Mishal Al-Ahmad Al-Jaber Al-Sabah and Saudi Crown Prince and Prime Minister Mohammed Bin Salman Bin Abdulaziz Al-Saud.

    Since that show of strength and unity, projects to produce and process gas from the Dorra field have gained momentum.

    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/16734353/main5834.jpg
    Indrajit Sen
  • Teams prepare bids for Riyadh East sewage treatment plant

    8 May 2026

     

    At least six consortiums are preparing to submit bids for Saudi Arabia's Riyadh East independent sewage treatment plant (ISTP) project, according to sources.

    The project will be developed under a build‑own‑operate‑transfer model with a 25‑year concession term.

    The plant will have a treatment capacity of 200,000 cubic metres a day (cm/d) in its first phase, expanding to 500,000 cm/d in the second phase.

    MEED understands that the following consortiums are in discussions to submit bids for the project, which has a recently extended bid submission deadline of 30 June:

    • Suez (France) / Civil Works Company (Saudi Arabia) / Alwael (Saudi Arabia)
    • Saur (France) / Samsung E&A (South Korea) / Al-Bawani (Saudi Arabia) / Nesma (Saudi Arabia)
    • Alkhorayef (Saudi Arabia) / GS Inima (Spain)
    • EtihadWE (UAE) / Metito (UAE)
    • Veolia (France) / AlJomaih Energy & Water (Saudi Arabia)
    • Miahona (Saudi Arabia) / Marafiq  (Saudi Arabia)

    In December 2025, a group comprising Metito, EtihadWE and SkyBridge was selected as the preferred bidder for the Hadda ISTP project. Miahona, Marafiq Company and Buhur for Investment was selected as the reserved bidder.

    That same month, the Miahona-led consortium was selected as preferred bidder for the Arana ISTP and the Metito-led consortium was selected as the reserved bidder. Both projects have yet to reach financial close.

    The Riyadh East, Hadda and Arana ISTPs are being undertaken by state water offtaker Sharakat, formerly Saudi Water Partnership Company, in collaboration with the National Centre for Privatisation & PPP.

    In 2024, Sharakat prequalified 53 companies that could bid for the Riyadh East ISTP, part of seven planned ISTP projects it said it would procure between 2024 and 2026. The request for proposals was issued last October. 

    WSP is the technical adviser and KPMG Middle East is the lead and financial adviser on the project.

    The targeted commercial operation date for the facility is 2029.

    ISTP plans

    According to Sharakat’s recent seven-year statement, it has identified six additional large ISTPs in the development pipeline.

    These are:

    • Kharj (75,000 cm/d)
    • Abu Arish (50,000 cm/d)
    • Hafar Al-Batin (100,000 cm/d)
    • Riyadh North (TBD)
    • Najran South (50,000 cm/d)
    • Khamis Mushait (50,000 cm/d)

    The company is also pursuing a nationwide small sewage treatment plant programme covering about 139 smaller ISTPs grouped into seven clusters.

    These are designed to add about 521,450 cm/d of additional treatment capacity across the kingdom.

    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/16734156/main.jpg
    Mark Dowdall
  • Saudi Arabia tenders Jeddah-Mecca highway PPP

    8 May 2026

     

    Saudi Arabia’s Roads General Authority (RGA) and the National Centre for Privatisation & PPP (NCP) have tendered the contract for the development of the Jeddah-Mecca highway project.

    The tender was issued on 19 April, with a bid submission deadline of 19 August.

    The scope of the tender is split into two sections: development of motor service areas (MSA) and highway services. 

    Under the MSA component, the company will develop, permit, finance, design, engineer, procure, construct, complete, test, commission, insure, operate and maintain three MSAs along the highway.

    The contract term is 25 years, including two years of the construction period.

    Each MSA plot will cover 34,500 square metres and will include facilities such as fuel stations, electric vehicle charging, truck services, tyre and oil change, car wash and repair, retail and food outlets, ATMs, restrooms, mosques, parking, landscaping and other associated utilities.

    The highway services component will include insurance, operation and maintenance of highway assets for 10 years.

    The 64-kilometre (km) Jeddah-Mecca highway has four lanes in each direction. The construction works on 51km are complete, while the rest is under construction and scheduled for completion in 2027.

    In March, the RGA and NCP prequalified three bidders to develop the project. These were:

    • Algihaz Holding / ICA Construction (local/Turkiye)
    • Lamar Holding / Shaanxi Construction Engineering Group Corporation (Bahrain/China)
    • Mada International Holding (local)

    The expression of interest notice for the project was first issued in October 2024, as MEED reported.

    The project is one of four planned highway schemes in the kingdom’s privatisation and public-private partnership (P&PPP) pipeline.

    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/16731199/main.jpg
    Yasir Iqbal
  • US sanctions Iraq’s deputy oil minister

    8 May 2026

    The US has sanctioned Iraq’s Deputy Oil Minister Ali Maarij Al-Bahadly, in another blow for the country’s oil and gas sector.

    In a statement released by the US Treasury, it said that he “abuses his position to facilitate the diversion of oil to be sold for the benefit of the Iranian regime and its proxy militias in Iraq”.

    The US Department of the Treasury’s Office of Foreign Assets Control (Ofac) has also designated three senior leaders of the militias Kata’ib Sayyid Al-Shuhada and Asa’ib Ahl Al-Haq. 

    In its statement, it said that the US will continue to hold these groups and other militias in Iraq, such as Kata’ib Hizballah, accountable for their attacks against US personnel and civilians, diplomatic facilities and businesses across Iraq.

    Secretary of the Treasury, Scott Bessent, said: “Like a rogue gang, the Iranian regime is pillaging resources that rightfully belong to the Iraqi people.”

    He added: “Treasury will not stand idly by as Iran's military exploits Iraqi oil to fund terrorism against the United States and our partners.”

    Ofac said that it designated Iraq’s deputy minister of oil on 7 May because he had been “instrumental in facilitating the diversion of Iraqi oil products to benefit known Iran-affiliated oil smuggler Salim Ahmed Said, as well as Iran-backed terrorist militia Asa’ib Ahl Al-Haq (AAH)”.

    It added: “For years, Maarij has used his official positions, first as the head of the Iraqi parliament’s oil and gas committee, and then within the Iraq Ministry of Oil, to enrich Said, AAH, and by extension, Iran.”

    The US Treasury said that it designated Said in June 2025 for running a network of companies selling Iranian oil falsely declared as Iraqi oil to avoid sanctions.

    In its statement, it said: “Integral to this operation was Said’s ability to obtain favoured access to Iraqi oil and procure forged documentation from Iraqi government officials, legitimising illicit oil.

    “To that end, Said was responsible for bribing complicit officials in the Iraqi government, as well as reportedly installing Maarij in his official position.”

    Since 2018, Maarij has held several positions in Iraq’s Oil Ministry, including head of the licensing and contracts office, deputy minister, and acting oil minister. 

    The US Treasury said that, in his official capacities, Maarij enabled Said to illicitly procure oil products by granting exportation rights to Said’s companies. 

    It claimed that Maarij authorised trucking several million dollars’ worth of oil a day from the Qayarah oil field to VS Oil Terminal in Khor Zubayr for export.

    The US sanctioned VS Oil Terminal in July last year.

    The US Treasury said that VS Oil oversaw the mixing of Iranian oil with Iraqi oil before being shipped to market. 

    It also said that Maarij is also responsible for falsifying documentation on the provenance of oil for Said’s network, enabling it to be smuggled to market disguised as purely Iraqi oil.

    Neither Iraq nor Iran has responded to the announcement of the new sanctions.

    The sanctions were announced as the US and Iran battle over control of the Strait of Hormuz, which has seen significant disruption to shipping since the US and Israel started their war with Iran on 28 February 2026.

    Iraq’s oil and gas sector is currently going through a crisis due to the disruption to shipping through the Strait of Hormuz, which has caused the country’s oil exports to collapse.

    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/16729987/main.png
    Wil Crisp
  • Sabic registers profit in first quarter of 2026

    8 May 2026

    Saudi Basic Industries Corporation (Sabic) returned to profit in the first quarter of 2026, posting a net income of SR13.2m ($3.52m) compared to a SR1.21bn loss a year earlier. 

    The Saudi petrochemicals ​giant posted adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of SR4.15bn for the three months to 31 March, up 25% from the previous quarter.

    The company’s revenue fell 6% quarter-on-quarter to SR26.15bn ($6.97m).

    Adjusted net income was recorded in at SR816m, compared to a loss in the previous quarter, while adjusted earnings per share stood at SR0.27.

    Adjusted earnings before interest and taxes rose to SR1.45bn, an increase of SR1.01bn from the prior quarter.

    Sabic said its net position shifted to a debt of SR2.77bn at the end of March, from a net cash position of SR3.61bn at the end of 2025.

    “Our transformation journey continues to deliver performance improvements that unlock greater value for our shareholders. We realised $220m at the Ebitda level on a recurring basis during the first quarter of 2026, in line with our planned improvement rate. This keeps us on track towards our cumulative 2030 annual target of $3bn, consisting of $1.4bn in cost excellence and $1.6bn in value creation,” Sabic CEO Faisal Alfaqeer said.

    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/16719476/main1840.jpg
    Indrajit Sen