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
  • Saudi Arabia’s Misk tenders residential package

    17 April 2026

     

    Saudi Arabia’s Mohammed Bin Salman Foundation (Misk Foundation) has floated two tenders for the construction of a residential community in District 5 of Prince Mohammed Bin Salman Nonprofit City in Riyadh.

    The first tender is split into two packages, one that covers the construction of 237 villas and the other covering 223.

    The second tender covers the construction of a community centre, swimming pool, mosque and school.

    The bid submission deadline for both tenders is 27 April.

    Misk Foundation is jointly developing the project in collaboration with local real estate developer Kinan.

    The estimated SR900m ($240m) project will span an area of about 121,692 square metres.

    In March 2022, the Misk Foundation released the masterplan for Prince Mohammed Bin Salman Nonprofit City.

    Saudi Crown Prince Mohammed Bin Salman Bin Abdulaziz Al-Saud said in November 2021 that the Misk Foundation development in Riyadh will be the world’s first non-profit city.

    “Prince Mohammed Bin Salman Nonprofit City, which implements the digital twin model, will host academies; colleges; Misk schools; a conference centre; a science museum; and a creative centre offering a space to support the ambitions of innovators in sciences and new-generation technology, such as AI [artificial intelligence], IoT [Internet of Things] and robotics,” he said.  

    “It will also feature an arts academy and art gallery, a performing arts theatre, a play area, a cooking academy and an integrated residential complex.

    “In addition, the city will host venture capital firms and investors to support and incubate innovative enterprises to drive community contributions from around the world.”

    The consultants working on the project include Germany’s Albert Speer + Partner as master planner and architect, and UK-based Buro Happold as the engineer. The project manager for the first phase of construction is UK-based Mace.

    MEED’s April 2026 report on Saudi Arabia includes:

    > COMMENT: Risk accelerates Saudi spending shift
    > GVT &: ECONOMY: Riyadh navigates a changed landscape
    > BANKING: Testing times for Saudi banks
    > UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
    > DOWNSTREAM: Saudi downstream projects market enters lean period
    > POWER: Wind power gathers pace in Saudi Arabia
    > WATER: Sharakat plan signals next phase of Saudi water expansion
    > CONSTRUCTION: Saudi construction enters a period of strategic readjustment
    > TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure push

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16440697/main.png
    Yasir Iqbal
  • Saipem wins $400m of Safaniya field work from Aramco

    17 April 2026

    Register for MEED’s 14-day trial access 

    Italian contractor Saipem has announced winning two offshore engineering, procurement, construction and installation (EPCI) contracts in Saudi Arabia, worth approximately $400m, which represent Saudi Aramco’s next expansion phase of the Safaniya offshore oil field development.

    MEED recently reported that Aramco had selected Saipem for the two contracts – numbers 154 and 155 on its Contract Release and Purchase Order (CRPO) system.

    Fabrication activities for the two contracts will be executed at Saipem’s Saudi fabrication yard in Dammam, Saipem Taqa Al-Rushaid Fabricators Company, the Milan-listed company said in its statement.

    Prior to winning the contracts for CRPOs 154 and 155, Saipem also secured the contract for CRPO 156, valued at about $500m, which forms the third package in Aramco’s latest Safaniya expansion phase.

    Aramco issued the three CRPOs to its Long-Term Agreement (LTA) pool of offshore contractors in February last year, with an initial bid submission deadline of 31 July. Aramco later extended the deadline to 28 August and then again to 31 August, with LTA contractors submitting bids on that date.

    The brief scope of EPCI work on the three tenders is as follows:

    CRPO 154:

    EPCI of a water injection tie-in platform; two production deck modules (PDMs)/wellhead platforms; approximately 5 kilometres (km) of associated pipeline, with diameters of 24 inches, and approximately 15km of 15kV cables at Safaniya; hook-ups; and subsea valve skids.

    CRPO 155:

    EPCI of four PDMs; intra-field and main trunklines to shore; and jackets.

    CRPO 156:

    EPCI of a 48-inch trunkline, covering a distance of about 65km offshore and 12km onshore, from the Safaniya offshore oil field to the onshore processing facility; and associated structures such as subsea hook-ups.

    The Safaniya field is the world’s largest offshore oil field, with a production capacity of nearly 1.2 million barrels a day. Discovered in 1951, the field is located in the Gulf waters, approximately 265km north of Aramco’s headquarters in Dhahran.

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

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

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

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16439869/main5806.jpg
    Indrajit Sen
  • Ora Developers adds land bank to its Bayn masterplan

    17 April 2026

    Egyptian firm Ora Developers has signed a land acquisition agreement with Abu Dhabi-based developer Modon Holding to acquire an additional 4.8 million square metres (sq m) of land in the Ghantoot area between Abu Dhabi and Dubai.

    Ora Developers said that the land acquisition will increase the existing Bayn masterplan from 4.8 million sq m to 9.6 million sq m.

    The firm added that the total investment in the masterplan upon completion is expected to reach AED30bn ($8bn).

    In January, Ora Developers appointed six engineering consultancies to lead the development of the first phase of its Bayn residential community project.

    The developer appointed UK-based firm Mace to lead the overall project management.

    Canadian firm WSP will serve as the masterplan, infrastructure, landscape and water bodies design consultant, as reported by MEED in May last year.

    Another US firm, Aecom, will provide construction supervision services.

    Hong Kong’s 10 Design is the project’s architectural concept design consultant.

    Local firm Dewan Architects & Engineers is the project’s design consultant and architect of record.

    The UK’s Currie & Brown is the cost consultant.

    The first phase will offer 805 villas and townhouses, and the project is expected to be completed in 2028.

    The project will also include a neighbourhood park, sports facilities, a water park, a five-star hotel and a shopping mall.

    In December last year, Abu Dhabi government-owned contractor NMDC Group won a AED142m ($39m) contract from Ora Developers.

    The contract scope covers the execution of enabling works on the Bayn masterplan.

    The main construction works on the project's first phase are expected to begin in the second quarter of this year.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16439214/main.jpg
    Yasir Iqbal
  • Firms prepare best offers for Riyadh Metro Line 7

    17 April 2026

     

    Consortiums are preparing to submit best and final offers on 21 April for the design and build of Riyadh Metro’s Line 7.

    The Royal Commission for Riyadh City (RCRC) opened the commercial proposals for the contract earlier this month, as MEED reported.

    Contractors submitted their commercial proposals on 31 January.

    In February, MEED reported that the RCRC had started post-tender clarifications with bidders for the project.

    The project involves constructing a metro line linking the Qiddiya Entertainment City development, King Abdullah International Gardens, King Salman Park, Misk City and Diriyah Gate.

    The line will be about 65 kilometres (km) long, of which 47km will be underground and 19km will be elevated. It will have 19 stations, 14 of which will be underground and five above ground.

    According to sources close to the project, the consortiums are:

    • Alstom (France) / Webuild (Italy) / Nesma (local) / China Harbour Engineering Company (China)
    • Siemens (Germany) / FCC (Spain) / Orascom Construction (Egypt) / Shibh Al-Jazira Contracting Company (local)
    • Hitachi Rail (Japan) / Larsen & Toubro (India) / Albawani (local) / Kalyon (Turkiye) / Cengiz (Turkiye) 
    • CRRC (China) / Mapa (Turkiye) / Limak (Turkiye)

    Earlier this month, MEED exclusively reported that firms have submitted bids for a contract covering the project management consultancy services for the construction of Riyadh Metro Line 7.

    Riyadh Metro’s first phase features six lines with 84 stations. The RCRC completed the phased roll-out of the Riyadh Metro network when it started operating the Orange Line in January this year.

    Construction has also begun on the next phase of Riyadh Metro, the Line 2 extension.

    In July last year, MEED exclusively reported that the RCRC had awarded an estimated $800m-$900m contract for the project.

    The contract was awarded to Arriyadh New Mobility Consortium, led by Italy’s Webuild. 

    The group also includes India’s Larsen & Toubro, Saudi Arabia’s Nesma & Partners and France’s Alstom.

    The Orange Line, also known as Line 3, stretches from east to west, from Jeddah Road to the Second Eastern Ring Road, covering a total distance of 41km. 

    The line covers 8.4km, of which 1.3km is elevated and 7.1km is underground. It includes five stations – two elevated and three underground.

    It will run from the current terminus of Line 2 at King Saud University (KSU) and continue to new stations at KSU Medical City, KSU West, Diriyah East and Diriyah Central – where it will interchange with the planned Line 7 – before terminating at Diriyah South.

    MEED’s April 2026 report on Saudi Arabia includes:

    > COMMENT: Risk accelerates Saudi spending shift
    > GVT &: ECONOMY: Riyadh navigates a changed landscape
    > BANKING: Testing times for Saudi banks
    > UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
    > DOWNSTREAM: Saudi downstream projects market enters lean period
    > POWER: Wind power gathers pace in Saudi Arabia
    > WATER: Sharakat plan signals next phase of Saudi water expansion
    > CONSTRUCTION: Saudi construction enters a period of strategic readjustment
    > TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure push

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16438898/main.jpg
    Yasir Iqbal
  • Kuwait prepares to tender LNG project

    17 April 2026

    Kuwait's Central Agency for Public Tenders (Capt) is preparing to issue a tender for the construction of an LNG reliquefaction unit at Al-Zour LNG import terminal.

    The client on the project is state-owned Kuwait Integrated Petroleum Industries Company (Kipic).

    The project is focused on the development of a boil-off-gas unit at the import terminal, according to a report in Kuwait’s Al-Anba newspaper.

    The project scope include engineering, procurement and construction works, along with pre-commissioning, commissioning and performance testing services.

    The list of pre-qualified companies is:

    • Fluor (US)
    • GS Engineering & Construction (South Korea)
    • Tecnicas Reunidas (Spain)
    • Larsen & Toubro (India)
    • Hyundai Engineering (South Korea)
    • CTCI Corporation (Taiwan)
    • Daewoo Engineering & Construction (South Korea)
    • Hyundai Engineering & Construction (South Korea)
    • Saipem (Italy)
    • Samsung Engineering (South Korea)
    • Sinopec Engineering (China)
    • JGC Holdings (Japan)
    • KBR (US)
    • China National Petroleum Corporation (China)
    • Technip (France)

    Kuwait’s LNG import terminal is currently not operating due to disruption caused by the US and Israel’s war with Iran.

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

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

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

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16426605/main.png
    Wil Crisp