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
  • Kuwait halves drilling contractor pool

    22 September 2026

     

    State-owned upstream operator Kuwait Oil Company (KOC) has reduced the number of approved contractors for onshore drilling and shallow-well maintenance from 51 to 24.

    Firms that are no longer qualified include major contractors such as Italy’s Saipem, Oklahoma-based Helmerich & Payne and Houston-based Patterson-UTI Energy.

    The latest list still includes a wide range of Kuwaiti, regional and international companies, according to the latest update on its electronic system, published on 21 September 2026.

    The full list of contractors that are now qualified to participate in tenders is:

    • Burgan Company for Well Drilling, Trading & Maintenance (Kuwait)
    • Kuwait Drilling Company (Kuwait)
    • Sun Drilling Kuwait (Kuwait)
    • TDL Kuwait for Oil Rigs & Natural Gas Extraction Activities, Services and Facilities (Kuwait)
    • United Precision Drilling (Kuwait)
    • Abraj Energy Services (Oman)
    • Adnoc Drilling Company (UAE)
    • Arabian Drilling Company (Saudi Arabia)
    • Anton Oilfield Services (China)
    • China Oilfield Services (China)
    • Egyptian Drilling Company (Egypt)
    • CNPC Bohai Drilling Engineering Company (China)
    • Great Wall Drilling Company (China)
    • John Energy (India)
    • Kerui Oilfield Service (China)
    • KCA Deutag Drilling (Germany)
    • Mohammed Al-Barwani Petroleum Services (Oman)
    • Nabors Drilling International (US)
    • National Drilling & Services Company (Oman)
    • Sea & Land Drilling Contractors (Oman)
    • Sinopec International Petroleum Service Corporation (China)
    • Karamay Jianye Energy (China)
    • Modern Drilling Company (Egypt)
    • Grey Wolf Drilling International (US)

    An earlier list, which was published on 11 February, included 51 qualified companies.

    The reduction in qualified drilling contractors follows KOC’s notice on 27 April this year, informing existing qualified contractors that they would need to reapply.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19863744/main3435.jpg
    Wil Crisp
  • Abu Dhabi expects 45% emissions cut as electricity demand rises

    21 September 2026

    Register for MEED’s 14-day trial access 

    Abu Dhabi-based Emirates Water & Electricity Company (Ewec) expects carbon emissions from power and water production to fall by more than 45% by 2035 as the UAE expands renewable energy and reverse osmosis (RO) desalination.

    The state offtaker's latest long-term system planning forecasts emissions will decline from about 42 million tonnes in 2019 to approximately 23 million tonnes in 2035.

    The reduction is expected despite annual electricity demand that is forecast to rise by about 70% in 2026-33.

    Ewec said the expansion of renewable energy and the shift towards RO desalination will be the principal drivers of the reduction.

    The company plans to increase Abu Dhabi's solar capacity to 14GW by 2030 and more than 35GW by 2035. This will be supported by up to 15GW of battery storage capacity.

    According to regional project tracker MEED Projects, Ewec has over $16bn-worth of power and water projects in the execution stage as part of its long-term procurement programme to increase renewable energy and low-carbon water production capacity.

    This includes a 5.2GW Abu Dhabi solar and battery energy storage system (bess) round-the-clock renewable energy project, as well as three 1.5GW solar photovoltaic independent power projects (IPP): Al-Ajban, Al-Khazna and Al-Zarraf.

    It also comprises the 1GW Al-Dhafra open-cycle gas turbine power plant, the 2.5GW Taweelah C combined-cycle gas turbine (CCGT) plant and a separate 400MW bess IPP.

    As previously reported, it is expected that the developer's agreement for the 3.3GW Al-Nouf 1 CCGT IPP will be signed by the end of the year, while contractors are preparing to submit bids for a separate 2.6GW power plant project in Ajman.

    The expansion of solar and battery storage is expected to reduce the system's reliance on gas-fired generation. However, gas-fired generation will continue to provide flexibility to support the system and balance intermittent renewable power output, according to Ewec. 

    The offtaker also expects RO desalination to account for more than 95% of total water production by 2035, with the procurement programme supporting the Abu Dhabi Department of Energy's Clean Energy Strategic Target 2035 for electricity production and the UAE Net Zero by 2050 Strategy.

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

    Nuclear power ambitions gather pace; Kuwait keeps dealmaking alive despite war; Region invests in raising gas processing capacity.

    Distributed to senior decision-makers in the region and around the world, the September 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/19849749/main.jpg
    Mark Dowdall
  • Seven bid for Bahrain highway upgrade

    21 September 2026

    Register for MEED’s 14-day trial access 

    Seven contractors have submitted bids for the next phase of the Sheikh Jaber Al-Ahmed Al-Sabah Highway upgrade project.

    According to results published by the Bahrain Tender Board, the firms that have submitted bids include:

    • Nass Contracting Company
    • Haji Hassan Group
    • Almoayyed Contracting Group
    • Mohammed Abdulmohsen Al-Kharafi & Sons
    • Eastern Asphalt & Concrete Production
    • Cebarco Bahrain
    • Kingdom Asphalt

    The contract scope includes expansion works on 2 kilometres of the highway. It consists of a four-lane dual carriageway with service roads on both sides.

    The scope of works also includes excavation and backfill work, construction of stormwater drainage networks, a pumping station, installation of ducts for future utilities, upgraded street lighting, traffic signs and directional signage.

    The project aims to improve traffic capacity, reduce congestion and enhance safety along the transport corridor linking Manama with industrial zones.

    In April, MEED reported that Bahrain had approved a financing agreement framework to fund the construction of the next phase of the Sheikh Jaber Al-Ahmed Al-Sabah Highway upgrade.

    In March last year, the Kuwait Fund for Arab Economic Development and the Bahraini government signed a KD10m ($32.4m) loan agreement to fund the second phase of the project, which is expected to cost about $404m.

    This was followed in September 2025 by the appointment of US-based Parsons Corporation on a $1.5m contract to provide pre-contract engineering consultancy services for the project.

    According to data from regional project tracker MEED Projects, construction of the first phase was completed in 2020.

    A joint venture of local firm Nass Contracting and Kuwait’s KCC Engineering & Contracting undertook the main construction works.

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

    Nuclear power ambitions gather pace; Kuwait keeps dealmaking alive despite war; Region invests in raising gas processing capacity.

    Distributed to senior decision-makers in the region and around the world, the September 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/19847073/main.png
    Yasir Iqbal
  • Teams prepare bids for Oman PPP wastewater project

    21 September 2026

     

    At least three consortiums are preparing bids for a contract to develop and operate two major sewage treatment plants (STPs) in Oman.

    The public-private partnership (PPP) project covers expanding two Muscat-based plants: the Al-Ansab STP (phase three) and the Al-Amerat STP (phase two). It will be delivered under a build-own-operate-transfer model.

    At Al-Ansab, capacity will increase from 125,000 cubic metres a day (cm/d) to 207,000 cm/d. At Al-Amerat, capacity will rise from 18,000 cm/d to 54,000 cm/d.

    According to sources, the bidders for the project include:

    • Etihad Water & Electricity (UAE) / Metito (UAE)
    • Lamar Holding (Bahrain) / Tawzea (Saudi Arabia)
    • Civil Works Company (CWC, Saudi Arabia)  / Suez (France)

    The bid submission deadline is 5 January 2027.

    State-owned Nama Water Services (NWS) issued a request for proposals for the project in July, as exclusively reported by MEED.

    It is understood that Veolia (France), Miahona (Saudi Arabia) and Samsung E&A (South Korea) are also among the firms that prequalified for the project after the request for qualifications was issued last November.

    The project scope includes the design, financing, construction, operation and maintenance of the new facilities, alongside the long-term operation of the existing facilities.

    It has been over a decade since the Al-Ansab STP first entered full operation at a capacity of about 54,000 cm/d. In 2015, South Korea’s Doosan Ennerbility, formerly Doosan Heavy Industries, was awarded the main engineering, procurement, and construction contract for the phase two expansion, which increased the facility’s maximum flow capacity to 125,000 cm/d. This phase was completed in 2017.

    Phase one of the Al-Amerat STP was awarded to a joint venture of France’s Degremont (Suez) and local contractor Al-Ansari Trading Enterprise under a design, build and short-term operation contract valued at about €50m ($58.1m). The plant was developed for Haya Water and commissioned in 2019 as part of the Muscat wastewater scheme.

    Haya Water, the former wastewater utility, was later incorporated into NWS following a government restructuring programme.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19794912/main.jpg
    Mark Dowdall
  • Oman reveals Sohar airport and Salalah Thumrait Road plans

    21 September 2026

    Oman is planning a new passenger terminal at Sohar Airport to expand regional air connectivity and strengthen the airport’s role in the national aviation network.

    According to Said Bin Hamoud Al-Maawali, Oman’s minister of transport, communications and information technology, new routes are expected to be announced before the end of the year. Potential destinations include Dammam in Saudi Arabia, Gwadar in Pakistan, and southern Iran.

    The planned terminal and additional routes will give residents of northern Oman more travel options.

    Al-Maawali also provided an update on the long-delayed Salalah-Thumrait truck road, saying the project will be procured through a conventional tendering model rather than a public-private partnership (PPP).

    In August 2023, Oman shortlisted five of eight prequalified teams to compete for the Salalah-Thumrait truck road project, which was set to be the sultanate’s first PPP road project.

    The 67-kilometre road project is specially designed for heavy vehicles. 

    The road is a key link in Dhofar’s transport network, connecting Thumrait with Salalah and supporting movement between the interior and the governorate’s main urban and economic centre.

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

    Nuclear power ambitions gather pace; Kuwait keeps dealmaking alive despite war; Region invests in raising gas processing capacity.

    Distributed to senior decision-makers in the region and around the world, the September 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/19794881/main.jpg
    Yasir Iqbal