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  Iraq leads non-GCC project finance activity

  28 October 2025

  This package also includes: Region sees evolving project finance demand

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  Iraq’s first airport public-private partnership (PPP) project is making steady progress, with bids submitted for the contract to redevelop the country’s main aviation hub, Baghdad International airport.

  The project, which could cost up to $600m, involves rehabilitating, expanding, financing, operating and maintaining the airport and increasing its capacity to around 15 million passengers a year. It is emblematic of Iraq’s growing position in the PPP market in the wider Middle East and North Africa (Mena) region outside of the GCC, where the country now outpaces the likes of Egypt and Morocco.

  Iraq’s Transport Ministry and General Company for Airport & Air Navigation Services released a tender for the airport project in July. In early October, bids were submitted for the scheme by three international consortiums. 

  The bidders were a UK/Turkish group of ERG International, Terminal Yapi and ERG Insaat; a Luxembourg/Iraq pairing of Corporacion America Airports and Amwaj International; and a larger consortium of five companies drawn from Saudi Arabia, Turkiye and Ireland, made up of Asyad Holding, Top International Engineering Corporation, Lamar Holding, YDA Insaat and Dublin Airport Authority. 

  The International Finance Corporation (IFC), part of the World Bank Group, signed an agreement with the Iraqi government in September 2023 to be the lead transaction adviser on the project – in what was its first PPP mandate in Iraq.

  Prominent sectors and frameworks

  Transport is one of the key sectors for project finance outside of the busy markets of the GCC, with $69bn-worth of schemes planned or under way across the 11 other countries of the region, according to regional project tracker MEED Projects. 

  The only sector that sees more activity is power, with $120bn-worth of projects in total. Between them, the wider region’s power and transport sectors account for more than half of the total market of $332bn of projects and more than 60% of the schemes by number.

  A few other areas have also been seeing significant amounts of activity, including the oil and gas sector with $57bn; chemicals projects, valued at $39bn; and construction, at $33bn. Most schemes are still in the planning rather than the execution phase, however, with around $118bn-worth of projects currently being built, or 36% of the total.

  In geographic terms, Iraq is the most active market, with $117bn-worth of project finance schemes in the works. It is followed by Egypt with $79bn, Morocco with $39bn and Iran with $38bn.

  Almost all countries have developed a project finance market of some description, although in the war-ravaged countries of Syria, Libya and Yemen the amount of activity is very limited.

  By far the most popular model for project finance deals in the region is build-operate- transfer (BOT) contracts, which account for $182bn-worth of all project finance activity under way or planned, equivalent to 55% of the total.

  BOT contracts are particularly prevalent in the power sector, with $65bn of deals, but they are also the most popular option in the chemicals, construction, transport and water sectors. In the oil sector, there is a slight preference for build-own-operate-transfer (BOOT) models over BOT contracts, although the latter are also widely used.

  Project finance trends

  There has been something of a slowdown in PPP activity in 2025 across the Mena region, excluding the GCC states – at least in valuation terms.

  There was a particularly strong market performance in 2024, when more than $39bn-worth of schemes using project finance were awarded. 

  In contrast, $19.2bn-worth of awards are expected to have been made by the end of December this year – down on 2024, but still well ahead of the figures for the years prior to that. 

  By other measures, activity is picking up, however. In 2025, the number of PPP contract awards is expected to rise to 32 by the end of the year. This compares to 18 contracts in 2024, which was itself twice as many as the year before. 

  Seven of the awards in 2025 are worth $1bn or more, for projects in Egypt, Iraq, Jordan and Morocco. 

  The largest is the $3.5bn Aqaba-Amman Water Desalination and Conveyance project, the main contract for which was awarded to a joint venture of Orascom Construction and Vinci in January. It is due to be completed by 2029. 

  In the same market, the $1bn Al-Shidiya to Aqaba phosphate railway line is due to be awarded in December by National Infrastructure Construction Company, a subsidiary of the UAE’s Etihad Rail.

  The Iraqi projects include the $2bn, 1GW solar independent power project (IPP) in Najaf that is being developed by Saudi Arabia’s Acwa Power; and the $1.5bn first phase of the Najaf-Karbala metro, which has yet to be awarded.

  Egypt’s leading PPP project this year is the $1.5bn, 1.1GW Suez wind farm IPP, which was awarded in January to Power China. Further west, two large renewable power plants are the biggest PPP contracts in Morocco, with phases two and three of the Noor Midelt solar complex. Each phase comprises a 400MW solar power plant and a battery energy storage system, and each is valued at an estimated $1bn, with Acwa Power undertaking both projects.

  None of these are on the scale of the largest PPP projects awarded last year, however, which was led by the $14bn Southern Refineries Company’s Al-Faw Investment Refinery project in Iraq. 

  Indeed, the six largest projects awarded in the non-GCC markets last year were all in Iraq. The country’s reliable tendering of clearly bankable projects as it steadily rebuild its infrastructure after decades of violence and economic stagnation is a success story to watch – and for many countries, one to emulate.

  Region sees evolving project finance demand

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  Dominic Dudley
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  Aldar announces new asset development plan

  28 October 2025

  Abu Dhabi-based real estate developer Aldar Properties has announced a series of major projects across the residential, commercial and logistics sectors in Abu Dhabi, with a combined gross development value of AED3.8bn ($1bn).

  In an official statement, Aldar said it will develop a new residential community in Alreeman, offering more than 2,000 rental units in the Al-Shamkha area.

  Aldar will deliver 665 residential units to the rental market on Yas Island. The new developments include a gated community offering 217 units.

  Aldar will also develop 448 new apartments on the island as an extension to Yas Residential Village.

  On the commercial front, Aldar said it will focus on developing office space in key business districts across the UAE to meet demand for Grade A office space.

  In Abu Dhabi, Aldar is currently developing Yas Business Park, an office development comprising four towers that will offer 47,500 square metres (sq m) of leasable space. The project is slated for completion in 2027. 

  In the logistics sector, Aldar said it is developing high-quality warehousing and distribution space across the UAE. Aldar added that it will expand the Abu Dhabi Business Hub by adding 175,000 sq m of gross floor area to the Musaffah site.

  Aldar will also deliver Abu Dhabi’s first Tesla Experience Centre on Yas Island. The facility will span 5,000 sq m and will include a showroom, service centre and delivery operations. 

  “Upon completion, the new residential, commercial and logistics assets will become part of Aldar Investment’s portfolio, which comprises income-generating real estate valued at AED47bn,” Aldar said in its statement.

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  Yasir Iqbal
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  Petrofac collapse could impact $5.83bn of Mena projects

  28 October 2025

  

   

  On 27 October, Petrofac announced that it had applied to appoint administrators, a move that has potentially put thousands of jobs at risk and increased uncertainty for projects worth billions of dollars in the Middle East and North Africa (Mena) region.

  The total value of projects awarded to Petrofac and under construction in the region is $5.83bn, according to information recorded by the regional project-tracking service MEED Projects.

  Petrofac also has bids under evaluation for 15 projects in the region worth a total of $19.28bn, according to MEED Projects data.

  Over recent years, Petrofac has aggressively sought to win new contracts in the Mena region, bidding on a range of projects in an effort to improve its financial situation.

  Some of the tender processes in which Petrofac is currently participating could ultimately be disrupted due to the company’s financial problems, especially when there is only one other bidder for the contract.

  Regional impact

  The UAE is potentially the most exposed to disruption from Petrofac filing for administration. It is executing major projects worth $2.87bn in the UAE.

  Algeria is second in the region in terms of exposure to contracts under execution, with $1.8bn in projects.

  Petrofac also has projects in Oman, Bahrain and Iraq, worth $483m, $353m and $320m, respectively.

  UAE projects under execution

  In the UAE, Petrofac has five active projects, all awarded by Abu Dhabi’s state-owned Adnoc Gas.

  The biggest of these is a $1.2bn project for the planned Das Island gas liquefaction facility, which was awarded in June this year and expected to be completed by the fourth quarter of 2027.

  The second-biggest contract that Petrofac has in the UAE is a $700m contract as part of Adnoc Gas’ project to upgrade its sales gas pipeline network across the UAE.

  The scope of the package is focused on developing a new compressor plant at the Habshan gas compressor facility.

  This contract was awarded in June 2023 and was previously expected to be completed before the end of next year.

  The other significant contracts that Petrofac has in the UAE include a $615m contract for a carbon capture, utilisation and storage (CCUS) facility at the Habshan site, as well as a $335m contract to upgrade the Habshan gas processing complex.

  Adnoc Gas awarded the CCUS contract in October 2023, and the upgrade contract was awarded in January this year.

  In addition to the projects Petrofac has won in the UAE, it has bids currently under evaluation worth $6.6bn in the country.

  Petrofac in Algeria

  Petrofac’s largest ongoing project in the Mena region is the $1.5bn project that it is executing to develop a major petrochemicals project in Algeria.

  The Scotland-based company is executing the project in partnership with China Huanqiu Contracting & Engineering Corporation (HQCEC) in Algeria’s Arzew region.

  Petrofac and HQCEC signed the engineering, procurement and construction (EPC) contract for the Algerian petrochemicals project in June 2023.

  HQCEC is a subsidiary of China National Petroleum Corporation.

  In July 2024, MEED reported that concerns about the project’s future were increasing due to Petrofac’s financial difficulties.

  The project is being developed in the Arzew Industrial Zone, west of Algiers, and the contract was signed with STEP Polymers, a wholly owned subsidiary of Algeria’s national oil company, Sonatrach.

  When the contract was signed, Petrofac said that its portion of the project was valued at about $1bn.

  The project’s scope includes the design and construction of two major integrated processing units.

  It includes the delivery of a new propane dehydrogenation unit and polypropylene production unit, as well as associated utilities and infrastructure for the site.

  It is expected to produce 550,000 tonnes of polypropylene a year.

  Petrofac has been active in Algeria since 1997, when it opened its first office in Algiers. The company has since developed some of the country’s most significant oil and gas assets.

  On top of the projects under execution in Algeria, Petrofac has bids under evaluation for projects worth $7.19bn in the country.

  Petrofac in Oman, Bahrain and Iraq

  Petrofac is working on a range of strategic upstream projects across Oman, Bahrain and Iraq.

  These contracts include a $370m project to expand the central processing facility (CPF) at Iraq’s Majnoon field.

  In August this year, MEED reported that Petrofac was pushing to complete the project contract.

  The EPC contract for the project was awarded to Petrofac by Basra Oil Company (BOC) in 2018.

  Originally, the contract had a 34-month time period, but, like many other projects awarded at a similar time, the project was delayed due to complications related to the Covid-19 pandemic.

  In August, MEED reported that the final part of the project that needed to be addressed was an issue relating to a single unit of the expansion project.

  The oil processing trains were mechanically complete in October 2022 and were ready for startup in late 2023.

  The facility then started operating in 2024. However, due to issues related to product specifications, it was taken offline.

  Majnoon is Iraq’s fourth-biggest oil field and is estimated to contain 12.6 billion barrels of oil.

  Petrofac does not currently have any bids under evaluation in Iraq or Oman, but it has submitted bids for projects worth $900m in Bahrain.

  Over recent years, Petrofac has been attempting to expand in Kuwait, Saudi Arabia and Libya.

  In these countries, it currently has bids under evaluation for projects worth a total of $4.63bn.

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  Wil Crisp
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  Petrofac files for administration

  28 October 2025

  The UK-based engineering company Petrofac, which is active across much of the Middle East and North Africa (Mena) region, has filed for administration amid escalating financial challenges.

  In a statement, the company said that its directors had “applied to the High Court of England and Wales to appoint administrators”.

  The statement added: “This is a targeted administration of the group’s ultimate holding company only.”

  Petrofac is actively working on projects in the UAE, Algeria, Kuwait and Bahrain. Projects in the UAE include an engineering, procurement and construction management contract awarded by Adnoc Gas in June.

  The company’s collapse followed the termination of an offshore electricity transmission contract by Netherlands-based TenneT, derailing a restructuring plan.

  The group’s operations will continue to trade, and options for alternative restructuring, as well as potential solutions such as mergers or acquisitions, are being explored, the company said.

  It added: “When appointed, administrators will work alongside executive management to preserve value, operational capability and ongoing delivery across the group’s operating and trading entities.”

  Petrofac has suffered from high debt levels for several years and was negatively impacted by shutdowns during the Covid-19 pandemic.

  Its financial problems led to the suspension of its shares from the London Stock Exchange in May.

  Petrofac collapse could impact $5.83bn of Mena projects

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  Wil Crisp
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  Region sees evolving project finance demand

  27 October 2025

  

   

  The GCC remains in the grip of an infrastructure supercycle that requires project sponsors to seek out the most efficient funding solutions. This places project finance firmly in the frame, with interest piqued by developers’ preference for financing models that match long-term concessions with long-term debt. 

  Deal advisers note the buoyancy of the Gulf projects market. 

  “There is a collective appreciation for international capital and international resources and skills that is creating healthy competition in the region, which has not been seen before. This is fuelling some of the project finance boom,” says Andrej Kormuth, head of law firm Bracewell’s Middle East projects practice.

  Deferring costs

  Non-recourse lending – in which lenders rely on a project’s cash flow – remains a popular method of deferring costs in the Middle East, and one that has grown in volume and size. The availability of long-term offtake agreements with creditworthy counterparties has helped to reinforce investor confidence.

  “Gulf states have recognised the budgetary benefit of not having to pay for infrastructure up front or in short order, but rather deferring these costs over a period of time – allowing a bit more budgetary flexibility in relation to critical spending,” says Kormuth.

  GCC governments have seen project financing deliver value over the long term, helping them as they map out their long-term economic transformation programmes.  

  “The procurers have seen how well the project finance deals in the Gulf have been run. They have seen the benefit of having international skills come in that would not historically have been locally available, and of running these assets for the long term,” says Kormuth.

  

  Shifting asset classes

  While traditional sectors such as power continue to dominate – according to ratings agency S&P Global, utilities alone accounted for 75% of project finance loans over the past five years – new sectors have come to the fore that are suitable candidates for project finance, including battery storage. 

  “Over the last 12-18 months, one of the new developments has been the introduction of the new asset class of battery storage projects in jurisdictions such as Abu Dhabi and Saudi Arabia,” says Oliver Irwin, head of project finance at Bracewell.

  “These projects are being developed on a very large scale, which gives rise to new challenges from a financing perspective, in terms of considerations for things like split procurement and battery degradation, which are not necessarily features of wind and solar project financings.”

  Alongside the almost 90GW of renewable energy that Saudi Arabia will install over the next five years, the kingdom is also planning 48 gigawatt-hours of storage battery capacity by 2030.

  There has also been a significant refocusing on the mining sector and digital infrastructure in the region, according to Munib Hussain, a partner at Milbank LLP, a project finance specialist.

  “Mining [is seeing increased interest] because of factors such as the energy transition, and the rush to try and secure the minerals that support the energy transition, and as another means of diversifying economies. There is a real drive in the GCC at the moment to try and build out the midstream processing infrastructure for those critical minerals.” 

  These projects are proving highly adaptable for non-recourse lending structures, backed by the preferred model of a long-term contract with a single offtaker. 

  Data centres are another area of growth where project finance is likely to make a mark in the GCC, though this may require a steeper learning curve for lenders.

  “In the digital space, there are still some challenges to [closing] large-scale project financing,” says Hussain. “But we know there are hyperscalers that are expected to come in with slightly longer-term leases or MSAs [master service agreements] that can support a project financing.”

  These may have tenors of around 10-15 years, which Hussain points out is not particularly common, but he says the hyperscalers “see the opportunity to have a foothold there – and so they may be committing for slightly longer tenors”.

  While renewable energy and data centres present new avenues for project lending, advisers point out that the Gulf has a surfeit of conventional infrastructure projects that are in need of funding – gas-fired independent power projects, for example, have seen a revival, as have water desalination and water reservoir storage projects. 

  Ancillary infrastructure around Saudi Arabia’s gigaprojects is also keeping lenders busy. Saudi Power Procurement Company plans to add about 7GW of combined-cycle gas turbine capacity annually over the next five years.    

  “The energy sector is quite buoyant,” says Bracewell’s Kormuth. “Two years ago, it was almost entirely dominated by renewables. Now, we are seeing quite a significant shift towards conventional, gas-fired baseload power stations.”

  

  International re-entry

  In newer sectors such as battery storage, international banks have built up their experience levels and are looking to replicate that in the GCC. 

  “A lot of the international banks that are supporting the new wave of battery storage projects in the region have experience of financing battery projects in Europe and elsewhere. 

  “So, while it might be new for the region, it is not necessarily new for those banks,” says Bracewell’s Irwin.

  The re-entry of international lenders has changed the pricing equation, too.  

  “The international commercial banks have become even more competitive, coming into domestic GCC projects, often outpricing the regional banks, which was not the case for the last five years or so,” says Hussain.

  Whereas regional banks used to be much more competitive than international banks, various liquidity constraints have meant that the international banks are now coming in at much tighter pricing than ever before. 

  So, while recent years have witnessed much liquidity and risk appetite from the local and regional banks that have started to play a prominent role in the financing of major infrastructure and energy projects, Bracewell’s Irwin says that in the last 12 months, there has been “a resurgence of sorts from the traditional international banks, leading to Middle East project deals, in particular in Saudi renewables projects”.

  New sectors have come to the fore that are suitable candidates for project finance, including battery storage

  Financing structures

  Refinancing has been a feature of GCC project financing arrangements for many years. The so-called soft mini-perm structure, which involves margin step-ups and cash sweeps that give an incentive to refinance debt over time, retains popularity among sponsors. 

  “The primary and preferred method for project financings in the region is a soft mini-perm. It is a proven model that works very well for the region and continues to attract a deep pool of financiers that are willing to lend to the region’s large pipeline of energy and infrastructure projects,” says Irwin.

  Export credit agency (ECA) and Islamic tranches remain prominent features of project loans, sometimes in combination. This was the case with UK Export Finance’s guaranteeing of a $700m Islamic Murabaha financing facility to finance the construction of the Six Flags Qiddiya City theme park in Saudi Arabia. 

  “We continue to see that Islamic financing is a key tool for project sponsors. If you are looking to diversify your funding base, it is now very normal to have an Islamic finance tranche alongside a conventional tranche, as well as an ECA tranche,” notes Irwin.  

  Capital market instruments are another innovation identified by Gulf deal advisers. Saudi Arabia’s Greensaif pipeline transaction with BlackRock and Saudi Aramco in 2024 was a pipeline monetisation deal that saw BlackRock take a 49% interest in Aramco’s gas pipelines in Saudi Arabia. 

  “There was a $13.4bn acquisition/stapled financing associated with that, which needed to be refinanced within a certain period of time,” says Hussain.

  BlackRock went to various funding sources, including the conventional bank market, the international bond market and the sukuk (Islamic bond) market.

  “The bonds and sukuk issued in connection with Greensaif are project bonds, because underlying the payment of the coupon on both was the revenue from the underlying project contracts with Saudi Aramco. These issuances were some of the largest project bonds issued in the region in recent times,” says Hussain. 

  The Gulf’s pull for project financiers shows no signs of petering out. Lenders have developed a taste for regional risk, and international banks are particularly keen to get back in the game. The mood music is positive. 

  “We have seen that different types of banks get priced out of the market from time to time, but they invariably look to return to the market because Middle Eastern projects are generally well-structured financings with very robust revenue streams. That gives rise to a lot of enthusiasm to support these projects,” says Irwin. 

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  James Gavin