September 26, 2011

RIYADH:

Saudi Aramco Total Refinery and Petrochemicals Company (Satorp) expects its new refinery at Jubail in Saudi Arabia to be fully operational in December 2013, the joint venture's chief executive has said.
State-run Saudi Aramco and France's Total are building the $14-billion Jubail facility as part of a push by the world's top oil exporter to almost double its refining capacity.
"Overall engineering, procurement and construction (EPC) work at the refinery is 68 per cent complete," Fawwaz Nawwab, CEO of Satorp, told reporters in the Saudi capital Riyadh.
Nawwab said that although the joint venture (JV) refinery was designed to process 400,000 barrels per day (bpd), Saudi Aramco had committed to supply it with up to 440,000 bpd for 30 years.
Jubail will refine Saudi heavy crude into a range of fuels - from gasoline to petroleum coke - for domestic consumption and export.
Around 54 per cent of the project's output will be diesel and jet fuel with an estimated quantity of 11.4 million tonnes a year.
Annual regular gasoline and petcoke production is estimated to be around 2.8 million tonnes and 2.1 million tonnes respectively, said Nawwab, adding that export of these products will depend on seasonal demand within the kingdom.
"Demand fluctuates with the season how much of the production goes to local versus international market depends on demand."
Saudi Arabia heavily subsidises fuel, however, Nawwab said that Satorp would still sell its products to Aramco at international prices, Aramco would then bear the costs of re-selling to the domestic market at discounted rates.
"For Satorp, we sell at international price both to Total and Aramco that is the case by the way for other joint venture refineries in Saudi Arabia," he told reporters.
The JV is set to issue up to SR3.75 billion ($1 billion) in Islamic bonds, or sukuk, with final pricing expected by the end of the September, lead arrangers said.
The sukuk, open only to Saudi investors, will be issued by Satorp to help finance the Jubail refinery project. The company got regulatory approval for the issue in August.
"It's up to SR3.75 billion. It has been offered in Saudi riyals only to Saudi entities, could be less, but you can't exceed SR3.75 billion," Usman Sikandar, director and co-head of investment banking at Saudi Fransi Capital told Reuters at an investor presentation.
He added that the sukuk would mature about 11 years after completion of the refinery, expected in December 2013.
Deutsche Securities Saudi Arabia, Samba Capital and Saudi Fransi Capital were appointed joint lead managers and joint bookrunners for the sukuk.

"This is a very good project, it's a secure project, the sponsors are guaranteeing this, so the risk factor is very low and it's a good investment and there's a lot of cash in the kingdom," Nawwab told reporters.
Bankers said final pricing for the sukuk - which will be calculated on the basis of six-month Saudi interbank offered rate (Saibor) - would be released soon.
Final allocations are due to be completed on October 3, with settlement expected on October 8.

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