Project Financing for Expansion of Rabigh Integrated Oil Refinery and Petrochemical Plant in Saudi Arabia
Supporting Overseas Business Deployment of Japanese Petrochemical Industries

• Region: The Middle East
• Manufacturing and Services
• Overseas Investment Loans
• Project Finance

1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Watanabe) signed a loan agreement on 16 March totaling up to USD1,998 million (JBIC portion) with Rabigh Refining & Petrochemical Company (PETRO Rabigh), a Saudi Arabian company, in project financing^*1, for the expansion of the Rabigh Integrated Oil Refinery and Petrochemical Plant (Rabigh Phase II Project) in Rabigh district, in the west coast of the Kingdom of Saudi Arabia. This loan is cofinanced with 5 private domestic financial institutions, including Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited, and The Norinchukin Bank, and also Public Investment Fund (PIF), a public institution of Saudi Arabia, and certain international commercial banks, with the overall cofinancing amount reaching USD5,168 million.
    
2. In this project, PETRO Rabigh, a joint stock company where the primary shareholders are Sumitomo Chemical Company, Limited (Sumitomo Chemical), and Saudi Arabian Oil Company (Saudi Aramco), expands the existing Integrated Oil Refinery and Petrochemical Plant (Rabigh Phase I Project)^*2 and manufactures high value-added petrochemical products of which Sumitomo Chemical and Saudi Aramco take delivery and sell in principle.
    
3. In this project, Sumitomo Chemical intends to maximize profitability by making use of the company's cost competitiveness and scale merit derived from the location of raw materials. Thus JBIC's support for this project through this loan will contribute to maintaining and strengthening the international competitiveness of Japanese petrochemical industries.
    
4. In addition, for Japan, Saudi Arabia is its largest crude oil exporting country, with Japan depending on about 30 percent of its crude oil import. The "Basic Energy Plan" decided by the cabinet in April 2014 set forth that it is important to develop relations with natural resource supply countries, such as Saudi Arabia, not only in simple resource transactions, but moving forward systematic diplomatic efforts for developing comprehensive and mutually beneficial bilateral relations, including a variety of economic transactions as consolidating the basis for Japan's resource supply environment. This project is consistent with such policy of the Japanese government.
    
5. Moreover, Saudi Arabia has currently adopted a national policy of expanding the petrochemical industry through attracting foreign capital and other measures in order to pull itself out of an oil-dependent economy and secure employment. In this context, JBIC's support for this project would not only support Saudi Arabia's policy, but would also serve to further deepen the relations between Japan and Saudi Arabia.
    
6. As Japan's policy-based financial institution, JBIC will continue to support Japanese companies for their overseas deployment by drawing on its various financial facilities and schemes for structuring projects, and performing its risk-assuming function.

Note

1. *1 Project finance is a financing scheme in which repayments are made solely from cash flows generated by the project and secured only on the project assets.
2. *2 JBIC signed a loan agreement totaling up to USD2.5 billion (JBIC portion) with PETRO Rabigh on March 2, 2006, for Rabigh Phase I Project. See details in the Press Release on March 3, 2006.