The second phase of the financing for the construction of Sadara Chemical Company’s integrated petrochemicals production complex in Jubail Industrial City II, Saudi Arabia was signed on June 16, raising an aggregate of US$12.5 billion. Sadara is a joint venture between The Dow Chemical Company and Saudi Arabian Oil Company.
This financing is the largest ever multi-sourced project financing in the petrochemicals sector and among the largest project financings undertaken in the EMEA region. This integrated hydrocarbon and chlorine-based production complex will include 26 manufacturing units (notably a mixed feed steam cracker and an aromatics plant) as well as three on-site third party process units, and extensive supporting infrastructure.
This phase of the financing involved the participation of seven export credit agencies, including COFACE (of France), Euler Hermes (of Germany), FIEM (of Spain), K-Exim and K-sure (both of Korea), UK Export Finance (of the United Kingdom) and US Ex-Im Bank (of the United Sates). The lenders included Saudi Arabia’s Public Investment Fund, as well as Saudi and international commercial banks and Islamic institutions participating in Wakala and Procurement facilities.
The Milbank deal team was led out of the firm’s London office and involved members of the firm’s Project Finance, Islamic Finance, Securities, Tax and Financial Regulatory teams.
Located in the Eastern Province of Saudi Arabia, the complex is projected to be the world’s largest integrated chemical compound ever built in a single phase with a capital cost of around US$19 billion. First production units are expected to come on line in the second half of 2015, with all production units coming on line in 2016.
Milbank, Tweed, Hadley & McCloy LLP acted as international counsel to all of the lenders to the project as well as to the joint lead managers of Sadara’s earlier US$2 billion Sukuk issuance. Dow Chemical is advised by Shearman & Sterling LLP, and Saudi Aramco by White & Case LLP. The Law Office of Abdulaziz H. Al Fahad are Saudi Arabian counsel to the lenders, and Hatem Abbas Ghazzawi & Co. are Saudi Arabian counsel to Dow Chemical.