Abstract project finance is the process of financing a specific economic unit that the sponsors create, in which creditors share. The proceeds of the sukuk were used to finance satorps planned crude oil refinery in jubail. Financial modelling of project financing transactions. For decades, project finance has been the preferred form of. A guide to project finance dentonscom foreword since the last edition of this guide in 2004, the use of project financing techniques as a means of financing largescale infrastructure projects has been severely tested by the global financial crisis of 20078. Transfer of risk lower the risk lower the costincrease the return on equity 4 project finance. It will be located next to the satorp refinery, which is also jointly owned and operated by aramco and total. Company satorp satorp is a joint venture between saudi aramco and total the sponsors. Project finance structures p roject funding can be obtained from v arious sources. Public finance for years, many governments, including the south african government, funded projects by. Hence, longermaturity loans would be cheaper than shorterterm credits. Often bandied about in trade journals and industry conferences as a new financing technique, project finance is actually a. Satorp a saudi arabian mixed limited liability company, and 0. Project finance operations methodology primary credit analysts.
The fundamentals of project finance ecc association. The contents of this document and any other documents and information flows identified or described within this document are to be treated asstrictly confidential and may not be distributed or disseminated beyond the experts from the industrial. Yes satorp 50% saudi aramco 50% total france jubail export refinery jer. Jul 16, 20 project finance consent from the third party to the project company charging or assigning by way of security the project companys rights under the relevant contract to such extent such consent was required, an undertaking from the third party that it would not exercise any right it had to terminate the contract without first giving the. Satorp is the first project to be built and operated in jubail ii.
Saudi aramco and total signed on monday a joint development agreement for a giant petrochemical complex in the kingdoms jubail industrial city. With this course, the institute for publicprivate partnerships, a tetra tech company ip3, will provide practical techniques. Dhahran and paris, june 25, 2010 saudi aramco total refining and petrochemical company satorp, a company that is 62. After describing the characteristics of pf, its historical origins and its unique benefits for empirical inquiry, i summarize the findings of academic research from. Project finance primer for renewable energy and clean tech projects authors.
However, project financing is a specialised funding structure that relies on the future cash flow of a project as primary source of repayment, and holds the projects assets, rights and interests as collateral. He is the governor of the islamic development bank and serves as a governor at the international monetary fund and arab monetary fund, among other roles. Lng project, the satorp refinery in saudi arabia and the sakhalin ii project in russia. Aramco, total sign jubail refinery financing petroleum economist.
This course on project finance fundamentals and financial analysis techniques is designed to assist investment professionals and financial analysts in gaining an understanding of the fundamentals of project finance. Notes to the condensed consolidated financial statements. Definition of project finance the term project finance is used loosely by academics, bankers and journalists to describe a range of financing arrangements. Year project finance deal of the year islamic finance news 2010 iflr middle east 2010 satorp refinery, project financing, jubail, saudi arabia project finance deal of the yearsaudi arabia deal of the year islamic finance news 2011 satorp refinery sukuk, jubail, saudi arabia sovereign deal of the yearmalaysia deal of the year. On august 30, 2008, saudi aramco and total signed the articles of association and agreed to form a limited liability company with the name saudi aramco total refining and petrochemical company satorp. It has been successfully used in the past to raise trillions of dollars of capital and promises to continue to be one of the major financing techniques for capital. The tools at the project financial management team and the project managers disposal must incorporate these elements to allow organizations to take advantage of new project management technologies and facilitate their incorporation for effective project delivery and reporting. Total confirms the sale of uk assets to neo energy. Islamic project finance has grown in significance and is now widely used to finance large. Satorp is a worldclass refinery started operation in june 2014. Market leading project finance and islamic banking. Project finance the term project finance is often interpreted incorrectly as the generic financing of a project. Chris groobey, john pierce, michael faber, and greg broome executive summary. The purpose of this chapter is to provide an overview of project finance.
At the announcement of the sadara joint venture on july 25 2011, khalid alfalih, president and ceo of saudi aramco, said the. Satorp refinery and petrochemical complex expansion ns. In addition to this, satorp is also responsible for funding routine operating expenses of. Satorp and the saudi electricity company sec boards. Satorp production should go for 72% to gasoline and diesel, the remaining 28% should be used for jet fuel and petrochemicals. Project finance primer for renewable energy and clean tech. The wharton school project finance teaching note 2 i. Provides a basic introduction to project finance and its relationship with other financing techniques. It has also been a leading player in the development of project finance. Satorp launches first project sukuk all special reports. Satorp refinery has a capacity of 400,000 bd crude oil, including heavy crude oil. Satorp pioneers project sukuk for jubail refinery arab news. Even if the parties to a project finance restructuring may expect a lengthy process that will last a few years, they still may not fully expect and be prepared for some of the delays that inevitably arise.
Satorp completes project financing for jubail refinery. Saudi aramco and total have equity interests in satorp of 62. The sukuk, priced at 95bp over sixmonth saibor with a tenor of 15. A stand alone project and a special purpose company non recourse mlt finance with high ration debtequity lending based on project cash flows lenders mainly rely on project contracts as project security. Uses for project finance project finance techniques have enabled projects to be built in markets using private capital. Satorp, the joint venture between staterun saudi aramco and french supermajor total, launched the worlds first project sukuk issue in september, completing a complex financing package for the jubail oil refinery in saudi arabia. Investment management and financial innovations, volume 14, issue 1, 2017. Satorp is developing a 400,000 barrels per day bpd refining and petrochemical complex in jubail industrial area the project. Signed in late june, the deal the first project financing in saudi arabia. Project finance fundamentals and financial analysis techniques.
Total and saudi aramco work on satorp expansion 2b1stconsulting. Robert has experience in arranging project finance debt, negotiating project contracts, project risk analysis, cash flow modelling and advisory services. Meed saudi aramco and total plan satorp refinery expansion. Kellogg graduate school of managementnorthwestern university.
The nature of credit risk in project finance1 in project finance, credit risk tends to be relatively high at project inception and to diminish over the life of the project. The jubail refinery in saudi arabia tecnicas reunidas. Project finance finding the right sources of funding bjorn. Barajas is a member of the state bar of california. The char ts belo w demonstr ate the dif ference between public, corporate and project funding, using an example of a water treatment project. Project finance restructurings in the emerging markets may take several years as well. Securing project finance can prove to be a critical step in the path to commercialization. Capacity at the saudi aramco total refining company satorp complex in jubail on the kingdoms eastern gulf coast will be increased to 480,000 barrels a day bd, up from 440,000 bd, total ceo patrick pouyanne said. These private finance techniques are a key element in scaling back government financing, a central pillar of the current ideological agenda whose goals are well articulated by grover norquist. It is the solution to infrastructure, public and private venture capital needs. Refining and petrochemicals satorp company project sukuk, which was the first public project. This chapter will outline what project finance is, the key features which distinguish it from other methods of financing, the motivations and circumstances for utilising it and.
Finance for project managers irelands premier project management certi. August 2018 this page was updated with the latest version of the guide in august 2018. Concession agreement a contract between a publicsector body and a project company, which allows the project company to carry out the project e. Torathuna to enable it to supporting projects for selected artisans. The obligation of satorp to make such payments to the issuer is, prior to and excluding the actual completion date as defined on page 192 of this prospectus, guaranteed by saudi arabian oil company saudi aramco pursuant to the saudi aramco debt service undertaking agreement as defined herein.
During 2008, representatives of the company carried out the following project financing. The term project finance is now being used in almost every language in every part of the world. Previously been the minister of finance of saudi arabia. Alassaf is minister of state and a member of the council of ministers, having previously been the minister of finance of saudi arabia. Investments in the clean technology sector often combine capital intensity with new technologies. For example, they may not be prepared for the delays. This guide looks at the use of project financing techniques, in particular as a means of financing largescale infrastructure projects.
Owned and operated by satorp, a joint venture of saudi aramco 62. It looks at all the parties engaged in project financing and their respective roles, including. Finance for pm institute project management ireland. Saudi aramco total refining and petrochemical company satorp sar 3.