Middle-east Arab News Opinion | Asharq Al-awsat

Saudi Aramco and ConocoPhillips Plan to Build Oil Refinery in Yanbu - ASHARQ AL-AWSAT English Archive 2005 -2017
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London, Asharq Al-Awsat- Saudi Aramco and ConocoPhillips have hired Saudi Arabia’s Riyad Bank and Citigroup as consultants in an effort to help finance the construction of a joint-venture refinery, the estimated cost of which is approximately 25 billion Saudi Riyals ($6.6 billion).

Although reports yesterday confirmed plans to sell $1 billion of Islamic bonds to help finance the project, the figure has yet to be confirmed or agreed upon. Based on the size and scale of the project it is expected that various sources of financing will be considered and looked into to develop a 400,000 barrel-a-day capacity refinery in on the city of Yanbu. Decisions will be made in April on the conditions for bond sale, Inam Ghazali, senior corporate finance officer at Riyad Bank, told Reuters late on Sunday in Qatar.

The biggest challenge is determining the physical asset that will underlie the sukuk, Ghazali said on the sidelines of an Islamic finance conference in Doha.

“If you launch a project, the asset is not yet there during the construction phase, so there’s no underlying asset,” Ghazali said, without giving more details about the planned sale.

Islamic bonds are generally backed by physical assets that pay bondholders rent or dividends rather than interest. Islam bans the receipt of interest, equating it with usury.