(EnergyAsia, December 21 2011, Wednesday) — Arab Petroleum Investments Corp (APICORP), a development bank owned by 10 Arab oil-producing nations, and National Bank of Fujairah PSC have agreed to lend the first tranche of a US$110 million loan for the construction of an oil storage terminal in Fujairah in the UAE.
In a statement, APICORP, which is owned by the Organisation of Arab Petroleum Exporting Countries (OAPEC), said it signed off on the US$61 million tranche to Socar Aurora Fujairah Terminal (SAFT) to develop the 641,000-cubic metre terinal. SAFT is jointly owned by the State Oil Company of Azerbaijan (SOCAR), Swiss commodity trader Aurora Progress SA and the Fujairah government.
In May this year, APICORP said it was awarded the role of sole arranger by SAFT in the face of strong competition from international banks.
The deal has enhanced APICORP’s role as a key facilitator of capital flows to the Arab energy sector amidst an environment marked by continuing scarcity of US-dollar funding and the withdrawal of many international financial institutions that have traditionally been lenders to the energy industry in the region.
Ahmed Bin Hamad Al-Nuaimi, APICORP’s CEO and general manager, said:
“We are delighted to announce this finance package for a project that is expected to add value to the development of the oil logistics infrastructure of Fujairah, an important international petroleum trading hub, as well as the burgeoning trading sector of the region,
“As part of its mission, APICORP seeks to support such vital oil and gas projects, especially at a time when international banks are withdrawing from the region.”
Through its strong involvement in trade finance and project finance transactions in the region in 2011, the bank has been consolidating its position within the regional banking industry.
Mr Al-Nuaimi added: “The volatility in European and global financial markets and new banking regulations have seen international financial institutions significantly reducing their project finance resources in the region in order to focus on their home countries.
“This withdrawal has created new strategic opportunities for regional banks such as APICORP to play an even more important role in energy-related transactions in the region. Our vast expertise as a multilateral development bank in providing financing solutions and financial advisory services for energy transactions puts us in an ideal position not just now, but also in the year ahead, to play such an enhanced role.”
For the year to date, APICORP said it has participated in US$11 billion worth of project finance and trade transactions in Egypt, Libya, Qatar, Saudi, Morocco and the UAE, committing US$1.3 billion.
APICORP’s active involvement in the secondary market for project finance this year has helped it consolidate and strengthen its financial position. The bank has made secondary-market acquisitions of high-quality energy-related assets in the Gulf Cooperation Countries worth close to US$600 million.
“These acquisitions made at very attractive discounts have enabled APICORP to enhance the average yield of its loan portfolio and maintain the size and quality of its project finance asset portfolio in a tough economic environment,” said Mr Al Nuaimi.
“APICORP’s strong banking fundamentals and robust capital position, endorsed by the A1 issuer rating we received from Moody’s, have helped us to push forward both our vision for hydrocarbon industry development in the Arab world as well as our important commercial priorities.
“The extremely successful issue of our debut Saudi Arabian Riyal (SAR) 2 billion (US$533 million) bond in October last year also helped expand our ability to support energy projects in the region.”
With assets valued at US$4.3 billion at the end of 2010, APICORP has participated in direct and syndicated energy finance transactions worth in excess of US$127 billion since 1975. Its aggregate commitments in these transactions, both in equity and debt, are valued at more than US$12 billion.
Established by OAPEC in 1975, APICORP is mandated to contribute to the development of the Arab hydrocarbon and energy industries through equity and debt financing, advisory and research. Its shareholders include the governments of the UAE (17%), Kuwait (17%), Saudi Arabia (17%), Libya (15%), Iraq (10%), Qatar (10%), Algeria (5%), Syria (3%), Bahrain (3%) and Egypt (3%).
Headquartered in the Al-Khobar/Dammam area in eastern Saudi Arabia, the bank operates a banking branch in Manama in Bahrain.