Financing Wrapped Up For Tihama Power/Steam Projects At Aramco Sites
The financing for the $430mn expansion of the Tihama power and steam projects at three Saudi Aramco sites has been completed, MEES learns. The agreements for the loan were signed on 3 May. It is being supplied half in dollars and half in Saudi riyals by seven domestic banks comprising APICORP, Arab National Bank, Banque Saudi Fransi, SBB, Samba, Saudi Hollandi and Riyad Bank. The expansion, which is expected to be completed in 2015, will generate an additional 532mw of power and 1.92mn lb/hour of steam, giving the Tihama plants a total capacity of 1,605mw and 6.3mn lb/hour of steam. It is taking place at three of Tihama’s four sites: Ju'aymah, Shedgum, and 'Uthmaniyah (see table). The fourth site, Ras Tanura, does not have sufficient room for a capacity increase.
Margins on the dollar portion of the loan were an average of around 200 basis points (bps) over the London interbank offered rate (Libor) and on the Saudi riyal tranche 140-160 bps over the Saudi interbank offered rate (Sibor), reflecting higher liquidity in riyals, MEES further learns. Despite the riyal liquidity dollars were included in the transaction in order to secure long term interest rate swaps. On Saudi riyals, interest rate swaps become illiquid further out and they can only be used to a maximum of five-seven years in the future. They therefore fall short of the deal’s 14.5-year payback period. The $430mn project will be financed 80% through bank debt with the remaining 20% coming from equity. Long term offtake contracts through to 2026 have been signed with Saudi Aramco for the expansion, and it is also supplying fuel for the operation. Now the financing has been signed, the contractor, South Korea’s Hyundai Heavy Industries, has been given the go-ahead to start work on the sites. General Electric is supplying gas turbines for the projects.
When Saudi Aramco originally decided to expand its cogeneration facilities it had envisaged setting up a couple of new plants, in addition to the Tihama expansion (MEES, 23 November 2010). Saudi Aramco is still considering these extra facilities, and the projects are expected to move ahead this year, MEES understands. Industry sources suggest that the new plants will probably follow the same format as the Tihama operation, with a tender for developers to implement the projects.
The ownership structure of the expanded plants is the same as the existing Tihama operation – Tihama Power Generation Company, which is 60% held by International Power (IP – which has now been taken over by GDF Suez) and 40% held by Saudi Oger. In 2003 IP and Saudi Oger were awarded the four 20-year energy conversion agreements by Saudi Aramco to build, own and operate the four cogeneration plants, which are located at the Saudi Aramco gas facilities of Ju'aymah, Shedgum, and 'Uthmaniyah, and at the Ras Tanura refinery (MEES, 5 January 2004). The initial Tihama project cost around $600mn to build, at an 80:30 debt/equity ratio. In 2007 the original $480mn loan was refinanced in a $550mn deal where tenor was set at 18.5 years (MEES, 18 June 2007).
Tihama Power Plant Capacities
Original Capacity | Expansion | Post Expansion Capacity | ||||
Site | Power (MW) | Steam ('000 lb/hr) | Power (MW) | Steam ('000 lb/hr) | Power (MW) | Steam ('000 lb/hr) |
Ju'aymah | 308 | 1,250 | 177 | 640 | 485 | 1,890 |
Shedgum | 308 | 1,250 | 177 | 640 | 485 | 1,890 |
'Uthmaniyah | 308 | 1,250 | 177 | 640 | 485 | 1,890 |
Ras Tanura | 150 | 645 | 0 | 0 | 150 | 645 |
Total | 1,074 | 4,395 | 532 | 1,920 | 1,605 | 6,315 |
Source:Compiled From International Power GDF Suez Figures (figures may not add up due to rounding).
Copyright MEES 2012.
