DUBAI- Italy's export credit agency SACE plans to back $1.6 billion in loans to Saudi Arabia over the next 12 to 18 months, the agency's chief told Reuters, potentially boosting the country's search for outside investment at a time of weak oil prices.

Export credit agencies (ECAs) offer loan guarantees, and sometimes direct financing to overseas buyers, to facilitate the export and supply of domestic goods or contractors.

ECA-backed debt financing has become increasingly relevant in the Gulf region as a drop in oil prices and tighter liquidity in local banks have prompted governments to seek alternative funding sources for long-term infrastructure projects.

Saudi Arabia last month sent requests for proposals to banks for the refinancing of a $10 billion syndicated loan, new bond issuance, and for ECA-backed funding.

"ECA structures can be in a lot of circumstances the structures that give access to long tenors and favourable conditions, besides having the advantage of not having the typical volatility which is in the nature of capital markets," SACE Chief Executive Alessandro Decio said.

"This awareness is consolidating in this region. It's not surprising in this context, for instance, that an important country like Saudi Arabia is seeking to put together a plan for ECA funding."

Saudi Arabia's national oil giant, Aramco, has also been tapping this form of financing. The company is looking to raise billions of dollars in ECA-backed loans involving agencies across the globe ahead of its planned stock market listing, sources told Reuters last month.

SACE, which is meeting prospective clients in the United Arab Emirates and Saudi Arabia this week, is evaluating projects in the Middle East and North Africa worth about $15 billion, $5 billion of which in the United Arab Emirates.

In the UAE, SACE plans to offer more than $1 billion in credit support to projects awarded to Italian companies for the construction of Dubai's Al Maktoum International Airport and the Expo Dubai 2020 site.

SACE, fully owned by the CDP Group in Italy, opened its Dubai office in 2016 as a hub for the Middle East and North Africa region. Since then, the agency's exposure to the region has increased to 12 billion euros from 4.4 billion.

"The fact we're here these days is because we believe there's the possibility to do even more," said Decio. "Growth has been stronger so far in Kuwait and UAE, while we haven't done much yet in Saudi Arabia.

"One of the objectives of this mission in the region is to spend some time with our prospective clients in Riyadh, and see if we can accelerate our operations there."

SACE's current portfolio in Saudi Arabia amounts to around $640 million.

(Editing by David Holmes) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: davide.barbuscia.reuters.com@reuters.net))