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The Arab Petroleum Investments Corporation (Apricorp), a multilateral development bank owned by the ten member states of the Organization of Arab Petroleum Exporting Countries (OAPEC), on Monday announced the signing of an agreement to deliver the first tranche of a finance package, worth $61 milion, in favour of Socar Aurora Fujairah Terminal (SAFT).

The financing will help fund the construction of a 641,000 cubic metre oil terminal in Fujairah.

The SAFT project is a joint venture between Socar Trading, the international marketing, trading and development arm of the State Oil Company of the Azerbaijan Republic (SOCAR); Aurora Progress, the Swiss based commodity trading house; and the Government of Fujairah. The government of UAE has a 17 per cent stake in Apricorp.

In May this year, Apricorp was mandated the sole arranger by SAFT for a $110 million term loan facility, consisting of two tranches, to finance the phased development of the project. Apricorp won the mandate against competition from international banks, following SAFT’s selection process. This is the first financing deal to be completed in 2011 for a terminal project in the Gulf Cooperation Council (GCC) region.

Under its mandate for the project, Apricorp has been working with SAFT and various independent advisors to structure an optimal finance package with funding for Tranche 1, worth $ 61 million, from Apricorp and the National Bank of Fujairah.

Ahmed Bin Hamad Al-Nuaimi [pictured], Chief Executive and General Manager of Apricorp, 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, Apricorp seeks to support such vital oil and gas projects, especially at a time when international banks are withdrawing from the region.”

Through its involvement in trade finance and project finance transactions in the Middle East in 2011, Apricorp has been consolidating its position within the regional banking industry. This year, the bank has further enhanced its role as a key facilitator of capital flows to the regional 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.

“As we predicted earlier this year, 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 Apricorp 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.” Al Nuaimi commented.

“In 2011, Apricorp has participated in $11 billion worth of project finance and trade transactions, of which Apricorp’s commitment is $1.3 billion,” Al Nuaimi said. “These transactions are spread across the Arab world in countries that include Egypt, Libya, Qatar, Saudi, Morocco and the United Arab Emirates.”

Apricorp’s active involvement in the secondary market for project finance this year has helped it to further consolidate and strengthen its financial position. The bank has made secondary-market acquisitions of energy-related assets in the GCC worth close to $600 million. “These acquisitions made at very attractive discounts have enabled Apricorp 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,” Al Nuaimi added.

“Apricorp’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 SAR 2 billion ($533 million) bond in October last year also helped expand our ability to support energy projects in the region,” the Apricorp Chief Executive said.