07/07/2005 – The Board of Directors of Arab Petroleum Investments Corporation (APICORP), – an affiliate of the Organisation of Arab Petroleum Exporting Countries (OAPEC) – held its 2nd meeting for the year 2005 on Thursday 7th July in the city of Jeddah, Kingdom of Saudi Arabia.
The meeting was chaired by Mr. Abdullah Al-Zaid representative of the government of Kingdom of Saudi Arabia and meeting was also attended by representatives of the governments of member states.
The Board reviewed reports on the developments of the Corporation’s business, including its finance and investment activities, in addition to the interim financial statements for the first half of 2005.
The Board endorsed the financial statements for the period, which disclosed that net the profit for the first six months of 2005 totalled US$ 28.4 million, 22.7% over the budget estimate for the same period of the year.
The Board also reviewed the 2004 annual reports and financial statements of the tweleve Arab joint ventures companies in which APICORP holds equity share interests.
These projects are located in Saudi Arabia, Bahrain, the Libyan Jamahiriya, Syria, Iraq, Egypt, Tunisia and Jordan, and operate in the fields of basic petrochemicals, liquefied petroleum gas, drilling and workover services, chemical fertilisers, carbon black, industrial fibers, productionn of MTBE polypropylene, aromatics and PTA.
The financial results of the APICORP investments portfolio in the above projects disclosed an improved peformance of most of these companies in 2004, which resulted in a US$ 14.2 million as an APICORP’s share of the total dividend distributed by these companies.
It is worth mentioning here that the Board of Directors approved the addition of another project to APICORP’s equity participations, hence rising its total to 13 projects. The new project is named “Yanbu National Petrochemicals Company” (Yansab), with a US$ 1.5 billion in capital and sponsored by the Saudi Basic Industries Corporation (SABIC). Based in the City of Yanbu, the project aims to the produce about 2 million tons/year of polyethylene, ethylene glycol and polypropylene, in addition to other petrochemical products. This project represents a new addition to APICORP’s investments protfolio, in term of diversification of its activities.
The Arab oil sector is currently witnessing a major and challening development; rising energy prices together with the change of consumption patterns have led to heavy investments in the development of the oil and gas infrastructure projects.
The stiff competition between the international financial institutions (with interest in project finance in the region), and their local and regional counterparts, have resulted in the extension of the loan maturities, while lowering the lending rates to levels lesser than those of cost of funding for regional banks, thus affecting both the local and regional financial institutions.
Developments on the project and trade front over the past four months saw APICORP’s participation in project and trade finance transactions totalling US$ 310 million with APICORP’s final take of US$ 55 million.
It is worth mentioning here that on 27th April 2005, APICORP signed a US$ 250 million five-year syndicated term loan facility arranged by The Arab Banking Corporation (B.S.C.), The Bank of Tokyo-Mitsubishi, Ltd., BNP Paribas, Calyon, Gulf International Bank B.S.C., Mizuho Corporate Bank, Ltd., Standard Chartered Bank and Sumitomo Mitsui Banking Corporation Europe Limited as the Mandated Lead Arrangers.
17th banks and financial institutions participated in the Facility which was fully underwritten by the Mandated Lead Arrangers. The proceeds of this loan will partly be used to refinance APICORP‘s existing US$200 million five-year syndicated term loan facility signed in July 2000.
At the end of the meeting, the chairman and members of Board of Directors expressed their thanks and appreciation to the government of the Custodian of the Two Holy Mosques, the Kingdom of Saudi Arabia for the warm reception and generous hospitality extended to them during their stay in Jeddah.