Saudi Aramco leads surge in GCC energy loans

Saudi Arabian Oil Co. (Saudi Aramco) is leading a surge in borrowing among energy companies in the Gulf, which are increasingly seeking loans to pay for exploration and production, Bloomberg reported.

Energy producers in the region have more than doubled their borrowings to $8.9 billion in Q2-2015 this year as compared to the same quarter last year, data compiled by the news agency showed.

Lending between April and June was also the third-highest quarter since 1996, in terms of total loan value.

The sharp increase in lending activity is being fueled by an oil slump which has limited firms’ ability to finance projects.

Yanbu Aramco Sinopec Refining, a joint venture between Saudi Arabian Oil Co. (Saudi Aramco) and China Petroleum & Chemical Corp., borrowed $4.7 billion in second quarter this year, making Aramco the top borrower among Gulf energy firms.

Falling borrowing costs also contributed to the uptick in the second quarter. Kuwait National Petroleum Co. recently secured $4 billion in loans, while Emirates National Oil Co. in Abu Dhabi raise $230 million for general corporate purposes.

Total bonds and loans issued by oil companies in the GCC are estimated at $13.2 billion so far for 2016, compared with a record $23.7 billion in 2015.