Azeri state oil company SOCAR plans to sign contracts with a consortium of banks on financing for its Turkish oil refinery project on May 5, SOCAR’s vice-president said on April 23.
SOCAR, which owns Turkish petrochemical company Petkim , is building the $5.5 billion Star refinery in partnership with Turcas Petrol to supply feedstock to Petkim and cut Turkey’s dependence on imported refined products.
“We will sign (a) funding agreement worth a total of $3.5 billion with foreign export-import banks as well as Turkey’s Denizbank,” Suleiman Gasymov told journalists.
He said that Denizbank, owned by Russia’s Sberbank, would lend SOCAR $500
million. The funding agreement with the consortium has a maturity of 10 years with a four-year grace period.
Int’l bodies replaced
Denizbank replaced the World Bank’s International Finance Corporation (IFC) and the European Bank of Reconstruction and Development (EBRD) which withdrew from the consortium financing the refinery earlier this year.
SOCAR plans to use $2 billion of its own equity for the project.
It signed a $3.46 billion engineering procurement and construction contract in May last year with a consortium comprising Tecnicas Reunidas, Saipem, GS Engineering & Construction and Itochu Corp.
Turkey has a surplus of gasoline but is heavily dependent on imports of diesel, which are expected to rise towards 20 million tons annually from around 12 million last year.
Turkey’s only refiner Tüpraş has four plants across the country with a combined oil processing capacity of 28 million tons.
The Star plant in Aliağa on the Aegean coast is expected to have an annual capacity of 10 million tons, 1.6 million tons of which would be naphtha which could feed the Petkim plant. It will also produce diesel, jet fuel and LPG.
Turcas exit plans
The project is expected to come online in mid-2017.
SOCAR owns 81.5 percent of the Aegean refinery project at Aliağa, with Turcas owning the remaining 18.5 percent.
However, at the end of March, Turcas Group has announced that it is in talks to withdraw from the Star Refinery project by transferring all of its 18 percent in shares to the majority shareholder Socar.