Socar plans to sign $3.5b Turkey refinery loan in May

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 Wednesday.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, Reuters reports. "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.

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 tonnes annually from around 12 million last year.

Turkey's only refiner Tupras has four plants across the country with a combined oil processing capacity of 28 million tonnes.

The Star plant in Aliaga on the Aegean coast is expected to have an annual capacity of 10 million tonnes, 1.6 million tonnes of which would be naphtha which could feed the Petkim plant. It will also produce diesel, jet fuel and LPG.

The project is expected to come online in mid-2017.

SOCAR owns 81.5 percent of the Aegean refinery project at Aliaga, with Turcas owning the remaining 18.5 percent.

BakuDaily.Az