Azeri state oil company SOCAR has signed a $3.29 billion financing deal with 23 banks and export credit agencies for the construction of a refinery on Turkey’s Aegean coast, SOCAR’s Turkish subsidiary Petkim said on Friday.
SOCAR is building the $5.5 billion Star refinery to supply feedstock to petrochemicals maker Petkim, which will help cut Turkey’s dependence on imported refined oil products.
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.
Around $2.69 billion of the financing has a maturity of 18 years and the remaining $600 million has a maturity of 15 years, Petkim said in a statement to the Istanbul stock exchange.
SOCAR said it would use $2 billion of its own equity for the project but has tapped the markets for funding for the rest.
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.
Earlier this week, Petkim said it signed an agreement to buy up to 1.6 million tonnes of naphtha feedstock from the Star refinery. The company said it estimates the purchase agreement will cut its raw material costs by $30 per tonne.
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.
SOCAR Turkey now is the sole owner of Star refinery after Turkish energy firm Turcas Petrol said it sold its 18.5 percent stake for $59.39 million.
