The State Oil Company of Azerbaijan (SOCAR) expects to sign an agreement for a $3.5 billion loan to construct a refinery in Turkey in May, Bloomberg reported with the reference to the chief executive for the company's Turkish unit Kenan Yavuz.
In early April it was reported that SOCAR has completed the negotiations with banks regarding the participation in financing the project for construction of a new Star refinery in Turkey.
"Most of the $3.5 billion package, arranged by the Turkish unit of Unicredit SpA (UCG), Italy's biggest lender, will be provided by 15 international lenders with guarantees from export credit agencies, or ECAs, of six countries", Yavuz said.
The package will finance the construction phase of the project and the total financing bill will exceed $3.5 billion including costs from the post-construction period, according to him.
Earlier, Turkish Denizbank expressed its readiness to allocate some $500 million for implementation of this project. The State Oil Company of Azerbaijan appealed to the Turkish bank after rejection by the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) to finance the project.
SOCAR Turkey Yatirim JSC was established with an authorised capital of $1.9 billion and a 40 percent public share, in accordance with the decree of Azerbaijani President Ilham Aliyev on additional measures to support the participation of the Azerbaijani side in the Star refinery construction project in Turkey. The public share at 40 percent worth $760 million in JSC will be funded by the State Oil Fund of Azerbaijan (SOFAR) according to the decree.
Some $ 475 million were allocated from the State Oil Fund of Azerbaijan to finance this project.
SOCAR and a consortium of companies signed an EPC- contract (Engineering, procurement and construction) for the Star refinery construction in May 2013.
An alliance of Tecnicas Reunidas SA, Saipem SpA, GS Engineering & Construction Corp and Itochu companies became the winner of the tender for the refinery construction. It is planned to process such crude oil as Azeri Light, Kerkuk and Urals at the refinery.
The annual naphtha production volume, used by Petkim as the main raw material, will hit 1.66 million tons at the Star refinery.
Along with naphtha, the new refinery will produce diesel fuel with ultra-low sulfur to the amount of 5.95 million tons, aviation kerosene - 500,000 tons, reformate - 500,000 tons, petroleum coke - 630,000 tons, liquefied gas - 240,000 tons, mixed xylene - 415,000 tons, olefin LPG - 75,000 tons and 145,000 tons of sulfur. The refinery will not produce petrol and fuel oil.