The banks will provide $3 billion of funding in the form of 18-year loans. A further $500 million will be offered by Turkey’s Garanti Bankasi as a 15-year loan facility. The latter is also to process all future monetary transactions related to the oil refinery within 15 years after its commissioning. The total cost of the Star project is estimated at $5.7 billion. This means that Socar will still have to provide over $2.2 billion. Construction of the oil refinery is expected to be completed in 2018. The Star oil refinery has been wholly owned by the Azeri state since 19 May when Turkey’s Turcas Petrol sold its 18.5% stake in Socar Turkey Yatirimfor $59.4 million to Rafinery Holding, a local subsidiary of Socar Turkey Energy. The latter now owns 60% of Socar Turkey Yatirim, which owns the refinery project. The other 40% is owned by the State Oil Fund of Azerbaijan. Last May an international consortium comprising Tecnicas Reunidas (Spain), Saipem(Italy), GS Engineering & Construction (South Korea) and Itochu Corporation (Japan) signed with Socar a $3.46 billion engineering, procurement and construction contract.
The Star refinery is projected to have an annual capacity of 10 million tons, 1.66 million tons of which would be naphtha that could go to the Petkimpetrochemical complex. Socar’s share in Petkim currently amounts to 61.32%. Besides naphtha, the new refinery is also expected to produce annually 5.95 million tons of diesel with an ultra-low concentration of sulphur, 500,000 tons of jet fuel, 630,000 tons of petroleum coke and 240,000 tons of liquefied petroleum gas. On 14 May Socar President Rovnag Abdullaev told The Business Year that the total volume of his company’s investments into various business ventures on Turkish soil has amounted to over $20 billion. The Azeri state firm is also active in neighbouring Georgia: as one of the largest taxpayers in the country, it has reportedly invested more than $400 million since 2006.
For more news and expert analysis about the Caspian region, please see Caspian Focus.
© 2014 Menas Associates