MOSCOW (MRC) -- Azerbaijan’s state-owned oil company, commonly known as Socar, is in the final stages of negotiations for a USD3.9 billion loan package to help build a refinery in Turkey, which aims to develop the biggest petrochemical complex in the country - Petkim (part of Socar), reported Hydrocarbonprocessing with reference to two people familiar with the talks.
State Oil Company of Azerbaijan expects to sign the agreement by early June, according to the people, who asked not to be identified because the talks are confidential.
Socar is building the USD5.5 billion Star refinery on the Aegean coast as it seeks to expand its naphtha output. The refinery, Turkey’s fifth, will process 10 million tpy of crude from 2017, producing 1.3 million tons of naphtha, as well as diesel and jet fuel.
About 95% of the borrowing will come from international lenders arranged by the Turkish unit of Unicredit SpA, Italy’s biggest lender, and will have a maturity of 18 years, the people said. The funds will be come with guaranteed coverage from eight export-credit agencies, including the US Ex-Im Bank and the Japan Bank for International Cooperation. The remainder may come from commercial loans, the people said.
Kenan Yavuz, chief executive of Socar’s Turkish unit, is in London today to discuss the loan package with creditors, one of the people said.
The Azeri oil producer and processor, which pledged USD17 billion for projects in Turkey by 2018, including a pipeline to carry gas to Europe via Turkish soil, is increasing spending amid rising demand for fuel and chemicals.
Naphtha from the Star refinery will be used to make petrochemicals at Socar’s Turkish Petkim Petrokimya Holding division. Petkim will take 2 million tpy of fuel from the plant, to be built by Tecnicas Reunidas, Itochu, Saipem and GS Engineering & Construction.
The US Ex-Im Bank approved a USD641 million loan to finance the export of equipment to Turkey for the project, its chairman Fred Hochberg said in December.
SOCAR includes production association Azneft (companies producing oil and gas on land and sea) and Production Association Azerkimya (chemical industry), production association Azerigas (gas distribution).
The State Oil Company is the only producer of oil products in the country (it has two refineries on its balance sheet) and also owns petrol stations in Azerbaijan, Georgia, Ukraine and Romania. SOCAR possesses a network of petrol stations in Switzerland and is the co-owner of the largest Turkish petrochemical complex Petkim.
Petkim is the leading petrochemical company of Turkey. Specializing in petrochemical manufacturing, the company produces ethylene, polyethylene, polyvinyl chloride, polypropylene and other chemical building blocks for use in the manufacture of plastics, textiles, and other consumer and industrial products.
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