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Azeri SOCAR to Borrow $4 Bln to Build Refinery in Turkey

Azeri state energy firm SOCAR plans to borrow about $4 billion from foreign banks to finance construction of a refinery in Turkey, a project that could provide a profitable outlet for its crude with the capacity of 10 million tonnes of oil a year

According to a financing scheme of SOCAR, 65 percent of financing of the Star refinery will be provided by bank credits, while the remaining 35 percent (will come) from Azerbaijan's own resources, mainly the state oil fund.

Turkey currently imports most of its oil products. Its sole refiner, Tupras, already buys some Azeri crude as some of the 28 million tonnes of oil it processes annually at four plants.

The refinery at Aliaga in western Turkey is planned to produce annually 500,000 tonnes of jet fuel, 6 million tonnes of diesel, 500,000 tonnes of petroleum coke, 300,000 tonnes of liquefied petroleum gas and 1.6 million tonnes of naphtha.

SOCAR will sign an EPC (engineering, procurement and construction) contract with a consortium of foreign companies this month. After what, conditions of the project will be presented to creditors.

Total construction costs are estimated at $5 billion to $6 billion. It is expected to be completed by 2016.

SOCAR, which controls Turkish petrochemical giant Petkim, owns 81.5 percent of the project, while Turkey's Turcas Petrol owns the remaining 18.5 percent.

In December 2012, SOCAR selected a consortium of Tecnicas Reunidas, Saipem, GS Engineering & Construction and Itochu to build the refinery on the Aegean coast.

The European Bank for Reconstruction and Development, the World Bank and some foreign commercial banks had expressed interest in funding the project.

Source: Reuters

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