Canadian firm to engage in loan organization for SOCAR’s refinery in Turkey
December 12, 2014 Leave a comment
Canada’s export credit agency Export Development Canada will act as a lead arranger in a $ 3.3 billion r debt financing consortium to STAR Rafineri A.S., majority owned by Azerbaijan’s state energy company SOCAR.
EDC announced that it has financed $150 million within the bank consortium. The company reported that this is the largest project financing deal ever done in Turkey.
“This deal is not only significant because of its size, but also for the number of financial institutions and export credit agencies involved, which together provided $3.3 billion in debt financing to the project. Other than EDC, there were a total of 6 export credit agencies; JBIC and NEXI, US Exim, CESCE, SACE and K‐Sure; and 16 commercial banks involved in this financing,” the company reported.
Once completed in 2018, the $5.6 billion STAR project will be the first refinery to start operations in Turkey since 1972. This project will process an estimated 10 million tons of crude oil per year and is expected to dramatically reduce Turkey’s dependence on foreign energy imports.
The project, located five kilometers from Aliaga, Izmir Province, also includes the construction and operation of three marine shipping terminals, and a new stand-alone wastewater treatment plant for managing refinery by-product.
Based on SOCAR’s interest and involvement with EDC to date, and given its significant capital expansion plans in Eurasia, EDC expects strong growth in Canadian procurement from SOCAR over the 15 year term of the loan.
“This was a landmark transaction for both Turkey and EDC,” says Sven List, Vice-President Structured and Project Finance, EDC. “The successful closing of this deal demonstrates EDC’s expertise in structuring complex project financings, and also sets the stage for future trade facilitation in Turkey.”
STAR refinery will be capable of refining oil grades such as Azeri Light, Kirkuk, and Urals. The refinery is mostly intended to create a resource base for the chemical company Petkim Holding. It will contribute significantly to the region’s and country’s economy by creating job opportunities and increasing competitiveness.
SOCAR earlier signed loan agreements totaling $3.29 billion with around 23 financial institutions in the Turkish city of Istanbul, as part of constructing a new Star refinery in Turkey.
As previously reported, around $2.69 billion of the total volume of the loans has been issued for an 18-year period (the grace period is four years) and the remaining $600 million – for a 15-year period with the grace period of four years.
The loan package consists of the funds of export-import banks (Spain, Italy, Japan, U.S. and the Republic of Korea), some 16 foreign trade and investment banks, as well as one local bank.