ISTANBUL
Turkish officials have signed the country's largest and longest-term financing deal for its first privately built oil refinery.
SOCAR Turkey Energy Company, the Azerbaijani energy giant's Turkish venture, signed a US$3.3 billion credit deal for its STAR refinery project in Istanbul on Thursday.
Turkey's biggest refinery project will have an annual crude oil refining capacity of 10 million tons.
SOCAR started construction of the STAR complex in Izmir on Turkey's Aegean coast in 2011. The project aims to relieve Turkey's petrochemical sector of its dependence on energy imports of petroleum products.
A total of 23 local and international creditors – including export credit agencies, commercial banks and development banks – will provide a total of US$3.3 billion of credit over an 18-year term, with a grace period for the first four years.
Turkey's Energy Minister Taner Yildiz told reporters that this deal, without enjoying a treasury guarantee, indicates a great deal of confidence in Turkey’s political stability, since 23 international banks from Japan to the U.S. have contributed their support.
Turkey also signed an important agreement last Friday with Azerbaijan, raising its shares in the Trans Anatolia Natural Gas Pipeline, which carries Azerbaijani gas to Europe and in the massive natural gas field, Shah Deniz, located offshore.
Yildiz said that both refinery and the TANAP project, a natural gas pipeline crossing Turkey from east to west, will be launched towards the end of 2018.
Turkey's Industry Minister, Fikri Isik, said these projects are essential for Europe's energy demand and its security of supply.
Stressing Turkey's current account deficit and its energy dependency, Isik said the country used to attract US$1 billion in foreign capital investment per year, while SOCAR by itself will invest US$2 billion as foreign direct capital.
"SOCAR's investment, including the TANAP project, will exceed US$20 billion between 2008 and 2018," Isik said.
The company aims to make US$3 billion in exports in 2018 bringing this figure to US$5 billion in 2023, becoming the biggest industrial corporation in Turkey.
The company, which has already spent US$800 million on construction, secured a substantial amount for its complex refinery project, which required a fixed capital investment of US$4.2 billion. The US$2.4 billion part of the financing will be provided by company's equity capital.
The refining complex will provide jobs for almost 10,000 people.
Developments on Kurdish oil
Yildiz also said that Kurdish petrol which has been stocked in Turkey has reached 2.8 million barrels, but there is no demand from the Kurdish administration to expand stocking capacity.
Regarding Iraq government seeking arbitration in a row over Kurdish oil transfers through Turkey, Yildiz confirmed that the files of the case had reached the ministry two days ago.
Yildiz said that Turkey and Iraq can settle the issue without arbitration and legal processes – as two brother countries.
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