Turkey signs largest-ever project financing(2)

A consortium of 23 lenders will provide funds to the $5.5bn STAR Rafineri, a facility with a planned processing capacity of 10m tons of crude a year.

SOCAR Turkey, a joint venture between Azerbaijan’s national oil company and Turkey’s Petkim Petrokimya Holding, has reached a close on the $5.5 billion STAR Rafineri project.

The deal is the country’s largest-ever project financing, involving export credit agencies CESCE, Export Development Canada, JBIC, K-SURE, NEXI, SACE, US Ex-Im Bank as well as 16 commercial lenders. Allen and Overy acted as legal adviser on the transaction.

The new refinery, located in Aliaga, Western Turkey, will process a range of different crude oils with a planned processing capacity of 10 million tons per year. It will produce an array of products including jet fuel, diesel, petroleum coke and liquid petroleum gases.

“This refinery will significantly reduce Turkey’s dependence on imports of many petroleum derivatives, and so it is a strategically important investment,” said Kenan Yavuz, chief executive of SOCAR Turkey, in a statement released last January.

The refinery will be constructed by a consortium consisting of Tecnicas Reunidas from Spain, Saipem from Italy, GS Engineering from South Korea and Itochu from Japan. It is expected to start operations in 2017.

Other large transactions closed in Turkey over the last 12 months include the Wataniya Telecom Algerie Project ($960 million, June 2013), the Kirikkale Gas Fired Power Plant Project Refinancing ($850 million, December 2013), and the Mersin International Port Refinancing ($650 million, August 2013).