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Buyer's Credit for STAR Oil Refinery Project in Turkey
Supporting Export of Japanese Companies through JBIC's Project Finance to Turkey

  • Region: The Middle East
  • Machinery and Equipment
  • Export Loans
  • Project Finance

May 30, 2014
  1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Watanabe) signed on May 29, a buyer's credit agreement (export loan)*1 in project financing*2 totaling up to about USD291 million (JBIC portion) with STAR RAFİNERİ ANONİM ŞİRKETİ (STAR). The loan is confinanced with The Bank of Tokyo-Mitsubishi UFJ, Ltd. (lead arranger), ING Bank N.V., Tokyo Branch, Crédit Agricole Corporate and Investment Bank, Tokyo Branch, and BNP Paribas, Tokyo Branch, which brings the total cofinancing amount to about USD485 million, with Nippon Export and Investment Insurance (NEXI) providing  insurance on the cofinanced portion. Also, the project is joined by a syndicate of foreign ECAs*3.
     
  2. STAR is invested by the State Oil Company of the Azerbaijan Republic (SOCAR), a national oil company of the Republic of Azerbaijan (Azerbaijan) and The Ministry of Economy and Industry of The Republic of Azerbaijan. The project is intended for STAR to build and operate an oil refinery with a daily capacity of 214,000 barrels in the Aliaga area about 50 km northwest of Izmir, and sell refined products to distributors, including Petkim Petrokimya Holding A.S., based on product offtake agreement. JBIC provides the necessary funds partially for engineering, procurement and construction of STAR's oil refinery plant, upon a collective order, by a joint venture participated by Itochu Corporation.     
     
  3. Turkey depends on import of oil refined products as domestic supply though some refined products such as naphtha and diesel are not catching up with the growing demand. The project is expected to contribute to the improvement of short supply of domestic refined products by building a new oil refinery in Turkey where the shortage is expected to continue. Also, the project contributes to creating export opportunities for Japanese companies and maintaining and improving the international competitiveness of Japanese industries.
     
  4. JBIC has contributed to the structuring of project financing with its abundant experience and knowledge of project financing, by participating in projects from early stages with foreign ECAs. JBIC will continue to support the export of plant, machinery and equipment to Turkey by Japanese companies, and the expansion of business participation opportunities in Turkey, by drawing on its various financial facilities and schemes for structuring projects, and by performing its risk-assuming function.

Note
  1. *1 A buyer's credit is a loan JBIC extends directly to a foreign importer (buyer) to finance its import of machinery and equipment from a Japanese company.
  2. *2 Project finance is a financing scheme in which repayments are made solely from cash flows generated by the project and secured only on the project assets.
  3. *3 Foreign ECAs include Compañía Española de Seguros de Crédito a la Exportación (CESCE), Export Development Canada (EDC), Export-Import Bank of the United States (EXIM), Korea Trade Insurance Corporation (K-SURE) and Servizi Assicurativi del Commercio (SACE) of Italy.

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