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Home › Dodgy Deals ›
Dodgy Deal
SOCAR Aegean RefineryTurkey

Project – On record

This profile is no longer actively maintained, with the information now possibly out of date
Profile by:
BankTrack
Last update: 2016-10-19 00:00:00
.. Photo: .

Project – On record

This profile is no longer actively maintained, with the information now possibly out of date
Profile by:
BankTrack
Last update: 2016-10-19 00:00:00
Why this profile?

What must happen

  • Banks should not finance this project.
  • The Turkish government should withhold permit until court cases with Buhar Enerji and the EIA court cases have been resolved.
  • The Turkish government should regulate and enforce the cumulative environmental impact assessment for highly industrialized and polluted areas, such as Aliaga.

About
Sectors Coal Electric Power Generation, Oil and Gas Extraction
Location
Status
Planning
Design
Agreement
Construction
Operation
Closure
Cancelled
Website http://new.socar.az/socar/en/new-projects/menu/aegean-refinery
This project has been identified as an Equator Project

SOCAR Turkey Enerji plans the construction of a coal thermal power plant co-fired with petro-coke from the refinery, which it intends also to supply with electricity. While the coal plant is essentially an integral part of the refinery project, the environmental and social impact assessments have been separated, and the coal plant has been excluded from the due diligence on the refinery project. The coal plant will have two phases to construct a facility with a total capacity of 1,335 MW. Two separate EIAs have been done so far. These EIAs were contested by local opposition, and consultation meetings about the EIAs were cancelled due to protests. The approval of the EIA for phase one has been challenged in court, and the approval of the EIA for phase two is pending.

The owner and operator of the Aegean Refinery is STAR Rafineri A.S., a joint stock company incorporated under the laws of Turkey. The joint venture is now 81.5% owned by SOCAR TURKEY Enerji A.S., 100% subsidiary Azerbaijan's oil company, and 18.5% owned by TURCAS Rafineri Yatirimlari A.S., 99.6% subsidiary of Turcas Petrol A.S..

The proposed location of the refinery and the coal plant interferes with a geothermal resource and with plans to develop a 50 MW geothermal-solar hybrid power plant. Buhar Enerji holds a 30-year operating license for a geothermal project on the site of the planned greenfield refinery, which was issued a year prior to the license for the refinery project, resulting in ongoing legal disputes.

Impacts

Social and human rights impacts

Buhar Enerji has managed to get a court investigation underway that notes that excavation works of the refinery are continuing in the absence of a legal construction permit and proper health conditions for workers. They move so fast that some workers unfortunately lost their lives in this unregulated excavation works.


Environmental and climate impacts

As designed now, the refinery and coal power plant would restrict access to a valuable geothermal energy resource. The geothermal reservoir is owned by the Turkish state and Buhar Enerji has been granted a 30-year operating license at least one year prior to that for the refinery. The EIA makes no reference to the geothermal reservoir and no stakeholder consultations have been held on this topic.

There are approximately 3,000 businesses in the Aliaga region, 100 of these are big polluters, representative for industrial sectors such as petro-chemistry, steel and iron production, fertilizer, cement and pulp factories, fuel storage etcetera. The local industry generates 25% of Turkey's dangerous waste, according to local environmental group Aliaga Environmental Platform.  However, none of the new facilities have conducted a cumulative assessment when preparing the EIA.


Other impacts

In 2010 Socar sued Buhar Enerji to have its 30-year geothermal power operating license canceled so it would not pose any obstructions for their refinery plans at the same location. Their oil refinery license was subsequently given 13 months after. They lost that case, just like a large number of other cases. However, none of these decisions have stopped the excavation works they are doing for their refinery. They are simply moving ahead in an attempt to reach a point of no return for the project.

In February 2014 the Turkish government passed a law to resolve the four-year-long legal dispute between Socar and Buhar Enerji  in Socar's favor. The legislation, called the Socar law by Turkish media, gives a panel of three government ministers the right to cancel geothermal licenses that clash with infrastructure or energy projects "in consideration of the public good and the needs of the economy."

Financiers
Institution type
Finance type
Year

For more details including total bank participant list with roles, see TFR. The State Oil Company of the Azerbaijan Republic (SOCR) and the Ministry of Economy and Industry of the Republic of Azerbaijan have raised USD 3.29 billion in debt financing for its STAR refinery project. Seven export credit agencies participated in the deal. A total of sixteen commercial banks were also involved in what so far has been the largest project financing deal ever done in Turkey. The facilities were split between ECA direct lending and ECA-covered loans from the commercial banks. Tenor was 18 years for the USD $2.69 billion of ECA direct and covered loans, and 15 years for the USD $600 million uncovered commercial loans.

World Bank IFC and EBRD pulled out from the project in March 2014.

Companies

SOCAR

Azerbaijan
Website
Subsidiary SOCAR TURKEY Enerji A.S, holds 81.5% of the shares of Aegean Refinery STAR Rafineri A.S. (“STAR”).

Turkas Petrol

Turkey
Holds 18.5% of the shares of Aegean Refinery STAR Rafineri A.S.(“STAR”).
No companies
Governance
Norms & standards

Applicable norms and standards

Equator Principles
News
BankTrack
Partners
Blog
External
BankTrack news BankTrack blog Partner news Partner blog

Historic win for frontline communities: plans for coal power project in Turkey shelved

2016-10-31 | Aliaga, Turkey | CEE Bankwatch
BankTrack news BankTrack blog Partner news Partner blog

23 banks to finance construction of SOCAR's oil refinery in Turkey

2014-06-09 | News.AZ
BankTrack news BankTrack blog Partner news Partner blog

IFIs pull out of Turkish coal project - NGO pressure integral

2014-05-14 | CEE Bankwatch
BankTrack news BankTrack blog Partner news Partner blog

SOCAR: “loan agreements on construction of Star refinery will be signed at the end of this month”

2014-05-13 | APA
BankTrack news BankTrack blog Partner news Partner blog

The case of a 'secret' coal plant in Turkey suggests a polluted future for the country

2014-04-28 | CEE Bankwatch
BankTrack news BankTrack blog Partner news Partner blog

UniCredit Socar Deal Seen as Loan-Market Revival: Turkey Credit

2014-04-25 | Turkey | Bloomberg
BankTrack news BankTrack blog Partner news Partner blog

Socar Plans to Sign $3.5 Billion Turkey Refinery Loan in May

2014-04-22 | Bloomberg
BankTrack news BankTrack blog Partner news Partner blog

The EBRD excluded the loan for the SOCAR refinery project in Turkey from consideration

2014-03-19 | ABC
BankTrack news BankTrack blog Partner news Partner blog

Turkey: Is Law Being Rigged to Help Azerbaijan’s SOCAR?

2014-03-19
BankTrack news BankTrack blog Partner news Partner blog

EBRD and IFC drop out of Star Rafineri

2014-03-18 | Turkey | Project Finance Magazine
BankTrack news BankTrack blog Partner news Partner blog

IFC, EBRD pull out from SOCAR Turkey's Star refinery project

2014-03-18 | Reuters
BankTrack news BankTrack blog Partner news Partner blog

SOCAR Turkey secures financing from Denizbank for Star refinery

2014-03-18 | Reuters
BankTrack news BankTrack blog Partner news Partner blog

Die deutschen Handlanger des Öl-Despoten

2014-02-19 | Die Welt
BankTrack news BankTrack blog Partner news Partner blog

Aliaga Termik Santrala Hayır Dedi, Ced Toplantısı Yapılamadı

2013-10-22 | Turkey | Haberler
BankTrack news BankTrack blog Partner news Partner blog

Socar Seeks $3 Billion to Finance Oil Refinery in Western Turkey

2013-05-20 | Bloomberg
Resources
Documents
Links
2014-04-28 00:00:00

ENVIRONMENTAL and SOCIAL IMPACT ASSESSMENT STUDY for AEGEAN REFINERY (STAR) PROJECT

Company document
2014-04-28 00:00:00 | STAR Rafineri A. Ş .
2013-04-16 00:00:00

PETKİM & EFQM Excellence Model

http://www.sqc.org.sa/meqa5thconferance/download/Day1/Petkim_and_EFQM_Excellence_Model.pdf
Company document
2013-04-16 00:00:00 | M.Hayati ÖZTÜRK

Change.org campaign against Socar

Pictures from Socar building site

CEE Bankwatch Network - Fact-finding mission to Aliaga, Turkey, to the SOCAR refinery and coal power plant projects....See more Fact-finding mission to Aliaga, Turkey, to the SOCAR refinery and coal power plant projects

IFC page on Socar

Source Watch on Socar

Updates

2016

2016-10-31 00:00:00 | Historic win for frontline communities: plans for coal power project in Turkey shelved

Fossil fuel giant Socar abandoned its coal power project in Aliağa, İzmir. Communities in Aliağa, Turkey, who have been resisting the construction of coal power plants in the region for decades, have achieved a significant victory. Azerbaijan’s state-owned energy company Socar, has decided to shelve plans to construct an integrated 672 MW coal power plant in Aliağa, İzmir (source Bankwatch).

2015

2015-01-14 00:00:00 | SOCAR refinery financed at US$3.29bn, largest project finance deal to date in Turkey

The State Oil Company of the Azerbaijan Republic (SOCAR) and the Ministry of Economy and Industry of the Republic of Azerbaijan have raised USD 3.29 billion in debt financing for its STAR refinery project. Seven export credit agencies and 16 commercial banks were involved in what so far has been the largest project financing deal ever done in Turkey. The facilities were split between ECA direct lending and ECA-covered loans from the commercial banks. Tenor was 18 years for the USD 2.69 billion of ECA direct and covered loans, and 15 years for the USD 600 million uncovered commercial loans (Source tfreview).

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