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SOCAR Aegean Refinery Turkey
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On record

This profile is no longer actively maintained, with the information now possibly out of date

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By: BankTrack
Created before Nov 2016
Last update: 2016-10-19 00:00:00

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.. Photo: .
Sector 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

About SOCAR Aegean Refinery

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.

Latest developments

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

2016-10-31 00:00:00

SOCAR refinery financed at US$3.29bn, largest project finance deal to date in Turkey

2015-01-14 00:00:00

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.

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."

Governance

Applicable norms and standards

Equator Principles

Timeline

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

2016-10-31 00:00:00

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).

SOCAR refinery financed at US$3.29bn, largest project finance deal to date in Turkey

2015-01-14 00:00:00

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).

Financiers

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.

Related companies

SOCAR Azerbaijan

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”).

News

| |
Type:
Year:
blog
external news
our news

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

2016-10-31 | Aliaga, Turkey | CEE Bankwatch
blog
external news
our news

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

2014-06-09 | News.AZ
blog
external news
our news

IFIs pull out of Turkish coal project - NGO pressure integral

2014-05-14 | CEE Bankwatch
blog
external news
our news

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

2014-05-13 | APA
blog
external news
our news

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

2014-04-28 | CEE Bankwatch
blog
external news
our news

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

2014-04-25 | Turkey | Bloomberg
blog
external news
our news

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

2014-04-22 | Bloomberg
blog
external news
our news

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

2014-03-19 | ABC
blog
external news
our news

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

2014-03-19
blog
external news
our news

EBRD and IFC drop out of Star Rafineri

2014-03-18 | Turkey | Project Finance Magazine
blog
external news
our news

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

2014-03-18 | Reuters
blog
external news
our news

SOCAR Turkey secures financing from Denizbank for Star refinery

2014-03-18 | Reuters
blog
external news
our news

Die deutschen Handlanger des Öl-Despoten

2014-02-19 | Die Welt
blog
external news
our news

Aliaga Termik Santrala Hayır Dedi, Ced Toplantısı Yapılamadı

2013-10-22 | Turkey | Haberler
blog
external news
our news

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

2013-05-20 | Bloomberg

Documents

Type:
Year:
company documents
2014-04-28 00:00:00

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

2014-04-28 00:00:00 | STAR Rafineri A. Ş .
company documents
2013-04-16 00:00:00

PETKİM & EFQM Excellence Model

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

Links

Change.org campaign against Socar

http://www.change.org/tr/kampanyalar/european-bank-for-reconstruction-and-development-ebrd-international-finance-corporation-ifc-unicredit-akbank-garanti-bankas%C4%B1-i%C5%9F-bankas%C4%B1-denizbank-ve-finansbank-alia%C4%9Fa-yar%C4%B1madas%C4%B1-nda-yeni-rafineri-ve-termik-santral-yat%C4%B1r%C4%B1mlar%C4%B1n%C4%B1-finanse-etmeyin

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
https://www.flickr.com/photos/bankwatch/sets/72157644257961713/

IFC page on Socar

http://ifcext.ifc.org/ifcext/spiwebsite1.nsf/651aeb16abd09c1f8525797d006976ba/54452dd777e2932885257b860068ac08?OpenDocument

Source Watch on Socar

http://www.sourcewatch.org/index.php/Socar_Power_station

Brief history

The state Oil Company of the Azerbaijan Republic, SOCAR, purchased the Petkim petrochemical plant from the Turkish Government in 2007. The plant is located in the Aliaga Peninsula of the Izmir Region. On this peninsula there are numerous highly polluting facilities, including the country's largest oil refinery, the Koc Group's Tupras. Before Tupras and Petkim were sold in privatization programs, they were a single facility. Together with consultants from the Jurong Petroleum facility in Singapore, SOCAR put together a plan to transform this peninsula into a complex of fossil fuels facilities.

In June 2010 the Socar Turkey Aliaga Refinery was granted a pre-licence for the same site. Between August 2011 and February 2014 Socar has been undertaking heavy excavation works. These are carried out by a construction company owned by the Aliaga mayor's son. With local governmental leaders in a conflict of interest regarding the project, local activists are going up against all odds and face severe pressures. Currently the excavation works contract has been terminated and a local prosecutor has opened a court case against the mayor's son, reported in Aliaga Express newspaper. Nonetheless, the public has opposed the project and an initial coal plant EIA meeting was canceled due to protests and later "rescheduled" without informing the local community.

In 2013 the EBRD announced its intention to invest USD 150 million. A Board decision was expected in early 2014. With this project, the EBRD would have been setting an example in Turkey as Turkish banks will lend under any conditions as long as EBRD puts its name on the loan package. In the public domain it is known that EP bank Unicredit is the lead financial arranger. It has disseminated the diligence reports to other commercial banks. These reports do not mention the coal plant or the geothermal reservoir.

Currently a local non-governmental organization and Buhar Enerji, the renewable energy company that holds the license for the geothermal resource, have submitted complaints to the Project Complaints Mechanism of the EBRD.

In February 2014, CEE Bankwatch Network, supported by nine other international NGOs including BankTrack, Greenpeace Mediterranean, Friends of the Earth, sent a letter to EBRD President and Executive directors and the IFC, calling on the Bank and potential lenders to reject this project or delay its approval until proper due diligence and satisfactory public consultations have been carried out, and legal disputes have been successfully resolved.

In March 2014 EBRD and IFC, The World Bank's International Finance Corporation, announced having withdrawn planned contributions of USD 150 million each for the refinery. Funding such dirty-energy projects runs counter to EBRD guidelines, but neither EBRD nor the IFC have implied that pressure from the NGOs has any link with their decisions to cancel financing for the refinery. According to media reports , the  lenders withdrew their EUR 300 Milliono support for the project because intercreditor policy requirements could not be met by the sponsor by April's deadline.

In January 2015 it was announced that the project had raised USD 3.29 billion in debt financing from seven export credit agencies and sixteen commercial banks.

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