Star – Azerbaijan’s state-run oil company SOCAR, owner of Turkey’s largest petrochemical complex PETKIM, has signed an agreement with a Spanish-led consortium to build a refinery in Turkey’s Aegean province of Izmir. The initial infrastructure and excavation work on the strategic facility, which will reduce Turkey’s costly import dependency on petroleum products, has been going on since late 2011.
The Star Refinery project, to be located in Aliaga Izmir on Turkey’s Aegean coast, will be built by a consortium of Spanish, Italian, South Korean and Japanese companies that entered into an agreement with SOCAR Turkey, one of the largest foreign investors in the country and the major partner in the Turkish-Azeri joint pipeline project, TANAP.
Estimated to cost between USD 4.8 – 5 billion, the refinery will significantly reduce Turkey’s dependency on imports of many petroleum derivatives, saving the country as much as USD 2.5 billion a year, according to SOCAR Turkey CEO Kenan Yavuz, speaking at the signing ceremony.
The refinery project is part of a greater clustering plan by SOCAR that envisions expanding the PETKIM site in Aliaga to include refining, energy production and logistics capabilities. “SOCAR’s investments in Turkey will reach USD 17 billion by 2018..” Vagif Aliyev, head of SOCAR Investments Division and Chairman of Board of PETKIM said, adding that around USD 7-8 billion of this total will be spent on the Star Refinery.
The 10 million ton-capacity refinery is also the first project to be issued a ‘Strategic Investment Incentive Certificate’ since the introduction of Turkey’s new investment incentives system last June, benefiting from value-added tax and customs tax exemptions, a 90 percent tax cut, and a 50 percent investment contribution.
Scheduled to be operational by 2016, the Star Refinery will create thousands of jobs in both the construction and operational phases.