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Four Firms Advise on Turkey’s Largest Project Financing

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Vinson & Elkins has announced that it is advising STAR Rafineri on the development and financing of a greenfield oil refinery in Turkey on the Aegean Sea.

STAR Rafineri is a joint venture between the State Oil Company of Azerbaijan Republic and the Ministry of Economy and Industry of Azerbaijan. V&E advised on all elements related to the signing of the finance documents for the STAR refinery project, including the common terms agreement and all the loan facility agreements. 

According to Vinson & Elkins, "the STAR Refinery project is unique and innovative on a number of fronts. Perhaps most notably, with an approximate value of USD 5.6 billion, the transaction marks the largest project financing in Turkey’s history. Additionally, with Export Credit Agencies (ECAs) from five different countries, this marks one of the world’s most diverse multi-source financings. The ECAs involved include JBIC and NEXI (Japan); US Exim (USA); CESCE (Spain); SACE (Italy); and K-Sure (South Korea). The financing of the refinery project also involves Export Development Canada and 16 commercial banks from Europe and Asia."

The EPC contractor is a consortium of companies from Spain (Tecnicas Reunidas), Italy (Saipem), Korea (GS) and Japan (Itochu). The full notice to proceed is expected to be issued to the EPC contractor following today’s announcement.  

In a statement released by the firm, V&E explains that "the project will have the capacity to process 10 million tons of crude oil and expects to manufacture approximately 1.6 million tons of naphtha, which will rescue the petrochemical sector from foreign dependency, and petroleum products such as diesel oil, jet fuel and LPG. The project has also received the first strategic investment incentive certificate of Turkey."  

STAR Refinery expects to provide employment and other financial considerations to the regional and national economy and it will start operation in 2018. It will be the first refinery to start operations in Turkey since 1972.  

London-based Vinson & Elkins Partner Nabil Khodadad, who co-heads the firm’s Global Project Finance practice, led the financing. He was assisted by a London-based team that included Partner Andrew Nealon and Associates Alistair Wishart and Lauren Davies.

UniCredit is acting as financial advisor to the borrower. The Allen & Overy team serving as lenders’ counsel was led by Istanbul-based Partner Charles Lindsay and London-based Project Finance Partner Lorraine Bayliss. The lender's Turkish counsel was the Paksoy law firm, led by Partner Zeynel Tunc, and lawyers from the firm's Banking/Finance, Tax, Real Estate, Corporate, Regulatory, and Capital Markets teams. Partner Muharrem Kucuk led the team of YukselKarkinKucuk -- the Turkish arm of DLA Piper -- as STAR's Turkish counsel.


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