SOCAR to get almost 2B manats worth of loan in Azerbaijan (UPDATE)

Details added (first version posted on 10:21)

Baku, Azerbaijan, Oct. 15

By Maksim Tsurkov - Trend:

Azerbaijan's state oil company SOCAR will soon receive the first tranche of loan from the International Bank of Azerbaijan (IBA), according to the company's vice-president for economic issues, Suleyman Gasimov.

Gasimov made the remarks Oct. 15 speaking to reporters at the '1st Azerbaijan Conference on Sustainable Development and Corporate Social Responsibility' held in Baku.

He said that the loan will total 1.86 billion Azerbaijani manats ($1 is equal to 1.0473 manats as of Oct. 15).

"Out of the total amount of the loan, 1.26 billion manats will be directed to modernize the oil refinery named after Heydar Aliyev, while 600 million manats will go to drilling at the 'Bulla Deniz' field and at the shallow part of the Gunashli field," said Gasimov.

He said that in this regard there is already a corresponding decision of Azerbaijan's Cabinet of Ministers, adding that the Finance Ministry acts as the state's guarantor.

"Contracts have already been signed, there only remains to solve some technical problems," he added. "Preparation of the documents needed to get the first tranche is being completed."

"We expect that the first tranche, both for modernization of the oil refinery, and for the drilling, will be allocated in the near future," Gasimov added.

He further noted that under the first tranche of the IBA's loan, some 50-60 million manats will be directed to reconstruct the oil refinery, and about 200 million manats to conduct to drilling.

"Both are long-term loans. The loan for the oil refinery's modernization is intended for about 13 years, the first three years covering a grace period. It [the loan] will be repaid over 10 years in equal instalments with help of funds from the state budget and SOCAR's authorized capital," said Gasimov.

He also noted that the loan for conducting drillings is meant for five to six years, and the proceeds from the sale of extracted hydrocarbons will be a source for this loan's repayment.

Earlier, SOCAR's Head Rovnag Abdullayev said that the process of modernization of the Baku oil refinery named after Heydar Aliyev will be completed by late 2018.

After the completion of the reconstruction, the processing capacity of the refinery will increase from six million to 7.5 million tons of oil per year.

SOCAR announced about liquidation of Azneftyag oil refinery on Jan. 1, 2015 and its merger with Baku oil refinery named after Heydar Aliyev.

The decision to do so was taken as part of work to improve and optimize SOCAR's structure.

Edited by SI

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Follow the author on Twitter: @MaksimTsurkov

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