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SOCAR uses over half of loan for construction of urea plant

Oil&Gas Materials 31 May 2018 18:18 (UTC +04:00)
Within the project of construction of urea plant of Azerbaijan state company SOCAR, about 325-330 million euros from 500 million euros loan of foreign banks have been disbursed.
SOCAR uses over half of loan for construction of urea plant

Baku, Azerbaijan, May 31

By Maksim Tsurkov - Trend:

Within the project of construction of urea plant of Azerbaijani state company SOCAR, about 325-330 million euros from 500 million euros loan of foreign banks have been used, the plant's director Khayal Jafarov told reporters May 31 in Baku.

He noted that, the main amount of payments will be made when SOCAR will take over the plant from Samsung.

"Ten percent of the plant’s value will be received upon completion of all work and upon acceptance of the plant [about 75 million euros]. Another 8 percent of the plant's value will be paid upon completion of mechanical work [about 50-56 million euros]. Therefore, there will be a large one-time payment. To date, about 325-330 million euros have already been used. Thus, about 120 million euros in large tranches, plus payment for the work that is performed will be used additionally," said Jafarov.

The cost of construction of the plant is estimated at 770-780 million euros.

At first, financing of construction work was carried out from the Azerbaijani state budget and about 210 million manats were allocated from there before the beginning of 2015, another 60-65 million euros were allocated to SOCAR.

But later it was decided to switch to project finance and negotiations with banks were initiated. As a result, the Export–Import Bank of South Korea (EximBank) opened a line of credit worth 500 million euros under Azerbaijan’s state guarantee to complete the construction of the plant. EximBank will directly provide 251 million euros, while 249 million euros will be allocated by three commercial banks (Italy’s UniCredit S.p.A., France’s Societe Generale S.A. and Germany’s Deutsche Bank AG) with the support of EximBank.

The plant will produce 1,200 tons of ammonia and, subsequently, 2,000 tons of urea per day. It is planned to supply a quarter of production, that is, 150,000 tons of urea (with a potential growth of up to 200,000 tons, or 30 percent of production) to the Azerbaijani domestic market. The remaining part will be exported to Turkey, Georgia and the markets of the Black Sea and the Mediterranean Sea countries.

South Korea’s Samsung Engineering won the tender for the construction of the urea plant. Samsung Engineering acts as a general contractor of the plant’s construction, but it has no license for production of urea and ammonia, which will be by-product in the urea production process. Therefore, the relevant licensing agreements were signed with Haldor Topsoe company (Denmark) for production of ammonia and Stamicarbon B.V. company (the Netherlands) for production of urea.

Production at the plant will be environmentally friendly. The plant will have an autonomous electricity system. The plant will consume 25-26 MW of electricity per hour.

Some 1.3 million cubic meters of gas per day (or 435 million cubic meters of gas per year) will be required to operate the urea plant at full capacity.

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