Play of the week, ST, Sat, May 25, 2013
.. It is added that Keppel may benefit from having a shipyard in Azerbaijan as it is reportedly close to signing a contract with Socar, an oil and natural gas firm owned by Azerbaijan, for a semi-submersible rig worth between US$700m - US$800m.
BAKU, May 22 (Reuters) - Azeri state energy firm SOCAR plans
to borrow more than $20 billion over the next five years to
finance energy projects to help boost gas exports to Europe, a
challenge to plans by neighbouring Russia.
SOCAR, one of the world's oldest oil companies, wants to
send gas to Europe, hoping to capitalise on a desire in European
capitals to diversify their supply from Russia after Moscow's
"gas wars" with Ukraine disrupted supplies in 2006 and 2009.
The plan to tap its Shah-Deniz II project for an expected 16
billion cubic metres per year (bcm/y) of gas to Europe is in
direct competition to the South Stream pipeline project, led by
Azerbaijan's former Soviet master, Russia.
Vice President Suleiman Gasymov said he would approach
foreign banks as well as turning to the state oil fund to pay
for a $5 billion refinery in Turkey, a $17 billion oil and gas
processing and petrochemical complex, the $8 billion
Trans-Anatolian natural gas pipeline project (TANAP) and new
drilling rigs on the Caspian Sea worth $4 billion.
"SOCAR starts implementation of four projects with a total
estimated cost of $33 billion-$35 billion from 2013," he said in
"Sixty-five percent of the cost will be provided by bank
credits, while the remaining 35 percent (will come) from
Azerbaijan's own resources, mainly the state oil fund."
SOCAR is a sole shareholder in three projects and controls
the TANAP project aimed at taking Azeri gas to Turkey and to
markets in Europe.
Construction of the TANAP pipeline, which will be built from
the Turkish-Georgian border to Turkey's border with Europe, is
expected to start at the end of 2013 and the project's first
phase is seen ready at the end of 2017 or early 2018.
South Stream, which will stretch more than 2,000 km to
northeast Italy, is expected to be built by the end of 2015, its
chief executive of the offshore section said earlier this month.
New drilling rigs on the Caspian Sea will be built for SOCAR
by Singapore's Keppel.
But credit ratings agency Fitch said in April that further
investment or acquisitions by SOCAR would result in "a
significant and sustained deterioration of credit metrics
(which) would be negative for the ratings". Fitch's rating in
April was BBB-.
In March 2013, SOCAR placed a $1 billion 10-year Eurobond
with 4.75 percent coupon to refinance part of its existing debt
and for its capital investment programme. The company's debut
Eurobond issue was in February 2012.
Gasymov dismissed concerns over increasing SOCAR's debt.
"There are no risks for Azerbaijan over financing of these
projects, because the state is behind them and we have a high
international rating," he said, adding that SOCAR planned to
borrow funds mainly in export-import banks abroad.
Fitch cut Azerbaijan's sovereign-credit grade outlook to
BBB- earlier this month because the Caspian Sea nation raised
spending as oil output declined.
Gasymov said the European Bank for Reconstruction and
Development, the World Bank and some foreign commercial banks
had already expressed interest in funding one of the projects --
construction of a new refinery at Aliaga in western Turkey,
which is expected to be completed by 2016.
Azerbaijan's $34 billion state oil fund holds proceeds from
oil contracts, oil and gas sales, transit fees and other
revenues and uses investment proceeds to help finance social
spending and infrastructure projects.
Apart from transfers to the Azeri state budget, it invests
in real estate abroad and plans to spend about $1 billion on
buying commercial property this year, mainly in Asia and
(Writing by Margarita Antidze; editing by Elizabeth Piper and