UPDATE 1-Socar to sign Turkish refinery financing within a month
* Cost of project seen at $4 billion, excluding financing
* Refinery will be major addition to Turkish refining capacity
* Project seen completed in 2016 (Adds quotes, details, background)
By Evrim Ergin
ISTANBUL, Feb 14 (Reuters) - Azeri state oil company Socar will sign a preliminary deal with a group of lenders within a month to help finance a $4 billion Turkish refinery, the head of its Turkish unit said, which would provide needed capacity and compete with Turkey's one refiner.
In December, Socar selected a consortium of Tecnicas Reunidas, Saipem, GS Engineering & Construction and Itochu to build the refinery at Aliaga on the Aegean coast in western Turkey. Construction is expected to be completed by 2016.
Turkey currently imports nearly all of its oil products, while sole refiner Tupras operates four plants across the country.
"Excluding financing costs, the total cost of the refinery will be $4 billion. Of that we will provide $1.9 billion from our own equity," Socar Turkey Chairman Kenan Yavuz said in a telephone interview on Thursday.
He said total investment in 2013 would be $800 million, which will come out of the $1.9 billion planned from its own equity.
The refinery will have a capacity to process 10 million tonnes of crude a year. Tupras has total annual capacity of around 28 million tonnes.
Socar, which owns Turkish petrochemical company Petkim , has so far invested $200 million from its equity in the Socar Turkey Aegean Refinery project in areas such as engineering and infrastructure.
"By the end of 2013, we will spend another $800 million from our own equity. Thus we will have completed some 20 percent of the project by end-2013 from our own equity," he said.
Yavuz said the company held meetings with lenders in London on Feb. 4 and in Istanbul on Feb. 6, most of them export credit agencies, to discuss financing the more than $2 billion in remaining costs.
"We will sign a preliminary agreement on financing with interested lenders within one month," he said.
Along with the cost of financing, the total investment will be $4 billion to $5 billion, he added.
Socar owns 81.5 percent of the Aegean refinery project at Aliaga, while Turkey's Turcas Petrol owns the remaining 18.5 percent.
The plant will target annual production of 500,000 tonnes of jet fuel, 6 million tonnes of diesel, 500,000 tonnes of petroleum coke, 300,000 tonnes of liquefied petroleum gas and 1.6 million tonnes of naphtha, company documents showed. (Writing by Daren Butler; Editing by Nick Tattersall and Jane Baird)