Both Citi, JP Morgan, and Socar have declined to comment on the early redemption of the loan led by the U.S. banks. Similarly, Lukoil and Socar have not responded to inquiries about the Lukoil loan, which had been previously reported by Reuters.
The sources clarified that there was no indication that either of the transactions breached U.S. or other international financial sanctions against companies engaged with Russia.
However, they mentioned the early loan redemption facilitated Moscow in resuming crude oil sales to Socar’s Star refinery in Turkey, a primary and longstanding purchaser, at a moment when other global refiners were avoiding Russian oil.
Coinciding with these transactions, Socar recommenced the acquisition of Russian oil at Star, which had been suspended the previous year. The suspension was attributed to a request from the U.S. banking consortium concerned about breaching sanctions following Russia’s invasion of Ukraine.
According to one of the three sources, who preferred to remain anonymous due to restrictions on speaking to the media, “Star was designed to process Russian oil, so when Western banks instructed it to cease Russian oil refining, it posed a challenge.”
The source further elucidated, “No loan, no problem,” illustrating the rationale behind the premature settlement of the loan from U.S. banks.
The Citi- and JPMorgan-led syndicate had initially loaned the funds to Socar’s Turkish division in 2021 for a five-year term, as stated by a Socar Turkey announcement at that time.
The redemption occurred at the end of the previous year, about when Lukoil lent Socar $1.5 billion as part of an arrangement to recommence supplies to Star through Lukoil’s trading division Litasco, according to the sources.
Constructed in 2018, the Star refinery has a processing capacity of 200,000 barrels per day, ranking it among the most significant refineries established in Europe in recent years.
Under the pressure from Western banks, Star reduced and then halted Russian oil purchases in mid-2023. The imports resumed in October, coinciding with the loan agreement with Lukoil.
Following the imposition of international sanctions in 2022 and the subsequent cessation of purchases by most of Europe, Turkey has emerged as one of the largest buyers of Russian oil. India and China have also become significant importers of Russian oil.
The U.S. warning of sanctions against financial firms engaging with Russia has recently dampened Turkish-Russian trade, causing disruptions or delays in some transactions.
Despite opposing sanctions against Moscow and criticizing Russia’s invasion of Ukraine two years ago, Ankara has succeeded in maintaining close relationships with both Moscow and Kyiv throughout the conflict.
