Russia’s private petroleum producer Lukoil provides a $1.5 billion loan to Azerbaijan’s state-owned petroleum company Socar in line with a broader deal that will allow Turkey's Star refinery to re-refine Russian petroleum.

This deal will give Lukoil another customer near Russian ports. Most of the European refineries have stopped importing petroleum from Russia in order to comply with EU sanctions over Moscow's military attack on Ukraine in 2022, but Turkey has not imposed any sanctions against Russia and continues to import petroleum and gas from this country.

However, Turkey's Star refinery, which has a production capacity of 200,000 barrels per day, was forced to cut Russian petroleum imports this summer due to problems stemming from international financial restrictions on trade with Moscow.

According to data from LSEG Eikon, Star Refinery reduced imports of Russian Urals oil earlier this year, then suspended purchases of the grade in August and September and instead bought Kazakhstan's Quebec oil, which has a similar quality and is loaded from Russian ports.

LSEG data shows that Star Refinery will purchase an average of 100,000 barrels per day of Ural oil in 2022, but its imports this year so far have been less than 50,000 barrels per day.

Lukoil will start shipping Urals oil to Star from October and is expected to deliver about 100,000 barrels of oil per day to Star, which is equivalent to half of the refinery's capacity, three sources familiar with the matter told Reuters.

According to LSEG data, three oil tankers supplied by Lukoil, each carrying 100,000 tons of Russian Urals oil, left the Primorsk Port for Turkey.

According to informed sources, Lukoil will also provide a $1.5 billion loan to Socar. In the past decade, Socar has got many loans to build Star Refinery.

Lukoil has been subject to U.S. sanctions against Russia's energy sector since 2014, but has been spared tougher measures imposed on other Russian companies since 2022. Litasco, the trading arm of Lukoil, continues to supply EU refineries in Bulgaria and Romania and has offices in Dubai and Geneva.

Launched in 2018, Star was designed to refine sour crude such as Urals or Kirkuk, and has relied on grades from Kazakhstan, West Africa and Iraq since Russia cut imports, according to a Reuters report.