Eurasian Development Bank reveals success of SOCAR on Ukrainian market

Business Materials 1 October 2014 13:07 (UTC +04:00)

Baku, Azerbaijan, Oct.1

By Emil Ismayilov - Trend:

Total investments of SOCAR (State Oil Company of Azerbaijan) for 2009-2013 in Ukraine exceeded $160 million, stated the annual report of the Center for Integrative Studies of the Eurasian Development Bank (EDB IIC) "Monitoring of mutual investments in the CIS - 2014".

The only CIS state to increase investment in Ukraine during the crisis, was Azerbaijan, according to the report. SOCAR opened petrol stations in Khmelnytskaya and Poltava regions, bringing their total number to 37 in the spring of 2014.

"The success of SOCAR on the Ukrainian market is largely due to the fact that the Azerbaijani company focused on the rapidly growing segment of premium fuel and imports oil of Polish, Belarusian and Lithuanian refineries, complying with the relevant Euro-5 and Euro-6 environmental standards," the report said.

In case if Russian oil companies competing with SOCAR are forced to leave the Ukrainian market, it is possible that investment expansion of SOCAR will continue even with a substantial reduction in consumer demand for gasoline, according to the report.

Despite this, it would be premature to talk about a breakthrough in investment relations between Ukraine and Azerbaijan. The report explains it with the following facts: firstly, the development of a network of petrol stations is still carried out within the framework of the strategy, which was adopted before the change of power in Kiev. Secondly, SOCAR sees Ukraine as an important, but not the main country for investment, even on the former Soviet Union (Georgia has more than 100 stations, and new construction still continues). Third, Azerbaijani companies still do not implement large investments in any other sectors of the Ukrainian economy in addition to the development of networks of gas stations.

SOCAR is among the 15 companies investing in CIS and Georgia mutual investments monitoring database with $0.72 billion on the results of 2013, according to the report. The main recipient country of SOCAR in this region is Georgia, which accounts for 84 percent of direct investments.

SOCAR includes Azneft (onshore and offshore oil and gas producing companies), Azerkimya (chemical industry) and Azerigas production associations. In addition, the State Oil Company has a number of processing enterprises, service enterprises, institutions involved in geophysical and drilling operations.

SOCAR is the only oil producer in Azerbaijan (it has two refineries on its balance), and also owns petrol stations in Azerbaijan, Georgia, Ukraine, Romania and Switzerland. SOCAR is a co-owner of the largest Turkish petrochemical complex Petkim and other assets in Turkey.

In particular, the total assets of the State Oil Company by the end of 2013 amounted to 23.05 billion AZN compared to about 21.87 billion AZN in 2012. The authorized capital of SOCAR was about 1.32 billion AZN at the same time in 2013 versus over 1.08 billion AZN in 2012.