Azerbaijan’s heavy industry to reach new level

Business Materials 10 April 2019 16:00 (UTC +04:00)

Baku, Azerbaijan, April 10

By Kheyraddin Nasirzade - Trend:

Azerbaijan has plans for the revival of its mechanical engineering sector, Trend reports with reference to the “Market Analysis Azerbaijan 2019” publication.

The focus is primarily on projects for the production of equipment for the oil and gas industry, according to the report.

“The Republic of Azerbaijan is striving to expand its capacity in mechanical engineering and improve the technology used,” reads the report. “Projects are based on the implementation of two documents: a program for industrial expansion from 2015-2020 and the Strategic Roadmap adopted at the end of 2016 for the development of heavy industry and mechanical engineering up to 2020, with a longer-term overview to 2025.”

“In line with the strategy, several obsolete factories are to be shut down and new mechanical engineering companies are under construction, in cooperation with foreign partners,” the report noted. “The country is pursuing ambitious targets set for the production of equipment to assemble agricultural machinery, as well as for drilling equipment for the oil and gas industry. By 2020, imports of parts for agricultural machinery and drilling equipment are expected to fall by 65 percent and 45 percent respectively, compared with 2016.”

“During the Soviet period, there were some 160 mechanical engineering companies and industry-related research and design institutes employing more than 110,000 staff in Azerbaijan,” the report said. “Two-thirds of the total production of oil and gas equipment for the maintenance, overhaul and repair of oil and gas production facilities came from the former Azerbaijan SSR. More than 20 manufacturers of this equipment exported a considerable proportion of their production to more than 30 countries.”

“Only a few manufacturers of oil and gas equipment are currently active,” reads the report. “Notable among those is a project in cooperation with the Belarusian MTZ, a manufacturer of agricultural machinery, to assemble tractors in the Ganja automobile plant (annual output 1,000-1,500 units) and companies under the Ministry of Defense. The value of machinery and equipment output, including spare parts, was a very modest $114 million in 2017. According to the State Statistical Committee, there are about 4,000 employees producing machinery and equipment today.”

“Most manufacturers of supplies for the oil and gas industry still operate under the state-owned Azneftkimyamash JSC,” the report said. “They mainly produce more than 100 technologically less sophisticated items of equipment, primarily to meet demand from the mining industry, as well as for the petrochemical and chemical industries. Their machinery and equipment park is generally worn out and technically outdated. Oil and gas companies operating in Azerbaijan source more than 99 percent of their equipment from abroad.”

“Opportunities for a revival of the mechanical engineering sector are basically not bad,” reads the report. “This view is supported by the great demand for oil and gas equipment from Azerbaijan and other countries bordering the Caspian Sea - Iran, Kazakhstan, Russia and Turkmenistan. There are several new companies in the country today that produce a wide range of metal products according to internationally recognized standards and thus recommend themselves as suppliers of oil and gas equipment.”


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