Kazakh Company and SOCAR Fail to Reach Agreement on Big Energy Project

Kazakhstan, Astana / corr Trend K.Konirova / The national oil companies of Kazakhstan and Azerbaijan, KazMunayGas and the State Oil Company (SOCAR) failed to reach an agreement on the construction of an oil refinery plant in the Ceyhan port, a source at the Kazakh company said in an exclusive interview with Trend.

"The sides could not reach an agreement on the construction of an oil refinery plant in Ceyhan. Talks on unification of efforts were halted. Azerbaijan offered its terms and we offered our own... and so, no talks are held on the unification of efforts on this project at the moment," he said.

A next round of talks on the construction of the ORP in Ceyhan was held in Istanbul last week. Its participants were to define the sides of the future consortium which would be involved in the implementation of the project.

At the beginning three companies KazMunayGas of Kazakhstan, Oil India of India, and Calik Enerji of Turkey, held talks on joint partners in this project.

In spring of 2007 the issue of unifying efforts over the construction of ORP in Ceyhan was raised between the state oil companies and Kazakhstan and Azerbaijan. However, the Azerbaijani company now intends to build the ORP in Ceyhan independently, in a tandem with another Turkish company.

Meanwhile, Italian ENI, which acts as an operator in the project to develop the Kashagan field, the biggest in the Kazakh section of the Caspian Sea, and construction of the Trans-Anatolian pipeline ( Samsun - Ceyhan) voiced its intention to enter this alliance in the summer of 2007.

Nevertheless, an official of the Kazakh company said that Eni's inclusion in the consortium on the construction of the ORP in Ceyhan is more preferable than with SOCAR. Interest by the Italian company towards the Ceyhan project is fully justified. It enters another project on Trans-Anatolian oil pipeline (renamed as Samsun-Ceyhan), which is built for the future Kashagan oil.

The construction of the ORP will begin in 2008 and is to be completed by 2012. The plant will be built in two stages. The first stage envisages the establishment of the oil refinery plant and the second the petrolchemical complex. The refining capacity of the plant will vary from 15mln to 20mln tons and the project is estimated at $5mln. It is planned to produce a wide range of oil products, all types of high quality gasoline, diesel fuel, aviation kerosene and petrochemical products. The enterprise is focusing on the Turkish market. Some 10mln tons will be sold to Turkey and the rest 5mln to India.

In the near future, the three different pipes meet one another in the area of the Ceyhan Port, which will therefore receive up to 170mln tons of oil per year in aggregate. It is more than that in the world famous port in Rotterdam, which accepts approximately 150mln tons 'black oil'. So, oil will be at an amount which can be sold and also refined.

A year ago KazMunayGas launched talks with the Turkish Government on the allocation of land for the future construction. Turkey is presently experiencing a shortage of oil refining facilities.

Turkish TURCAS and State Oil Company of Azerbaijan (SOCAR) also intends to construct an oil refinery plant in Ceyhan port. Initial cost of the construction at the Ceyhan port is $4bln.

The Government of Turkey has received three applications for the construction of a new Oil Refinery Plant (ORP) in the area of Ceyhan port. There are three groups of companies willing to build ORPs. The first group unites Calik Enerji of Turkey, KazMunayGas of Kazakhstan and Oil India of India. The second group includes Turkish company TURCAS and the State Oil Company of Azerbaijan (SOCAR). The third group unites the Turkish company Petroil offici and the Austrian company OMV.

Turkey is presently experiencing a shortage of oil refining facilities. According to various sources, Turkey's current need for oil reaches 32mln tons per year.

The five oil refineries presently operational in Turkey may produce up to 26.5mln tons of oil product, and the country has to rely on importing the rest of the 6 -7mln tons of oil products, buying oil refined products from Russian or Italian companies. According to predictions, by 2010, Turkey's oil dependency will increase to 34mln tons and up to 43mln tons by 2012.

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