Construction of Shipyard May Create New Prospect to SOCAR

Oil&Gas Materials 27 May 2008 19:27 (UTC +04:00)

Azerbaijan, Baku, 26 May / Trend / Establishing a shipbuilding plant near Baku may significantly expand opportunities of the State Oil Company of Azerbaijan (SOCAR), the experts consider.

A memorandum on construction of a shipbuilding plant was signed by SOCAR, Azerbaijan Investment Company (AIC) and Korean company STX in Baku on 19 May. SOCAR's share holding in the project is 65%, AIC - 10% and STX - 25%. The plant will be built in Garadag region of Azerbaijan

Establishing a modern shipbuilding company in Azerbaijan will provide an opportunity to the Republic to maintain leadership with regards to transportation in Caspian.

Currently SOCAR owns Caspian Oil Fleet possessing 250 vessels. All these vessels are involved in supporting marine operations of SOCAR. In addition, the vessels of the fleet are involved in marine operations of the foreign companies working inside and outside Azerbaijani section of the Capitan Sea. Insignificant number of vessels is possessed by the Ministry of Ecology anf Natural Resources, State border Service.

The vessels transporting cargos and passengers in Caspian are owned by the Caspian State Shipping Company. Today the transport fleet of the Shipping Company includes 86 vessels, with 41 tanker fleet (including 1 water carrier), 35 dry cargo fleet, 10 subsidiary vessels. The fleet also includes universal vessels Po-Po, as well as marine railway-passenger ferries.

Presently, shipping is one of the cargo transporters in the Caspian Sea. Caspian State Shipping Companyhas four largest ship repair enterprises. However, their functioning will be stopped after construction of the new plant. It is expected that they were completely eliminated, as they are located in the boundary of the city. At the same time shipping is not participants of the memorandum on construction of new plant, which says that Caspian State Shipping Companyis completely deprived of its ship repair basis.

Currently, shipyard in the Caspian Sea becomes one of the most significant spheres of functioning of the company. This factor is observed by significant increase of oil and oil product transporting via the Caspian Sea. To 2013, it is expected that oil transporting via Caspian Sea to Azerbaijan and further via the Baku-Tbilisi-Ceyhan pipeline to Mediterranean coast or via railway to Georgian Black Sea ports.

New ships are needed to transport these cargos. According to some specialists, the maximum deadweight of the ship, which usage is possible in the Caspian Sea, is 30,000 tons. However, Kazakhstan insists upon expediency of construction of ships with deadweight 60,000 tons. Construction of such ships beyond the Caspian Sea is not expediency due to impossibility to deliver them. So, the one enterprise, which will construct such ships, may be new shipyard enterprise in Azerbaijan.

Availability and increase of transport fleet in Caspian Sea is considered by all the Caspian Sea countries. Nowadays, building of tankers to transport own oil is carried out by Kazakhstan. Currently, Turkmenistan and Iran are considered to create their own fleet in the Caspian Sea. Russia is to increase the number of ships in Caspian Sea. The Azerbaijani new shipyards may provide part of orders from these countries.

If there is a large shipyard, SOCAR will be able to offer a wide range of services to transport and oil producing companies. The prospect of creation of SOCAR own fleet at the Caspian Sea to transport oil and oil products should be taken into consideration.

The new enterprise is expected to be constructed in the free area owned by the Baku Deep Water Jacket Factory named after Heydar Aliyev of SOCAR. The enterprise constructs offshore platforms to produce oil and gas both in the field operated by foreign consortiums and in SOCAR's own fields.

Experts do not rule out that the shipyard may be operated for construction of large offshore platforms. For this purpose the experience of large Korean companies may be used, such as Keppel Fells and Hyundai. Construction of new platforms to develop the fields is acquiring urgency. They may be used to produce oil and gas in the fields development of which has been considered economically inefficient. However, since oil prices have hiked, economic attractiveness of the fields has dramatically grown.

Outline construction cost of the shipyard in Azerbaijan is supposed to comprise about $400mln. It is expected to be put into operation in 2011. In June, 2008, an independent expert group will be created to develop feasibility study, business plan, technical parameters of the enterprise (production capacity, application of up-to-day technologies and methods) and to determine required volume of investments.