SOCAR/Turcas oil refinery to bring investment income worth 30%: interview with Petkim oil-refinery complex

Oil&Gas Materials 23 June 2009 11:23 (UTC +04:00)

Azerbaijan, Baku, June 22 / Trend , E.Ismayilov/

General Manager of Petkim Kenan Yavuz spoke with Trend in an exclusive interview.

Q: At what stage is the construction of refinery on the territory of Petkim complex? 

A: The vision of Petkim is to create a regional force in Petrochemicals operating world class assets by the year 2018. One of them is funds to be invested by SOCAR & Turcas Refining, Inc in the construction of the oil refinery with a capacity of 10 million ton/year. First and foremost, the refinery will meet Petkim's raw materials needs. The remainder of its output will be sold to buyers in Turkey and Europe.

The establishment of the refinery within the Petkim complex, where there is already existing port, dam, energy, storage and logistics infrastructure, generates a cost advantage of approximately 30% for this investment. Petkim presently imports raw materials from countries like Russia, Syria and Algeria. Petkim has allocated 1.375 million square meters of land to SOCAR & Turcas Refining for the establishment of the refinery. We are awaiting approval from the Energy Market Regulatory Authority (EMRA) and working to receive an Environmental Impact Certificate. We expect construction of the refinery to last three years.

Q: What is your forecast for investment to develop Petkim this year?     

A: Despite the economic crisis, in 2008 we made investments in Petkim totaling $54 million and are planning a further $59 million worth of investments in 2009. Most of the investments planned for the year of 2009 are capacity maximization and renovation type of investments for the existing plants.

Q: What are the results of your company's activity since early 2009?  

A: In the first half of the 2008, although raw material prices increased by around 60-70%, the increase in product prices was only 30%. In the second half of 2008, the decrease in product prices was faster than that of raw material costs. As a result, we closed the year 2008 with a loss of 151,2 million TRY.

Turkey is also affected from global recession and oversupply situation in the market effect the Turkey petrochemical industry also. At that time, depending upon the global crisis, our capacity utilization rate was 75% in between September 2008 and February 2009. Since February, we are running our plants with an average capacity utilization rate of 95%, because our customers preferred getting raw material from Petkim instead of importing it. Petkim has produced 294,000 tons of marketable products in the first quarter of 2009, Gross Revenues were $222 million, Gross profit - $22 million and Gross profit margin - 9.9%.