Baku, Azerbaijan, Oct. 23
By Maksim Tsurkov – Trend:
The payback period of urea plant of Azerbaijan’s state oil company SOCAR under the current market conditions is estimated at 8-9 years, the plant’s Director Khayal Jafarov told reporters in Baku Oct. 23.
Jafarov said that the plan to complete the construction work at the plant until the end of this year remains relevant.
“Currently, certain welding work is being carried out. The commissioning work will start in the beginning of next year and will continue in stages, and the exact date of putting the plant into operation will become clear,” he noted.
The director expressed hope that the plant will be able to start production by the middle of the next year.
“We must complete the work on laying water and gas pipes, electric and sewer lines by the end of October,” said Jafarov.
He noted that to date, as part of the project, more than 300 million euros out of the loan worth of 500 million, issued by the Korean Eximbank, have been spent.
“We receive the funds regularly once a month, depending on the work progress. At the same time, about 100 million euros will be received in the form of final payment after completion of commissioning,” said the plant’s director.
“Repayment of the loan, according to the contract, begins one and a half years after the commissioning – in late 2019. Interestingly, the loan can only be used to pay for Samsung’s work, thus, a certain amount is invested by the contractor itself,” he added.
Jafarov went on to say that Marketing and Economic Operations Department of SOCAR will be involved in the sale of products.
“Urea is highly demanded, and the positive point is that this is a spot market without long-term contracts. Turkey is expected to be the main market. After the launch of the Baku-Tbilisi-Kars (BTK) railway, it will be easier to deliver products. Moreover, there is an access to the Black Sea ports, from where urea will be delivered to world markets. The demand is expected to be 150,000 tons in the domestic market, with potential growth of up to 200,000 tons. This means that about 500,000 tons of urea will be delivered to international markets,” added Jafarov.
The plant will produce 2,000 tons of urea per day. A quarter of products is planned to be supplied to the domestic market. The remaining volume will be exported, in particular to Turkey, Georgia and the markets of the Black Sea and the Mediterranean.
The foundation of the plant was laid by the president of Azerbaijan in December 2011.
Samsung Engineering Co. Ltd. won an international open tender to provide engineering, procurement, construction and pre-commissioning services for the plant.
---
Follow the author on Twitter: @MaksimTsurkov