Baku, Azerbaijan, Aug. 16
By Azad Hasanli – Trend:
Investments of Azerbaijan’s state oil company SOCAR in Turkey may be repaid later than expected amid the ongoing depreciation of the lira, according to Moody's report.
On Aug. 13, the Turkish lira exchange rate hit another record low, weakening to about TRY6.9 against the US dollar, amid growing political and economic tensions between Turkey and the US.
The lira has been weakening against the US dollar for several years, depreciating by more than 70 percent over the last five years and losing more than 40 percent of its value since the beginning of 2018.
According to Moody’s, SOCAR has substantial exposure to Turkey with revenue generated from sales in Turkey comparable to that generated from sales in Azerbaijan (about 5 billion manats in 2017).
“The company's noncurrent assets located in Turkey made up 20 percent of its total assets as of the end of 2017,” the report said. “SOCAR operates in Turkey through its subsidiary SOCAR Turkey Energy A.S (STEAS). STEAS indirectly controls 51 percent of Petkim Petrokimya Holding A.S. The second asset that STEAS owns is STAR, a $6.3 billion refinery at the Petkim site. The refinery will start operations in October 2018.”
The total amount of investments of SOCAR Turkey Energy in Turkey at the end of 2017 was about 12.2 billion manats ($7.2 billion). In 2017 SOCAR invested 587 million manats ($437 million) in the capital of its Turkish subsidiary and this year it plans to invest $600 million.
Petkim produces plastic packages, fabrics, detergents, and is the sole Turkish manufacturer of such products, a quarter of which is exported. The production capacity of Petkim is 3.6 million tons per year.
Along with naphtha, the new oil refinery will produce diesel fuel with ultra-low sulfur content, aviation kerosene, petroleum coke, liquefied gas, and other products. The refinery will not produce petrol and fuel oil. It is planned to refine Azeri Light, Kerkuk and URALS oil at the plant.
In 2018 the consolidated turnover of SOCAR Turkey Energy, according to the company's forecasts, must reach $15 billion. Thus, the company will become the second biggest industrial company in the country with 5,000 employees and $3 billion of export potential. It aims to become the biggest Turkish industrial company by 2023.
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