SOCAR’S GEORGIA DILEMMA: NEW STANDARDS FOR PETROLEUM STAPLE

The Georgian state company Saknavtobtransi (former Gruzneftetrans) has send the State oil company of Azerbaijan (SOCAR) a notification of the Georgian government’s decision to introduce European standards for automotive fuel sales beginning from January 1, 2006.

Saknavtobtransi is the biggest buyer of SOCAR-produced petroleum on the Georgian market. SOCAR exports 20,000 tons of A-92 motor spirit to Georgia per month.

The standards require that the concentration of benzol in motor spirit must me under a per cent, with the rate of aromaticity not exceeding 35 per cent.

The move is widely seen in Azerbaijan as a threat to petroleum exports to Georgia. In addition, the introduction of EU standards for motor spirit also seems to be fraught with a slump in SOCAR’s export price of petroleum products sold on the Georgian market. SOCAR’s petroleum products are inferior to those meeting EU standards in two positions at the least.

A SOCAR source told Trend that the company’s A-92 motor spirit is of lower quality compared to the fuel that meets EU standards. The concentration of benzol in SOCAR-produced motor spirit is in the range of 3 to 4 per cent, with must me under a per cent, with the corresponding rate of aromaticity varying 37 to 42 per cent.

Adverse market conditions in Georgia will certainly force SOCAR to eye other markets, but the cost petroleum exports will certainly go up, because of rising transportation expenses.

The company has other options too: hopes are pinned on UOP of the United States, which is about to build up two new installations at Heydar Aliyev Refinery (former Azarneftyanacag) as part of a program on the upgrade of the plant, thereby converting the existing capacities to the production of environmentally safe petroleum products.

UOP Limited has already clinched a contract with SOCAR on the construction of a new facility, which will be capable of producing high-octane gasoline. The entire complex will also include Alkylene, Oxypro and Butamer installations designed for the production of environmentally safe products. The Alkylene plant is the first international example for the use in practice of the technology for the alkylation motor spirit (UOP’s know-how) вЂ" the process means the use of solid catalysts instead of liquid acid for the alkylation of C4 olefines with isobutane. The Alkylene plant will run at an operating capacity of 300,000 tons per year of motor spirit alkali, with Oxypro system to produce 130,000 tons per year of components of high-octane gasoline вЂ" both are important raws in the production of environmentally safe gasoline.

However, SOCAR has to wait at least two years and a half, with the first-year period to be spent on design work on the construction of the entire system.

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