Kazakhstan, Turkey and India Decide to Increase Capacity of Future Oil Refinery Plant in Ceyhan

Kazakhstan, Astana / corr Trend K.Arinova / Three partners KazMunayGas oil company of Kazakhstan, Calik Enerji of Turkey and Oil India of India made a decision to increase the parameters of future oil refinery plant at the Turkish port of Ceyhan from 15mln tons year to 20mln a year, a source at KazMunayGaz said. The decision was made as a result of trilateral talks in Deli.

"There are all grounds to increase the project capacity of the plant. These are Turkey's quickly growing demand for oil products, profitable location of the port, exit to world markets, as well as crude in big volumes. Oil will be delivered via the BTC pipeline, as well as two pipelines to run from Iran - the Kirkuk - Ceyhan and Samsun - Ceyhan, the same source said.

Along with construction of the plant under the project it is planned to build overall port infrastructure: piers, tankers and pipeline to the plant.

All conditions are there in the plant to increase its design capacity. In addition to the construction of the oil refinery itself, the project envisages erecting all port infrastructures. Increasing the capacity will lead to a rise in the project cost, but the cost has not yet been disclosed. Earlier, the variant of the project in 15mln t per year was estimated at $5bln.

The Turkish Company of Calik Enerji, which received a license for constructing the oil refinery, established a daughter company DAPRAS, in which 'KazMunayGaz' and Oil India should acquire their shares to participate in the project. A Memorandum of Understanding between the two countries has already been signed.

Italian ENI which is an operator in the development project of Kazakhstan's Kashagan field also voiced its wish to join the alliance.

Indian company's entrance to this group is explained with Oil Indian's possession of 10 oil refinery plants in India, a 6,000km-long pipeline, over 200,000 retail places for trading oil products in this country. This company has great experience in development of a feasibility study on the construction of oil refinery plants and advanced technologies.

Meanwhile, Italian ENI, which acts as operator in the project on development of the Kashagan field the biggest in the Kazakh section of the Caspian Sea, and construction of the Transanatloian pipeline ( Samsun - Ceyhan)has voiced its intention of entering this alliance.

The Government of Turkey received three applications for the construction of the oil refinery in Ceyhan Port. Three groups of companies voiced their wishes to construct the oil refinery. As mentioned above, the first one is 'KazMunayGaz', Turkish Calik Enerji and Indian Oil India, second - Turkish TURCAS and State Oil Company of Azerbaijan (SOCAR) and third - Turkish company of Petroil office and Austrian OMV.

KazMunayGaz' received proposal to joins the project from second and third groups. The proposals from Petroil office and Austrian OMV were denied. The proposals from the second group, particularly from SOCAR are being considered.

Whilst signing an agreement on strategic oil and gas partnership in Astana this week, the SOCAR President, Rovnak Abdullayev, said that SOCAR has already commenced procedures of constructing an oil refinery in Ceyhan. "We have already begun the project. If 'KazMunayGaz' wishes, we may realize the project jointly," he said.

The Head of 'KazMunayGaz', Uzakbay Karabalin said that this issue has been discussed at length at the level of high-ranking representatives of Kazakhstan and Turkey, and Azerbaijan and Turkey. "We are going to further discuss the project. If we discover the expediency of the project, the agreement will be included with the intention for cooperation on the project," he said.

First of all the strategic location of the Ceyhan Port is to where oil is carried via the BTC (Baku-Tbilisi-Ceyhan) Pipeline, which has a capacity of 50mlnT per year.

Oil delivered from Kirkuk (Iraq) may in the near future be piped via the pipeline of Kirkuk-Ceyhan which has a capacity of up to 70mlnT per year.

Turkey's Government has plans to install the third oil pipeline in its territory - Samsun-Ceyhan, with the initial projected capacity of 50mlnT of oil a year.

It means that in the near future, the three different pipes meet one another in the area of the Ceyhan Port, which will therefore receive up to 170mlnT of oil per year in aggregate," stressed the source.It is more than that in the world famous port in Rotterdam, which accepts approximately 150mln tons 'black oil'.

Secondly, the economic expediency of the construction of a new oil refinery in Ceyhan lies in the fact that the market is there, in Turkey itself. This production is mainly intended for satisfying Turkey's market with its needs in oil products, which are set up to increase year to year.

Turkey has liberalized its market, by creating equal and similar conditions both to import and export oil products. The country presently is experiencing a shortage of oil refining facilities. According to some data, cited by the source, today, Turkey's needs in oil reaches 32mlnT per year.

The five oil refineries presently operational in Turkey may produce up to 26.5mlnT of oil product, and the country has to rely on importing the rest of the 6-7mlnT of oil products, buying oil refined products from Russian or Italian companies. According to predictions, by 2010, Turkey's oil dependency will increase to 34mlnT, and up to 43mlnT by 2012.

The construction of the oil refinery is intended to be completed in 2012. the plant will produce large specter of oil products ranging from all types of high quality petrol, mazut, diesel fuel, aviation kerosene and petrochemical products. The participants of the project plan to sign a Memorandum of Understanding and agreement of shareholders at the end of August in Astana.

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