PETKIM - Most important foreign asset of Azerbaijan

PETKIM - Most important foreign asset of Azerbaijan

Azerbaijan is turning into a major foreign investor. This fact was recently announced by the Economic Development Minister Shahin Mustafayev at the presentation of a special issue of the magazine "The Business Year-Azerbaijan 2011", setting a number of examples. "So, over $4 billion has already been invested in the Turkish economy, and over the next years, the figure will be increased up to $6 billion," said the Minister. He said investing in Georgia's economy has reached $1 billion, and the recognition of Azerbaijan's SOCAR Energy Georgia as the largest investor and taxpayer of the year is a clear indicator of how Azerbaijan is an important investor for Georgia. The list of foreign investments can be extended: the construction of an oil terminal in Fujairah (UAE), creation of networks of filling stations in Ukraine and Romania, the projects in tourism, retail, industrial sector implemented under African, Latin American and Caribbean Fund (ALAC) established under the International Finance Corporation (IFC).

The largest and strategically most important foreign asset of Azerbaijan is the equity participation in the largest Turkish petrochemical complex Petkim, in which the joint venture SOCAR-Turcas (SOCAR - State Oil Company of Azerbaijan) has a 51-percent of shares.

In 2008, an alliance of SOCAR with Turcas Petrol/Injaz Projects won a tender on sale of 51 percent of shares in the Petkim concern, offering $2.04 billion for it.

Azerbaijan 's share in joint venture SOCAR-Turcas, through SOCAR, is 75 percent.

The general director of group of companies SOCAR/Turcas, Kenan Yavuz, said that the plans of holding is to double the capacity by 2018 and increase the share in the domestic market to 40 percent. The strategic plan of the holding includes the creation of the cluster model and its transformation into a petro-chemical and energy super-complex of global scale like industrial zone Jurong Island in Singapore.

The alliance between SOCAR and Turcas Petrol /Injaz Projects won a tender in 2008 to buy a 51percent stake in chemical projects, offering$2.04 billion.Now Turkey imports 70-75 percent of its demanded chemical products. Investments in the development of Petkim will reduce imports by 30 percent. In 2010, Petkim's production reached a record level-3.24 million tons of oil and exports amounted to $531 million. Petkim also has the ability to produce 226 megawatts of electricity through steam and gas turbines.

According to Business Monitor Incorporated (BMI), published in the report "The petrochemical industry in Turkey - 2nd quarter of 2011", Turkey imports about 2 million tons of polyolefins per year. Imports of certain polymers reach 80 percent: PVC - 81%, polypropylene - 87%, high density polyethylene - 80%. The main suppliers are Iran and Saudi Arabia.

The rate of growth in demand for petrochemicals production in Turkey, particularly in products of thermoplastics at least twice exceeds the world average, while per capita consumption in Turkey is significantly lower than in developed countries.

Consumption of plastics products per capita

Kg / per capita

2008

2009

2010

USA

West Europe

Т urkey

China

In world

Brazil

India

75

69

43

28

24

25

5

76

70

45

30

24

27

6

71

65

52

37

25

28

6

Source: PETKİM PETROCHEMICAL HOLDING CORP. INVESTOR PRESENTATION June 2011

Exactly the rapid growth in demand for petrochemical products in the domestic market of Turkey served Azerbaijan's decision to make significant investments in the development of the complex. On the other hand, with the investments of SOCAR, Petkim will have a steady volume of raw material (oil products), on which it heavily depends for the subsequent manufacture of chemical products, 70-75 percent of which Turkey imports. The investments of SOCAR/Turcas in developing Petkim will reduce imports to 30 percent.

Therefore, today the main task of SOCAR/Turcas is to build a refinery that would provide the holding with the guaranteed volumes of petroleum products. Mainly because after commissioning, the refinery will produce up to 2 million tons of straight-run gasoline (naphtha) per year, 90 percent of which the holding has to import today. The refinery will also produce LPG (liquefied petroleum gas), diesel and aviation kerosene. Output will reach 214,000 barrels per day. Naphtha and fuel oil after hydrocracking will be supplied to Petkim for chemical production. Four million tons of the total volume of products manufactured at the refinery will be supplied for the needs of raw materials, and the rest, particularly diesel fuel, aviation kerosene and other energy products will be sold in the markets of Turkey and Europe. Processing capacity will be 10 million tons of crude oil per year, the construction costs range from $4.8 to $5.2 billion. In addition to the construction of refinery, work will also began on modernizing and expanding the capacity of the petrochemical complex. Already next year, it is planned to complete the construction of a wind park for power generation, with a capacity of 25 megawatts per year. A new plant will also be built for production of olefins, with a capacity of 1 million tons. The plans of Petkim also include expanding Aliaga port. For four years, will be completed the construction of a new port complex, which will include storage park, as well as container terminal, with a capacity of 1.2 million TEUs (twenty-foot equivalent), while the bulk cargo - 20-25 million tons.

The Director General of Petkim Petrokimya Holding Hayati Ozturk, who recently was in Baku, has announced some projections: in 2018-2020, the capacity of the petrochemical complex Petkim will increase from the current 3.2 million tons up to 6-6.5 million tons. The amount of investments required to carry out the work scheduled by 2015 would be $6 billion, of which over $300 million will be invested by the complex, and the rest - SOCAR-Turcas. As a result of planned activities to expand, the capacity of the complex in 2015 will increase by 15-20 percent.

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