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Petkim – future super complex worldwide

Analysis Materials 21 October 2011 22:19
Oct. 25, Turkey will host the ceremony of laying the foundation of a refinery being built at the expense of Azerbaijani investments. A total of $5.5 billion will be invested in the project. The plant is scheduled to be commissioned in four years. Its operation will strengthen Azerbaijan's position in the energy market of Turkey, and at the same time, significantly reduce dependence on imports of final petrochemical products.
Petkim – future super complex worldwide

Baku, Azerbaijan, Oct. 21 / Trend /

Azer Ahmedbeyli, expert of Trend's analytical center

Oct. 25, Turkey will host the ceremony of laying the foundation of a refinery being built at the expense of Azerbaijani investments. A total of $5.5 billion will be invested in the project. The plant is scheduled to be commissioned in four years. Its operation will strengthen Azerbaijan's position in the energy market of Turkey, and at the same time, significantly reduce dependence on imports of final petrochemical products.

Azerbaijan is becoming a major foreign investor. Over $4 billion has already been invested in the Turkish economy and there are plans to increase investments to $6 billion in the coming years. A total of $1 billion has been invested in the economy of Georgia and it indicates how Azerbaijan is an important investor in Georgia, and was the recognition of SOCAR Energy Georgia as the largest investor and tax payer in this country. The list of external investments can be enlarged: construction of an oil terminal in Fujairah (UAE), creating a network of filling stations in Ukraine and Romania, the projects in tourism, retail trade, industry within the African, Latin American and Caribbean Fund (ALAC) created as part of the International Finance Corporation (IFC).

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

Petkim shares are distributed as follows: SOCAR-Turcas - 51 percent, shares in free circulation (Istanbul Stock Exchange) - 38.68 percent, the Office for Privatization of the Government of Turkey - 10.32 percent. At the same time, Azerbaijan's share in the joint venture SOCAR-Turcas is 75 percent.

Rate of growth in demand for petrochemicals products in Turkey, especially for products made of thermoplastics, at least twice exceeds the world average, while per capita consumption in Turkey is much lower than in developed countries.

The consumption of plastic products per capita

Kg/per capita

2008

2009

2010

USA

Western Europe

Turkey

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: Petkim petrochemical holding corp. Investor presentation June 2011

Exactly the rapid growth in demand for petrochemical products in the domestic market of Turkey served the decision of Azerbaijan to make a substantial investment in the development of complex, especially the construction of the refinery.

After the refinery is put into operation, Petkim will have a stable volume of starting material (oil products) for the production of chemical products, 70-75 percent of which Turkey imports. Investments will reduce imports by 30 percent. The new refinery will produce up to 2 million tons of naphtha per year, 90 percent of which is now imported by Petkim. The refinery will also produce LPG (liquefied petroleum gas), diesel and aviation kerosene. The straight-run gasoline and fuel oil after hydrocracking will be supplied for the production of chemical products, and diesel fuel, aviation kerosene and other energy resources will be sold in the markets of Turkey and Europe. Processing capacity is 10 million tons of crude oil per year.

This year, Fitch Ratings revised its rating outlook for Petkim, changing it from "negative" to "stable". The agency's report said the Petkim's capacity to use growth potential in the Turkish petrochemical market is currently limited by its production and investment potential and depends on the realization of project by Socar/Turcas.

The strategic plan Petkim, according to CEO of company SOCAR / Turcas Kenan Yavuz was the creation of the cluster model and its transformation into a petro-chemical and energy superkompleks global industrial zone along the lines of Jurong Island in Singapore.

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.

About Petkim Holding: is the only producer of petrochemicals in the country, with domestic market share of 25-26 percent, sales worth $1.870 billion in 2010, number of employees - 2,500 people. In addition to the raw material for polymer fibers (terephthalic acid, ethylene glycol, acrylonitrile), thermoplastics (polyethylene, PVC, polypropylene), benzene and other raw materials, the company produces several types of finished products: plastic packaging, textiles, detergents, cosmetics and other products. Petkim has 15 main production facilities, and 8 subsidiary. In 2010, production totaled 3.2 million tons - a record figure for the last 45 years. Petkim exports products to 60 countries. Major competitors are BASF SE, Saudi Basic Industries Corporation, Shell Chemicals Limited.

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