SOCAR Turkey to invest over $500 million in increasing capacity of STAR refinery

By Azernews

By Leman Mammadova

As the Star refinery of the State Oil Company of Azerbaijan (SOCAR) in Izmir (Turkey) increases its production and export volumes, the revenues to Azerbaijan's economy also grow.

SOCAR Turkey Energy will invest $600 million in investments to increase the capacity of the Turkish STAR oil refinery, said Zaur Gahramanov, CEO at SOCAR Turkey Energy .

“Our investment in STAR continues. Currently, we are implementing a project worth $600 million, providing an increase in the plant capacity for oil and oil products storage,” he noted.

He stressed that $6.3 billion was invested in the STAR refinery, which is able to process 10 million tons of crude oil per year. “The refinery is currently purchasing crude oil from Russia and Iraq. The activities of this refinery will reduce the current account deficit in Turkey by $ 1.5 billion per year.”

Gahramanov also said that the payback period on investments made in the STAR refinery will be 11-13 years.

In his words, after the acquisition of the Petkim petrochemical complex by the SOCAR in 2008, the company's investments in Turkey exceeded $15 billion.

“We continue to invest in Turkey, their volume is planned to be brought up to $19.5 billion,” he said.

He noted that only $100 million is invested annually in Petkim. “The volume of investments in Petkim today has reached $1 billion, excluding the amount paid for the acquisition of a 51 percent stake in the complex.”

Petkim meets 20 percent of Turkey's petrochemical needs. About 60 types of products produced in the complex are used by 6,000 industrial enterprises, most of which are small and medium-sized enterprises.

Gahramanov also mentioned an investment of $ 400 million in Petlim Limanc?l?k, founded in 2010. In March of this year, it was renamed SOCAR Terminal.

He also spoke about the Trans-Anatolian Gas Pipeline (TANAP) project, in which $7 billion was invested. “TANAP gas deliveries to Turkey began in June 2018, and by the end of this year 4 billion cubic meters of blue fuel will be pumped through the pipeline.”

He further noted that the new petrochemical complex (Mercury project - Production of aromatic hydrocarbons and purified terephthalic acid), which is planned to be implemented by the SOCAR and BP in Aliaga (Izmir, Turkey), will reduce Turkey’s current deficit of petrochemical imports by $5.5 billion.

Gahramanov pointed out that the construction of the new complex will begin in 2020, and its launch is expected in 2023. The company will produce 1.25 million tons of purified terephthalic acid, 840,000 tons of paraxylene, 340,000 tons of benzene.

“The investment value of the joint venture BP and SOCAR (50/50) is provided in the amount of $1.8 billion. New petrochemical complex will be integrated with STAR refinery and Petkim petrochemical complex,” he said.

On December 20, BP and SOCAR signed the principles of an agreement on evaluating plans to build a world-class petrochemical complex in Turkey and creating a joint venture to manage it.

In 2018, the revenues of SOCAR from operations in Turkey amounted to 4.9 billion manats (0.9 percent up).

SOCAR carries out its activity in Turkey through SOCAR Turkey. SOCAR Turkey’s market value is around $11 billion owing to the recent investments. SOCAR Turkey’s share in SOCAR constitutes 35 percent. Meanwhile, 5,000 people work in the company, while the export potential reaches $3 billion. The company has a controlling stake (51 percent) in the Petkim petrochemical complex on the Aliaga peninsula since 2008 and owns the STAR oil refinery.

Star Oil Refinery that is the first Turkey-specific Industrial Zone opened in October 2018. Refinery will supply Petkim with raw materials. Star has already launched the sale of its first products on January 31, 2019. By selling 1.303 tons of naphtha produced at STAR refinery to Petkim, SOCAR Turkey Energy completed the integration of the refinery and the petrochemical complex. By the end of 2021, Star's total capacity will be increased. In the end, the investment will total $7 billion. STAR has the first investment incentive granted by Turkey.

Recently, SOCAR has acquired EWE Turkey Holding, owned by the German energy company EWE AG to optimize company's activity.

SOCAR will start construction of a new petrochemical complex in Turkey in 2019.The enterprise is expected to be commissioned at the end of 2022.

SOCAR Turkey also plans to increase energy production at the Petkim wind power plant as well as expand network of filling stations in Turkey.

Moreover,Turkish Gubre Fabrikalari TAS (Gubretas) and SOCAR Turkey Energy signed a letter of intent to create a joint venture with a 50 percent share each to import carbamide from SOCAR petrochemical plants and from other manufacturers in the neighboring geography and sell this carbamide in Turkey’s domestic market and in foreign markets.

Investments of the SOCAR in Turkey will reach approximately $20 billion in the future.