Final investment decision of SOCAR's new petrochemical complex in Turkey to be made in 2020

By Azernews

By Leman Mammadova

The final investment decision on SOCAR and BP’s new petrochemical complex project to built in Turkey is expected to be announced in 2020, Anar Mammadov, Director General of Petkim Petrochemical complex (a subsidiary of SOCAR in Turkey), said at a press conference held in Izmir, Turkey, on October 10.

“This project will be as strategic as other projects. With the launch of the complex, Turkey will completely abandon import of PTA (purified terephthalic acid). Today, this product is manufactured in Turkey exclusively at the PTA plant operating as part of Petkim. However, one production can cover only part of Turkey's needs,” he noted.

Mammadov stressed that the new investment project will also allow the production of paraxylene (PX) products in Turkey, which is now imported in the amount of 800,000 tons.

In his words, the project, whose investment value is estimated at about $1.8 billion, is expected to begin in the first half of 2020. “The final investment decision of the project, which will be implemented by BP and SOCAR Turkey, is expected to be made by 2020, and the facility will be commissioned in 2023.”

“Currently, there is a process of technical paperwork for a project called Mercury. If the results are positive, a final financial decision will be made in 2020. The construction of a new facility can take up to 5 years, and its commissioning will take place in 2024-2025,” he added.

As of December 20, 2018, SOCAR Turkey and BP signed contractual principles for evaluating plans to create a joint venture for the construction and management of a global petrochemical complex in Turkey.

The project involves the construction of a plant producing 1.25 million tons of PTA, 840,000 tons of PX and 340,000 tons of benzene per year. PTA is the main raw material in the production of polyester, from which containers for drinks and food, packaging materials, photos and film and other consumer goods and industrial products are obtained.

Mammadov further pointed out that since 2008, SOCAR has invested approximately $100 million annually in Petkim and its total investment has reached $1 billion.

“The petrochemical sector in Turkey has great potential and is growing 6-7 percent annually. Petkim is the country's only integrated enterprise producing petrochemicals. Petkim is able to meet 20 percent of Turkey's demand for petrochemicals today. This sector has high potential for expansion, so significant investments are made in it,” he said.

He also noted that 60 different products manufactured at Petkim's 15 main and six auxiliary facilities are used by 6,000 manufacturers, including small and medium-sized enterprises (SMEs).

Mammadov added that the company, which is in high demand for its products, ended 2018 with a profit of 872 million Turkish liras ($148 million).

“In the first six months of 2019, Petkim showed the highest productivity ever and broke a production record. The company earned 5.9 billion liras ($1.01 billion) in January-June 2019, net profit of 439 million liras ($74.98 million). In the reporting period, Petkim's interest, depreciation and pre-tax profits increased by 26 percent compared to the same period last year and reached 890 million liras ($152 million),” he stressed.

In his words, after Petkim's acquisition, implementing large projects, including $ 400 million of SOCAR Terminal, $ 6.3 billion of Star refinery and $ 600 million of warehouse investment, as well as $ 6.5 billion of TANAP project, SOCAR's total investments in Turkey exceed $15 billion.

“SOCAR will increase this figure to $ 19.5 billion with ongoing projects. The company plans to become one of Turkey's three largest holdings and the first in the industry after completing its investment projects,” added Mammadov.

Petkim produces plastic packages, fabrics, detergents, and is the sole Turkish manufacturer of such products, a quarter of which is exported. The complex includes 14 factories producing 20 different types of products. Petkim's production capacity is 3.6 million tons per year.

Turkey's first petrochemical plant "Petkim Holding" was established in 1965. SOCAR purchased 51 percent stake in Petkim for $2.04 billion, at the end of privatization process in 2008.