SOCAR manages to cut cost of its new gas chemical complex
By Nigar Abbasova
Azerbaijan's state energy giant SOCAR has cut the cost of its project on construction of a new gas chemical complex in Azerbaijan.
The cost of the 1st stage of the complex construction is expected to be around $4 billion. The construction process of the gas processing and petrochemical plants will be implemented within the framework of the 1st stage of the Oil and Gas Processing and Petrochemical Complex (OGPC) project.
“To reduce the expenditures on the project’s implementation, it was decided to reduce the capacity of the gas processing plant from 12 billion cubic meters to 10 billion cubic meters of gas per year,” SOCAR’s representative said. “Thanks to this, the cost is now estimated at $4 billion.”
The cost of the first stage of the project was reduced by approximately 50 percent following the decision to cut the design capacity of the gas processing plant, Trend reported.
Earlier the cost of OGPC construction was reported to be $17.1 billion, including the interest rates on loans taken during the construction period. The cost of the first stage of the project was previously estimated to be $7 billion. Payback period was about 4-5 years.
SOCAR was also planning to attract Japanese companies as partners in construction of the complex.
“The talks with Japanese companies were unsuccessful, as they said the project is not attractive for them due to high expenditures,” the source said.
Therefore, SOCAR signed memorandums of intention with China National Petroleum Corporation (CNPC), Russia’s Gazprombank and Agency for Export Credit and Investment Insurance (EXIAR), as well as Italian export credit agency SACE on the gas chemical complex project.
“Currently, we are evaluating all the proposals in order to choose the most acceptable one,” SOCAR’s representative said. “We also take into consideration that if the oil prices rise, the Japanese companies will reconsider their participation in the project.”
OGPC will be located at the distance of 60 kilometers from Baku near Sangachal terminal, along the boundaries of the Absheron and Garadagh Districts. The project will be comprised of 3 processing enterprises and thermal power plant.
OGPC project is expected to replace the existing processing facilities in Baku and Sumgait covering an area of approximately 4,500 hectares. The products from the complex will primarily meet the domestic demands and the excess will be exported. The project is expected to generate approximately 15,000 construction jobs and 2,000 permanent jobs.
Being established in September 1992 and headquartered in Baku, SOCAR is involved in extraction, exploring oil and gas fields, producing, processing, and transporting oil, gas, and gas condensate, as well as oil and chemical products in domestic and international markets, and supplying natural gas to the industry and the public in Azerbaijan.
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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova
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