By Leman Mammadova
STAR Refinery of the State Oil Company of Azerbaijan (SOCAR) plans to process 8 million tons of oil by late 2019, Director General of the refinery Mesut Ilter said at a press conference held on October 10 in Izmir.
In his words, so far 4.5 million tons of oil have been refined at STAR, situated in the Aliaga region of Izmir.
Ilter noted that since late September 2019, the refinery has been operating at full capacity - 10 million tons per year or 214,000 barrels per day.
“Depending on oil prices on world markets, we expect revenues from sales of finished products at $6-9 billion per year. Net profit is projected at $500 million per year,” he added.
He pointed out that following the results of the plant in 2019, zero profit is projected.
“As for revenues from the sale of finished products, this indicator is projected at $4 billion by late 2019, but we expect this figure to be higher,” Ilter said.
He further noted that since April 2019, the process of repayment of loans attracted for the construction of the STAR refinery has begun.
“The payback period of funds invested in the implementation of the project is 11-12 years. The actual costs of the project amounted to $ 6.3 billion, of which $3.3 billion accounted for attracted loans, and another $3 billion was a capital investment from our shareholders. In 2022, we plan to begin the process of repaying invested funds to shareholders in dividends,” he added.
Ilter went on to say that along with meeting the needs of the domestic market, the STAR also exports its products to the countries of the Mediterranean and Northern Europe.
“The long-term perspective of the plant is to fully sell its products in the domestic market. The plant alone provides 25 percent of Turkey’s refined oil needs. STAR also aims to eliminate Turkey's dependence on oil products and reduce its current deficit. The plant will significantly reduce Turkey's dependence on diesel imports by producing 4.8 million tons of diesel fuel a year. There is no gasoline in the product range,” he noted.
In his words, the refinery with a total refining capacity of 10 million tons, along with 4.8 million tons of diesel fuel and 1.6 million tons of naphtha, produces aircraft fuel and LPG. STAR’s production capacity is 214,000 barrels of oil per day, which are of particular importance in Turkey's current deficit.
He also recalled that SOCAR has won a tender for providing the new Istanbul airport with 700,000 tons of fuel. “Most of the jet fuel produced at STAR refinery to be delivered to Istanbul Airport. In addition, other airports are expected to be among STAR's customers.”
Ilter outlined that Turkey's annual need for jet fuel is about 5 million tons. Since the expansion of the tourism sector and the emergence of such a large consumer as the new Istanbul Airport, this demand is expected to rise to 6-6.5 million tons. It is expected that Turkey will not need to import jet fuel in 7-8 years.
Ilter emphasized that the production of the necessary raw materials at the STAR plant increases the production capacities and the quality of the petrochemical complex Petkim products. “Petkim received 260,000 tons of oil from STAR refinery in the first half of this year.”
He added that due to the suspension of naphtha imports by the sea, the density at Petkim's port has decreased and its export has become easier.
Ilter also stressed that an additional investment project worth $ 600 million had recently been created at the STAR refinery to increase operational efficiency.
“Under this project, the STAR storage capacity is planned to be increased from 1.6 million to 2.5 million cubic meters. This includes two crude oil tanks with a capacity of 134,500 cubic meters each and two intermediate product tanks with a capacity of 36,500 cubic meters each,” he said.
The project is expected to create additional storage capacity of 342,000 cubic meters and will be completed in 2021, he added.
STAR refinery was put into operation on October 19, 2018 and is designed to process such grades of oil as Azeri Light, Kerkuk and Urals. The plant will supply Petkim with raw materials, producing 5 million tons of diesel fuel, 1.5 million tons of naphtha, 1.6 million tons of aircraft fuel, 1 million tons of xylene / reformat, LPG, oil coke and sulfur per year.
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.
The total investment of the project is $6.3 billion, of which 90 percent has been already invested. 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.
Leman Mammadova is AzerNews’ staff journalist, follow her on Twitter: @leman_888
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