CEO - 2019 important year for SOCAR Turkey in terms of investments
Trend’s exclusive interview with Zaur Gahramanov, CEO of SOCAR Turkey
Summing up 2019 results for SOCAR Turkey
2019 is of special importance for SOCAR Turkey as a year when the company started to get the results of its investments, said Gahramanov.
“As you know, in June 2018, we opened the Trans Anatolian Natural Gas Pipeline (TANAP), which is a great step towards ensuring energy security. Since then the commercial natural gas supplies to Turkey began. The construction of the entire 1,850-kilometers long TANAP was completed in late 2019, thereby bringing natural gas to the European gate with the ceremony held in Ipsala,” he added.
He noted that after the commissioning of the Trans Adriatic Pipeline (TAP), Azerbaijani natural gas will be supplied to Europe.
“Another huge investment is Star Refinery worth $6.3 billion, which was opened in October 2018. Star Refinery that produces diesel, naphtha, jet fuel and LPG, which play an important role in Turkey's current account deficit, started to operate at full capacity in 2019 and began sales to the domestic market,” said Gahramanov.
The CEO went on to add that another important step was the acquisition of Bursagaz, Kayserigaz, SOCAR Enerji Ticaret, Enervis, and Millenicom in June 2019.
Thus, SOCAR Turkey also became involved in natural gas distribution, thereby completing the whole refinery-petrochemical-energy-logistics-distribution-supply chain, he added.
“We launched an integration process covering all of our group companies and created SOCAR Turkey Refinery and Petrochemical Business Unit, SOCAR Turkey Natural Gas Business Unit, SOCAR Turkey Innovation and Technologies Business Unit and SOCAR Turkey Logistics Business Unit. I believe that Star Refinery was the first concrete proof of what kind of advantages this integration will bring us. We saw the benefits of the integrated operation of Star Refinery and Petkim in the financial results of Petkim in the third quarter of 2019. We will continue to increase synergy and profitability in our business processes with the common infrastructure we have created in our business units and common services, which will be provided,” Gahramanov said.
Transportation via TANAP
The volume of gas transportation to Turkey via the Trans Anatolian Natural Gas Pipeline (TANAP), which is the most important part of the 3,500 kilometers long Southern Gas Corridor that will supply Azerbaijani natural gas to Turkey and Europe, reached 3.7 billion cubic meters as of late 2019 [since the start of commercial gas supplies on June 30, 2018], Gahramanov said.
TANAP, which has a total capacity of 16 billion cubic meters [per year], will supply 6 billion cubic meters of gas to Turkey and will deliver 10 billion cubic meters to the Trans Adriatic Pipeline (TAP) on Turkey-Greece border, he added.
Gahramanov pointed out that with this project, Azerbaijan will play an effective role in ensuring Europe’s energy supply security.
Petkim petrochemical complex
“Petkim petrochemical complex, the majority stake of which we acquired in 2008, is still the first and only integrated petrochemical plant in Turkey. Petkim, which is the the most reliable supplier of Turkey’s petrochemical market, produces nearly 60 different petrochemical products at 15 major and six auxiliary facilities. We are constantly evaluating investment options to process intermediate products and convert them into different products at Petkim,” he said.
“With Petkim's 55 years of experience and R&D Center, we continue our research and business development activities to expand our petrochemical portfolio with our established facilities or additional investments. In this year's focus, there are alternative evaluation options for our products and synergies as a result of integration between STAR Refinery and Petkim,” noted Gahramanov.
He pointed out that despite the contraction both in general terms and in the petrochemical field in the world markets in the third quarter of 2019, Petkim's financial results were quite good.
Petkim petrochemical complex broke production records with 3.4 million tons of gross production in 2019 and the aim is to continue this success in 2020.
He went on to add that exporting to more than 78 countries, Petkim petrochemical complex stands out in the world markets with high quality of its products.
Gahramanov noted that within the scope of the Turquality program, a target market study was carried out for each product of Petkim.
“In this study, countries with GDP of over $50 billion in 2017 were ranked according to geographical location, political instability, difficult-to-enter markets criteria and countries with economic potential were selected as target markets. Malaysia and Pakistan, which are among the countries with high economic potential, are also in the list of our target markets,” added Gahramanov.
“After acquiring the majority stake in Petkim petrochemical complex, SOCAR Turkey has invested in it on average nearly $100 million each year. Our total investments in Petkim stood at around $1 billion in 2008-2018,” he said.
Gahramanov noted that priority in making investments was given to modernization of the factories, general improvement, digitalization, energy and environmental issues.
“We will continue making investments in digitalization journey of Petkim and modernization of our factories in 2020,” he added.
The volume of refined crude oil at Star Refinery, which started the production at full capacity in September of 2019, reached 7.2 million tons as of late 2019, said Zaur Gahramanov,
He reminded that Star refinery, which is the biggest investment project of the real sector in Turkey, started to operate after the opening ceremony held in October 2018 with participation of Azerbaijani and Turkish presidents.
“Star Refinery, which has a capacity of refining 10 million tons of crude oil per year, produces 4.8 million tons of diesel, 1.6 million tons of naphtha, as well as jet fuel and LPG, which play an important role in Turkey’s current account deficit,” added Gahramanov.
He pointed out that SOCAR Turkey uses the most modern technologies in the world at Star refinery, which was built with $6.3 billion worth investment.
“While continuing our operations, we do modeling studies and process the products with the best prices and quality according to the market conditions. Naturally, the countries, wherefrom we purchase the products and the quantities of products also change. In addition to Russia and Iraq, we started to import from more sources as of the end of 2019. We plan to add more import sources
Joint project with BP on building a petrochemical complex in Aliaga
He pointed out that preliminary engineering and design works still continue on the petrochemical complex project that is planned to be implemented in the Private Industrial Zone in Aliaga, Izmir.
“We will give updates regarding the final investment decision in 2020. As a result of commissioning of this facility, Turkey’s imports of pure terephthalic acid (PTA) are expected to come down to zero and at the same time, it will be possible to produce paraxylene (PX) products in Turkey, which are now imported in the amount of 800,000 tons,” Gahramanov concluded.
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