SOCAR Trading eyes reactivating deals with Iran
By Aynur Karimova
SOCAR Trading, a trading arm of Azerbaijan's energy giant SOCAR, eyes reactivating deals with Iran and expanding into new oil and gas markets from North American crude to natural gas in Europe.
This was stated by Arzu Azimov, SOCAR Trading Chief Executive Officer, on February 23.
Azerbaijan and Iran, two neighbor countries and strategic partners, have been strengthening ties since the removal of international sanctions against Tehran in January. On February 23 SOCAR signed two memorandums of understanding with National Iranian Oil Company and Ghadir Investment Company as part of President Ilham Aliyev's Tehran visit.
“We have been actively trading with NIOC in the Caspian Sea region, until international sanctions forced us to discontinue such deliveries,” Azimov said in an interview with Reuters. “There is a great potential to explore.”
Azimov said that other possibilities include trading refined products with Iran in the Gulf, where SOCAR has storage facilities in the United Arab Emirates port of Fujairah.
“One option was to supply Iran with gasoline and to buy naphtha and liquefied petroleum gas (LPG),” he added.
Baku and Tehran are fruitfully cooperating in the energy sector. The two countries are engaged in the implementation of several oil and gas projects. In particular, the Islamic Republic participated in the development of Azerbaijan’s giant Shah Deniz gas field in the Azerbaijani section of the Caspian Sea.
The two countries also carry out gas swap operations: Azerbaijan supplies its fuel to Iran’s northern provinces while Iran ensures the gas demand of Nakhchivan Autonomous Republic.
Currently, the possibility of transporting Iranian gas through Azerbaijan to Europe via the Southern Gas Corridor is high on the agenda of talks between the two governments.
Azimov went on to add that SOCAR Trading, which currently employs less than 200 people globally, sees its role as somewhat different from the trading arms of many national oil companies.
"Where the market is oriented towards direct deals between producers and consumers, there is no space for trading houses,” he said. “We need to be customer oriented. I see us as a services provider.”
About 90 percent of SOCAR Trading’s profit was from outside trading of its parent company’s oil or products and it was expanding in new markets beyond oil, such as LNG.
"We decided that buying and selling LNG wasn't terribly attractive,” he said. “So we started looking at other options. We looked at Malta, an interesting case as it is not connected to an EU gas grid and has been burning fuel oil for heating needs.
ElectroGas Malta consortium has been chosen to implement the gas power plant construction project in Malta.
SOCAR Trading holds a 20-percent share in this project. SOCAR Trading will also act as a supplier of liquefied natural gas, floating storage unit and equipment for its processing.
The cost of the plant’s construction is estimated at 175 million euros. It is planned to commission it in the summer of 2016, and its capacity will enable to meet up to 50 percent of Malta’s electricity demand.
SOCAR Trading, with headquarters in Geneva, was established in late 2007 by SOCAR.
SOCAR Trading sells the main part of crude export volumes from the Ceyhan port (the Mediterranean Sea, Turkey), carries out trading of oil and oil products of other countries, and also renders assistance to the parent company with the international investments.
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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova
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