Baku Energy Forum - SOCAR about to finalize construction of carbomide plant, continues talks on polymer production

SOCAR about to finalize construction of carbomide plant, continues talks on polymer production


Azerbaijan state oil company SOCAR is sure to finalize the construction of carbomide plant in accordance with schedule and launch production no later than  early 2018.    

The construction of a carbamide plant is complete by 94.8 percent, the plant's director Khayal Jafarov said at the second SOCAR International Caspian and Central Asia Downstream Forum – Trading, Logistics, Refining, Petrochemicals scheduled for April 24-26.

He said that engineering work and procurement of equipment have been done by 100 percent, construction work by 82 percent, civil engineering work by 93 percent, and installation of equipment by 70 percent.

Jafarov added that it is planned to complete all work and start adjustment and commissioning of the plant by the end of 2017.

He noted that the plant will produce 650,000-660,000 tons of carbamide per year.

It is planned to supply a quarter of production, that is, 150,000-200,000 tons of carbamide, to the Azerbaijani domestic market, he said, adding that the remaining part will be exported to Turkey, Georgia and the markets of the Black Sea and the Mediterranean Sea countries.

Jafarov recalled that Samsung Engineering won  the tender for the construction of a carbamide plant. The net cost of the project for the construction of production capacity units amounts to about 498 million euros.

"Samsung acts as a general contractor, but has no license to produce ammonia, which will be an intermediate product in the process of production, and carbamide. Therefore, the relevant licensing agreements have been signed with Danish Haldor Topsoe for ammonia and Stamicarbon for carbamide in Netherlands," the director of the plant clarified.

Production at the plant will be environmentally friendly, that is, no emissions into the atmosphere are expected. The plant will be completely autonomous and produce electricity independently. It will consume electricity in the amount of 25-26 megawatt per hour.

"The construction of infrastructure to provide the plant with gas, industrial water and connection to electricity networks, as well as electricity in emergency situations, will be completed in June or July this year," Jafarov said.

As many as 3,000 jobs were created at the peak of the plant’s construction. Once the plant is commissioned the number of jobs will decrease to 300-350.

At first, construction work was financed out of the state budget and about 205 million manat has been allocated by 2015. But later it was decided to switch to project financing and negotiations were launched with the banks.

"As a result, a 500 million euro credit line was opened by Korean Eximbank under Azerbaijan's state guarantees to complete the construction. So, Eximbank directly provides 251 million euros, while 249 million euros are allocated by three commercial banks with the support of Eximbank - UniCredit, Societe Generale and Deutsche Bank,” Jamalov said.

Speaking about carbamide exports, he noted that the main market for the sale will be Turkey. According to market research, today Turkey imports about 1.5 million tons of carbamide. By 2020, imports are expected to grow up to 1.8 million tons. Taking into account the fact that the Baku-Tbilisi-Kars railway will be launched by the end of this year, it will be possible to supply carbamide to the Turkish market quickly and inexpensively, Jafarov said.

Despite the construction of a carbamide plant in Azerbaijan, building a carbamide plant in Georgia remains on agenda, he added.

Fuad Ahmadov, financial director of SOCAR Polymer company who also participated in the event, said that the final investment decision on the project of construction of the SOCAR GPC, a gas processing and petrochemical complex of Azerbaijan’s state oil company SOCAR, in the country is expected to come out by early 2018.

Currently, SOCAR is negotiating with China National Petroleum Corporation (CNPC) company for the financing of the construction of SOCAR GPC, he noted.

The construction of the complex will take four years, and it is planned to complete it in late 2022, he added.

More than 150 delegates including managers of SOCAR’s units and members of Azerbaijani Parliament as well as high-level officials, industry leaders, analysts, trade and financial experts, top executives, managers and representatives from ministries and transnational oil&gas companies from Georgia, Iran, Kazakhstan, Kyrgyzstan, Russia, Turkey, Turkmenistan, Ukraine and other countries participate in the event. The three-day forum featured eight plenary sessions.