Azerbaijan’s energy firm SOCAR to buy Iraqi oil for refinery in İzmir

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The State Oil Company of Azerbaijan Republic (SOCAR) is due to purchase crude oil from Iraq next month to process at the SOCAR Turkey Aegean Refinery (STAR), which was inaugurated in October 2018 and has processed 1.5 million tons of crude oil so far.

SOCAR Turkey CEO Zaur Gahramanov, in his meeting with journalists during the 26th Caspian Oil and Gas Fair in Baku yesterday, elaborated on STAR’s recent operating capacity. Remarking that 1.5 million tons of crude oil have been processed at the STAR Refinery so far, Gahramanov added: “We plan to process 8 million tons of crude oil by the end of the year. As of next month, we will start buying Iraqi oil from the Persian [Gulf].”

He went on explaining the refinery’s activities and noted that SOCAR has started selling diesel and jet fuel to the Turkish market and that they will start petroleum coke sales in the coming months.

Indicating that SOCAR Turkey will supply 700,000 tons of jet fuel to Istanbul Airport on an annual basis, Gahramanov spoke about what countries and how much oil the refinery has bought so far. He said: “First, we bought Azeri oil, but then we processed Russian oil at the refinery. We did this to use a single type of oil, while the refinery was going through test phase and to see whether problems would arise from the oil or the plant. If we had mixed oils and encountered problems, we could not have understood the exact reason of the problem.” Gahramanov noted that 250,000 tons of petrochemical products from the STAR Refinery are currently being used at Petkim, adding that the refinery will be able to produce up to 750,00-790,000 tons of petrochemical products and that 500,000 tons of this will be exported.

Touching on the latest developments concerning the Trans-Anatolian Natural Gas Pipeline (TANAP), the 1,850-kilometer section of the Southern Gas Corridor, and the Trans Adriatic Pipeline (TAP) to extend into Europe, Gahramanov said that the Southern Gas Corridor is a $40 billion investment made to transmit Azeri gas to Europe.

Gahramanov said that the Southern Gas Corridor’s section, extending from the Azeri production venue to Eskişehir, Turkey, has been completed and that TAP is in the final stage.

According to Gahramanov, TANAP, which was put into operation last June, has carried 2 billion cubic meters of natural gas to Turkey so far. This amount will rise to 4 billion cubic meters by the end of the year.

Gahramanov noted that the commercial transmit of Azeri gas to Europe is likely to start in the middle of next year, adding: “To this end, we are waiting for the completion of TAP. The construction of the pipeline will end next year, and it will run in the test phase for six months. Then, commercial gas flow will begin. Thus, six out of a total of 16 billion cubic meters of capacity will remain in Turkey and the remaining 10 will go to Italy, starting from the Turkey-Greece border.”

In response to a question whether options such as adding Iraqi or Eastern Mediterranean gas to TANAP is on the table, Gahramanov stressed: “The possibility of linking Iraqi or Eastern Mediterranean gas to TANAP is always discussed, but it is not a decision we can make alone. First, the Republic of Turkey must make a decision on the issue. At present, we know that some companies have applied to the Ministry and the Presidency for this. No decision has been conveyed to us yet, but the pipeline was constructed in such a way as to be suitable for such additions. The capacity of TANAP, which is currently capable of carrying 16 billion cubic meters of gas, can be increased by adding new compressor stations.”

Touching on SOCAR Turkey’s investment plans, Gahramanov noted that the petrochemical industry comes first. Thus, the company has a project with BP to make their second investment in this area. Pointing out the project runs fast, Gahramanov said that they would make the final investment decision in the first quarter of next year.

According to Gahramanov, the company plans to invest about $2 billion and to produce 1.2 million tons of petrochemical products. SOCAR will produce purified terephthalic acid (PTA) and P-xylene (PX), which are both imported products currently. Emphasizing that they will reduce the import of these products, Gahramanov said that Turkey’s current account deficit stemming from the petrochemical industry was $11.5 billion in 2017. Stressing that the new petrochemical plant will reduce by half Turkey’s current account deficit of $11.5 billion stemming from petrochemical imports, Gahramanov remarked that there is an excellent incentive practice for petrochemicals and Turkey must invest in this field. “We are not afraid of competition, as long as there is proper competition; the more competition, the better things will be. After all, Petkim is Turkey’s largest petrochemical plant, but meets 18 percent of the market today. I mean, there is space for new petrochemical investments in the market,” he concluded.