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23.07.2015 09:43

SOCAR to receive loan to reconstruct refinery

Azerbaijan's state energy company SOCAR will receive a loan worth 1.2 billion manats ($1.14 billion )for the reconstruction of a refinery named after Heydar Aliyev, SOCAR President Rovnag Abdullayev told journalists on July 14.

The loan will be guaranteed by the state.

"As is known, there was some delay in the process of construction of a new refinery within the project of creation of a new gas processing and petrochemical complex in Azerbaijan. Due to this, it was decided to extend the life of the refinery named after Heydar Aliyev to 2030 through renovations," he noted.

Abdullayev also said that in order to do this, the government would allocate a loan worth 1.2 billion manats either from the assets of the Central Bank of Azerbaijan or through appropriations from the state budget for the reconstruction of this facility, which includes the elimination of the "Azneftyag" refinery.

"These works will be started next year and by 2017-2018, the production capacity of the refinery will be increased, production of oil products of Euro-5 standard will be arranged, bitumen and six other large installations will be constructed. After this, Azneftyag refinery will be eliminated and its area will be cleared to expand the Baku Boulevard," Abdullayev added.

SOCAR announced in January 2015 that the "Azneftyag" refinery would be eliminated and combined with the Baku Oil Refinery named after Heydar Aliyev. This decision was taken as part of works to improve and optimize the structure of SOCAR.

Abdullayev also said SOCAR will attract long-term credit resources to the OGPC project.

"When the price for a manufactured product decreases, it is necessary to cut spending on future projects. However, all our projects are now at such a stage that there is no issue on reduction of them. As you know, works on the Southern Gas Corridor project are underway, and they have entered the stage of FEED and detailed design of works of creation of the OGPC. I have discussed this issue in Japan with local large companies, and they have a great interest in participating in this project," he noted.

The Japanese Exim Bank has an opportunity to participate in the financing of the project. "All of these works will be continued, and long-term loans will be attracted for the implementation of OGPC."

The OGPC project has multiple interfaces not only between process units, utilities, and offsite facilities, but also between the new gas processing and petrochemical facilities. The project costs about $17.1 billion plus interest for the loans to be received during construction.

The OGPC will be constructed roughly 60 kilometers from Baku. It will consist of three processing plants and a thermal power plant. The project will be completed in late 2022 - early 2023.

The OGPC construction project will improve product quality, enhance the export potential of the country, and help protect the environment of the capital.

The annual capacity of the OGPC refinery will be 8.5-9 million metric tons, the gas processing plant will be 12 billion cubic meters, and petrochemical production will exceed 1 million metric tons.

Abdullayev also spoke about the successful implementation of the SOCAR Polymer project. Plant construction has already begun and financing is underway.

The SOCAR Polymer project is being installed at the Sumgayit chemical-industrial park. The project will allow the production of 180,000 tons of polypropylene and 120,000 tons of polyethylene per year, which will be sent to Turkey and Western Europe.

AzMeCo to buy gas from Gazprom

Abdullayev went on to add that SOCAR has allowed the Russian Gazprom Company to supply gas to the methanol production plant of Azerbaijan's AzMeCo Company.

"We do not have a need to import gas, we fulfill all our contractual obligations. The fact is that a methanol plant was constructed, which has not concluded a long-term contract with us for the supply of gas, so we do not have resources for it. For this reason, when Gazprom addressed us, SOCAR did not oppose to the purchase of gas by AzMeCo from the Russian company. A contract on the supply of Russian gas to the plant via our pipelines was concluded," Abdullayev said.

In June 2015, Gazprom Head Alexey Miller announced that his company is ready to meet Azerbaijans demand for gas imports.

Currently, Gazprom has a contract (with the possibility of extension) on purchasing Azerbaijani gas signed October 14, 2009. The contract between SOCAR and Russias Gazprom allows for suspending and resuming gas supplies at any time.

AzMeCo was founded in November 2007 to invest in petrochemical projects as an owner and operator. In addition to its portfolio of international hydrocarbon investments in the Caspian basin, AzMeCo created a master plan of investments in the non-oil sector of Azerbaijan.

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