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12.05.2016 16:46

New refinery and petrochemical complex in Baku can be built only at oil price of $60-70 a barrel

The State Oil Company of Azerbaijan (SOCAR) has announced plans concerning oil refining for the next 10-15 years.

Tofig Gahramanov, SOCAR Vice President for Strategic Sevelopment, says that refinery Azneftyag will be closed in 2018 after the launch of the bitumen plant at the Baku Oil Refinery named after Heydar Aliyev.

"Although in 2015 a decision was made to withdraw Azneftyag out of service, the operation of this enterprise is yet required as there two plants of primary oil refining and the old bitumen plant with capacity of 250,000 tons a year are operating. As soon as the Baku refinery will launch a new bitumen plant for 400,000 tons a year in the summer of 2018, Azneftyag will be closed and dismantled," Gahramanov said.

The Azneftyags territory will be transferred to Baku White City Project.

As for the plans of creation of a new oil & gas processing and petrochemical complex SOCAR OGPC in Garadagh district of Baku, SOCAR vice president informed that "an optimal price of oil for active work within the framework of SOCAR OGPC project is the corridor of $60-70 a barrel, while current world oil prices reach $40-45.

"Due to lower prices of oil since the end of 2015, the global prices for polyethylene and polypropylene also fell from $1,700 to $900 a ton (now the average price is about $1,100 per ton). This also affects the terms of creation of SOCAR OGPC," Gahramanov added.

He stressed that the key factor for this project is the internal rate of return.

"If this figure is 20% and above, there is interest among companies to SOCAR OGPC, and if it is below 15% - the interest falls. Despite the difficult situation, we continue discussions with Mitsui and HQC," Gahramanov said.

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