Zaur Gahramanov: “We will see contribution of TANAP to Azerbaijani economy in a short period of time” - INTERVIEW
- 07 August 2019
Interview of Zaur Gahramanov, general Director of “SOCAR Turkey Energy” to APA’s Turkey Bureau
- SOCAR actively represented in the energy market of Turkey. How much has the company invested in the Turkish economy so far?
- SOCAR started to invest in Turkey in 2008 by purchasing 51% of shares of “Petkim” petrochemical complex from Turkish Privatization Office for $2,04 billion. Our investments constantly continue since that date. It is 11 years that we are in Turkey and continue our operations with giant enterprises like “Petkim”, “SOCAR Terminal”, “Petkim” KES, TANAP, “Star” Oil Refinery Plant which provide 4500 people with jobs. Our key objectives are to turn Turkey into one of the crucial energy corridors of the region, further develop Azerbaijani economy with additional valuable products, in reducing Turkey's import dependence and current budget deficit. Investment of SOCAR in Turkey reached $15,3 billion by the day. Currently, SOCAR is the biggest direct foreign investor of Turkey and after the ongoing investments complete this number will reach $19,5 billion.
- Close relations in several fields, including in energy sector connect Azerbaijan and Turkey. TANAP, which is a part of Southern Gas Corridor, became the next project in this field. Gas is already transported though “Shahdeniz-2” to Turkey. How much gas exported to Turkey through TANAP? What will be forecast for this and next years?
The volume of natural gas exported to Turkey through TANAP reached 2,2 billion cubic meters. It is forecasted that this amount will reach 4 billion cubic meters by the end of 2019. The amount of gas that will be sent to Turkey will be 6 billion cubic meters beginning from 2020. Natural gas of 10 billion cubic meters will be sent to Europe in the initial stage after the beginning of transportation of gas to Europe. So, it is envisaged to reach transportation of 16 billion cubic meters of gas through TANAP. These figures will be dragged to initially 24 billion, then to 31 billion cubic meters after additional investments.
- Azerbaijani natural gas is already at the Greek borders via Turkey. Furthermore, it will be transported through the territories of Greece and Albania to Italy through TAP. When is our natural gas planned to reach Europe?
- TANAP has been made fully ready to transport Azerbaijani natural gas to Europe from July 1 of this year. Currently, we are waiting for complete works of TAP. We are expecting to reach Azerbaijani natural gas to the European market by 2020.
- The Southern Gas Corridor is considered one of the greatest and most prospective projects. Which prospective and opportunities will the project provide involved countries with? What is the place and role of the mentioned corridor in the global energy market?
- The Southern Gas Corridor, of which investment cost is USD 40 billion, has paramount importance for the global energy market. It is known energy security also means national security of the countries. The European market is the greatest natural gas importer and dependence of European countries on natural gas importation increases day-by-day. That is why there is a need for additional sources in order to meet energy requirements. The Southern Gas Corridor project will contribute to the energy security of Turkey and Europe.
- There is information on SOCAR’s provision Turkey’s producers with 4 billion c/m natural gas per a year from 2020. How will the process be organized and which opportunities will be created for SOCAR in Turkey’s energy market by the process?
- The volume of the gas, transported to Turkey via TANAP, will be 6 billion c/m in 2020. In the framework of the project, Azerbaijani gas will be transported to Europe too. All of us will see how greatly and positively the establishment of the Corridor to Europe will affect Azerbaijan’s economy soon. On the other hand, fraternal Turkey, on which national leader Heydar Aliyev said “one nation, two states” and in which we have invested a lot” supports Azerbaijan’s investments. Such favorable condition has been provided for Azerbaijan prior to Turkey’s local companies. That is why one of Azerbaijan’s goals is to contribute to the decrease in Turkey’s current big energy deficit, originating from energy. At the moment we are all out to provide economic development of both fraternal countries, integration to the European market, and diversification of energy provision.
- If SOCAR’s subsidiary company plans to enter to fund exchanges of London, Hong Kong, and Istanbul, what kind of goals does the Company have and which assets are in question? How much will the volume of the assets, suggested by the Company to investors, be?
- Issuing SOCAR’s Turkish assets into turnover is included in our strategy since 2015. Although it has not yet been determined, we are planning to implement these operations until 2021-2022. Taking into consideration the conditions of markets and exchanges will influence to our decision, it is impossible to say the exact date for the operations. That is why our bank choices and exchange operations have not yet been defined accurately. Initial researches are underway in the issue.
- Recently SOCAR Turkey purchased “Bursagaz”, “Kayserigaz”, "Enervis", "EWE Enerji" and "Millenicom" companies, belonging to “EWE Turkey Holding”. What is the main purpose of the Company in the Agreement? How will the mentioned Agreement effect to SOCAR in Turkey’s energy market?
- SOCAR Turkey is a key player in Turkey’s natural gas market. For 6 years- since 2013, we have had natural gas trade with Turkey. We started transportation of Azerbaijani gas to Turkey through TANAP, which is the strategic and greatest project of two countries, since June 30, 2018. SOCAR began gas-sharing trade by purchasing “Bursagaz” and “Kayserigaz”, and completed value chain in natural gas. It will not only establish synergy in natural gas operations but also increase productivity and income.
-What is the main purpose of Mercuri project that SOCAR will carry out jointly BP? When will be the construction of the complex started? When is it expected to be commissioned? How much will the project’s capacity be?
-SOCAR operates in Turkey mainly in petrochemical and oil refining fields. Petkim is the only integrated petrochemical complex of Turkey and can provide only 20 percent of the market. This share should be increased in order to decrease Turkey’s import of petrochemical products and thus to contribute reduce of foreign trade deficit. We try to meet the needs of the market with a new venture that we planned on the basis of international partnership.
We plan to lay the foundation of the new venture in the first half of the next year. This investment has strategical importance as all the projects of SOCAR. Pure Acid Acid (PTA) imports of Turkey will be completely eliminated after the completion and operation of the venture. The only venture that produces PTA in Turkey is Petkim that own PTA factory. However, Petkim alone can meet only some part of Turkey’s needs. Therefore after the operation of the venture, this need of Turkey will be also met. At the same time, 800 thousand tons of paraxylene currently imported will be produced in Turkey. This venture will also enable vertical integration of raw materials supplied from Star Refinery and Petkim. Being built on our territory in Aliaga, both Petkim and Star will be very close to the raw material resources and shared infrastructure. This, in turn, will be a great advantage both in terms of productivity and competitiveness. The reformed products to be produced by the "Star" NEZ will also be processed here and will be converted into high added value petrochemical products with the establishment of this venture.
-“Energy of Azerbaijan SOCAR is adding strength to Turkey’s strength. Our goal is to increase local production and reduce dependence on foreign products” This thoughts sound in one of the ad. What does local production mean?
-Currently “Local production” phrase is widely used in Turkey. We support this as SOCAR. As mentioned above we are the biggest direct investor of Turkey and try to strengthen the economy of two countries. As I mentioned before, Turkey has foreign deficit depending on energy. We would like to sell the products produced in Petkim and Star plants first in Turkey in order not to buy these products from abroad. Products of Petkim ensures more than 30 sectors with raw material. Star NEZ alongside products such as diesel, LPG, aviation fuel provides Petkim with naphtha, which needs basic raw materials. It means that we produce in Turkey and we sell our products for use in Turkey. Therefore, we are proud to have tens of thousands of products in the sector. We also wanted to reflect on our pride in this ad.
- Some part of the products produced in Star NEZ is exported to foreign markets. How many products have been exported so far?
-The products produced in Star NEZ mainly are exported to the Mediterranean region and Northern Europe countries. 1 million 350 thousand tons of diesel, aviation fuel, reforming products and other products worth $ 750 million have been exported from the date of commissioning until August 1, 2019, from the plant.