Turkey-Azerbaijan: ties that bind

[mahatir]

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The Azeri dialect of Turkish may sound strange to Turkish ears but it is perfectly intelligible and the increasing economic and political cooperation between the two states represents as much a common culture as the geographical imperative that makes Turkey the perfect export route for Azerbaijan’s sizeable reserves of oil and gas reserves.
The latest example of Turkish-Azeri cooperation came with the signing Monday of a $3.4bn EPC contract between Azeri state oil company Socar and its Turkish partner Turcas and a consortium led by Spain’s Tecnicas Reunidas for the construction of a 10m tonnes/yr refinery at Aliaga on Turkey’s Aegean coast.
Owned 81.5 per cent by Socar and 18.5 per cent by Turcas, the STAR refinery is being constructed on a site adjacent to Turkey’s former state petrochemical firm Petkim which is now owned by Socar and is slated to start producing by autumn 2017.
Originally conceived to process Azeri crude arriving at Turkey’s Mediterranean oil hub of Ceyhan into primarily naphtha feedstock for Petkim, the plant’s design was later expanded to allow it to process all regional crudes and to produce low sulphur diesel, jet fuel and other products for local and regional markets.
According to Socar Turkey CEO Kenan Yavuz, the new refinery should cut as much as $2.5bn off Turkey’s current import bill for refined products – a significant contribution to cutting Turkey’s current account deficit.
Also speaking at the signing, Vagif Aliyev, Socar’s head of international investments pointed out that at an expected final cost of $4.8bn-$5bn, the STAR refinery is currently the biggest FDI project in Turkey.
But, he added, this is only a fraction of the $17bn the company plans to invest in Turkey by 2018, with Socar also planning further investments in Petkim and the planned Trans Anatolian Gas Pipeline (TANAP) being developed by Turkey and Azerbaijan to carry Azeri gas to Turkey and on to markets in Europe.
Aimed at carrying gas initially from Azerbaijan’s Shah Deniz gas field, current plans foresee TANAP being constructed by 2018, supplying initially 6bn cu m/yr of gas to Turkey with a further 10bn cu m/yr going for export to Europe, later to be increased to 25bn cu m/yr.
The BP led consortium which is developing the Shah Deniz field is expected to decide next month which of two competing pipeline projects will connect with TANAP on Turkey’s European borders to carry the Azeri gas to markets in Europe

Turkey-Azerbaijan: ties that bind | beyondbrics

 

[mahatir]

Turkey-Azerbijan is a great example of how relations should be between two countries in middle-east/caucus region , we hope at some point in future Turkish-Gulf relations will reach this level through high trade level , mutual investment and cooperation in defence , research and development , food security and energy security.

 

[revojam]

This is what the article talking about :

Turkey is set to receive a new refinery after Azerbaijan’s Socar and a Spanish-led group ink a multibillion-dollar deal to build the facility on İzmir’s Petkim peninsula on the Aegean coast


Socar Turkey and a consortium led by Spain’s Tecnicas Reunidas signed an agreement yesterday to build “Star Refinery,” worth $4.3 billion in the western province of İzmir.

Socar Turkey, which was founded by Azeri state-run energy company Socar to carry out its activities in Turkey in 2008, had begun infrastructure and excavation work for Star Refinery in the Aliağa district of İzmir after the groundbreaking ceremony attended by Turkish Prime Minister Recep Tayyip Erdoğan and Azeri President İlham Aliyev in October 2011.

The value of the agreement signed between Socar Turkey and a consortium of Spain’s Tecnicas Reunidas, Italy’s Saipem, South Korea’s GS Engineering and Construction and Japan’s Itochu is $3.4 billion, said Socar Turkey CEO Kenan Yavuz, adding that they had invested $185 million using their equity capital so far for the refinery’s infrastructure and completed 70 percent of infrastructure work.

“When we add the infrastructure investments worth $185 million, the future expenditures for electric and automation systems, others and taxes, the investment value aside from the financing costs will be worth $4.3 billion,” Yavuz said. The estimated value of the refinery, including financing costs and interest, is between $4.8 billion and $5 billion, he added. Yavuz said Star Refinery was a localization project that would enable a $2.5 billion reduction in Turkey’s current account deficit yearly.
Currently Turkey’s sole refinery is Tüpraş.

Value-Site vision

“As Socar plans to invest $17 billion in Turkey by 2018, around $7 billion to $8 billion of this amount will be used for Star Refinery, which will be a chemical industry park on Petkim Peninsula in framework of the ‘Value-Site’ vision,” said Vagif Aliyev, the head of Socar’s International Investment Management Department and also the CEO of Petkim, Turkey’s state-run petrochemical company, which is owned by Socar. The Value-Site vision aims to integrate refinery, petrochemical, energy and logistics on the Petkim site in order to complete production, which begins from crude oil and ends with the final product, in the framework of a cluster model.

Aliyev said the strategic partnership between Turkey and Azerbaijan, which gained speed with the privatization of Petkim in 2008, would be enforced by Star Refinery and the Trans-Anatolian natural gas pipeline project (TANAP). Turkey has a 20 percent stake in TANAP, while Socar holds 80 percent.

Construction of the TANAP pipeline, which will be built from the Turkish-Georgian border to Turkey’s border with Europe, is expected to start at the end of 2013 and the project’s first phase is estimated to be ready by the end of 2017 or early 2018.

TANAP is set to take some 10 billion cubic meters (bcm) of gas a year from Azerbaijan’s Shah Deniz II field to Europe, while Turkey, which aims to cut its dependence on Russian gas, will get six bcm. BP and Azerbaijan’s Statoil hold 25.5 percent of shares each in the Shah Deniz II as Socar, Total, LukAgip Nioc and Turkey TPAO share the rest.

10 million ton capacity

Star Refinery is planned to have an annual capacity of 10 million tons to refine different crude oil types.

The refinery is planned to produce annually 4,900,000 tons of ultra-low sulfur diesel, 1,300,000 tons of naphtha, 457,000 tons of mixed xylene, 1,630,000 tons of jet fuel, 260,000 tons of LPG, 525,000 tons of reformat, 692,000 tons of petroleum coke and 159,000 tons of sulfur.

Yavuz said they had put in $8 billion of equity capital for Star Refinery as they would borrow $3 billion from foreign banks to finance the project. “We came to the final phase of the negotiations with export import banks of Spain, Italy, South Korea and Japan, which have been continuing for two years,” Yavuz said. UniCredit has been their corporate solution partner since the beginning of the process, he added.

Moody’s recent rating upgrade for Turkey, which lifted the country’s grade to “investable,” will have positive impacts on Socar’s foreign finance seeking, Yavuz noted.

Yavuz said the project, in partnership between Socar Turkey and the consortium, would be completed 51 months from today. “We will complete the refinery’s mechanical works by the 43rd month, start-up works between the 43rd and 48th months and performance tests between 48th and 51st months. Star Refinery will be completed and come into operation after 51 months,” he said.

 

[Ahiska]

The relationship with Azerbaijan is good because they are brother countries.
The Azeri Turks and the Gagauz Turks are the next brothers to Turkish then comes Turkmenistan and then the other Turkic languages.