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Last Trade - 01/03/21

Sector
Industrials
Size
Mid Cap
Market Cap £574.3m
Enterprise Value £502.2m
Revenue £1.13bn
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Azerbaijan targets petrochemicals in push to reduce reliance on oil and gas

Tue 6th August, 2019 2:16pm
* Azerbaijan has completed three new plants in past year
    * Plans new Turkish plant in partnership with BP
    * Expects $2 bln in 2019 non-oil exports, up from $1.7 bln
in 2018

    By Margarita Antidze and Nailia Bagirova
    BAKU, Aug 6 (Reuters) - Azerbaijan is betting on
petrochemicals investment to diversify its oil and gas-dependent
economy, industry and government officals told Reuters.
    Plummeting global oil prices five years ago sent the former
Soviet energy producer's economy into decline, devalued its
currency and led to bankruptcies among its commercial banks.
    But lessons appear to have been learned as Azerbaijan has
sought additional sources of revenue, investing in petrochemical
plants at home and abroad as it chases the bigger margins from
turning crude oil into plastics rather than oil products.
    Construction has been completed on three new petrochemical
plants in Azerbaijan over the past 12 months. The plants are
producing polypropylene, carbamide and high-density
polyethylene.
    Azerbaijan also produces methanol and other petrochemicals
and plans to begin construction of a new petrochemicals plant in
Turkey to produce various materials in partnership with British
oil major BP  BP.L  at the end of 2020, aiming to complete the
project within three years, said BP and state-controlled Azeri
oil and gas company SOCAR.
    Plans to construct a second carbamide plant in Azerbaijan
with Tekfen  TKFEN.IS  will also boost the South Caucasus
country's potential as a petrochemicals exporter.
    "Azerbaijan is deliberately conducting a policy of non-oil
sector development," Vahit Akhmedov, a member of Azerbaijan's
parliamentary economic policy committee, told Reuters.
    "Development of petrochemicals is one of the priorities as
this sector will bring good profits and provide the country with
these products."
    Oil and gas account for about 95% of Azeri exports and 75%
of government revenue, with the hydrocarbon sector also
generating about 40% of the country's economic activity, making
the Caspian Sea republic particularly vulnerable to a downturn
in gas and crude prices.
    "Rapid development of the petrochemicals sector will help us
to support economic growth if the oil price falls," said SOCAR
vice president Suleyman Gasimov.
    Oil output in Azerbaijan, led by BP and SOCAR's
Azeri-Chirag-Guneshli oilfields (ACG), has been stable over the
past couple of years. BP and SOCAR say that ACG, which has so
far produced 3.5 billion barrels of oil, has the potential to
pump a further 3 billion barrels by 2050. Azerbaijan is also a
major producer of gas in the region, aiming to export supplies
to Europe.  urn:newsml:reuters.com:*:nR4N23Y01K  urn:newsml:reuters.com:*:nL5N20D4V9
    "Azerbaijan's oil and gas reserves are enough for rapid and
successful development of the petrochemicals industry," an
industrial source told Reuters.
    New enterprises have allowed the country to satisfy domestic
petrochemicals demand while boosting exports, with Azeri
officials saying total petrochemical exports are projected to
reach $241 million this year, up from $190 million in 2018.
    Its export markets for petrochemicals include Georgia,
Turkey, Russia, Ukraine, Europe, China, Egypt and Israel. Other
non-oil exports, including the agriculture and mining sectors,
are projected to grow to $2 billion in 2019 from $1.7 billion
last year, Azeri officials said.
    "We are confident that 15% of the growth in non-oil sector
exports this year will be from the petrochemicals sector," said
Ramil Huseyn, analyst at the Baku-based Centre for Analysis of
Economic Reforms and Communication.

 (Writing by Margarita Antidze
Editing by David Goodman)
 ((margarita.antidze@thomsonreuters.com; +995322999370; Reuters
Messaging: margarita.antidze.thomsonreuters.com@reuters.net))
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