News Archive

19 October 2018

SOCAR’s giant investment project - STAR Refinery launched

+

SOCAR, the largest direct foreign investor in Turkey, launched its $6.3-billion SOCAR Turkey Aegean Refinery - STAR Refinery, which will provide a large portion of oil products demand in the local market with 10 million tons of annual oil processing capacity. In coming years, SOCAR's new refinery will be a solid contribution to the economies of Azerbaijan and Turkey. SOCAR’s $6.3-billion STAR Refinery, one of the largest investment projects in Turkey, was inaugurated on October 19, 2018 in a ceremony held in Aliaga, Izmir. Alongside the refinery SOCAR has also launched its other projects - Petlim Container Terminal, Petkim Wind Power Plant and its regional head office. President Ilham Aliyev of the Republic of Azerbaijan, President Recep Tayyip Erdoğan of the Republic of Turkey, government officials of the two countries and numerous guests have attended the inauguration ceremony.

Addressing the event, SOCAR President Rovnag Abdullayev spoke about the STAR project: ''Today is a historic day for us. Because we are launching the STAR Refinery, foundation of which was laid by the leaders of the two countries on October 25, 2011. The STAR Refinery, built and equipped with the world's latest technologies, helps integration of our petrochemical business and therefore has a strategic importance for our company. The refinery, with annual processing capacity of 10 million tons of crude oil, will make a significant contribution to the economy of Azerbaijan and Turkey''.

STAR Refinery will strengthen Petkim's and SOCAR’s market power in the Mediterranean region. It will produce naphtha, the main crude material for Petkim, and considerably reduce Turkey's dependence on imports. STAR Refinery will process various types of oil, which is an indication of the refinery’s competitive edge.

R. Abdullayev said SOCAR would continue investments in Turkey after the inauguration of the Refinery. He expressed gratitude to Turkish and Azerbaijani leaders, as well as other state and government officials, to TSGI alliance, the major contractor of the project, international financial institutions involved in financing the project, and everyone who contributed to the construction process of the refinery.

STAR Refinery will meet a quarter of Turkey's oil products demand.

STAR Refinery will help to reduce the current trade deficit in Turkish petrochemical sector, one of the largest oil consumers in Europe, the Middle East and Africa. It will produce oil products such as naphtha, xylene, diesel, aircraft fuel and LPG. The refinery, which has Turkey's first Strategic Investment Promotion Certificate, employed 19,500 workers from 14 countries, including 3,000 engineers at the peak stage of the construction. 1100 professionals will permanently work at the refinery after its launching. Shareholders of the project are SOCAR (60%) and the Ministry of Economy of Azerbaijan (40%).

The Petlim Container Terminal, with a capacity of 1.5 million TEU, is one of the 3 largest ports in Turkey. Around $400 million has been invested in the terminal.

SOCAR's renewable energy project PETKIM Wind Power Plant has a capacity of 51 MWT. The investment in this project totaled 55 million euros. The energy plant connected to Turkey's energy network will significantly contribute to meeting the energy needs of SOCAR in Aliaga.

17 October 2018

Drilling, production and export figures for the third quarter of 2018

+

Following the growth in production, over 3 billion cubic meters of gas have been supplied to gas storage facilities SOCAR has managed to stabilize oil production and increase its natural gas production significantly by increasing the drilling capacity in the third quarter of 2018. During the quarter, SOCAR production amounted to 1.9 million tons of oil and 1.67 billion cubic meters of natural gas , increasing 1.5% and 11% respectively compared to the previous year's figures. Overall, 29 million tons of oil and 22 billion cubic meters of natural gas were produced in Azerbaijan in the first nine months of 2018. Compared to a year earlier, the country's oil production grew by 0.8% and gas production by 4,5%.

During the quarter, SOCAR has carried out more than 42 thousand meters of drilling work, surpassing the last year’s same period figures by 43%. In addition to increased drilling capacity, old and redundant wells were repaired and reactivated, allowing SOCAR to stabilize its production.

During the first 9 months of this year, Azerbaijan imported 1.59 billion m3 and exported 6.48 billion m3 of gas . The imported and exported gas volumes increased by 22.6% and 5.8% respectively compared to the same period of last year. During the first 9 months of the current year SOCAR exported 871.8 million m3 of gas , increasing it by 0.5% compared to the results of previous year’s same period. SOCAR directs all natural gas produced in Azerbaijan by own efforts to the local market. SOCAR exports natural gas, acquired from third parties, to bring additional profit to Azerbaijan. SOCAR has already collected over 3 billion cubic meters of gas in gas storages for the winter season.

In the third quarter, SOCAR’s crude oil export reached 6 million tons exceeding the last year’s respective figures by 9.3%. During the quarter SOCAR exported 465,800 tons of oil and petrochemical products from Azerbaijan, reaching 43% growth compared to a year earlier.

____________________

1 1.902.252 tons

2 1.668.082.000 m3

3 29.046.822 ton

4 22.068.938.000 m3

5 42.684 meter

6 1.588.409.000 m3 and 6.484.996.000 m3 respectively

7 871.812.000 m3

8 5.994.976 tons

9 465.787 tons

Note for editors: The figures mentioned in the text are rounded off for better readability. Please see the exact figures below in the notes.

2 October 2018

SOCAR and China’s BGP establish joint venture on seismic exploration

+

SOCAR and BGP Inc., a subsidiary of China National Petroleum Corporation (CNPC) have signed a Foundation Agreement on the establishment of a joint venture. Rovnag Abdullayev, President of SOCAR, Khoshbakht Yusifzadeh, First Vice President of SOCAR, Bahram Huseynov, Vice President for Geology and Geophysics at SOCAR, Gou Liang, President of BGP Inc., as well as other high-ranking officials from both companies attended the signing ceremony, which took place in SOCAR Tower. The contract was signed by Rovnag Abdullayev, President of SOCAR and Gou Liang, President of BGP Inc. The newly established joint venture will carry out joint seismic exploration in the Republic of Azerbaijan and the Caspian Sea, creating new opportunities for exchange of experience between the professionals of the two companies.

Rovnag Abdullayev shared his opinion on the signed contract: “Today, SOCAR is working on modern technologies in all areas and testing different and alternative methods to explore new oil and gas fields and stabilize production levels. Establishing a joint venture with China's BGP for geological and geophysical studies creates an alternative perspective in this area and a fertile ground for sharing experiences that will be useful for professionals of both countries”.

On June 6, SOCAR signed a Memorandum of Understanding with the purpose of establishing cooperation with BGP Inc., a subsidiary of the China National Petroleum Corporation (CNPC), as well as the establishment of a joint venture for geophysical services. In accordance with the Memorandum of Understanding, the companies held negotiations and prepared a final document.

BGP is a 100% subsidiary of CNPC, a state-owned oil company of the People's Republic of China. BGP's main areas of activity include onshore, transboundary and offshore exploration, including acquisition and interpretation of seismic data, production of seismic equipment and providing information and communication technologies (ICT) services.

2 October 2018

Ernst & Young rates SOCAR as ''STRONG'' on corporate governance

+

According to a report from Ernst & Young, SOCAR is one of the world's leading state-owned enterprises not listed on a stock exchange. Recent monitoring shows that it is impossible to improve the performance of enterprises without effective corporate governance system. In 2016, two regulations were signed by the President of the Republic of Azerbaijan to strengthen the corporate governance system of state enterprises in the Republic of Azerbaijan. For this purpose, in the same year, Ernst & Young, one of the world's leading audit companies, was involved in preparing a report on competency assessment of corporate governance at SOCAR, where it has investigated the SOCAR’s internal documents and conducted relevant surveys. The project was implemented in order to assess the current level of competency of the corporate governance system at SOCAR, to focus on desirable indicators, and to identify strengths and potential development areas for each component of corporate governance.

As a result of the interviews and review of internal documents, it was concluded that SOCAR gives high priority to the principles of corporate governance and the company’s overall corporate governance has been rated as ''STRONG'' at 81 percent of the maximum result. This indicates that SOCAR takes a leading position among the enterprises not listed on a stock exchange, and is in the forefront of the local state-owned enterprises. SOCAR has not only prepared documents on corporate governance components but also held functional procedures. The company is constantly exploring advanced practices, preparing financial statements in line with international standards and audited by an independent external auditor.

During the report presentation meeting attended by SOCAR top-managers, attention was drawn to the issues related to the areas to be improved. It was noted that the company had completed significant work to develop key performance indicators and more than a thousand indicators had been identified and approved. The next stage is to coordinate these indicators with strategic targets, appropriate motivation systems, and approve the calculation methodology. It was recommended to provide automation of the risk management process, training in corporate governance and use of certification programs, as well as an evaluation of the effectiveness of internal audit and internal control systems by external experts.

It should be noted that most of the recommendations provided by the consulting company are already being implemented by SOCAR. Thus, within the framework of cooperation with IBM and SAP companies, the company is working on the automation of production and management processes now.

Ernst & Young regularl audits, and all reports of the company are published after review by outside observers. In the coming years, these and other projects will contribute to the further improvement of corporate governance indicators of SOCAR.