Page 11 - DMEA Week 15 2020
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DMEA PETROCHEMICALS DMEA
SOCAR, BP delay greenlight for $1.6bn Turkish petchem venture
TURKEY
Construction had been due to get underway this year.
AZERBAIJAN’S state oil firm SOCAR and its partner BP have delayed taking a final invest- ment decision (FID) on the construction of a new petrochemical complex in western Turkey, in light of the oil price collapse.
With oil benchmarks trading at $20-30 per barrel, the pair have decided to push back the FID by a year, to the fourth quarter of 2021, the head of SOCAR’s Turkish business, Zaur Gahra- manov, told local media.
SOCAR and BP signed a heads of agreement (HoA) on the project, known as Mercury, in late 2018. The planned complex will be sited in Izmir Province on the shore of the Mediterranean, and will turn out 1.25mn tonnes per year of purified terephthalic acid (PTA), 840,000 tpy of parax- ylene (PX) and 340,000 tpy of benzene at peak capacity. It will run on feedstock provided by SOCAR’s nearby STAR oil refinery and its Pet- kim petrochemicals plant.
The partners initially aimed to sanction the $1.8bn project by the end of 2019 but then post- poned the decision until late 2020. They had
hoped to break ground on construction as early as this year. Production was originally slated to begin before the end of 2023.
Mercury is set to be one of the biggest com- bined PTA, PX and aromatics complexes in the world. PTA is used to manufacture polyesters – a key product in Turkey’s growing textile and packaging industries that the country currently imports.
Petrochemicals are tipped to see rapid growth over the coming decades. But the sector has struggled over the last several years as a result of lacklustre global economic growth. The corona- virus (COVID-19) pandemic has further weak- ened its outlook. BP and SOCAR, which both rely predominately on oil and gas sales for their revenues, also have less available capital for new investments following the oil price crash.
The pair each have a 50% stake in Mercury. They are yet to announce an engineering, pro- curement and construction (EPC) contractor for the venture, despite holding a tender to select one early last year.
Aramco in talks for $10bn loan for SABIC takeover
SAUDI ARABIA
Aramco is in talks with HSBC and JPMorgan, among others.
SAUDI Aramco is in early discussions with banks to secure a $10bn loan to fund its $69bn acquisition of a 70% stake in Saudi petrochemi- cals producer SABIC, Reuters reported on April 15 citing sources.
Aramco agreed on the purchase last year and obtained EU regulatory approval to pro- ceed with the deal in March, meaning it now has received all necessary clearance from antitrust authorities.
“The financing would be for the SABIC deal, but the borrower is Aramco,” a Reuters source said, adding that talks were only at an early phase. “$10bn is where they want to get to; [it is] not clear if, in this market, they’ll manage to reachthat.”
HSBC and JPMorgan are involved in the dis- cussions, along with lenders in the Gulf region, a second source told the news agency. Neither international bank has commented on the report.
Aramco told Reuters: “the company con- tinues to review its financial options as part of its normal course of business, while prudently
preserving its pristine balance sheet and its resilience.”
A third source told the agency that Aramco wanted to borrow in US dollars, as this was cheaper than Saudi riyals in terms of interest rates. It is also seeking to avoid putting strain on Saudi banks’ liquidity. The Saudi economy is under considerable strain following the cat- astrophic collapse in oil prices during the past month.
Taking over SABIC will play an integral part in Aramco’s plan to expand its downstream operations. The national oil company (NOC) wants to diversify its predominately oil-based revenues by developing petrochemicals opera- tions.SABIChasanannualpetrochemicalspro- duction capacity of 62mn tonnes (tpy), dwarfing Aramco’s own capacity of 17mn tpy.
SABIC has a significant international busi- ness, with operations in more than 50 coun- tries. The current owner of the SABIC share is the kingdom’s Public Investment Fund, which recently made headlines by acquiring stakes in four major European oil companies.
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