Page 9 - FSUOGM Week 50 2019

FSUOGM INVESTMENT FSUOGM
Turkey Tekfen buys stake in Socar’s petrochemical unit
TURKEY
SOCAR Polymer has two recently launched petrochemical plants.
TURKISH construction group Tekfen has taken a 10% stake in the petrochemical division of Azerbaijan’s state oil company Socar, the latter reported on December 14.
Half of the shares sold belonged to Socar, while the other half were held by Pasha Hold- ing, widely reported to be owned by Azerbaijani President Ilham Aliyev’s family. Socar did not disclose the transaction price.
SOCAR Polymer is a crucial piece in Azer- baijan’s drive to diversify its economy away from oil and gas exports. The company launched a 180,000 tonne per year polypropylene plant in Sumgait last year, followed by a 120,000 tpy pol- yethylene plant in January, at a combined cost of $816mn. Both facilities run on hydrocarbon feedstock supplied by a nearby oil refinery.
Socar claimed last year that the two facilities would generate $6.6bn in revenues, around $2bn in profits and $600mn in tax receipts during their operational lives. The bulk of their products are exported, with a large share going to Turkey.
Tekfen did not comment on the rationale behind its acquisition at SOCAR Polymer. But the company serves as one of Socar’s main con- tractors, helping it complete a 650-660,000 tpy urea plant in late 2018.
In May, Tekfen and SOCAR signed a memo- randum on building a second plant in Azerbai- jan, capable of producing 730,000 tpy of urea. Tekfen suggested it might serve as an engineer- ing, procurement and construction (EPC) con- tractor, or even take a stake in the project.
Socar is also Turkey’s biggest direct foreign investor, indicative of the close political ties between Baku and Ankara. Besides its involve- ment in developing the Trans-Anatolian Natural Gas Pipeline (TANAP) which pumps Azerbai- jani gas to Turkey, it also completed the $6bn STAR oil refinery in the southeast of the coun- try, which produces petrochemical feedstock, and controls the nearby Pektim petrochemical production complex. Tefken also played a key role in STAR’s construction. ™
PERFORMANCE
Kashagan output still impeded by repairs
KAZAKHSTAN
Kashagan’s output is still volatile, more than three years after its launch.
OUTPUT reportedly remains impaired at Kazakhstan’s giant Kashagan offshore oilfield, following lengthy unplanned maintenance over the past few months.
Kazakhstan’s national production was down 8% at 235,800 tonnes (1.73mn barrels per day) on December 12 compared with two days ear- lier, according to energy ministry data. Sources at Reuters attributed the decline to unscheduled maintenance at Kashagan.
Kashagan’s output has fluctuated wildly since its launch in late 2016, making it harder for the project’s investors to recoup their substantial costs, estimated at near to $60bn. They have also put off discussion of a second-stage expansion at the field until production can be stabilised.
Serious problems began in October, when the loss of pressure at a compressor station and subsequent repair work caused output to slump from 365,000 to 294,000 bpd. Sources then told Reuters in late November that production had more than halved since early that month to 184,000 bpd, again because of gas compression issues.
Kashagan is operated by the North Cas- pian Operating Co. (NCOC), an international
consortium involving Italy’s Eni, US major Exx- onMobil, China’s CNPC, Royal Dutch Shell, France’s Total, Japan’s Inpex and Kazakhstan’s state-owned KazMunayGas (KMG). NCOC has rarely commented on reasons for Kashagan’s volatile output, though its reservoirs are highly complex, making results from gas injection unpredictable.
Kashagan was discovered back in 2000 but its development was marred by cost overruns, delays and disputes between its investors and the Kazakh government. The field finally began pro- duction in late 2013 but was shut down within weeks after it was discovered that sulphur-con- taining gas was eroding its pipelines. The field’s entire gas transport system was replaced with sulphur-resistant pipes, at a cost of $4bn.
Under its first phase of development, Kasha- gan’s output could reach as high as 500,000 bpd, according to Kazakh authorities. To boost recov- ery, the government and NCOC are considering the construction of a new 1bn cubic metre per year gas processing plant at the site. It has been claimed that Kashagan could eventually produce up to 1mn bpd of oil, based on its 9-13bn barrels of recoverable reserves.™
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