Methanol producer to double domestic market supplies

The 4th international conference “Oil refining and petrochemistry of the Caspian Sea and Central Asia” was held in Baku on November 28-30.

Over the past four years, the conference has turned into the largest regional venue and the most significant event in the industry of the Caspian region and Central Asia, each year traditionally bringing together the heads of the biggest oil and gas companies, oil refineries and petrochemical plants of Kazakhstan, Azerbaijan, Uzbekistan, Turkmenistan, Tajikistan and Kyrgyzstan, as well as foreign partners representing world engineering and technology companies.

On the last day of the conference, Fazail Yusifov, deputy head of Modernization and Reconstruction Department of Azerikimya said that Azerikimya Production Union will build a number of new units by 2020.

He went on to say that construction of new units started last year and will cover the period until the end of 2019.

“Four new steam pyrolysis furnaces and a pressure swing absorption (PSA) hydrogen treatment unit will be built within the framework of the petrochemical production’s modernization project, and this will make it possible to bring purification of the hydrogen fraction to 99.9 percent,” he said, adding that it is also planned to build a new hydrogen electrolysis unit, a new propanepropylene fraction (PPF) purification unit, a dry gas cleaning unit, a new distributed control system (DCS) and a new ethylene and propylene storage facility.

Rasim Ibrahimov, chief engineer at the Heydar Aliyev Baku Oil Refinery told reporters that Azerbaijan’s state oil company SOCAR increased the depth of oil refining at the Refinery to 92 percent, while last year, this figure was 89.5 percent.

Ibrahimov also noted that SOCAR plans to keep this level in 2018 as well.

Currently, the Heydar Aliyev Baku Oil Refinery is being modernized, after which its production capacity will increase from 6 million to 7.5 million tons per year. The petroleum products processed at the plant include automotive gasoline, aviation kerosene, diesel fuel, black oil, petroleum coke, and others. The refinery meets Azerbaijan's entire demand for petroleum products and exports 45 percent of the products.

On November 29, within the framework of the conference Fuad Ahmadov, deputy director general at SOCAR GPC, said that SOCAR GPC, gas processing and petrochemical complex of SOCAR, is planned to be launched in 2022.

Ahmadov noted that one of the goals of the project is to strengthen the monetization of gas processing, extract useful fractions and ensure the production of polymers.

“It is planned to build a gas processing plant with capacity of 10 billion cubic meters per year and a polymer plant that will consist of a pyrolysis unit and a polyethylene unit with capacity of 600,000 tons per year,” he said.

“Ten billion cubic meters of gas to be processed at this plant, will be supplied for the project. About 600,000 tons of polyethylene and 130,000 tons of propylene will be annually produced. A part of the propylene may be transported to SOCAR Polymer in Sumgait city, and the remaining part may be exported.”

Touching upon the SOCAR Polymer project he stressed that about $100 million were saved as part of implementation of the project due to the introduction of tax and other benefits in the Sumgait Chemical Industrial Park.

He went on to say that the polypropylene unit will be ready and commissioned in May next year, and polyethylene - by October next year.

“The unit for production of polypropylene is 94.8 percent ready,” Ahmadov said. “The test work regarding the unit is already underway, start-up and commissioning work is being launched. Engineering work and all supplies are finished, so there are no risks of delaying the project because of logistics. In general, we are in an active stage and we will start production of polypropylene in May 2018.”

The unit for production of polyethylene is 81.4 percent ready and will be commissioned at the end of the third quarter of next year, he noted.

Elnur Mustafayev, director general at SOCAR Methanol LLC, said, in turn, that the global demand for methanol will amount to 83 million tons in late 2017.

Further he mentioned that SOCAR Methanol LLC plans to double the supply of methanol to the domestic market within the next two to three years, noting that currently, 5 percent of the plant’s products are supplied to the domestic market.

“Ninety-five percent of the products are exported to the world market. This year we produced 265,000 tons of methanol that is six percent more than the annual plan. This allowed us to raise $35 million, which helped the company to rank fifth in non-oil exports in Azerbaijan,” he said.

The director general noted that the strategic goal of the enterprise is to double the volume of supplies to the domestic market and completely meet the demand for methanol and methyl alcohol in Azerbaijan.

Production at Azerbaijan’s methanol plant, the only plant of this kind in the South Caucasus and Central Asia, started in January 2014. The plant’s annual capacity is 650,000-700,000 tons. SOCAR acquired the plant from the Aqrarkredit non-bank credit organization.

Taking his turn, Khayal Jafarov director of the urea (carbamide) plant of Azerbaijan’s state oil company SOCAR noted construction of the plant has been completed by 98.4 percent, and all the works is planned to be completed in December, saying that production at the plant will begin in the first half of 2018.

The plant will produce 1,200 tons of ammonia and, subsequently, 2,000 tons of urea per day. It is planned to supply a quarter of production, that is, 150,000-200,000 tons of urea, to the Azerbaijani domestic market. The remaining part will be exported to Turkey, Georgia and the markets of the Black Sea and the Mediterranean Sea countries.

Production at the plant will be environmentally friendly, that is, no pollutant emissions into the atmosphere are expected.

The plant will have an autonomous electricity system. The plant will consume 25-26 MW of electricity per hour.

At first, financing of construction work was carried out from the Azerbaijani state budget and about 210 million manats were allocated from there before the beginning of 2015, but later it was decided to switch to project finance and negotiations with banks were started.

As a result, the Export–Import Bank of South Korea (EximBank) opened a line of credit worth 500 million euros under Azerbaijan’s state guarantee to complete the construction of the plant. EximBank will directly provide 251 million euros, while 249 million euros will be allocated by three commercial banks (Italy’s UniCredit S.p.A., France’s Societe Generale S.A. and Germany’s Deutsche Bank AG) with the support of EximBank.