SOCAR inks deals with Tec­ni­cas Re­u­nidas, Sta­toil

Azer News - - Business - By Sara Is­rafil­bay­ova

Azer­bai­jan’s state oil com­pany SOCAR has signed an EPC (Engi­neer­ing, Pro­cure­ment and Con­struc­tion) con­tract with Span­ish engi­neer­ing com­pany Tec­ni­cas Re­u­nidas on De­cem­ber 19 for re­con­struc­tion of units at the Hey­dar Aliyev Baku Oil Re­fin­ery as part of its mod­ern­iza­tion, ac­cord­ing to the com­pany.

SOCAR-KBR LLC, a con­trac­tor for man­age­ment of the mod­ern­iza­tion project, has se­lected the Span­ish com­pany Tec­ni­cas Re­u­nidas as a win­ner of a ten­der on an EPC con­tract for re­con­struc­tion of units and gen­eral pro­duc­tion fa­cil­i­ties.

The sign­ing cer­e­mony was at­tended by SOCAR Pres­i­dent Rov­nag Ab­dul­layev, Vice Pres­i­dent for Strate­gic De­vel­op­ment Tofig Gahra­manov, Vice Pres­i­dent for Re­fin­ing David Mam­madov, Vice Pres­i­dent for Eco­nomic Is­sues Su­ley­man Gasi­mov, Di­rec­tor Gen­eral of the Hey­dar Aliyev Baku Oil Re­fin­ery El­man Is­may­ilov, First Ex­ec­u­tive Vice Chair­man of the Board and CEO at Tec­ni­cas Re­u­nidas Juan Llado Ar­bu­rua, Tec­ni­cas Re­u­nidas Di­rec­tor Gen­eral for Cor­po­rate De­vel­op­ment En­rique Ruben Alsina Mas­sana and oth­ers.

The con­tract was signed by Di­rec­tor Gen­eral of the Hey­dar Aliyev Baku Oil Re­fin­ery El­man Is­may­ilov and Di­rec­tor Gen­eral for Cor­po­rate De­vel­op­ment at Tec­ni­cas Re­u­nidas En­rique Ruben Alsina Mas­sana.

The cost of the con­tract is about $800 mil­lion. It is ex­pected that the work will be com­pleted within 38 months.

“To­day, SOCAR is im­ple­ment­ing a num­ber of ma­jor in­vest­ment projects not only in the ex­trac­tive but also pro­cess­ing in­dus­tries, con­tribut­ing to the di­ver­si­fi­ca­tion of its busi­ness port­fo­lio and the coun­try's econ­omy. The re­con­struc­tion project of the Baku Oil Re­fin­ery oc­cu­pies a spe­cial place. We are on the verge of pro­duc­ing ga­so­line and diesel fuel cor­re­spond­ing to eco­log­i­cal stan­dard Euro-5,” Ab­dul­layev said.

SOCAR an­nounced the liq­ui­da­tion of the Azneftyag re­fin­ery and its merger with the Baku Oil Re­fin­ery named af­ter Hey­dar Aliyev, in 2015. This de­ci­sion was made in the frame­work of works to im­prove and op­ti­mize the struc­ture of SOCAR.

The com­pany plans to pro­duce high-qual­ity oil prod­ucts as part of the next stage of the re­con­struc­tion work to be car­ried out at the Hey­dar Aliyev Baku Oil Re­fin­ery. Un­der the pro­gram, the oil re­fin­ery will pro­duce Euro-5 stan­dard diesel in 2019 and the Euro 5 stan­dard petrol in 2020.

The cost of mod­ern­iza­tion of the re­fin­ery is es­ti­mated at about $1.51.7 bil­lion.

By the con­struc­tion of a new bi­tu­men pro­duc­tion fa­cil­ity, the cur­rent in­fra­struc­ture of for­mer Az­erneftyag oil re­fin­ery will be fully de­com­mis­sioned and the coastal ar­eas will be emp­tied and handed over for the re­al­iza­tion of White City project. Fur­ther­more run­ning costs of Hey­dar Aliyev Baku Oil Re­fin­ery will be op­ti­mized and the coun­try will be pro­vided with high-qual­ity bi­tu­men.

The mod­ern­iza­tion of the Hey­dar Aliyev Baku Oil Re­fin­ery will be com­pleted by 2021. The pro­duc­tion ca­pac­ity of the re­fin­ery will be in­creased from 6 mil­lion to 7.5 mil­lion tons per year as a re­sult.

More­over, SOCAR signed agree­ments on main prin­ci­ples of co­op­er­a­tion with Nor­way’s Sta­toil on De­cem­ber 20.

The com­pany re­ported that as a re­sult of long dis­cus­sions and con­sul­ta­tions, spe­cial­ists de­vel­oped and agreed upon the main prin­ci­ples of prospec­tive co­op­er­a­tion re­lated to a Risk Ser­vice Con­tract (RSC) for the de­vel­op­ment of the Karabakh oil field, as well as a PSA (pro­duc­tion shar­ing agree­ment) on var­i­ous prospec­tive struc­tures.

Pres­i­dent of SOCAR and Se­nior Vice Pres­i­dent of Sta­toil Al Cook signed two agree­ments on the main prin­ci­ples of co­op­er­a­tion. The first con­tract cov­ers is­sues of ex­plo­ration, de­vel­op­ment and main com­mer­cial prin­ci­ples and pro­vi­sions of the PSA on some promis­ing struc­tures in the Azer­bai­jani sec­tor of the Caspian Sea, while the sec­ond con­tract cov­ers main com­mer­cial prin­ci­ples and pro­vi­sions of the RSC re­gard­ing the Karabakh oil field.

At the sign­ing cer­e­mony, SOCAR pres­i­dent noted that spe­cial­ists of both com­pa­nies achieved pos­i­tive re­sults.

“Sign­ing the agree­ment on the main prin­ci­ples will cre­ate a re­li­able ba­sis for the im­ple­men­ta­tion of fu­ture projects that will pos­i­tively af­fect Azer­bai­jan’s econ­omy,” Ab­dul­layev noted.“It is nec­es­sary to take mea­sures to com­plete the work in this di­rec­tion in a short time.”

The Karabakh field was dis­cov­ered in 2000. Its ini­tial oil re­serves amount to 100 mil­lion tons. SOCAR op­er­ates Karabakh field’s de­vel­op­ment.

SOCAR is wholly owned by the gov­ern­ment of Azer­bai­jan. SOCAR par­tic­i­pates in joint ven­tures (in­clud­ing ven­tures in Ge­or­gia and Tur­key), con­sor­tia, and op­er­at­ing com­pa­nies es­tab­lished with SOCAR’s par­tic­i­pa­tion.

The com­pany in­cludes such pro­duc­tion as­so­ci­a­tions as Azneft (the en­ter­prises pro­duc­ing oil and gas on­shore and off­shore), Az­erikimya (the chem­i­cal en­ter­prises) and Az­eri­gas (dis­trib­u­tor of gas pro­duced in the coun­try), as well as oil and gas pro­cess­ing plants, ser­vice com­pa­nies, and the fa­cil­i­ties in­volved in geo­phys­i­cal and drilling op­er­a­tions.

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