Petrochemicals/Downstream Industries Petrochemicals and Downstream Industries Boom in Azerbaijan
Growth from the steppe – Azerbaijan, commonly known for its oil productions, has also a thriving petrochemical and downstream business: In 2011, the country's chemicals industry was one of the strongest non-oil industrial segments for the year, with 36% growth, while rubber and plastic output rose 25%, new figures show...
The Eurovision caravan has passed – but there is no quiet at the Caucasus: Petrochemicals and downstream industries report stellar growth, as the industry enjoyed an influx of fresh investment and strong demand. Just a flash in the pan? New figures of Research and Markets indicate that new projects, like an integrated petrochemicals complex planned for 2018 could likely continue the success story at the Caspian Sea.
Market researchers see the expansion of the petrochemicals sector during the second half of 2012 and beyond closely linked to the performance of Azerbaijani methanol producer AzMeCo, which is planning to export about 90% of its output when it completes a new US $ 360 million plant project in early 2013. The plant, with a production capacity of 560,000 tonnes per annum (tpa), will raise methanol production in Azerbaijan to 720,000 tons per year, analysts expect.
Methanol and Petrochemicals on the Rise
The remainder of AzMeCo’s output is for domestic use and it will be employed to bolster the domestic non-oil industry, leading to the production of acetic acid (165,000 tons/year), formaldehyde (18,000 tons/year) and melamine (15,000 tons/year). Additionally, a fertiliser project is also planned at AzMeCo’s Karadagh facility, with capacities of 255,000 tons/year ammonia and 500,000 tons/year urea.
Not only Azerbaijan, also China and Middle East Compete for Leadership in Methanol!
National Oil Company Eyes Fertilizer Markets
The public State Oil Company of Azerbaijan Republic (SOCAR) is also planning two new fertiliser plants, with a production capacity of 700,000 tons of urea capacity per year each – one in Azerbaijan and one in Georgia. Construction is due to begin in mid-2013, with completion due by end-2016. With these projects underway, Azerbaijan could raise its fertiliser exports to one million tons per year, market experst believe.
All sunshine and sparkles? Not really: The 10th BMI proprietary Central and Eastern Europe Petrochemicals Risk/Reward Ratings put Azerbaijan at the bottom with a score of 32.7, 6.6 points, even behind Bulgaria.
This score could rise if plans for a new integrated petrochemicals complex come to fruition, but this is unlikely to come onstream before 2018 at the earliest.
The 'Dutch Disease': Why Azerbaijan's Oil Industry Might Hold Back the Development.
Apart from that, the country suffers from what economy analysts call the "Dutch Disease": Azerbaijan’s considerable energy reserves and rising gas output have meant petrochemicals capacity has been overlooked, largely owing to a poor business environment, which has deterred investors. However, there are signs that things are changing for the better, as the government is making a concerted effort at restructuring the sector.
More from Azerbaijan? Currently, Foster Wheeler Cooperates With Azerbaijan National Oil Company Socar on Oil and Gas Processing Project.