Petkim Director General: Production from high quality raw material from STAR increases - INTERVIEW

Petkim is only petrochemical complex of Turkey. Petkim Holding was established on April 3, 1965. As a result of privatization in 2008, SOCAR became main shareholder of Petkim with 51%-stake. Other stakes of Petkim is in Istanbul Stock Exchange.

Director General of Petkim Holding Anar Mammadov’s interview with Report:

-Petkim ended the first quarter successfully. This was reflected in financial performances too. What do you relate these successes with? What are your targets for 2019?

-We ended the first quarter of 2019 on TRY 142 million in net profit. This is good result. In spite of negative works in the word market, we managed to achieve this result. I think this was resulted by optimization works we carried out in the recent years. As we are open to community, we don’t announce the targets yet. However, this year, we expect results close to 2018’s results.

- STAR has been supplying main raw material to Petkim since it was lauched. By working with STAR, how much has Petkim saved?

- The works are still underway. It’s difficult to say now. We have already started to buy naphta from STAR. So far, we have bought nearly 100,000 tonnes of naphta. Not only saving, but quality of naphta is also appropriate for us. It had been planned to produce the most effective naphta in the refinery during projection of STAR. STAR’s effect appears not only in saving I terms of logistics, but also in an increase in our production due to high quality naphta.

- Which volume of production is planned to be supplied from STAR to Petkim this year?

- After STAR operates in full capacity, it is planned to obtain 1.6 million tonnes of naphta per year. For 2019, 800-900,000 tonnes of naphta are lanned to be supplied to Petkim.

- Will 1.6 million tonnes of naphta fully supply Petkim with raw material?

- Yes, they will. Moreover, we have Aromatics production chain. Reformat production for that will also be supplied from STAR. Totally 1.9 million tonnes (naphta and reformat) will be supplied from STAR.

- In 2018 Petkim issued $500 mln. Eurobonds. Is there any plan to issue new Eurobonds?

- At that time, we issued Eurobonds to acquire stake in STAR. Today, we don’t need to issue additional Eurobonds.

- Has the procedure on Petkim’s indirect acquisition of 18% stake in STAR been completed?

- The process is currently running. It will be completed by the end of this year or the first quarter of 2020. Major part of payments have been done.

- After Petkim was transferred to SOCAR’s management, a certain amount of investment is made every year. How much investment was made in Petkim after privatization? What amount do you plan for making investment for this year?

- Nearly $800 million has been invested in Petkim since 2008. In 2018, technical works were carried out in Petkim, which are carried once in four years. After this, we don’t need large amount of investment. This year, we plan to invest about $50 million in Petkim.

- How much is the market value of Petkim?

- This indicator is changeable. We saw the market value change from $1.5 billion to $3 billion. This, mainly, depend on the market conditions. Currently, the situation in the petrochemical markets is not good. And we are indirectly affected by this.

- How many percent does Petkim meet Turkey’s demand for petrochemical products? Which volume of products are directed to the domestic market?

- This figure is changeable. However, Petkim meets about 20% of the market. Our priority is Turkish marketş Currently, 60% of products are sold to Turkish market 40% - exported.

- What works are now being carried out for the construction of a new petrochemical complex? Has the tender procedure ended?

- Technical works are underway. All technical works will be completed in the first quarter of 2020 and there will be opportunity to make investment decision.

- How many percent will you meet Turkey’s market with the new petrochemical complex?

- Implementation of the new complex will take 5 years. Turkish market is not stable, it’s growing. However, we think that production of Petkim and the new enterprise will meet 30-35% of Turkish market.

- Investments have been being made on digitalization since last year. What amount of funds is planned to be spent on this direction? What are goals of Petkim regarding digitalization? Which benefits are forecasted to be got?

- Shortly, our goal is to be most leading digital company in Turkey. We did a lot for this purpose. Digitalization is a commonly used word. Everyone speaks about digitalization, but less companies implement it. We have nearly 40 digital projects. Many of these projects have already been implemented. We see its affect in production and quality of the product. We think we’ll reach our goal fi we continue at this rate. We plan complete many of our plans in 2020. Digitalization is an unstoppable process. New technologies are produced every year. This process won’t be over. Advantage of the digitalization is that there is no need for investing in such projects.

- Wind Power Station project is being implemented in Aliagha peninsula. Does it work in full capacity? Is there any sale?

- Sales are carried out. Capacity of the Wind Power Station is 51 mw. Currently, we produce 25 mw and sell to the network. We are expecting to obtain license for the second 25 mw. The Wind Power Station is cheaper because state support and is not harmful for environment.

- What is your production plant for this year?

- Petkim’s annual production capacity is 2 million tonnes. The production will close to this figure this year too.