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Memorandum of understanding signed on construction of propylene plant in Azerbaijan

The contract signed between SOCAR Polymer and Italian Maire Tecnimont

Baku. 15 April. REPORT.AZ/ The signing ceremony of Sumgayit polypropylene plant project was held today in Baku, between "SOCAR Polymer" and Italian "Maire Tecnimont", in the frame of the trade mission led by the Italian Minister of Economic Development Federica Guidi. The contract was signed by General Manager of SOCAR Polymer Farid Jafarov and CEO of Maire Tecnimont Pierroberto Folgiero.

Report informs the signing ceremony, during the visit of the trade mission to Azerbaijan headed by the Italian Minister of Economic Development Federica Guidi took place at the presence of President of SOCAR Rovnag Abdullayev, Azerbaijani Minister of Economy and Industry Shain Mustafayev, Azerbaijani Minister of Energy Natiq Aliyev, Italian Ambassador to Baku H.E. Giampaolo Cutillo and Chairman of Maire Tecnimont Fabrizio Di Amato.

The contract has a total value equal to 350 million euros, and it relates to the realization of a 180,000 t/y (tons per year) polypropylene plant and relevant utilities and off sites facilities on a Engineering, Procurement and Construction (EPC) Lump Sum basis. This will be used as a raw material as a result of having propylene from naphtha cracking.

SOCAR Polymer is a joint venture between SOCAR (State Oil Company of Azerbaijan Republic) and major industrial players in Azerbaijan: Pasha Holding, Azersun Holding and Gilan Holding. SOCAR is fully government owned international vertically integrated oil and gas major company with an annual revenue of around 40 billion dollars.

The Sumgayit Polypropylene plant will be the first to be realized in Azerbaijan, enabling the country to grow its petrochemical industry entering the production of this segment of plastics market. Polypropylene is a basic product used for several consumer goods in a wide variety of applications, such as packaging, textiles, stationery, automotive components, electronic and electrical appliances, and several other uses.

It was noted in the event that, "Chemical and petrochemical industry plays an important role in the economy of Azerbaijan. President of the Republic of Azerbaijan Mr.Ilham Aliyev is showing continuous support to ensure stable development of chemical industry in the country. Currently, Azerbaijan imports Polypropylene (PP) and High Density Polyethylene (HDPE) from Middle East, Turkey, Russia and other countries. Only Low Density Polyethylene is produced in Azerbaijan. Realization of SOCAR Polymer project will enable production of up to 180 kilotons PP and 120 kilotons HDPE per annum. SOCAR is fully committed to bring this project to successful completion together with Tecnimont". 

CEO of Maire Tecnimont Pierroberto Folgiero added: "We are delighted to put our distinctive capabilities in the polyolefins field at SOCAR’s service, and support such prestigious client in the development of the Country’s industrial sector. Further, we are particularly pleased that this ceremony was held in the frame of the Italian Ministry of Economic Development’s trade mission, since this project will involve a significant number of Italian manufacturers that will generate a relevant turnover for the whole Italian plant engineering supply chain".

Pierroberto Folgiero, Maire Tecnimont CEO, added: "We are delighted to put our distinctive capabilities in the polyolefins field at SOCAR’s service, and support such prestigious client in the development of the Country’s industrial sector. Further, we are particularly pleased that this ceremony was held in the frame of the Italian Ministry of Economic Development’s trade mission, since this project will involve a significant number of Italian manufacturers that will generate a relevant turnover for the whole Italian plant engineering supply chain".

"SOCAR Polymer" LLC founded by the State Oil Company of Azerbaijan Republic has been established in relation with construction of a plant manufacturing polypropylene (PP) and high density polyethylene (PE) products in order to strengthen the development of the Chemical Industry in Azerbaijan, as well as open new vacancies. It passed State Registration on July 16, 2013 in the Republic of Azerbaijan. Main operation directions of "SOCAR Polymer" LLC include design and construction of the polymer production plant, procurement, installation and putting into service of necessary equipment, devices and others, etc. It is planned to complete the construction of the PP unit with capacity 180 thousand ton/ year and commencing operation in 2017; to complete the construction of the PE unit with 120 thousand ton/ year capacity and commencing operation in 2018. The Terms Sheet for 425 mln dollars credit facility has been signed with "Gasprombank" for construction of PP and HDPE plants. Lyondell Basel is the licensor of Polypropylene unit, while Ineos Company is the licensor of the HDPE unit. It is planned to sell the 30% of manufactured products in local market, exporting the remainder to Turkey, Europe and CIS.

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