Turkey, Azerbaijan join hands in $5 bln petrochemical investment

Erdogan and Aliyev attended the foundation-laying ceremony of the Star Refinery and Haydar Aliyev Technical High School in the western province of Izmir.

Tuesday marked the groundbreaking ceremony of the Star Refinery, a joint investment with a total value of $5 billion between Azerbaijani state-owned oil company SOCAR and Turkey’s Turcas [SOCAR-Turcas] in what is expected to turn into a significant project to help reduce Turkey’s widening current account deficit (CAD).

Prime Minister Recep Tayyip Erdoğan and Azerbaijani President Ilham Aliyev attended the ceremony on İzmir Aliağa’s Petkim Peninsula on Tuesday.

The project is the largest single private investment realized in Turkey. Expected to be completed by 2015, the refinery’s total oil refining capacity will be 10 million tons a year.

Observers say the new project is significant in that it will domestically produce liquid petroleum gas (LPG) and other petrochemicals of which Turkey is presently a net importer. Turkey’s dependence on foreign oil and gas is the most significant reason for the country’s consistent foreign trade deficit, which in turn results in a high CAD. Data show that petrochemicals constituted $8 billion of Turkey’s total $75 billion in intermediate goods imported last year, another important detail that makes the Star Refinery project of critical importance in positively impacting the CAD.

The project will provide jobs to 10,000 workers during the construction period, after which 1,000 will have permanent employment following its completion by 2015. It also involves the construction of a high school that will provide vocational training for Turkish and Azeri students, who will later have the opportunity for jobs at the refinery.

Speaking at the event, Erdoğan first thanked the Azeri government for their support to the people of the eastern province of Van, which was hit by a magnitude 7.2 earthquake on Sunday. Three planes carrying food and medical supplies along with a search and rescue group from Bakü had previously arrived in Van. “We thank our Azeri brothers and sisters for their support in our worst days,” he said.

Underlining that Turkey has done its best to contribute to Azerbaijan’s development and will continue to do so, Erdoğan said the Azeri government has also showed its solidarity in joint projects with Turkey. The prime minister said the Baku-Tbilisi-Ceyhan pipeline (BTC), which carries Azeri gas to Turkey’s Mediterranean coast, has helped “cement ties between the two brotherly nations, and similar projects will add more to this brotherhood.” He said they expected to open the Baku-Tbilisi-Kars Railroad (also called the Iron Silk Road), which will connect Europe to Central Asia, shortly. Sixty percent of the project is now completed, officials said last month.

Noting that this is Turkey’s largest single private investment, Erdoğan said the project would contribute to Turkey’s 2023 economic development vision while also creating job opportunities and added value for the Turkish economy. Turkey expects to become one of the world’s 10 largest economies, but the CAD problem remains one of the major challenges on that road. “Turkey and Azerbaijan cooperate to maintain political and economic stability in the region. … We share the same vision and goals, and this sets an example to other countries in this part of the world.”

Also addressing the audience, Azerbaijani President Aliyev said Turkey and Azerbaijan have realized prominent projects in the past and will continue to join forces in similar investments in the years to come. “As you all know, we are celebrating the 20th year of Azerbaijan’s independence this year, and today marks a historic turning point in bilateral relations. This giant project is a clear indicator that Azerbaijan is committed to maintaining a close business relation and trade partnership with brother Turkey,” he said.

Aliyev also said they are glad to see that entrepreneurs from Turkey and Azerbaijan give priority to joint projects in both countries and also in third countries. Aliyev joined Erdoğan in saying that the BTC was a great example to mark close cooperation between the two nations and that he looked forward to also seeing the completion of the Iron Silk Road project. “The Baku-Tbilisi-Erzurum natural gas pipeline carried the first Azeri gas to Turkey in 2007, and it was another successful example. … We can increase its capacity in coming years.” Aliyev said Turkey has attracted substantial foreign investment in the past decade and that Azerbaijan is happy to see Turkey expand its influence both in the region and in the world.

Making mention of the Van earthquake, Aliyev offered condolences to the Turkish nation and underlined that his country will stand side by side with Turkey in “good times and bad.”

In separate remarks, Kenan Yavuz, the CEO of SOCAR-Turcas, said that upon completion of the oil refinery, Turkey’s dependence on oil and oil products will be reduced by huge amounts per year. Yavuz thanked the Turkish and Azeri governments for their support in realizing the project.

Cihan

25 October 2011 Tuesday