New Chemical Complex of Azerbaijan Estimated at USD 6 Billion
OREANDA-NEWS. March 16, 2010. State company Azerikimya (national chemical operator of Azerbaijan) continues approaching to implementation of the construction project of a petrochemical complex and a fertilizer plant in the country.
Azerikimya’s President Majid Karimov says at investment cost of the project in the amount of \\$6 billion it is supposed that \\$2 billion will be given by investors and \\$4 billion will be raised as loans of banks and export and import agencies.
“Investors will be selected by means of Societe Generale bank, chosen by a consultant for organization of financing,” M. Karimov told.
At present the Cabinet of Ministers considers all materials concerning the project.
The Cabinet of Ministers established the commission, which should define types and volumes of raw material, which will be required for work of a new complex for manufacture of chemical production and fertilizers.
Meanwhile, the Company has already launched work with holders of international licenses for chemical products - ExxonMobil, Imeos, Basel and ENI. Azerikimya wants to define itself beforehand with the list of licenses to be acquired for organization of manufacture of appropriate products at the new complex. Work with potential off-takers of the new complex’s output is being conducted.
In its turn, France’s Societe Generale has launched organization of financing for the project and prepares conditions of the tender procedure for raising financing. Azerbaijan’s potential partners apply to their countries’ export and import agencies for the purpose of receiving financing.
In particular, the UK Export Credits Guarantee Department is considering the issue of financing for the project. Work on drawing of investors is underway as well.
In parallel following the tender procedure British company ERM was chosen to make a report of environmental impact assessment (EIA). It has already started to first estimates due to which the volume and terms of works of two other stages of EIA will depend.
Originally investment cost of the project was estimated at \\$5.5 bn. Construction term was expected to be 4 years before the launch of output production and period of recoupment 3 or 4 years. It is considered that due to high rate of return on capital, the project is attractive for investors.
19 plants will be involved in the project. Infrastructure and certain parts will remain from operating plants, while the other will be subjected to utilization.
Financing will be oriented to foreign sources. At the same time, investments will provide 30% of the project cost and loan finances 70% of the cost.
“Societe Generale bank, European Bank for Reconstruction and Development (EBRD), US Exim, British Export & Import Agency, Czech Export & Import Bank have already expressed their interest for financing.
Azerikimya and Italy’s ENI signed the Memorandum of Understanding and the Agreement on confidentiality of project secrecy. The operator also conducted for ENI the presentation of the project on sea water purification plant, which will operate as part of the fertilizer production complex.
Membranous and thermo-distillatory method will be applied for salt water purification.
In September, 2008, the operator signed similar agreements with companies Exxon Mobile, Bazel, KBR, Technip, Imeos Thysenn Krupp and Unde. The new complex, including 19 factories, will be designed for manufacture of 700,000 tons of high and low pressure polyethylene, 130,000 tons of polypropylene, 40,000 tons of benzol, 110,000 tons of styrol and other kinds of petrochemical products.
The operator plans to build the nitric fertilizer plant by 2011. American company Nexant prepared a feasibility study of the project. The plant’s capacity will total 1 million tons of nitric fertilizers per annum.