BMI View: Azerbaijan's hopes of establishing a world-class petrochemicals facility by 2020 have been dealt a major blow as the country's economic woes have prompted a freeze on the plans for a new integrated complex , the Oil and Gas Processing and Petrochemical Complex, which was intended to rival major Middle Eastern producers.
Azerbaijan's aim of becoming a significant petrochemicals exporter is unlikely to be realised in the foreseeable future. SOCAR is focusing on petrochemicals investment in Turkey, which remains a major export destination for the country's oil and is a large industrial economy with access to the EU market. Azerbaijan imports 60,000tpa of finished chemicals products that could be substituted with Azerbaijani-made products. In order to meet this target and become a net exporter, it is our view that additional ethylene and propylene plants will need to be constructed.
Azerbaijan will need to address major infrastructural constraints if it is to become a significant petrochemicals producer. Capacity utilisation of existing plants is restricted by lack of investment and maintenance, as well as the predominance of old and environmentally damaging technology. Projects outlined by the economy ministry are formulated based on prospective export markets. However, the industry is highly underdeveloped and there is a gap between petrochemicals ambitions and available feedstock. In the past, output has been undermined by the rising cost of electricity, which state-run chemicals company Azerkimya has been unable to afford, leaving it in need of a government-backed financial lifeline. This demonstrates the lack of efficiency in the petrochemicals industry in Azerbaijan and its dependence on state subsidies.
SOCAR's Oil and Gas Processing and Petrochemical Complex (OGPC) has been cancelled, removing from our 2020 forecast petrochemicals capacities of 700,000 tonnes per annum (tpa) high density polyethylene and low density polyethylene, 550,000tpa polypropylene (PP), 40,000tpa benzene and 110,000tpa styrene.
The SOCAR Polimer PP plant with 200,000tpa capacity, planned for the Sumgayit Chemical Technology Park in Azerbaijan, is scheduled to start production in H216. A 100,000tpa polyethylene plant is also likely to come onstream at the same time.
A fertiliser project is planned in Karadagh with capacities of 255,000tpa ammonia and 500,000tpa urea. SOCAR also plans two fertiliser plants, each with capacity of 700,000tpa of urea: one in Azerbaijan and another in Georgia. Construction is due to be completed by end-2016. The objective is for Azerbaijan to raise its fertiliser exports to 1mn tpa.
Azerbaijan's Petrochemicals Risk/Reward Index score has declined 5.9 points this quarter, due to a significant decline in the rewards score as a result of the postponement of planned petrochemicals capacity, as well as the downgrading of market risk scores as a result of a deteriorating investment environment for petrochemicals. This pushes it behind Ukraine in our Europe ranking.
The Azerbaijan Petrochemicals Report has been researched at source, and features BMI Research's market assessment and independent forecasts for key petrochemicals sub-sectors. The report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing companies by products and services, sales, market share, investments, projects, partners and expansion strategies.
BMI's Azerbaijan Petrochemicals Report provides industry professionals and strategists, sector analysts, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Azerbaijani petrochemicals industry.
- Benchmark BMI's independent petrochemicals industry forecasts to test other views - a key input for successful budgetary and planning in the Azerbaijani petrochemicals market.
- Target business opportunities and risks in the Azerbaijani petrochemicals sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Azerbaijan.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering the petrochemicals markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the petrochemicals sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Energy: Oil production (‘000 b/d), oil consumption (‘000 b/d), net oil exports (‘000 b/d), gas production (bcm), gas consumption (bcm), net gas exports (bcm), oil refinery capacity (‘000 b/d).
- Petrochemicals: Ethylene capacity (‘000 tpa), ethylene production (‘000 tpa), ethylene consumption (‘000 tpa), polyethylene capacity (‘000 tpa), polypropylene capacity (‘000 tpa), polyvinyl chloride capacity (‘000 tpa), polyolefins consumption (‘000 tpa).
- Oil Products Prices: Price forecasts for all major oil-based products (USD/bbl) at major global energy trading hubs.
- Economic: Nominal GDP (USDbn), real GDP growth (%), GDP per capita (USD), population (mn), unemployment (%), exchange rate (against USD).
BMI’s Petrochemicals Risk Reward Index
BMI’s Risk Reward Indices provide investors (both corporate and financial) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Structure, size and value of the industry sector; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.
Industry Trends & Developments
Evaluation of company and sector-wide developments, including key projects (as well as expansion plans), latest company financial details and proposed international ventures.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Global & Regional Market Overview
Analysis of the key trends driving the global industry, including worldwide output/capacity and demand analysis across ethylene, polyethylene, polyvinyl chloride, polystyrene, polyethylene terephthalate and polypropylene. The regional analysis looks at the implications of local and global trends on specific company activity.
Sub-sectors covered by the Petrochemicals Reports include:
Oil & Gas, Oil Refining, Olefins (ethylene, propylene), Polyolefins (polyethylene, polypropylene), Polyvinyl Chloride, Polystyrene
Please note – not all country Reports cover all sub-sectors – see website for details.
The Petrochemicals Market Reports are based on a network of primary sources, such as multilateral organisations (ACC, APLA, Cefi c, ICCA, ICMA), national chambers of commerce and industry, national statistical offi ces, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.