Slow economic growth in Azerbaijan, compounded by the devaluation of the manat, will limit demand growth for petrochemicals, which has largely been fulfilled by imports. While this may cause a downturn in the sector in 2016, it will not affect the overall long-term prospects for the expansion of domestic production.
Azerbaijan is currently burdened with ageing petrochemicals plants with low levels of capacity and poor productivity. Local market performance is unlikely to provide much uplift, although the 50% depreciation of the manat will favour local production over imports. Nevertheless, high levels of imported inflation will suppress demand growth and could outweigh the benefits of improved external competitiveness.
The alleviation of sanctions on Iran in January 2016 may offer Azerbaijan entry to the Iranian market for downstream and finished products with potential for petrochemicals investment. At the same time, Iran poses a direct threat to competition on the domestic market. This is unlikely to hold back the country's ambition to build world-scale plants, but until they are in commercial operation, the petrochemicals industry will remain small, dedicated to domestic consumption and operating at low levels of capacity utilisation.
SOCAR's Oil and Gas Processing and Petrochemical Complex (OGPC) will have total gas processing capacity of 10-12bn cubic metres (bcm) and oil refining capacity of 10mn tonnes per annum (tpa). Capacities will include 700,000tpa high density polyethylene (HDPE) and low density polyethylene (LDPE), 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 on stream at the same time. Beyond that, attention will shift to the massive world-class USD17bn OGPC, which will improve efficiency and provide a wider range of higher-value refined products.
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.
This quarter, Azerbaijan's Petrochemicals Risk/Reward Index score has increased 4.7 points to 38.5 out of 100 due to the inclusion of the OGPC project in our five-year forecast, as well as an improvement in its Country Risk rating. This puts it 0.1 point ahead of Ukraine, removing it from the bottom place in our Europe rankings.
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.