The cost of constructing an oil and gas processing and petrochemicals complex in Azerbaijan has grown to $17 billion (including bank loan interest), State Oil Company of Azerbaijan (SOCAR) Vice President Tofig Gahramanov told the press Thursday.

"Earlier the cost of the project was estimated at $15 billion (including loan interest). But because changes have been made to the configuration of the complex the cost is now $17 billion," he said.

Government investment will cover 30% to 40% of the cost and foreign bank loans will cover the other 60% to 70%. "In this issue we are counting on the State Oil Fund of Azerbaijan as we see this project not as just commercial but as social and commercial," he added.

"We recently met in London with representatives from seven major international banks: BNP Paribas, Societe Generale, Credit Agricole, ING, Uniсredit, RBS and Citibank. They showed huge interest in this project," Gahramanov said.

SOCAR has announced three tenders in which it will select financial, legal and environmental consultants.

The complex will be situated on an area of 1,500 hectares. It is expected to open in 2018-2020. A gas processing facility with 10 billion cubic meter annual capacity will be launched first. It will process gas from SOCAR fields, associated gas from the Azeri-Chirag-Gunashli field and if necessary gas from the SOCAR share of the Shah-Deniz field.

The second phase will see the launch of a petrochemicals complex and then a refinery with 10 million tonne annual capacity. The refinery will produce A-92, A-95 and A-98 gasoline as well as jet and diesel fuels.

The feasibility study for the project is being compiled with the participation of Technip, Foster Wheeler AG and UOP. The complex is expected to start paying for itself after 6-7 years.

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(Originally published June 1, 2012, in Russia & CIS Energy Newswire.)