Turkey celebrates its first new oil refinery since 1975

Turkey celebrates its first new oil refinery since 1975
Presidents Erdogan (left) and Aliyev inaugurated what amounts to a milestone in their countries' growing energy cooperation.
By bne IntelliNews October 21, 2018

The new $6.3bn SOCAR Turkey Aegean Refinery (STAR) inaugurated by Turkish President Recep Tayyip Erdogan and Azerbaijani counterpart Ilham Aliyev on October 19 is set to significantly reduce Turkey’s dependence on imports of processed oil products. The last refinery opening in Turkey took place as far back as 1975.

“This [refinery investment] is aimed at saving around $1.5bn annually in oil product imports and the reduction of foreign dependence for oil products,” Erdogan said at the opening ceremony for the refinery on the Aliaga peninsula, near Izmir, on Turkey’s Aegean coast.

Built by the SOCAR Turkey subsidiary of Azerbaijan’s SOCAR national oil company, the facility was hailed by Erdogan as Turkey’s biggest step yet in the country’s drive to meet its energy needs. It will expand Turkey’s 28.1mn tonne annual oil processing capacity by a third. The major investment by SOCAR—the biggest foreign direct investor in Turkey—underlines Turkey and Azerbaijan’s growing partnership in the fields of oil, gas and petrochemicals.

Poised to supply Petkim
The refinery is poised to provide adjacent petrochemical producer Petkim, which is also controlled by SOCAR Turkey, with feedstock including naphtha for making polymers. Diesel and jet fuel will be supplied to the domestic market.

SOCAR-controlled Petkim has signed an agreement to buy xylenes and naphtha from STAR refinery for 20 years.

The refinery has a naphtha capacity of 1.3m tonnes/year and a xylenes capacity of 400,000 tonnes/year. Other capacities are liquefied petroleum gas (330,000 tonnes/year), jet fuel (500,000 tonnes/year), diesel (6m tonnes/year), reformate (500,000 tonnes/year), petro coke (700,000 tonnes/year) and sulphur (170,000 tonnes/year).

Azerbaijan on July 1 celebrated the launch by BP and partners of the $28bn Shah Deniz 2 gas field development, from which gas will be sent by pipeline to Georgia, Turkey, Greece, Albania and Italy.

Gas from Shah Deniz 2 is to be exported through three interconnected pipelines that will make up the $40bn and 3,500-km Southern Gas Corridor (SGC) stretching to Melendugno in southeast Italy.

The gas is to transit along an already completed extension of the 700-km South Caucasus Pipeline (SCP) to reach Turkey via Georgia. It then enters the 1,850-km and $8bn Trans Anatolian Natural Gas Pipeline (TANAP), launched on June 12, and traverses Turkey to flow to Greece. From there, the 878-km Trans Adriatic Pipeline (TAP)—to run from Greece to Albania and then onwards to Italy via an undersea route—forms the last leg of the SGC. TAP is still under construction, but BP said earlier it should be operational in time to make commercial deliveries of Shah Deniz 2 gas to western Europe a reality by 2020. TAP was said to be two-thirds complete in February.

Shah Deniz 2 and the SGC will eventually compete with Russia’s TurkStream pipeline (sometimes referred to as Turkish Stream), forks of which will by late 2019 send gas to Turkey and perhaps Bulgaria via Black Sea routes, according to plans.