IN THE MIX
The expanding petrochemical market in Azerbaijan looks to increase both the export potential of the country and import substitution efforts.
In a country with a wealth of engineers and advanced technical knowledge due to its close relationship to oil and gas over the past decades, the petrochemical industry seems like another great fit for success in Azerbaijan. Petrochemical products are in constant demand on the world market, ensuring that there will be a steady source of buyers for the increased levels of production that are in progress for Azerbaijan. Polymers are the main product in the vast array of petrochemical creations because products made from polymers offer great durability, low density, aversion to both heat and cold, and enjoy a wide range of application. This makes polymer products ideal and popular for use in heavy industries, such as shipbuilding, machine manufacturing, pipe coating, and the automotive industry, as well as in agriculture and construction. In addition, they are used in a wide assortment of everyday products from rubber, plastics, textiles, packaging, electronics, and more. The attractiveness of petrochemical products is extensive because they are involved in the majority of objects one touches or uses every single day.
The broad application of petrochemical products is capable of helping the economic and industrial output of Azerbaijan overall because these raw materials can be moved upstream and turned into higher-cost consumer goods. From the feedstock, a company can make a petrochemical product. In turn, this petrochemical product can be used to create packaging, which can be applied to a good. In the end, these petrochemical products can go into products such as electronics, cosmetics, and agricultural tools, all of which are high-value products that started from simple feedstock. Thus, the petrochemical industry effectively adds value through the chain of production.
Taking notice of this relatively under-represented market in Azerbaijan, national giant SOCAR has been working on a new joint venture called SOCAR Polymer. Designed with the idea to accelerate the development of the chemical industry of Azerbaijan, this is the first project of this size and scale in the petrochemical industry of Azerbaijan in the past 40 years. SOCAR Polymer plans to offer 30% of the yielded products on the local market, while exporting 70% to international markets, specifically to Turkey and Europe. The anticipated output of the plant is as impressive as the project itself: 120,000 tons of high density polyethylene and 180,000 tons of polypropylene. The plant, built as part of the Sumgait Chemical Industrial Park, is set for a 2018 commission date and its operation will create a large number of jobs in the country as well. As a joint venture, this exciting new project has received the attention of some of the biggest players in the Azerbaijani business world, including PASHA Holding, Azersun, and Gilan Holding. PASHA Holding invested $25 million in this project to obtain a 10% interest, which is more money than they usually allocate for these types of investments. They made this exception due to the high level of project planning and the overall interesting prospects that this new plant offers. Remarking on this project and his confidence in the industry in general, PASHA Holding Director Mir Jamal Pashayev said, “The petrochemical industry is being redeveloped [in Azerbaijan] in accordance with best practices and modern technologies.”
Not to be overlooked, Azerbaijan is also home to the largest methanol plant in the region at AzMeCo. As it stands, AzMeCo is currently the leading petrochemical producer in the country, producing 720,000 tons of methanol per year. Nizami Pieriyev, the Chairman of the Board at AzMeCo stated that “Methanol can be used as a raw material to produce certain products and can drive the development of related sectors, such as furniture manufacturing and plastics, for example.” As additional proof of how a strong petrochemical sector can increase the export potential of the country, AzMeCo has sent 200,000 tons of methanol to European countries alone. Piriyev also believes that a strong petrochemical sector will help spur growth of SMEs in the country. The healthy development of SMEs will also offer a strong base to the economy of Azerbaijan.
IN THE MIX
TABLE OF CONTENTS
Year In Review
Good Times Ahead
<strong></strong><strong>In a year dominated by the overarching theme of low hydrocarbons prices, Azerbaijan showed resilience and verve in putting in place bold measures both to counter the slump in energy prices and put its economy on a surer footing.</strong>
read articleReview: Diplomacy
Operation Outreach
In 2015, Azerbaijan's military budget increased by a notable 27%, to $4.8 billion, or 17.9% of the government's total budget for the year. The first Azerbaijan Defence Exhibition (ADEX 2014), drew over 200 companies from 34 countries, including Russia and the US.
read articleInterview
Rufat Mammadov, President, Azerbaijan Export and Investment Promotion Foundation (AZPROMO)
TBY talks to Rufat Mammadov, President of the Azerbaijan Export and Investment Promotion Foundation (AZPROMO), on large-scale events and their ability to attract FDI and the potential Iran may hold.
read articleReview: Banking
More Interest
In a sector faced with relatively flat growth for 2015-16, new opportunities are still there aplenty, led by the nascent Islamic banking sector, e-banking, and microfinance initiatives. Together, these areas should make banking more diversified and less reliant on a buoyant energy sector for its capital inlay.
read articleReview: Capital Markets
Taking Stock
As Azerbaijan grapples with the knock-on effects of low hydrocarbon prices, the Baku Stock Exchange (BSE) finds itself at the center of the country's efforts to stave off a budget deficit this year. In January, the government announced plans to sell $500 million worth of bonds on the BSE.
read articleReview: Industry & Mining
In The Bag
Industry in Azerbaijan is long established, diversified, and, in many areas, fast growing. Together, these qualities make the sector well placed to see through the global slump in commodity prices, while at home, the manufacturing industry continues to find ways to use its hydrocarbons expertise in other fields, including high technologies and research.
read articleInterview
Khanlar Fatiyev, , Chairman of the Supervisory Board, Ganja Automobile Plant Production Association
TBY talks to Khanlar Fatiyev, Chairman of the Supervisory Board of the Ganja Automobile Plant Production Association, on the role of the plant in driving growth in the non-oil sector.
read articleReview: Transport
The New Node
With major new railways linking the region, the opening of the new Baku International Sea Trade Port Complex, the completion of a massive program of road building and upgrading, investment in state-of-the-art fleets ranging from Boeing 787s to rail locomotives, Azerbaijan can rightly claim the title as the Caucasus' transportation hub.
read articleReview: Agriculture
Lots More
Farms across the country are pursuing a policy of increased yields for year-round fruit and in the wheat harvest to stave off an over-reliance on imports. With carefully targeted increases in exports, better routes to port and to market, and greater sophistication of agricultural facilities, farming could soon be the morning star of Azerbaijan's diversified economy.
read articleReview: Health
Under One Umbrella
Life expectancy at birth (2015) is 75 years for women and 70 for men. The median age is 30. For both sexes, longevity increased by six years between 2000 and 2012. Azerbaijan is a relatively youthful country—an important factor in healthcare—with 22% of its populace aged under 15 and just 9% aged over 60.
read articleReview: Education
Baku to School
Azerbaijan's culture has always harbored a deep respect for educational values. This is embodied in the country's Azerbaijan 2020 mission statement, which seeks to raise standards across the sector and introduce ICT as a standard part of the learning experience at all levels.
read articleInterview
Elkhan Mammadov,, Secretary General, Association of Football Federations of Azerbaijan (AFFA)
TBY talks to Elkhan Mammadov, Secretary General of the Association of Football Federations of Azerbaijan (AFFA), on the experience Azerbaijan is gaining in hosting international events.
read article