Azerbaijan's state-owned energy powerhouse, SOCAR, announced on Monday its intention to invest an additional $7 billion (TL 247.29 billion) to lessen Türkiye's dependency on imported petrochemical products.

Source: DailySabah

As the largest foreign investor in Türkiye, SOCAR has committed approximately $18.5 billion over the past 17 years, according to Elçin Ibadov, the CEO of SOCAR's Turkish subsidiary.

This investment, part of a project known as the "Master Plan," will focus on creating several new polyolefin production facilities to enhance capacity at SOCAR Türkiye's petrochemical unit, Petkim, located in Aliağa, in western İzmir province.

A comprehensive front-end engineering design (FEED) for the facilities will be developed between 2025 and 2026, requiring about $50 million in initial investments, shared Kanan Mirzayev, head of SOCAR Türkiye's refining and petrochemicals division.

The project received approval during a board meeting in December and is anticipated to be executed over the next five to ten years, Mirzayev informed reporters.

Türkiye imports up to 90% of its polyolefins. This initiative will reduce dependency on imports and boost SOCAR Türkiye's revenues.

A final investment decision is expected by the end of 2026.

Following the announcement, Petkim's shares experienced a surge of 5.5% at 15:03 local time on Monday.

Petkim, which has been in operation for nearly 60 years, became fully owned by SOCAR in 2008 after the Azerbaijani energy company purchased a controlling stake for $2.04 billion.

The unit operates 16 production plants and produced 2 million metric tons of petrochemicals in 2024, satisfying 11% of Türkiye's domestic demand.

Based on our study of the Turkish market, we determined that doubling the capacity of our ethylene plant and tripling that of our polyethylene-polypropylene facility would be the most viable option.

Mirzayev emphasized the challenges currently confronting the global petrochemical sector, indicating a prolonged downturn in demand is anticipated compared to previous cycles. He forecasted that capacity utilization rates would decrease until 2030 before starting to recover.

He also noted that the naphtha-ethylene spread, a key profitability measure, is at historic lows but is likely to improve as the industry enters a growth phase.

The new investment aims to establish facilities with annual capacities of 1.2 million tons for ethylene, 550,000 tons for polypropylene, and 827,000 tons for HDPE/LLDPE.