Boston, MA -- (SBWIRE) -- 10/02/2013 -- Azerbaijan is beginning to address major infrastructural constraints with a view to becoming a significant petrochemicals producer. Capacity utilisation at existing plants is restricted by lack of investment and maintenance, as well as the predominance of old and environmentally damaging technology. Projects outlined by the economy ministry are formulated based on prospective export markets. However, BMI believes that the industry is highly underdeveloped and there is a gap between the country's petrochemicals ambitions and available feedstock.

The petrochemicals sector will contribute significantly to the development of the non-oil economy, providing the basis of growth in downstream manufacturing as well as exports. It will also be able to move the country towards self-sufficiency in some segments, particularly polyethylene and methanol. This should even out the impact of volatile oil output growth on the wider economy. Over the past quarter, BMI has revised the following forecasts/views:

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- The new oil and gas processing and petrochemical complex (SOCAR OGPC) that promises to turn Azerbaijan into a net petrochemicals exporter is progressing, but is slipping behind schedule while costs have already risen by US$1.6bn up to US$14.2bn of net capital expenditures, yet construction has not started.
- The focus in 2013 will be on the new export-oriented 560,000 tonnes per annum (tpa) methanol production facility, which came onstream in Q113 and raised total methanol capacity in Azerbaijan to 720,000tpa. Around 90% of production will be sold abroad with the remainder utilised by non-oil sectors, including in the production of acetic acid (165,000tpa), formaldehyde (18,000tpa) and melamine (15,000tpa).
- Azerbaijan is in 16th and last place in BMI's proprietary Europe Risk/Reward Ratings (RRRs), with a score of 35.2 points, unchanged since the previous quarter. Azerbaijan is 5.5 points behind Ukraine.

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