Boston, MA -- (SBWIRE) -- 11/14/2012 -- The latest Azerbaijan Petrochemicals Report reflects our expectations for long-term growth in capacities, but cautions that plans remain vague and there is no firm confirmation on proposed projects and potential partners.

The report examines the country's strengths and weaknesses and assesses potential growth areas over the medium term. It also looks at government policy, which is focusing intensively on developing the non-oil sector.

Over the medium term, the expansion of the petrochemicals sector will focus on Azerbaijani methanol producer Azerbaijan Methanol Company (AzMeCo), which is planning to export about 90% of its output when it completes its US$360mn plant in Q113. The plant will have a capacity of 560,000 tonnes per annum (tpa), raising methanol production in Azerbaijan to 720,000tpa. The remainder, planned for domestic use, will be used by manufacturing firms to bolster the domestic non-oil industry. This includes the production of acetic acid (165,000tpa), formaldehyde (18,000tpa) and melamine (15,000tpa). A fertiliser project is planned at AzMeCo's Karadagh, with capacities of 255,000tpa ammonia and 500,000tpa urea. The State Oil Company of Azerbaijan Republic (Socar) is also planning two fertiliser plants with 700,000tpa of urea capacity each, one in Azerbaijan and one in Georgia, with construction due to begin in mid-2013 and completed by end-2016. The objective is for Azerbaijan to raise its fertiliser exports to 1mn tpa.

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Over the last quarter, BMI has revised the following forecasts/views:

- Socar announced in April 2012 that it planned to start construction of a new oil refinery, a gas liquefaction plant and a chemical plant in Q113. The US$14bn project, which is expected to be completed by 2020, shares many similarities with a previously announced project at Sangachal, although with smaller capacities. This could suggest that the original project has been scaled back.
- The government of Azerbaijan plans to increase polyethylene production from 72,200 tonnes in 2011 to 120,600 tonnes in 2015. The country is also set to start production of polypropylene in 2014, with 58,300 tonnes produced in the first year of operations and 61,800 tonnes in 2015. BMI believes these targets are likely to be met.
- Azerbaijan is in 10th and last place in BMI's proprietary Central and Eastern Europe Petrochemicals Risk/Reward Ratings, with a score of 34.7, up 2.0 points since the previous quarter owing to an improvement in its country risk score. Azerbaijan is 4.6 points behind Bulgaria. Azerbaijan's score could rise if plans for a new integrated petrochemicals complex come to fruition, but this is unlikely to come on stream before 2018, at the earliest.

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