The formation of new partnerships with Turkish energy companies is key in offering lucrative opportunities for new investments and in mitigating financial hardships, SOCAR Turkey CEO said Tuesday.
Zaur Gahramanov, SOCAR Turkey's CEO, in an exclusive interview with Anadolu Agency, said after analyzing the Turkish economy over the long term, economic indicators show that despite some difficulties, the fundamentals of the economy are strong and he affirmed the country has a bright future.
Due to large currency fluctuations over the last few months in which the Turkish lira has seen record lows, some Turkish energy companies have seen increases to their debt.
He acknowledged that Turkey has overcome worse economic circumstances than the current turmoil, and said there are very good companies looking for new partners.
"As Turkey has an open market, some companies can be sold or they might be in debt. However, all these processes are very normal in open markets like Turkey," Gahramanov said.
"It is a very good time to do business both for our company and any other companies but we should look at developments in the long term as the current problems are temporary," he stressed.
He recommended that for long-term investments in the sector, that Turkish banking system accommodate more long-term loans.
"Megaprojects in the energy sector, in particular, are long-term investments and you need a long time to earn money, mostly 15 years. However, as the loans of Turkish banks are generally for the short term, most investors need to look for international loans like we did for the STAR Refinery," he explained.
SOCAR’s group companies in Turkey, namely Petkim, STAR Refinery, Petlim Container Terminal and Trans-Anatolian Natural Gas Pipeline (TANAP) represent the largest-scale investment Azerbaijan has made to a single country to date.
The STAR Refinery has a total investment of $6.3 billion.
Although the STAR Refinery will decrease the current account deficit by around $1.5 billion annually with the onset of full production capacity in January 2019, Gahramnov advised that Turkey's private sector increase investments to reduce the current account deficit.
He said that Turkey's current account deficit due to energy imports is around $40 billion out of which $11.5 billion is for petrochemicals.
The New Economy Program, introduced on Sept. 20 for the period of 2019-2021 will see the government support investments to decrease the account deficit, he said, adding that SOCAR's second petrochemical investment will also contribute to this.
SOCAR Turkey plans to build a second petrochemical facility in Aliaga region of Izmir where STAR Refinery, Petkim Petrochemical company and Petlim Container Port are also located.
"We will make our final decision in the first quarter of 2019. Then, our plans show that the facility will be operational by the end of 2022 or beginning of 2023," he announced.
-SOCAR submits offer for EWE's gas distribution shares
Gahramanov confirmed they submitted an offer to buy German EWE's shares in the Kayserigaz and Bursagaz distribution companies as EWE plans to terminate its activities in Turkey.
"We believe that we have a chance. EWE distributes 1 billion cubic meters of gas per year," he said.
According to Gahramanov, because of the Petkim Petrochemical company and STAR Refinery, which will have an opening ceremony next month with the participation of the presidents of both Turkey and Azerbaijan, the company will have around 3.5 to 4 billion cubic meters of gas consumption annually.
"Thus, natural gas distribution will complete our investment chain in Turkey," he said.
Gahramanov added their gas production will correspond to Turkey's annual natural gas consumption, which was 53.8 billion cubic meters last year.
-TANAP currently delivers 400 million cubic meters to Turkey
Gahramanov also shared that the TANAP project, which was inaugurated in June, has now 97 percent of the second phase complete.
TANAP's first phase from the Turkey-Georgia border to Eskisehir in the Central Anatolia Region of Turkey has started to deliver Azeri gas.
"The pipeline has currently delivered 400 million cubic meters of gas to Turkey since June. This amount will reach 1 billion by December. The amount will be 2 billion cubic meters in 2019, 4 billion in 2020 and 6 billion in 2021," he confirmed.
The second phase of the 16 billion cubic meter gas capacity pipeline is expected to reach the Turkey-EU border in the middle of 2019 where it will connect to the Trans Adriatic Pipeline (TAP), Gahramanov said.
By Nuran Erkul Kaya