Azerbaijan’s state oil fund SOFAZ will allocate funds for financing the modernization and reconstruction of the Heydar Aliyev Baku Oil Refinery of SOCAR, SOCAR Vice-President for strategic development Tofig Gahramanov told reporters on the sidelines of the 24th International Caspian Oil & Gas Exhibition and Conference on June 1.
“Modernization of the Baku Oil Refinery is fully financed by the state. The part that is now needed to finance the modernization work will be allocated in dollars by SOFAZ. Most likely, these funds will be used to increase the authorized capital of SOCAR,” Gahramanov said.
Attraction of a foreign loan under the state guarantee for modernization of SOCAR’s Azerkimya Production Union is planned (PO), he added.
Gahramanov said that a year and a half ago, U.S based companies UOP and Fluor prepared a feasibility study for the modernization of the Baku Oil Refinery and Azerkimya PO.
“Then the approximate cost was estimated at the level of $1.3 billion, about $300 million of which was supposed to be spent on Azerkimya, and about $1 billion-for upgrading the refinery. Then we studied this issue in more detail. Today, the cost of the projects is estimated at $1.8 billion. The modernization of the refinery will require about $1.5 billion and $320-340 million will be spent on the modernization of Azerkimya,” said Gahramanov.
So far, about 400 million manats [$235 million] were spent within the framework of both projects, according to him.
The refinery modernization process will be completed by 2020. The processing capacity will increase from 6 million to 7.5 million tons of oil per year.
SOFAZ was established under the Presidential Decree, dated December 29, 1999, “On Establishment of the State Oil Fund of the Republic of Azerbaijan”.
The main purpose of the establishment of the Fund was to preserve and multiply the income derived from oil, create an excellent economic base, taking into account social needs, the requirements of economic progress and development of the country. Besides, the challenge ahead is to protect the country’s economy from possible negative influences caused by the growth of foreign exchange earnings and avoidance of damage to financial discipline.
The total volume of SOFAZ investment portfolio amounted to $33.2 billion as of April 1, 2017, or 99.98 percent of total assets.