Our Analytics 10 february — 11:34

Oil giants have losses, SOCAR has modernisation (Our comment)

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BY ELNUR MAMMADOV, ECONOMY SECTION

The world media is full of reports about the losses incurred by the oil giants last year. Thus, British BP ended the year with a loss for the first time in ten years. At the end of 2020, the net loss amounted to $20.31 billion against a profit of $4.03 billion a year earlier. Loss of the second US oil company Chevron Corp. amounted to 5.543 billion dollars against a profit of 2.924 billion dollars last year. Revenue fell 35% to $94.692 billion. The largest oil and gas corporation ExxonMobil was no exception. According to the results of the last quarter of last year alone, its loss amounted to 20 billion, although a year earlier the company made a profit of 5.7 billion dollars.

The largest oil companies suffer tens of billions of dollars in losses

The large-scale restrictions caused by the coronavirus pandemic have dealt a severe blow to the global oil sector, and no one knows when will the situation stabilise. While experts are making forecasts, many oil companies have gone bankrupt, others are changing the direction of their activities, merging... It got to the point that Swedish banks refuse to provide loans for new oil and gas projects. And the governments of many countries, including the most developed ones, recommend that they switch to renewable energy sources. How does the State Oil Company of Azerbaijan (SOCAR) cope in this situation?

Of course, the COVID-19 pandemic hit SOCAR hard, in particular, the coronavirus epoch caused a slight delay in the implementation of the project to modernise the Heydar Aliyev Baku Oil Refinery. But the company is already actively making up for lost time. True, they had to accept a new work schedule, but still...

A few days ago, SOCAR and Maire Technimont Group have signed agreements on new generation processing plants. Rather, within the framework of the refinery modernisation and reconstruction project, two EPC agreements were signed with the subsidiaries of the Italian company Tecnimont S.p.A. and KT-Kinetics Technology S.p.A. It is envisaged to build installations necessary to improve the quality of products and comply with its environmental requirements. For this purpose, the petrol (gasoline) fraction from the catalytic cracking unit will be sent to the new hydrotreating unit. Demercaptanization (desulfurization) of LPG, amino purification and primary processing of LPG are also gaining in importance today. All this will improve the quality of petrol at the refinery up to the Euro-5 standard, and the updated Azerbaijani LPG will also take a worthy place in the world market.

Signing ceremony of another agreement, historic for Azerbaijan

Tecnimont and KT-Kinetics Technology are already known in Azerbaijan. Previously, they won refinery tenders for other installations, and today they are busy with the modernisation of the refinery in accordance with the EPC agreement (the contractor performs the full cycle of work and is responsible for the risks associated with construction), signed in 2018. The companies' investments have already exceeded 400 million euros. And work on the new EPC agreements worth about $160 million is scheduled to be completed within 33 and 26 months, respectively.

The question may arise: why did Azerbaijan again choose an Italian company? President of Azerbaijan Ilham Aliyev gave a clear answer to this question during a video meeting with an Italian delegation headed by the chairman of the Maire Teknimont Group, Fabrizio di Amato. And he literally said the following: 'In general, your company is involved in projects in Azerbaijan, the cost of which exceeds 1.6 billion euros, I think this will continue, because you have already proved your loyalty to our country. Your words about the number of local citizens employed in your activities demonstrate your dedication and long-term strategy in Azerbaijan. Because Italy and Azerbaijan are strategic partners.' The head of state announced his intention to involve only friendly countries that supported Baku in the difficult days of the Patriotic War in large-scale modernisation of the country.

The Heydar Aliyev Oil Refinery is the only oil refinery in the South Caucasus region. Its example shows that SOCAR, unlike oil giants, is not going to curtail its production. On the contrary, the company is carrying out a large-scale reconstruction of the enterprise, which will significantly improve the quality of diesel fuel and petrol, bring them into line with the Euro-5 standard. The renovation works are important both economically and ecologically. This also reflects the head of state's strategy aimed at introducing the most advanced technologies. For the country to modernise, achieve intellectual growth, strengthen its industry and not depend on fluctuations in oil and gas prices.

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