Largest private sector investment STAR refinery set for grand opening next week

The State Oil Company of Azerbaijan Republic's (SOCAR) Turkey Aegean Refinery (STAR), expected to reduce Turkey's annual foreign trade deficit by at least $1.5 billion on its own as the largest private sector investment in a single point, is poised to open after a seven-year construction process.

The refinery, which has a significant share of SOCAR's investments in Turkey, will open at a ceremony on Oct. 19 with President Recep Tayyip Erdoğan and his Azeri counterpart İlham Aliyev expected to be in attendance.

The refinery, which started construction in 2011 near the campus of one of Turkey's top-ranking industrial enterprises and the country's leading petrochemical company PETKİM in the Aliağa district of İzmir, is the same size as an organized industrial zone with three piers and 20 production facilities spread over 2,860 acres.

With the capacity to process 10 million tons of crude oil per year, the facility was built on three terraces due to the challenging geographical structure. During construction, 17 million cubic meters of earth were removed, and 250,000 tons of steel, enough to construct 20 Eifel towers, 400,000 cubic meters of concrete, enough to establish a small town, and enough cable to circumnavigate Turkey four times were used.

Construction of the STAR Refinery also witnessed the transfer of the largest cargo handled in Turkey, as a one-piece reactor weighing 1,200 tons was brought to the facility and installed and commissioned in two months with a 2,000-ton lifting crane.

As the first refinery petrochemical integration in Turkey, the facility cost nearly $6.3 billion. While the average daily number of workers in the construction of the plant was 10,000, this number increased to 19,500 in November last year. Once the facility opens, 1,100 people will be directly employed at the refinery.

Mesult İlter, general manager of STAR Refinery, a subsidiary of SOCAR Turkey, was quoted by Anadolu Agency (AA), saying that President Erdoğan and Azeri President Aliyev are expected to attend the inauguration ceremony scheduled for Oct. 19. The facility is considered to be part and parcel of SOCAR's $19.5 billion investment in Turkey.

According to İlter, the testing production process at the facility, which will reach a production capacity of 10 million tons in January, continues. PETKİM will meet the need for leading raw materials, such as naphtha, reformat and mix xylene.

As to the facility's other capacities, İlter said that STAR Refinery, in addition to petrochemical raw material, will contribute significantly to the economy with products such as diesel, jet fuel and LPG that are of strategic importance for the country. Indicating that diesel consumption in Turkey is rising by 7-8 percent every year, he said: "Last year, 10.5 million tons of diesel were produced, while consumption was about 24 million tons. This 13 million ton gap was covered by imports; we imported 56 percent of the diesel we consumed last year. The refinery will reduce the import rate to less than 40 percent with its production capacity of 5 million tons of diesel." According to İlter, jet fuel consumption is expected to increase with the Istanbul New Airport and growth in the tourism sector. STAR Refinery will be able to meet all of Turkey's need for jet fuel with its production capacity of 1.6 million tons.Recalling that Turkey's annual LPG consumption is 3.7 million tons, he noted that 80 percent of it is imported. Due to STAR, the import rate will drop to 70 percent. In addition, annually the plant can produce 700,000 tons of coke, a by-product of oil, and will reduce import need in the cement industry. "When we put all this together, we calculate that there will be an annual decrease of about $1.5 billion in the foreign trade deficit with the introduction of the STAR Refinery. This is the minimum figure, and I think it will increase in line with oil prices," İlter added.

Emphasizing that the refinery will generate $6-8 billion in trade volume every year, depending on oil prices, İlter pointed out that it is the first refinery petrochemical integration in Turkey and the most modern plant in Europe. Noting that crude oil will be directly converted into high value-added products without producing black products at the facility, he said that it is one of three refineries in Europe with this property. The refinery, the largest investment by the private sector in Turkey in a single project, indicates the importance Azerbaijan attaches to brotherhood with Turkey and sends an important message conveyed in this regard.