Azerbaijan's state-owned energy giant SOCAR on Monday announced plans for an additional $7 billion (TL 247.29 billion) investment aimed at reducing Türkiye's reliance on imported petrochemical products.
SOCAR is already the largest foreign investor in Türkiye, having invested about $18.5 billion over 17 years, said Elçin Ibadov, CEO of the company's Turkish subsidiary.
The investment under a project dubbed the "Master Plan" will center on establishing several new polyolefin production facilities to expand capacity at SOCAR Türkiye's petrochemicals unit Petkim in Aliağa in the country's western Izmir province.
A detailed front-end engineering design (FEED) for the facilities will be prepared in 2025-2026, requiring around $50 million in initial investments, said Kanan Mirzayev, head of SOCAR Türkiye's refining and petrochemicals division.
The decision was approved at a December board meeting, and the project is expected to be implemented over the next five to 10 years, Mirzayev told reporters.
"Türkiye imports up to 90% of its polyolefins. This initiative will reduce dependency on imports and boost SOCAR Türkiye's revenues," he said.
A final investment decision is expected by the end of 2026.
Following the announcement, Petkim's shares surged by 5.5% at 15:03 local time on Monday.
Petkim, founded nearly 60 years ago, became wholly owned by SOCAR in 2008 after the Azerbaijani energy firm acquired a controlling stake for $2.04 billion.
The unit operates 16 production plants and, in 2024, produced 2 million metric tons of petrochemicals, meeting 11% of Türkiye's domestic demand.
Mirzayev highlighted the challenges facing the global petrochemical sector, noting that a prolonged downturn in demand is expected compared to previous cycles. He projected that capacity utilization rates would decline until 2030 before beginning to recover.
He also pointed out that the naphtha-ethylene spread, a profitability indicator, is currently at historic lows but is expected to improve as the sector enters a growth phase.
According to Mirzayev, Petkim's 2022 capacity and market assessment identified ethylene production and polymerization as the products with the highest growth potential in the domestic market.
"Based on our study of the Turkish market, we determined that doubling the capacity of our ethylene plant and tripling that of our polyethylene-polypropylene facility would be the most viable option," he said.
The new investment aims to construct facilities with capacities of 1.2 million tons per year for ethylene, 550,000 tons per year for polypropylene, and 827,000 tons per year for HDPE/LLDPE.
Mirzayev emphasized that the total cost would be determined only after the final investment decision is made, and the investment would come into play "during a market upturn."
Ibadov said the company is yet to decide on financing methods or equity allocation for the investment. "These will be addressed in the next stages," he explained.
SOCAR officials also stated that Petkim's domestic market share is expected to triple after the investment is completed.
Among others, Ibadov said SOCAR Türkiye's investments in its natural gas distribution companies in the country reached $209 million.
"We are currently conducting natural gas operations in Kayseri and Bursa. Our total investment in the Kayserigaz and Bursagaz distribution networks has reached $209 million," he noted.
Ibadov stated that Bursagaz's distribution network had reached 7,703 kilometers (4,786 miles), while Kayserigaz's network totaled 7,118 kilometers.
Bursagaz has 1.2 million subscribers, and Kayserigaz has 700,000 subscribers.
The company was in November reported to have been in talks with potential buyers for the sale of its shares in Bursagaz and Kayserigaz.
The talks were said to be in the early stages, and no information was provided about the timing of any possible sales.
"More than 10,000 people are employed within SOCAR Türkiye. This provides significant support to employment in Türkiye," Ibadov said.
