Fluor Secures PMC Contract for Refinery in Turkey

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Researched by Industrial Info Resources (Sugar Land, Texas)--Azerbaijan's joint venture company SOCAR & TURCAS Rafineri AS (STRAS) has awarded global professional services company Fluor Corporation (NYSE:FLR) (Irving, Texas) the project management consultant (PMC) contract for the proposed SOCAR & TURCAS Aegean Refinery (STAR) project in Aliaga, Turkey. STRAS is jointly owned by the State Oil Company of the Azerbaijan Republic (SOCAR) (Baku, Azerbaijan) and TURCAS Enerji AS (Istanbul, Turkey).

The scope of the PMC contract will require Fluor to help STRAS select and manage the engineering, procurement and construction (EPC) contractors, in addition to providing PMC services. The commercial value of the contract has not been disclosed yet and will be reported in Fluor's fourth-quarter 2010 results. Site preparation for the project is under way.

STAR will be part of the petrochemical complex being set up by Petkim Petrokimya Holding AS (IST:PETKM) (Izmir, Turkey) near the port city of Izmir, on Turkey's Aegean coast. The refinery project is scheduled to be completed by late 2014 and has been designed according to the needs of the petrochemical unit, which will utilize the refinery's naphtha and fuel oil.

STEAS is treating the STAR project as a priority over the Ceyhan refinery project in an effort to meet Petkim's raw material needs as early as possible.

Vice Chairman Erdal Aksoy of STRAS said, "The STAR refinery should significantly contribute to the growth of the Turkish economy while meeting the diesel deficit in the nation." He added that the project was progressing on schedule. The front-end engineering and design (FEED) work is almost complete, and the company is ready to enter the EPC contractor selection stage. EPC work is expected to begin in mid-2011, followed by construction in the first quarter of 2012. The refinery construction is estimated to require an investment of between $3.5 billion and $5 billion.

The president of Fluor's Energy & Chemicals Group, Peter Oosterveer, said: "This new refinery project award in the downstream oil and gas market in Turkey is a precedent-setting milestone." He added that with Turkey's economic growth and Fluor's strong presence in Europe, the new project would position Fluor favorably in both the Turkish and Asian markets.

The license to build a 10 million-ton-per-year refinery near Petkim was secured from Turkey's energy market regulator in June 2010. The STAR refinery has been designed to have a production capacity of 214,000 barrels per day (BBL/d). The facility will include crude and vacuum distillation units, a naphtha hydrotreating unit; a 40,000-BBL/d delayed coking unit; a 66,000-BBL/d hydrocracking unit; diesel and kerosene hydrotreaters; a 28,000-BBL/d continuous catalytic reformer; and other associated refinery units, utilities, auxiliaries and offsite facilities.

Petroleum refining is Turkey's largest industry. The nation has six oil refineries, four of which are operated by the state. The four state refineries have a combined refining capacity of about 550,000 BBL/d. According to 2009 data, Turkey's estimated oil consumption in 2010 will be about 579,500 BBL/d.

Considering the ongoing and future pipeline projects in the region, Turkey is set to acquire an important regional role. However, Turkey is far from becoming an energy hub since it is not involved with crude oil sales from Azerbaijan, Iraq, or any other sources at Ceyhan. Neither is Turkey involved in the sale of Russian gas that is transported across its territories on its way to southern Europe through the South Stream pipeline. The Nabucco pipeline, which will begin operating in 2015, is not integrated with the Turkish market in spite of running through the country. Turkey, however, is benefiting from its proximity to almost 72% of the world's oil and gas reserves in the Middle East and Russia, and is considered to be an important transit country in the region.

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