Turkish Petrochemicals Major Petkim Given $5 Billion Production Boost

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Researched by Industrial Info Resources (Sugar Land, Texas)--When the consortium formed by Socar (Azerbaijan), Turcas (Turkey) and Injaz (Saudi Arabia) finalized the $2 billion, 51% takeover of Turkey's state-owned petrochemical major Petkim Petrokimya Holding A.S. (IST:PETKIM) (Izmir) in May, it promised a major investment to expand the group to more than double its annual production capacity to 4.5 million tons.

The consortium has now announced that it will invest $5 billion into production capacity over the short-, medium- and long-term. About $2 billion will go toward new petrochemical products and $3 billion will go into refinery projects. Turcas board member Batu Aksoy said the application of a modern chemical cluster model was planned. Petkim's research and development department, in collaboration with Scientific and Technological Research Council of Turkey, universities and strategic partners, would develop innovative chemicals with high added value that would be produced at the new Petkim "supersite."

Petkim has a range of more than 50 petrochemical products produced in 14 plants, feeding sectors including construction, agriculture, automotive, electronics, packaging and synthetic fibers. Raw materials are supplied to the pharmaceuticals, paints and coatings, cosmetics, and soaps and detergents sectors. The company supplies 27% of Turkey's petrochemical demand, including 60% of low-density polyethylene, 25% of high-density polyethylene, 20% of polyvinyl chloride and 12% of polypropylene. The company has two major complexes in Izmit and Izmir.

In 2007, Turkey was the world's third-largest importer of petrochemical products after China and Italy, consuming 4.86 million tons of thermoplastics and a range of petrochemical products. "Turkey has become the third-biggest force in engineering plastics in Europe, with more than 6,000 small and medium-sized enterprises demanding plastic-related raw material," Aksoy said. He added that the market had grown at a rate of 12% per year over the past decade and that even if it leveled to 9%, Turkey's market for petrochemicals would reach $15 billion.

With Socar as a member of the consortium, a natural-gas feed can be delivered at fair prices and conditions, and Petkim will have the opportunity to invest in Azerbaijan's petrochemical industry.

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