SOCAR TÜRKIYE: RECORDS AND AMBITIONS

SOCAR Türkiye Enerji Anonim Şirketi (STEAS), the Turkish division of the State Oil Company of Azerbaijan, has confidently consolidated its position in the Turkish energy market since its establishment in 2008 and has summarised its results for 2024. During a press conference for Azerbaijani journalists held in Istanbul, the company shared its achievements, strategic successes, and ambitious plans for the future. A key conclusion that can be drawn from the statements made by STEAS executives is that the company has achieved high production and financial performance despite the challenging geopolitical situation in the world and global economic instability last year. Furthermore, the company has expressed its intention to explore the possibility of investing billions of dollars in developing the petrochemical sector in Türkiye, a move that has contributed to its success.

Immediate plans include increasing production capacity in the petrochemical industry, implementing new environmentally sustainable projects, and further solidifying Türkiye's position as an energy hub between Europe and Asia.

Billions For Petrochemicals

Thanks to large-scale investments in the petrochemical, energy, and infrastructure sectors, SOCAR is contributing to the development of strategically important areas of the Turkish economy and has become a key player in Türkiye's real economy.

The company has commissioned the STAR refinery and integrated it with Petkim. Additionally, SOCAR has constructed the Petlim Limancilik container terminal, a wind farm, and the SOCAR Depolama facility for storing oil and oil products. The company also engages in petroleum product trading activities through SOCAR Petrol Ticaret and supplies gas to the Turkish domestic market through SOCAR Türkiye Doğalgaz Yatırım A.Ş.

Representatives of SOCAR Türkiye Enerji have noted that these achievements represent only a part of a long-term strategy. According to company data, the total volume of investments in projects implemented in Türkiye over 17 years has reached $18.5 billion. STEAS's corporate structure encompasses 32 companies, collectively employing approximately 5,600 individuals, with a further 5,000 contractors.

The company aims to become an uninterrupted and efficient supplier of gas and energy by 2030 while continuing its sustainable development. This objective will be primarily achieved by expanding its presence in Türkiye's petrochemical sector. "In the next five years, we aim to become a company with a high level of integration between refining and petrochemicals," Ibadov said.

The company is particularly focused on the Petkim petrochemical complex on the Aliaga Peninsula (Izmir). Each year, SOCAR invests approximately $113 million in developing the facilities belonging to Türkiye's only integrated petrochemical holding. From 2008 to 2024, the total investment volume reached $2 billion.

Petkim comprises 15 main production facilities with a maximum production capacity of 3.6 million tonnes, producing about 60 different types of products that are exported to 48 countries. In 2024, Petkim plants produced 2 million tonnes of products, which accounted for approximately 10.8% of Türkiye's domestic demand for petrochemical products.

Kanan Mirzayev, head of SOCAR Türkiye's refining and petrochemicals division, shared plans for further development of the holding, stating that long-term demand for polymers is anticipated to grow; therefore, the company intends to expand production of these products (polyethylene, polypropylene). "Türkiye's demand for polyolefins grows by 2.5-3 percent annually. Currently, Türkiye imports up to 90% of polyolefins, and Petkim is the sole producer of these products in the country," Mirzayev noted.

As it turns out, STEAS has been actively working on a master plan over the last three years (2022-2024) involving major companies in the sector—STORK, Wood Mackenzie, and KBR. This plan will serve as the foundation for a roadmap aimed at renewing Petkim's outdated plants.

In collaboration with STORK, significant investments were identified as necessary over the next 3-7 years for renovating Petkim's existing plants. Working with Wood Mackenzie revealed that ethylene production and polymerization are products with the highest growth potential in the domestic market.

A feasibility study for the master plan was prepared with KBR, which developed various investment scenarios for continuing Petkim's petrochemical operations. As a result of this collaboration, plans emerged to establish new capacities in Türkiye for ethylene (1.2 million tonnes per annum), polypropylene (550,000 tonnes annually), and high- and low-density polyethylene (HDPE/LDPE—827,000 tonnes annually). Petkim's current polyolefin production capacity, including polypropylene and polyethylene, stands at 588,000 tonnes per year.

"We have conducted market research and anticipate growth in Türkiye's polymer sector. If a decision is made to proceed with the investment, doubling the capacity of our ethylene plant will enable a threefold increase in Turkey's ethylene market. The precise investment amount and technical specifications of the project will be determined by detailed design. Preliminary estimates suggest that these efforts will cost around $7 billion.

Preliminary engineering and design (PreFEED) work is currently underway for expanding polymer production at Petkim. This involves both enhancing existing facilities' capacities and constructing new plants. "In May-June 2025, we will commence detailed engineering and design (FEED) work along with selecting licensees and addressing other technical issues. The FEED process is costly—requiring $50 million—and will take 18 to 24 months to complete. If detailed engineering is finalized, a final investment decision will be made in December 2026, allowing construction to begin. Implementing this project will reduce dependence on imports while increasing SOCAR Türkiye's revenues," Mirzayev noted.

The company has yet to decide on financing methods or share capital allocation for new investments; however, this matter will likely be considered at subsequent stages.

Key Steps In Refining

Last year was also successful for the STAR Refinery owned by SOCAR Türkiye Enerji. A significant achievement was a considerable increase in both oil refining capacity and petroleum product production at the refinery.

The plant was commissioned on October 19, 2018, becoming a key component of Petkim's petrochemical complex operations by providing it with feedstock (naphtha). It has also opened opportunities for SOCAR to enter the Mediterranean market with products such as diesel, jet fuel, and feedstock for the chemical industry. The total investment by the State Oil Company of Azerbaijan in constructing and developing this Turkish refinery amounted to $6.7 billion.

In 2024, the plant underwent a shutdown starting September 5 for its first scheduled repair and maintenance work. These activities produced positive outcomes; as Ibadov noted, following repairs and modernization efforts, STAR is now Türkiye's largest oil refinery concerning production volumes. It is anticipated that by 2025, the refinery will operate at full capacity, processing more than 13 million tonnes of oil annually.

"The refinery meets 18% of Türkiye’s oil product needs. The STAR repair and modernization period lasted two months during which one unit was replaced at a cost of $56 million for these efforts. Consequently, we achieved growth in both refining capacity and petroleum product production; for instance, capacity utilization increased from 118.5% to 121%. We aim to raise this indicator to 123 percent in 2025 and are currently conducting relevant test operations; we expect them to yield successful results," Ibadov stated.

He also highlighted that developments at Petkim and STAR Refinery emphasize implementing new carbon capture and utilization technologies. "These advancements enable refineries not only to reduce emissions but also to convert CO₂ into valuable products such as synthetic fuels and chemicals. This innovation reshapes the refining industry by combining profitability with environmental stewardship—a true win-win scenario," Ibadov remarked.

He emphasized that low-carbon recycling potential alongside enhanced facility efficiency reinforces STEAS' commitment to a greener and smarter energy future.

According to its 2030 development strategy, STEAS intends to establish production of Sustainable Aviation Fuel (SAF) from waste vegetable fats—a significant step reflecting its commitment to sustainable development principles while demonstrating its desire to incorporate innovative solutions. However, while SAF can reduce air travel’s carbon footprint, it remains expensive and challenging to produce.

Possible Sale

New significant developments may soon be announced regarding other aspects of SOCAR's Turkish division activities, in particular those related to its gas distribution business and potential sale.

SOCAR Türkiye Enerji entered this sector in 2019 through the acquisition of EWE Türkiye Holding — the Turkish subsidiary of Germany's EWE AG — along with five companies within EWE Türkiye Holding: Bursagaz, Kayserigaz, Enervis, EWE Enerji, and Millenicom. The transfer of these companies to SOCAR was completed on June 17, 2019.

By the end of 2024, SOCAR Türkiye Enerji's total investments in Turkey's gas distribution business had reached $209 million. E. Ibadov has reported on this matter, emphasising the continuation of successful gasification in Kayseri and Bursa through Bursagaz and Kayserigaz. The Bursagaz gas distribution network extends to 7,703 kilometres, while Kayserigaz covers 7,118 kilometres; Bursagaz serves approximately 1.2 million subscribers, while Kayserigaz caters to around 700 thousand.

The news regarding the possible sale of STEAS's gas distribution assets first surfaced at the end of November last year, coming as a complete surprise to the public. It was reported that negotiations were underway concerning the sale of SOCAR Türkiye Doğalgaz Yatırım AŞ, the company that includes Kayserigaz and Bursagaz.

Addressing the feasibility of this potential transaction, the head of SOCAR Türkiye Enerji has stated that there is no intention of divesting the business as a whole, but rather, the company is exploring various offers received.

"Our gas distribution companies, Bursagaz and Kayserigaz, are performing very successfully; we have not specifically placed them up for sale, but are evaluating several interesting offers received thus far. Ibadov explained that a decision regarding this matter is expected soon, as the company is assessing these offers in terms of strategic interests, future plans and financial implications. Ibadov also noted that the company's strategy does not include expansion into gas distribution over the next five years. "Therefore, in the event of such a sale, it would not be in contravention of our strategic plans," he added.

Expansion of Port Infrastructure

SOCAR Türkiye Enerji has also announced plans for significant expansion of its terminal in Izmir — the SOCAR Terminal (Petlim). Mr Ibadov has indicated that they intend to boost the terminal's throughput capacity to 1.5 million TEU per year.

Situated near Petkim Holding and STAR Refinery, SOCAR Terminal has been operational since 2016 and boasts the highest capacity within the region, allowing it to accommodate both large vessels (165,000 deadweight tonnes) and latest-generation container ships with capacities reaching 18,000 TEU.

"This is the largest container terminal in the Aegean region; our goal is to increase its capacity to 1.5 million TEU annually—nearly three times its current capacity. Furthermore, the construction was conducted with this anticipated capacity in mind; however presently it handles around 500-550 thousand TEU per year but plans exist for gradual increases," Ibadov noted.

He added that the company intends to continue engaging in port services: "We have received various proposals related to our activities within this sector, all implying SOCAR's continued presence rather than withdrawal from this field."

The SOCAR terminal facilitates cargo delivery to SOCAR Türkiye facilities, and its expansion will enhance operational efficiencies.

The results from 2024 demonstrate SOCAR Türkiye Enerji's position at the forefront of the Turkish energy sector, integrating business practices with technology in a sustainable manner. Through long-term investments in the Turkish economy, modern infrastructure development and innovative implementations, the company not only strengthens its position but also makes a significant contribution to enhancing fuel-energy complexes in this brotherly nation.

It can confidently be asserted that successful project implementations along with their subsequent impact on Türkiye’s economy guarantee SOCAR's support for new initiatives within the country—opening vast opportunities for further growth alongside realization of new ambitious objectives ahead! Decisions regarding forthcoming projects will certainly capture interest moving forward.