BAKU ENERGY ON THE APENNINES

September holds a special place in Azerbaijan’s oil history. From the day the famous Contract of the Century was signed, 31 years ago on 20 September, a new milestone began in the development of the domestic oil and gas sector and the region’s largest projects. This strategic document opened the way to large‑scale investment and infrastructural transformation, turning Azerbaijan into a significant player on the global energy market.

A vivid confirmation of that is the current role of the State Oil Company of the Republic of Azerbaijan (SOCAR), which now acts as a global player not only in hydrocarbon production but also in refining and retail distribution of energy products. It has representations in 13 countries and a network of more than 600 filling stations in Europe, Georgia and Türkiye. This demonstrates SOCAR’s transformation from a hydrocarbon exporter into a comprehensive energy brand covering the full cycle — from production to the end consumer.

It is symbolic that the strategic agreement on SOCAR’s acquisition of Italy’s Italiana Petroli (IP) was signed precisely in September. This deal not only expands the company’s geographic presence but also confirms its long‑term strategy of strengthening its position in the European market.

An Italian "marriage"

SOCAR started foreign operations back in 2008 with its entry into the Turkish market and the purchase of the controlling stake in the petrochemical complex Petkim. This laid the foundation for SOCAR’s large energy hub in Türkiye, culminating in the commissioning on 19 October 2018 of the STAR refinery with a capacity of 10 million tonnes per year.

Now the company is consolidating its positions in Southern Europe by signing an agreement with API Holding, a leading private Italian firm in oil refining, petroleum retail and transport services (the Brachetti‑Peretti family holding).

The deal concerns SOCAR’s acquisition from API Holding of 99.82% of IP’s shares. This transaction is central to expanding the company’s footprint in the European energy market, confirms Azerbaijan’s strategic orientation towards strengthening economic partnership with Italy and contributes to enhancing the region’s energy security and sustainable development.

The transaction was formalised within the framework of the 1st Azerbaijan International Investment Forum in Baku. Its closing is expected in the first quarter of 2026, subject to standard conditions and approvals from regulatory authorities.

SOCAR said the agreement resulted from a competitive M&A process that the company has been engaged in since the fourth quarter of 2024.

Italiana Petroli is one of Italy’s largest integrated oil‑processing platforms. It owns more than 4,500 filling stations and two refineries with combined throughput of about 10 million tonnes of oil per year. IP produces specialised products such as bitumen, aviation fuel and lubricants, and operates a nationwide logistics system. The company, enjoying a strong reputation among customers and the local population, is run by an experienced local management team and a professional staff known for their attention to safety, regulatory compliance and efficiency.

This deal allows SOCAR to reach a new level of integration into the European market — refining and retail distribution of fuel — turning it into a strategic player. The company has stated it will preserve jobs and continue environmentally responsible policies in Italy.

SOCAR President Rovshan Najaf characterised the acquisition of IP as an important step in the company’s international diversification strategy: "This demonstrates our long‑term commitment to developing a competitive, innovative and socially responsible business that contributes to Europe’s energy security and further strengthens partnership between Azerbaijan and Italy."

From API Holding’s perspective, selling IP to an Azerbaijani buyer reflects the desire to transfer assets to an international player with a sustainable reputation and institutional profile, which will allow the Italian company to strengthen its global position and retain strategic significance in the Mediterranean.

API Holding emphasised that it decided to sell its entire stake in IP to SOCAR after careful selection and taking into account SOCAR’s institutional profile and extensive experience in the business.

"IP has been and remains a national benchmark in the fuel sector and a key player in mobility and energy security in Italy. Managing a company that for more than 90 years has been among the nation’s leaders, we are proud to leave its future owners a solid legacy of knowledge, outstanding professionals, rich experience and exceptional innovative potential," said chairman Ugo Brachetti‑Peretti.

The official price of the deal has not been disclosed. Media reports put it at approximately €3 billion. It is also reported that SOCAR prevailed over other bidders for Italiana Petroli — the Swiss multinational Gunvor and the Bin Butti Group from the UAE.

In any case, SOCAR’s transaction with Italiana Petroli is not merely an expansion on the Italian energy market. It reflects Azerbaijan’s long‑term priorities in European energy and creates new opportunities for SOCAR in the Mediterranean region.

The hunt for refineries continues?

This deal may not be the last acquisition of refining capacity in Europe by Azerbaijan. According to Azerbaijani broadcaster Anewz, SOCAR and Turkish Cengiz Holding have formed a consortium to negotiate the purchase of a refinery owned by the Russian company LUKOil (Bulgaria).

It is reported that several other major players are also vying for the asset, including Kazakhstan’s national oil company KazMunayGas, international trader Vitol, Turkey’s pension fund OYAK and Hungary’s MOL Group.

The channel notes that over the past 18 months LUKOil has been unable to process Russian oil at the Burgas plant due to sanctions. At the same time, Azerbaijan and Türkiye are well placed to supply the refinery with stable volumes of feedstock. For Baku the deal could open the way to restarting the Baku‑Supsa pipeline, idle since spring 2022, which would help restore part of its transit role in the Black Sea region.

Incidentally, the LUKOil Neftochim Burgas refinery, located near the city of Burgas, is the largest refining facility in the Balkans. Its capacities allow processing of about 8–10 million tonnes of oil per year (roughly 190,000 barrels per day). The plant produces a wide range of petroleum products, including gasoline, diesel and aviation fuels, fuel oil and bitumen. The facility has been in operation since 2 September 1963.

In 2015 a deep conversion complex was commissioned at the refinery, which significantly increased production of light petroleum products.

However, over the past 18 months the plant has faced difficulties: due to sanctions LUKOil could not use Russian crude as feedstock. Bulgaria also introduced a ban on processing Russian oil and exporting fuel derived from it, and a tax of 60% on the plant’s profits was imposed. Media estimate the asset’s value at about $2 billion.

There is no official confirmation yet of SOCAR and Cengiz Holding’s interest in the Bulgarian refinery, but media publications suggest that negotiations are indeed under way. If confirmed, a successful deal would strengthen Azerbaijan’s and Türkiye’s positions in Europe’s energy sector, give Bulgaria an opportunity to reduce dependence on Russian capital, and allow LUKOil to minimise sanction risk and monetise a problematic asset.