Project background
As early as in the mid-XX century Azerbaijan was one of the major producers of chemicals within the territory of the former Soviet Union. The production of fertilizers had been among the primary segments of chemical industry. In this regard, Super-Phosphate Plant was built in Sumgayit to meet domestic demand as well as supply other Soviet republics with phosphate fertilizers.
After the fall of the Soviet Union the fertilizer production stopped functioning and the country became dependent on import of fertilizers from abroad. Stable domestic demand in fertilizers necessitated the construction of a new fertilizer plant. The subject project is implemented pursuant to the “State Programme on Reliable Food Supply of the Population in the Republic of Azerbaijan during 2008-2015” and “State Programme for the Development of Industry for 2015-2020” approved by the relevant Orders of the President of the Republic of Azerbaijan. These State Programmes prove the strategic importance of the Project for the whole economy of Azerbaijan.
The Engineering, Procurement and Construction (EPC) contractor for the Project was selected through an international open tender announced in August 2011. The bids were presented by major international companies as Hyundai E&C, Kawasaki Heavy Industries, Ltd., Samsung Engineering Co, Ltd., Technip Italy S.p.A., ThyssenKrupp Uhde GmbH, Toyo Engineering Corporation and the partnership of Saipem S.p.A. and Technimont S.p.A. As a result of the tender evaluation process, Samsung Engineering Co, Ltd. was selected as the EPC Contractor and the EPC Contract was concluded on 13 March 2013. Subsequently, in July-August 2013, SOCAR entered into license agreements with Haldor Topsoe (Denmark) and Stamicarbon B.V (Netherlands) – two internationally reputable process technology companies for ammonia and urea processes respectively. Upon the fulfilment of certain conditions precedent under the EPC Contract, the EPC Contractor officially commenced the implementation of the Project in February 2014.
As known, it is essential to involve a project management consultant (PMC) to effectively implement and control such a large project. In this regard, based on an international open tender, Neste Jacobs Oy (Finland) was selected as the project management consultant for the Project. The PMC and third party inspection services contract was executed between SOCAR and Neste Jacobs Oy on 11 May 2015 in Helsinki, Finland.
Project progress
Up to date, approximately 71% overall Project progress has been achieved. Detailed engineering and procurement works are almost entirely accomplished and approximately 20% of the construction works have already been completed. It is worth to note that 3D Model of the Plant and piling works have been finalized, while foundation works, construction of infrastructure facilities and piping works are currently being carried out. Furthermore, 90% of long-lead items ordered for the Plant have been delivered to Azerbaijan and are being gradually transported to the construction site. The equipment and materials for the construction of the Carbamide Plant have been procured from various reputable international companies from Asia, Europe and America.
Natural gas will be the main feedstock for the production of nitrogen fertilizers. Annual gas consumption required for the production is expected to be 435,000 m3 (1320 m3/per day). In this regard, it is quite important to have uninterrupted supply of natural gas and other utilities to the Plant. Corridors for natural gas, raw and potable water pipelines to be located in the territory of Sumgait have already been determined and the engineering works for these projects have started.
As for the plans about 2500 workers will be involved in the implementation of the Project at the peak of construction works, and around 200-250 people are to be permanently employed during the operational phase. With the purposes of supply of the Plant with specialised personnel, orders related to the required specialisations were placed with the Education-Training Centres of SOCAR. The relevant orders have been placed among those following specialisations: packaging operators, operators of the automatic control systems, technological equipment operators, electricians, technicians and others. The personnel trained at the education centres are currently being recruited and their number is planned to be increased in the future.
Moreover relevant training and simulation courses are to be organized by Samsung and the licensors for the employees of the Plant. Besides, it is planned that they will participate in SOCAR-organised internship programmes at one of the carbamide plants in foreign countries. These will contribute to continuing professional development of the employees, increase of production and operation efficiency of the Plant as well as promote employment of workforce, particularly in Sumgait.
Project Financing
The overall cost of the Carbamide Project is estimated to be approximately 900-920 million Euro (including taxes, duties and levies). This amount covers Engineering, Procurement of Equipment and Materials, Construction and Transportation costs associated with the Project. At the initial stage, the project was financed by the State Budget of Azerbaijan. Afterwards, a decision has been made to change the source of financing and currently, the project is being mainly financed through the loans received directly from Export-Import Bank of Korea or with its support from international commercial banks.
Due to the change in the source of financing, the implementation schedule of the Project has been modified. Currently, the construction of the Plant is planned to be completed at the end of 2017 and the start-up is expected to take place in early 2018.
The Plant will be located in Sumgayit city and will consist of the ammonia, liquid and granulated carbamide production sections. It will produce 1200 MTPD of Ammonia and 2000 MTPD of carbamide per day. Implementation of this project by SOCAR will render a strong support to the development of agriculture which is one of the key sectors of the state economy. In the meantime, it is planned that the nitrogen fertilizers produced at the Plant (approx. 650-660 thousand tons per year) will completely satisfy domestic demand and the surplus of the product will be exported to Turkey by railways and into the world markets through the Black Sea ports.Currently, Turkey is viewed as the main target market for the export of the carbamide. Due to lower feedstock prices and favourable proximity to the target markets, the Plant is expected to have competitive advantage against other regional nitrogen fertilizer producers. Carbamide is considered to be among the most efficient fertilisers for agriculture use due to its highest nitrogen content and water-soluble capabilities. Nearly 140 mln tons of carbamide is being produced annually, 90% of which is being used as fertiliser in the agricultural sector. In addition to the use of carbamide as a fertilizer, it can also be used as animal feed and feedstock in the manufacture of various chemicals.
