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BMI View: The postponement and scaling back of the State Oil Company of Azerbaijan Republic
(SOCAR)'s Oil and Gas Processing and Petrochemical Complex (OGPC) underlines the country's struggle
to develop downstream industries that add value to its considerable energy resources. The manat's
depreciation, a collapse in oil prices and high costs of external financing due to Azerbaijan's junk credit
rating in Q116 have combined to undermine the plans. Other projects involving polymer expansion and new
fertiliser plants also look set to be delayed.
The country has been burdened with ageing plants and its downstream is vastly
underperforming. Utilisation rates for the country's refineries have averaged around 30%. SOCAR has
ambitions to significantly improve utilisation, refining increased volumes of Azeri crude domestically.
However, a key problem has been the lack of demand. More than half of Azerbaijan's refined fuels are
consumed internally and domestic consumption growth has been slow. Export markets also remain limited,
due to the low quality of Azeri fuels.