ECONOMIC INDEPENDENCE AND RATIONALITY MUST DEFINE PRODUCTION STRATEGY

Azerneftyag Director, Ramiz Mirzoyev

Caspian Energy (C.E.): Mr. Mirzoyev, Azerneftyag is one of the first ORPs in the world. What has it achieved during the period of its activity?

Ramiz Mirzoyev: The Plant was established in 1879. In 30th of XX century a plant named after Stalin was established on the basis of small oil plants. In 1961 the enterprise was renamed oil-refining plant named after XXII Party Congress, in 1991 – Baku oil-refining plant Azerneftyag. In 1994 the Production Association Azerneftyag was established on the basis of the plant. The enterprise has been working as ORP Azerneftyag since 2003.

Azerneftyag ORP has been supported by the government during its history. At the time of Soviet government the plant was producing about 25 different sorts of oil in different years that necessitated new technologies application in the production processes. In spite of the difficulties at that time, the authority of the Union especially purchase advanced foreign technology for Baku oil-refining plant.

In 1980 Azerneftyag ORP started its complete reconstruction on the republic leader Heydar Aliev’s personal initiative. It marked the beginning of a new stage in the life of the oldest oil-refining enterprise in Baku. A plant on oil hydrorefining was constructed.

The works on the enterprise construction and reconstruction continued after Azerbaijan regained its independence. Azerneftyag ORP’s team made much effort for eliminating the results of the economic crisis in 1993-1996 and meeting country’s fuel and lubricants demands. Today the plant is producing more than 20 kinds of oil-products, including diesel engine L-62, straight-run gasoline, jet engine fuel TC-1, kerosene KO-20, different kinds of lubricants, building and road bitumen.

Beginning from the July1997, the plant has always been improving its economic indicators in production. First, after the long break, the enterprise concluded the year with some 28,5 billion manats income. The income of the enterprise continued climbing up and reached 131,7 billion manats in 1998; 189,7 billion manats in 1999; 548 billion manats in 2000; 348,2 and 419,3 billion manats in excess of the plan in 2001-2002; 696,3 billion manats in 2003 and 1020,4 billion manats in 2004. Last year Azerneftyag ORP continued its successfull activity. The plant has exceeded the production plan within 2005. The balance income for this period was 1585,1 billion manats.

The development observed at the plant since July 1997 has become of dynamic character. At the present, when the economic results of oil products production and sale defines the highest level of production, the plant administration and specialists fairly appreciate the significance of increasing the depth of oil refinery and increasing the product sale for the domestic economy. We think that the production strategy should not be defined by political stamps, but economic independence and rationality.

C.E.: How much does the plant meet the world standard requirements, as well as the ecological requirements; and is the enterprise planning to shift to producing oil-products according to European standards (Euro-4, Euro-5)?

Ramiz Mirzoyev: Production and export to the world market of high quality and competitive products meeting world requirements is the main goal of the plant. Though much has been done in this direction, but still we need to continue working. Taking into account the steady raise of attention towards the oil-refinery products in compliance with the world ecological norms, the plant administration has worked out and is already implementing a perspective development plan for 2005-2015. The devices on primary oil refinery constructed at the plant in 1994-1995 allowed narrow fractions for producing the necessary quantity of light products. However, lack of the modern technology for producing oils continue creating difficulties in oil production in compliance with the world requirements. The old devices on selective refinery, dewaxing, deasphalting and hydrorefinery do not meet the present requirements. To provide compliance of the enterprise’s flagship products – lubricants and motor oils production – to the world standards we have considered full reconstruction, enlargement and modernization of the oil block. (During Soviet times Azerneftyag ORP with some 1.2-1.5 million tons annual productivity was one of the biggest lubricants and motor oils producer).

The plant can deliver its products to the international markets only after reconstruction. In its turn this will create wide opportunities for the enterprise to get more income and will affect economic indicators of Azerbaijan. But already today the competitive products produced on the modern devices win prizes in different competitions. Thus, for example, jet engine and Diesel engine produced at the plant have been awarded "Golden Star" in Switzerland, "Platinum Star" – in the USA and Spain, and "International Europe" – in France because of high-quality.

Positive results are achieved in environmental protection. It has been several years that the concerned organizations did not express reproaches. Economic utilization of the power resources has become a tradition already. Undoubtedly, all these promote steady increase of financial potential of Azerneftyag.

C.E.: How effective do the devices ELOU-AVT–2 and ELOU-AVT-6 work on the primary oil refinery?

Ramiz Mirzoyev: The ELOU-AVT – 6 for the primary oil refinery had a capacity of around 6 million tons of oil a year at the plant in 1981. Two devices ELOU-AVT – 2 & 6 were put into use in 1994-1995 by the American company Pertofac and the South-Korean firm Lucky Engineering. This caused a sharp increase in volume of oil produced at the enterprise. Putting these devices into use had a powerful effect on the development of the country’s oil-refining industry. The use of these devices positively affected the quality of oil products, reduced production losses and pollution of the environment as well. Their operation helped in fully ceasing activities of the Baku oil-and-gas plants (including other devices not meeting the requirements of time at the ORP named after A. Garayev) which were turning the capital of the country to an environment-unfriendly black dump-yard. Today the returns on these devices fully meet modern-day quality requirements.

C.E.: Launching the bitumen device ‘Biturox’ has defined a new direction for the enterprise’s activities. What is the progress of the activities being carried out in this direction?

Ramiz Mirzoyev: Construction of the technical part of the up-to-the-minute devices producing oil bitumen corresponding world standards – Biturox has been the main achievement of the enterprise for the last few years. The device construction began in 1993 and commenced operation in October, 2000. Annual productivity of the bitumen complex Biturox was $16.9 million amounting to 250 thousand tons bitumen which corresponds to world standards. This technology was supplied by the Austrian firm ‘Perner’ and can produce 100,000 tons more than the planned capacity of 1980. 200,000 tons out of it is road bitumen, and 50,000 tons - is construction bitumen. The enterprise gets orders from dozens of countries for the bitumen producing device. The cessation of production on old bitumen devices 406 and 601 which were responsible for pollution of the environment, was largely due to use of the new device. Biturox products are also being used in construction of Azerbaijan section’s of the Great Silk Way. One of the advantages of the complex is its complete compliance to technological standards.

C.E.: What is the social aspect of work of ORP Azerneftyag, an entity which has an over hundred-year old history?

Ramiz Mirzoyev: Looking after the material well-being of its employees is one of the priorities of Azerneftyag. Economic development of the enterprise has permitted increase in wages for both blue-collar and white-collar employees. Azerneftyag had gained profits even in the period when prices for oil products at the world markets s lide down. That gave an opportunity to solve the housing problems of collective members and meet their other social needs. The enterprise has achieved record levels in this area. 876 flats of around 69,000 square meters have been constructed and placed at the employees’ disposal within a short period. Our country is considered as a rare one when it comes to flat construction at the expense of the government without further compensation from the recipient. Much attention is paid to providing the oil industry workers and their families with required norms of rest. For example, we have completely reconstructed the Dalga recreation center in Mardakan which was empty for many years. Shekhids’ families (martyrs who died protecting Azeri territories) hold special status in the social policy of ORP Azerneftyag.

Paying constant attention to the social problems of the plant’s team, the company’s administration tries its best to obtain and maintain high economic indicators to promote well-being, first of all, of those, who put their best efforts to achieve these indicators.