Yesterday since midnight State Oil Company of Azerbaijan (SOCAR) has suspended pumping of Russian gas for the methanol plant AzMeCo from the pumping station Shirvanovka on the Azerbaijani-Russian border.
SOCAR did not explain the reason of suspension of gas supplies, just saying that SOCAR only ensures transportation of the Russian gas to the Azerbaijani private plant. “We have been informed by Gasprom Export about completion of the export and import operations and all remaining issues bear no relation to us,” said the same source.
There was no information about that available on the web site of Gasprom Export company. Turan the web site of the Russian company had no information about signing of the contract between Gasprom Export President Yelena Burmistrova and Nizami Piriyev, chairman of Board of Directors of AzMeCo company, in Baku on September 11, 2015. The information about beginning of Russian gas deliveries to Azerbaijan on September 29, 2015 was also absent. Although the web site’s section press releases regularly informs about each step of the company’s President and the company’s operations.
AzMeCo’s web site has information about the signature ceremony on September 11 with the pictures attached. All local news agencies and web sites have copied this information quoting AzMeCo. One can see that representatives of the methanol plan would like to “close the Russian gas case” as soon as possible.
“Because of reduction of world methanol prices, purchase of gas from Gasprom at the contract price has become unprofitable. The company has decided to suspend gas purchases, because the methanol production has become unprofitable in the current situation,” said a source from AzMeCo.
According to AzMeCo, during the period of the contract AzMeCo bought over 100 million cub.m. of Russian gas.
It is very interesting. It is especially interesting, because both the International Bank of Azerbaijan (IBA) (allotted credit worth $300 million for construction) and the European Bank for Reconstruction and Development (EBRD) (allotted credit worth $120 million) have not even asked the AzMeCo administration if it has a contract with SOCAR for a long-term gas supplies to the plan. Only in May 2015 SOCAR said that (that time AzMeCo President Nizami Piriyev has been arrested by the law enforcement agencies for failure to return IBA’s credit in time) during construction of the methanol plant SOCAR has not received inquiries about volume of gas consumption.
Now this private company, which has been advertised as the best example of the oil industry, signs the contract with the biggest gas company in the world and then terminates it in over a month. Is it possible that the world methanol market has collapsed during such a short period of time? Piriyev came to Baku from Moscow in 2006. He knew how “sharks” of the world class methanol business are developing in Russia, which has cheap gas, good infrastructure established relationships at the market and etc. Year after year they improve the quality by deepening refining. If there were such risks, then why one needed to build this capital-intensive plant?
Piriyev appeared in Baku with his methanol project in 2006. The project implementation started in 2007 (looking for funds, providing the land plant and design). The ribbon was cut only at the end of 2013. The first product was manufactured in August 2014. Last year the plant produced 100,000 tons of methanol, during first 4 months this year -44,900 tons. Capacity of the methanol plant is 720,000 tons of methanol a year.
As a result now the methanol plant will not manufacture this product. SOCAR does not have natural gas for the plant available in autumn and winter period.
