SOCAR selects KBR venture to manage Baku refinery modernization

KBR announced Tuesday that its SOCAR-KBR joint venture was awarded a significant project management consultancy (PMC) contract for the Heydar Aliyev Baku oil refinery modernization project in Azerbaijan.

This award marks the first major award to the joint venture, SOCAR-KBR Ltd. (SOCAR-KBR LLC), since its inception in mid-2015. 

SOCAR-KBR LLC was created to provide design, engineering, technical, consultancy, procurement, construction supervision and project management services for all brownfield and greenfield projects across the upstream, midstream and downstream oil and gas sectors, in the Azerbaijan–Georgia–Turkey (AGT) region. 

This company was formed to help Azerbaijan's ambition for creating a world-class Azerbaijan-based engineering company, according to project officials.

SOCAR-KBR LLC says it aims to build upon KBR's long-term project experience in Azerbaijan to perform project management services from its offices in Baku for the Baku modernization project.

"The Heydar Aliyev refinery reconstruction project is currently one of the most important investments for SOCAR globally, and I am very happy that this project is in the capable hands of one of SOCAR's own entities—namely the SOCAR-KBR joint venture," Rovnag Abdullayev, SOCAR's president, said at the signing ceremony.

The overall refinery capacity will be increased from 6 MMtpy to 7.5 MMtpy, while the catalytic cracking unit capacity will be increased from 2 MMtpy to 2.5 MMtpy. Additionally, Euro 5 standards will be established for all refined products. 

The modernization of the Heydar Aliyev Baku oil refinery will begin immediately and will be completed by late 2018, with an estimated capital cost of $1 billion for the total project, according to the companies.

The value of the PMC contract was not disclosed and will be booked into the backlog of unfilled orders for KBR's engineering and construction business segment for the first quarter of 2016.