Vagif ALİYEV
Chairman of the Board of Directors
       

Distinguished shareholders and business partners,

 

We completed the year 2015, in which we celebrated Petkim’s 50th year of operation, in a background of very important investment projects, historically high levels of profitability and a busy work schedule. Thanks to the maintenance work and capacity increases undertaken in previous years, we have achieved a high production performance. Thus, the year 2015 was a successful year for our company with respect to sales and profitability.
 
After many years of expansion, the year 2015 was also marked by a sharp contraction in the global commodity trade. The IMF and the World Bank project that the global commodity trade will continue to shrink by between 1.5% and 2% in 2016 as well. This suggests that the decline in global commodity prices will continue, with a contraction of around 5-10% in 2016.
 
In fact, the fall in raw material prices paved the way for 2015 to be a buoyant year for the petrochemical industry. At Petkim, we took the maximum advantage from the wide ethylene/naphtha spread. We increased our profitability by redoubling our efforts to improve our operating efficiency and effective positioning in accordance with market needs. The year 2015 was a challenging one for the BRICS countries, apart from India. According to OECD growth projections the US economy is expected to grow by 2.5%, China’s economy by 6.5% and Turkey’s economy by 3.4% in 2016.
 
The Petlim Container Port investment, which was initiated in 2013, was completed in 2015 and delivered to APM Terminals. With a starting capacity of 1.5 million TEU, the port is now the country’s third biggest port and the largest integrated port in the Aegean Region, symbolizing the brotherhood between Turkey and Azerbaijan. Global and regional tensions continued to grow in 2015 due to heightened political tensions and the global refugee crisis, bringing chronic geopolitical risks to our region. This was most clearly reflected to the economies of the countries in the region in a number of ways.
 
In spite of the economic uncertainty and consequential volatility in exchange rates, Petkim managed to attract major foreign investors to Turkey in 2015. Thanks to our container port, we brought the Netherlands-based APM Terminals, one of the world’s most important container port operators, as an investor in our country. Again in such a period, we were also proud to be a reason for the world’s largest investment bank, Goldman Sachs, to invest in Turkey.
 
In 2015, crucial steps were taken in the construction of a refinery in the Petkim Peninsula by the STAR Rafineri A.Ş., a subsidiary of SOCAR Turkey, our main partner. Half of the construction work on the STAR Refinery has been completed, with work on the USD 5.6 billion investment set to finish in 2018. The refinery is expected to enter operation in 2018, with a capacity of 10 million tons, contributing to the raw material security for Petkim.
 
With the lifting of the sanctions against Iran in 2016, we will now be following Iran more closely as the petrochemical sector. The return of Iran, which managed to develop its petrochemical industry even during the sanctions, to the international petrochemical sector, along with the investments and the capacity increases that will be undertaken in the country, is something that needs to be monitored carefully in Turkey. The country is currently undertaking investments in its petrochemicals industry. On the raw materials side, Iran is likely to step up its investments in the downstream segment in the coming period. In this respect, Turkey may need to take measures to tackle the threat of losing market share.
 
Petkim will continue to create value for our stakeholders and our country in the future, as it has in the past. With the power we draw from our ambition to carry out additional investments, our belief in the future of our countries and the enjoyment we take from providing employment opportunities for more people, we are confident that we will maintain our operational and financial success in 2016.
 
I would like to extend my gratitude to all of our employees, all of our suppliers and our business partners, as well as stakeholders, who have contributed to the success of Petkim, the embodiment of the principle of “One Nation, Two States”, for their trust and commitment to Petkim.
 
With my deepest regards...

   
Vagif ALİYEV
Chairman of the Board of Directors