The arbitral award dated3rd February 2021 was issued by arbitration tribunal acting in accordance with the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL) in favor of Azerbaijan (ACG) Limited, a company within SOCAR Group.
The London-seated tribunal awarded to Azerbaijan (ACG) Limited a monetary compensation exceeding USD 132,000,000 in the third arbitration between companies, belonging to SOCAR Group and Palmali Group. This was the last of three arbitration proceedings initiated by companies belonging to SOCAR Group against the companies of Palmali Group and Mubariz Mansimov due to the violation of commitments to SOCAR Group by Palmali Group and Mubariz Mansimov.
Ultimately, three independent tribunals acting under the arbitration rules of the London Court of International Arbitration, London Maritime Arbitrators Association and United Nations Commission on International Trade Law ruled in favour of SOCAR Group and awarded to SOCAR Group a monetary compensation exceeding USD 240,000,000 and dismissed all Palmali's counterclaims.
NOTE: For reference, please see our previous reports on the first and second arbitration.
The contracts relate to the installation of three process units, necessary for the production of EURO-5 gasoline at the Heydar Aliyev Baku Oil Refinery in Baku, Azerbaijan
Milan, 03 February 2021 - State Oil Company of Azerbaijan Republic (SOCAR)’s subsidiary Heydar Aliyev Oil Refinery has signed two Engineering, Procurement and Construction contracts with Tecnimont S.p.A. and KT-Kinetics Technology S.p.A., the subsidiaries of Maire Tecnimont S.p.A., as a part of the Modernization and Reconstruction of SOCAR Heydar Aliyev Oil Refinery in Baku, Azerbaijan.
The overall contracts’ value equals to approximately USD 160 million.
SOCAR’s president Rovnag Abdullayev, Italian Ambassador in Azerbaijan H.E. Augusto Massari, Maire Tecnimont Chairman Fabrizio Di Amato and Maire Tecnimont Group CEO Pierroberto Folgiero, along with other SOCAR’s and Maire Tecnimont’s senior officials have attended the signing ceremony.
The scope of the first contract entails the installation of an FCC gasoline hydrotreating unit, while the other contract refers to the installation of an LPG (Liquefied Petroleum Gas) mercaptan oxidation unit and an amine treatment and LPG pretreatment unit. These units are crucial to upgrade the quality of gasoline to the EURO-5 standard. Both projects will be executed in the Heydar Aliyev Oil Refinery, where Tecnimont and KT-Kinetics Technology are already jointly executing an EPC contract awarded in 2018, by winning the tender at that time for other new units.
The projects under new EPC contracts are expected to be completed respectively within 33 months and 26 months from the signing date.
This is a major milestone for Maire Tecnimont Group’s core business, since it allows to further consolidate the Group’s industrial footprint in the strategic Azerbaijani market and in the crucial natural resources transformation sector. Moreover, it confirms the orientation of the Group to leverage its distinctive competencies, technological know-how and synergies between its EPC contractors.
Rovnag Abdullayev, the president of SOCAR said: “SOCAR’s Heydar Aliyev refinery, being the only oil refining complex in the South Caucasus region, plays an important economic role. It’s the only regional fuel supplier as well as a feedstock provider to SOCAR’s petrochemical units. The modernization of the refinery will significantly improve the quality of produced diesel and gasoline, upgrading them to comply with EURO-5 standards. On the other hand, it will supply the petrochemical industry of Azerbaijan with sustainable and cost-efficient feedstock. While modernization is an inevitable business standpoint, it will also reduce the environmental footprint and increase the quality of life in our cities. In order to accomplish these strategic goals, we are pleased to cooperate with famous Maire Tecnimont Group, the company representing the creative and competent spirit of Italy, our friendly country.”
Pierroberto Folgiero, Maire Tecnimont CEO, commented: “We are really honored to put once again our technological expertise at the service of an historical and prestigious client such as SOCAR, thus consolidating our successful, longtime collaboration aimed at unlocking greater value in Azerbaijan’s downstream value chain. This achievement lets us foster a mutually beneficial relationship and paves the way to future growth, confirming the reliability of our technology-driven strategy.”
Maire Tecnimont S.p.A., listed on the Milan Stock Exchange, heads an industrial group, which leads the global natural resource processing industry (downstream oil & gas plant engineering, with technological and executive expertise). Its subsidiary NextChem operates in the field of green chemicals and technologies in support of the energy transition. The Maire Tecnimont Group operates in 45 countries, through 50 companies and about 9,100 people. For further information: www.mairetecnimont.com.