SOCAR expects STX?s steps on Caspian Shipbuilding Factory Project

A SOCAR source says that they made no decisions on stoppage of factory project preparing because of global crisis or fall of world oil prices. “Now we are waiting from the Korean party further moves on the project,” the source said. Germany’s Marine Service has been operating within the project as the feasibility study consultant. Specification of the feasibility study is linked with change of future factory construction concept in accord with the agreement on May 19.
The consulting company is re-evaluating the project, conducting market analysis and making a business plan jointly with STX.
Under the Memorandum, SOCAR subscribed for 65% equity stake in the project, STX for 25% and AIC for 10%.
When organizing project financing it was planned to raise money from foreign sources and re-distribute partly equity stakes among the shareholders. But these issues will be solved after feasibility study is ready.
Thanks to use of Baku Deepwater Jackets Factory (BDJF) n.a. Heydar Aliyev and its infrastructure as basis, the project is expected to be cheaper than earlier announced $400 million.
STX that initiated the project offers parity distribution of the project shares between all the shareholders – STX itself, AIC, SOCAR, and Azerbaijan State Caspian Shipping Company (Kaspar).
Azerbaijan insisted that STX should acquire an equity stake of at least 35% of shares to make the latter to be more interested in the project operatorship and to raise more investments from abroad.
The new factory will be located nearby BDJF belonging to SOCAR and both enterprises will complement each other with orders and work. The ship-building factory will make all vessels necessary for work on the shelf. Azerbaijan is applying 27 types of vessels. SOCAR itself that is numbering 270 vessels is going to renew them at the new enterprise.
Under the primary feasibility study, the ship-building factory was estimated at $400 million. In accordance with world practice 30% of the project cost will be financed at the expense of shareholders and 70% will be raised. At the same time STX will undertake project management and construct the factory under turnkey.
T the moment the parties expect to construct tankers with tonnage of up to 30,000 tons for four Caspian states (except Iran whose position on the occasion is unknown).
Holding of project presentation in Baku was scheduled for the end of 2007.
It was planned to produce a whole range of vessels (from yachts to large tankers) at the new enterprise.
The Memorandum on Ship-Building Factory was signed in Seoul on 24 April 2007, under which AIC was ready to acquire 25% equity stake in the project.
The factory will be oriented to repair ships including tankers to carry Kazakh and Turkmen oil. It will be the single factory in Azerbaijan but its capacity will depend on portfolio of orders.