Bayegan Aims to Construct $1.9 Billion Petrochemical Plant in Turkey

Turkish petrochemicals powerhouse, Bayegan Group, is set to revolutionize the nation's polypropylene production with a groundbreaking $1.9 billion plant slated for construction in the southern region. The ambitious project, situated in Hatay province, aims to establish a 450,000-ton-per-year facility, accounting for approximately 20% of Turkey's polypropylene demand and curbing the need for imports, particularly in the carpet industry.

In alignment with Bayegan's strategic vision of expanding its business throughout the value chain, this substantial investment is poised to reshape Turkey's petrochemical landscape. The forthcoming plant holds the potential to save Turkey, a leading polypropylene importer trailing only China, an estimated $500 million annually. This initiative has garnered support from the government in the form of tax incentives, reduced power and labor costs, aligning with broader efforts to fortify core industries and stimulate growth amid a challenging economic landscape marked by a 65% inflation rate, contributing to a cost-of-living crisis.

The chosen location for the plant, in close proximity to Gaziantep, holds historical significance as a center for carpet manufacturing dating back to the Ottoman Empire. Beyond meeting domestic demand, Bayegan's venture is poised to contribute significantly to the global polypropylene market.

Originally estimated at 27.7 billion liras in a government decree from January of the previous year, the fixed investment cost has risen to $1.9 billion due to an increase in production capacity to 450,000 tons. This upward adjustment underscores the scope and scale of Bayegan's commitment to driving the nation's self-sufficiency in polypropylene production.

Highlighting the robust local demand, another entity is concurrently developing a $1.7 billion polypropylene plant in Ceyhan, emphasizing the industry's vitality in the region. Ronesans Holding AS and Algeria's Sonatrach are at the forefront of this $1.1 billion fundraising initiative for a 472,500-ton-per-year plant, further emphasizing the momentum in Turkey's petrochemical sector.

While Bayegan Group briefly withdrew from a consortium with Ronesans Holding AS in 2018, the company is now exploring potential partnerships for its independent project. Talks with potential investors are ongoing, and discussions with export credit agencies continue, underscoring Bayegan's commitment to fostering collaboration for successful project realization.

Anticipating significant progress, Bayegan expects to finalize an engineering, procurement, and construction (EPC) contract shortly, with construction set to span 34 months. This transformative venture is not only poised to bolster Turkey's polypropylene production but also solidify its standing as a key player in the global petrochemical arena.

Turkey currently relies on imports for 96% of its annual polypropylene demand, with an average of 2.2 million tons sourced from nations such as Saudi Arabia, South Korea, Egypt, and Israel, according to Pagev, a local organization of plastics producers. With Bayegan's pioneering investment, the nation is on the brink of a significant paradigm shift, fostering self-reliance and contributing to the growth of the petrochemical industry on a global scale.