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In a move set to reshape the energy landscape of the region, Black Sea Petroleum (BSP) has entered into a definitive engineering and licensing agreement with U.S. technology giant Honeywell. The partnership marks a critical milestone for the Kulevi Oil Refinery, the largest private investment project in Georgia’s history. Under the terms of the agreement, Honeywell will provide the core technological licenses, basic engineering, and specialized equipment guides required for the facility’s high-tech processing units. The deal also includes the supply of proprietary catalysts and advanced control systems, ensuring the refinery meets stringent standards for gasoline and diesel quality.
Macroeconomic Alignment and Strategic Location
The Kulevi Oil Refinery will transition Georgia from a primarily transit-oriented energy state into a producer of high-value refined commodities. Historically, Georgia has functioned as a vital link in the Southern Gas Corridor and the transport of Caspian crude, but it has remained almost entirely dependent on imported refined fuels. The project is intended to satisfy growing regional demand for refined engine fuels and simultaneously provide domestic price stability in volatile global trends.
The refinery’s geographic positioning on the Black Sea coast provides a definitive logistical advantage. Located near the Kulevi Oil Terminal owned by SOCAR, the refinery is situated at the nexus of major energy routes. This proximity allows for the receipt of raw materials and the export of finished products to diverse markets, including the European Union, the Mediterranean, and Central Asia.
Development Architecture
The company has adopted a sophisticated, four-stage implementation strategy designed to manage capital deployment while progressively increasing the depth of refining. This phased approach allows BSP to adapt to regional market dynamics and regulatory shifts while building a robust industrial infrastructure from the ground up.
The first stage, which represented an initial investment of $150 million, focused on the launch of an atmospheric distillation unit with a nominal capacity of 1.2 million tons per annum. This milestone, achieved in late 2025, established the refinery’s baseline ability to produce naphtha, high-sulfur diesel, and fuel oil (Mazut). Building upon this foundation, BSP is currently in the final stages of a second expansion phase scheduled for completion early 2027. This stage introduces vacuum distillation and bitumen production units, enabling the facility to manufacture vacuum gas oil (VGO) and industrial-grade bitumen.
The third and fourth stages represent the most technically complex phases of the BSP roadmap. By April 2027, the company plans to launch a second atmospheric-vacuum unit with a nominal capacity of 3.3 million tons per year, which will bring the refinery’s total nominal annual capacity to 4.5 million tons and further expansion of bitumen production capabilities. The final integration stage, projected for July 2028, involves the activation of production units for Euro-5 diesel, Petroleum 92-95, and high-quality aviation fuel Jet A-1. To further optimize productivity, BSP’s long-term master plan includes the future start-up of Hydrocracking and Thermal Cracking units, which will enable full-cycle refining and maximize the yield of high-value distillates from every barrel of crude feedstock.
Operational Status and Infrastructure
A significant portion of the general infrastructure has been pre-engineered and sized to accommodate future expansion. This foundational readiness ensures that upcoming technological blocks can be integrated and commissioned with high operational efficiency and significantly compressed timelines. The site is supported by a central rack structure, a central boiler house for steam generation, dedicated water cooling and a water supply system, including advanced water treatment units to maintain strict environmental and ecological safeguards. Power supply is managed through high-capacity transformer substations. Operational management is housed in a state-of-the-art control building and an administrative operations building, supported by an on-site laboratory for real-time quality assurance. A critical logistical link, a pipeline connecting the refinery directly to the SOCAR terminal, was completed in 2025 to enable the efficient transfer of feedstock.
Circular Economy: By-product Recovery and Fertilizer Potential
A significant component of the refinery’s long-term economic viability is the planned recovery and utilization of industrial by-products. This strategic focus aligns with the creation of a “petrochemical cluster” as envisioned by national development funds and corporate leadership. Specifically, the refining and desulfurization processes generate sulfuric acid and ammonia as secondary products.
These by-products represent the foundational inputs for the manufacturing of nitrogen-based fertilizers. By integrating byproduct recovery with agricultural supply chains, the project aims to support the domestic agricultural sector through the provision of locally produced nutrients, thereby reducing the need for imported fertilizers. This circular approach is designed to enhance the overall profitability of the refinery while providing broader industrial benefits to the Georgian economy.
Institutional Challenges: Workforce Training and Industrial Localization
Despite the technological advancements provided by international partnerships, the refinery faces a critical shortage of qualified personnel within the regional labor market. To mitigate this, Black Sea Petroleum has initiated comprehensive local content and human capital development programs. These initiatives focus on the vocational education and technical training of the local workforce to ensure that the new industrial ecosystem is operated by highly skilled Georgian professionals.
The development plan includes specialized training for seafarers and onshore technicians, conducted in coordination with recognized maritime and industrial training institutions. These programs emphasize the management of high-tech automated systems, industrial safety standards (ISO 45001), and quality control protocols. This commitment to workforce localization is intended to fulfill the project’s corporate social responsibility while ensuring that the long-term operational needs of the facility are met.
Geopolitical Navigations and Crude Feedstock Diversification
The operational success of the Kulevi refinery is increasingly contingent upon its ability to navigate a complex geopolitical environment. Currently, crude oil is procured directly from shore tanks at the SOCAR Terminal through multiple trading partners. So far BSP has received Azerbaijani and Russian crude Oil, however, the company has successfully navigated a period of intense economic, logistical, and geopolitical challenges to secure a diversified supply chain including Turkmen and Kazakh Crude Oil.
This effort is now yielding tangible results, marking a definitive transition toward non-Russian feedstock. The strategic roadmap for the coming months is as follows:
• March–April: Integration of Turkmen crude oil into the supply mix.
• Nearest future: Commencement of Kazakh crude oil shipments.
The refinery gains the flexibility to target high-premium markets. While previous outputs were restricted to the Turkish, African and Asian regions following EU sanctions, after shifting to non-Russian crude the refinery will open the gates of the European market fully. Enhancing both its geopolitical safety as well as commercial benefits.
