«SIBUR» LLC is the managing organization of PJSC «SIBUR Holding».
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Russia’s petrochemical business is too small and its plants outdated and not specialized
Russia is well positioned in the global petrochemical industry, Konov said in London Tuesday. The country is blessed with an the abundance of
And Russia’s geographical location means easy access to the export markets of Northwest Europe and Asia. But Russia lacks the economies of scale to compete effectively in the global petrochemical arena.
Its olefin crackers are small and
This means developing Russia’s downstream petrochemical industries will also be a huge challenge.
«The [plant] capacities [Russia] has now are marginal, and they are not specialized," Konov told reporters. He said Russian petrochemical producers in general must look for projects that can make them globally competitive. «And we believe we can be competitive. The projects [that Russia undertakes] must be much
That is the step
Sibur plans to construct two olefins and polymers complexes in the Orenburg and Tumen regions. The complex in Orenburg, to be run in conjunction with Orenburggazprom LLC, a subsidiary of Gazprom, would have the capacity to produce 450,000 mt/year of polypropylene and 650,000 mt/year of polyethylene. These polymer plants will be fed by a 1.1 million mt/year gas cracker/propane dehydrogenation plant. The cracker uses pyrolysis gas as a feedstock and this will be supplied by Orenburggazprom.
The company will build this complex in two phases with construction due to start in 2008. Orenburg 1, which comprises the PP unit, is expected to be
Sibur is also in the process of building another PP complex in Tumen, to be operated by 100% subsidiary,
«If you look at the four projects we discussed, these projects are roughly the same size [as the petrochemical complexes currently being built in Asia and the Middle East]. Honestly, that is the only way we can compete," Konov said.
In addition to the Orenburg and Tobolsk projects, Sibur is also considering expanding its olefin cracker at Kstovo, in the Nizhny Novgorod region, to supply ethylene to its newly established PVC
The cracker currently has a 240,000 mt/year ethylene capacity. It will be expanded to 360,000 mt/year by the end of 2010, in line with RusVinyl’s new 330,000 mt/year PVC plant (of which 300,000 mt/year is suspension grade PVC and 30,000 mt/year is emulsion grade).
Sibur is expected to make a decision in 2008, on whether or not it wants to expand this PVC unit to 510,000 mt/year. «Should we decide to go ahead with this expansion, we will also expand the Kstovo cracker to 430,000 mt/year," Konov said. This expansion, if carried out, would likely be on stream in 2012, he said.
NEED TO ENCOURAGE FOREIGN PARTNERS
Facing global competitors with bigger crackers is not the only challenge for Sibur and for Russia. Foreign companies looking to impart technologies or operate in Russia may find the cost prohibitive, unless they can partner with companies like Sibur, as SolVin has done.
(Under the new agreement, RusVinyl will buy the PVC technology license from SolVin’s parent company, Solvay.)
This is because Russia does not provide many incentives to foreign investors who want operate in the country.
«Honestly, I am personally not aware of any government initiatives of giving incentives to someone from the outside who want to invest in Russia," said Konov. «There is some local governmental support, [they] offer lower taxation, if they have the budget. There is also the government support investment fund…this can be used but is granted on a
The Russian government has also failed to introduce any initiatives or provide funds to help Russian companies to pool resources either to build worldscale olefins crackers or improve petrochemical infrastructure, said Konov.
Konov acknowledged «there are actually very few locations in Russia that you can do this. You can build a huge cracker in Western Siberia (because of the close proximity to gas supplies), but then you have a problem in what you do with the ethylene/propylene produced. You need to have the infrastructure to transport these gas liquids. Or you need to invest there (in Siberia, with maybe other partners) and build and operate PP and PE plants," Konov said.
«There may be an idea of how the state can help…it’s been discussed, but there has not been any
«It’s something the industry wants, but it hasn’t happened.» —Shahrin Yatim, shahrin@platts.com -Ihsan Rahim, ihsan_rahim@platts.com