19 Apr 2024 10:38

SINOPEC completes entry into Kazakhstan's Polyethylene project - Government

ASTANA. April 19 (Interfax) - China Petrochemical Corporation (SINOPEC) has officially become a shareholder in the Polyethylene project, a report from the press service of the Kazakh government said.

Prime Minister of Kazakhstan Olzhas Bektenov met with Sinopec President Zhao Dong and CEO of SIBUR Mikhail Karisalov on Friday, the press service said. Discussions centered on the collaborative development of an integrated gas-chemical complex for polyethylene production valued at $7.7 billion. With a capacity of 1.25 million tonnes per year, the project will eventually represent 1% of global capacity.

"During the meeting, a trilateral protocol was signed, officially marking Sinopec's entry into the project as a participant. The ownership structure now includes KazMunayGas with 40%, Sinopec with 30% and SIBUR with 30%," the statement said.

A gas separation complex will be built at the Tengiz field to supply raw materials (ethane) to the Polyethylene project. Its capacity will reach 9.1 bcm of dry gas processing per year, with the goal of producing 1.6 million tonnes of ethane.

Ethane will be transported via the main pipeline from Tengiz to the Karabatan site in the Atyrau region, where a polyethylene production plant will operate.

The project aims to produce approximately 22 grades of polyethylene using licensed technologies from American companies Chevron Phillips and Univation, with premium products accounting for 40% of production. Polyethylene is widely used in various industries and households, making it the most popular polymer globally.

Construction of the plant is scheduled for completion by 2029, and will create over 8,000 jobs during construction and nearly 850 jobs during operation.

The government is backing the project, which will be located in a special economic zone with suitable infrastructure and tax benefits. Prime Minister Bektenov stressed the significance of optimizing local resources for the project's success.

"Our economy prioritizes high-value production, especially in manufacturing goods with rapidly growing added value within the export-oriented chain. For example, polyethylene represents a value added that is 20 times greater than its raw material, ethane, with an increase from $80-90 to $1600-1800 per tonne. The Polyethylene project is expected to provide a significant boost to both the manufacturing sector and the country's overall economy," Bektenov said.

Analysts estimate that the project's contribution to the country's GDP by 2030 could reach approximately 1.2%, Bektenov said.

The Samruk-Kazyna state fund, KazMunayGas, SIBUR Holding and participants from the operating companies of the Polypropylene and Polyethylene petrochemical projects signed the main documents in November 2022 on the creation of joint ventures using Kazakhstan Petrochemical Industries and Silleno LLP as their basis (The "Polyethylene" project). The parties determined the terms of partnership in the joint venture, in particular, investment in the project, as well as the procedure for selling the enterprise's finished goods. An agreement was signed in May 2023 on the entry of Chinese Sinopec into the Polyethylene project as a full partner.