Rosneft reviewing feasibility study for rubber plant in Armenia
YEREVAN/MOSCOW. Feb 27 (Interfax) - Russian oil major Rosneft has expressed intentions to invest about $500 million in the construction of a new rubber plant in Armenia, Armenian Deputy Energy and Natural Resources Minister Iosif Isayan told reporters.
He said Rosneft voiced these plans recently in Sochi during negotiations with an Armenian delegation that included Isayan. The new plant would be built on the premises of Nairit Plant, he added.
The plant will produce butadiene-styrene rubber, for which there is strong demand on the world market, Isayan said. This rubber is used primarily in production of automobile tires.
Isayan said Armenia's accession to the Russia-led Customs Union will make the Armenian market more attractive to Rosneft, since there will be a legislative opportunity for duty-free trade.
Representatives of Rosneft, Pirelli Tire Russia and Rosneft Armenia signed a letter of intent in Yerevan at the end of 2013 to form a joint venture to produce butadiene-styrene rubber that is used to produce more environmentally friendly tires.
A spokesman for Rosneft told Interfax that the company is now studying the feasibility study for the project. "Based on the results of the assessment, it will be possible to discuss the investment parameters of the project," he said.
The capital assets of Nairit Plant and its principal shareholder Rhinoville Property Limited were pledged as collateral on a loan from Mezhgosbank, and were forfeited to the bank due to default on the loan. The $70 million loan was extended for five years, to the end of December 2011, at 12.5% interest, and secured by the plant.
Nairit Plant is the only producer of chloroprene rubber in the CIS, but it has been standing idle since April 2010 due to financial troubles. Its debt is estimated at $130 million.