14 Sep 2010 12:14

Russian petrochemicals could get pre-crisis 90 bln rubles investment in 2010

NIZHNY NOVGOROD. Sept 14 (Interfax) - The Russian petrochemicals industry could get 80 billion-90 billion rubles investment this year, Energy Minister Shmatko told reporters in Nizhny Novgorod on Monday evening.

"We could reach the pre-crisis level of 80 billion-90 billion rubles in 2010," Shmatko said.

He said the sector had been dynamic this year and had managed to buck its the crisis-period tendencies, thanks mainly to the government's support in areas like zeroing out duties on liquefied hydrocarbon gases. Also, the state-owned Sberbank has provided 36 billion rubles and Vnesheconombank (VEB) $1.4 billion rubles in loans, Shmatko said.

But Russian petrochemicals plants still have some catching up to do with their international peers. "We have to remember that petrochemicals here was late out of the starting blocks, before and after the 1990s," he said, adding that under-investment was still a problem.

Indeed, there are problems right now. OJSC Kaustik , one of Russia's biggest PVC producers with approximately a quarter of the country's output, has been short on ethylene, its key raw material after OJSC Salavatnefteorgsintez cut supplies in July. Reports have said Salavatnefteorgsintez did not intend to resume supplies until a debt of 59 million rubles had been settled, while the supplier itself said it had cut the supplies due to scheduled production capacity maintenance.

Shmatko said on September 13 that a solution had now been found and that Salavat would supply Kaustik with the 4,500 tonnes of ethylene it needed per month for the next two months at 19,000-19,500 rubles a tonne and would then sign a long-term deal.

In addition, Shmatko said his ministry was proposing to build six pyrolysis plants over the next 15 years to recycle the surplus of hydrocarbon material that was being created as refining depth and associated petroleum gas utilization increase.

Russia currently has the pyrolysis capacity to deal with 4.2 million tonnes of this material, yet 27 million tonnes have accumulated.

Alexander Dyukov, the chief of oil producer Gazprom Neft , said additional pyrolysis capacity could be built at existing sites in Budyonovsk, the Volga region and West Siberia, and new sites might be built in the Far East, where Rosneft is planning to build a petrochemicals complex, with the focus on the Southeast Asian markets. In time, new pyrolysis plants might be built in the Baltic region.

Russia has 12 pyrolysis plants today. The biggest are at the Nizhnekamskneftekhim complex in Tatarstan, which is capable of producing 600,000 tonnes of ethylene per year.