13 Feb 2023 14:41

Caspian Innovation Company, Ufaorgsintez sign investment agreements on commissioning petrochemical facilities, to grant right on reverse excise duty

MOSCOW. Feb 13 (Interfax) - Russia's Energy Ministry signed investment agreements in 2022 on establishing new petrochemical facilities with Caspian Innovation Company LLC and PJSC Ufaorgsintez , according to Deputy Prime Minister Alexander Novak's article in Energy Policy magazine.

The agreements on the projects of Nizhnekamskneftekhim (NKNKH), Kazanorgsintez, (KOS), and ZapSibNeftekhim (ZSN), together with three SIBUR agreements signed in 2021, should permit additional investments of over 600 billion rubles in the petrochemical industry up to 2027, Novak emphasized.

A law was adopted in October 2020 in order to introduce a reverse excise tax on ethane and liquefied hydrocarbon gas (LPG). The document sets the excise rates for 2022 at 9,000 rubles per tonne of ethane and 4,500 rubles per tonne of LPG. Meantime, the excise tax on LPG will increase by 1,000 rubles as of 2024 every year in order to reach 7,500 rubles by 2026.

In order to receive a reverse [negative] excise tax on ethane or LPG, companies will either have to introduce new processing facilities with capacity over 300,000 tonnes per year, or sign a special investment agreement with the Energy Ministry prior to January 1, 2023, and, invest at least 65 billion rubles in new capacities from 2022 to 2027.

As reported, Caspian Innovation Company LLC intends to launch a gas processing and polymer production complex near Gazprom's Astrakhan GPP in 2024. The estimated annual capacity of the enterprise is 300,000 tonnes of ethylene, 650,000 tonnes of polyvinyl chloride, and 430,000 tonnes of caustic soda. The estimated volume of required feedstock is at least 320,000 tonnes of ethane and 62,000 tonnes of LPG per year. It has been noted that the cost of the project will exceed 90 billion rubles.

In order to provide CMC with ethane, Gazprom plans to reconstruct the processing units of the AGPZ at the same time as constructing the complex in order to produce the first ethane in 2026.

It has also been reported that Ufaorgsintez in 2018 began preparatory work in order to implement a project to construct a polyolefin complex in 2019-2028, including building a pyrolysis complex, a polypropylene production unit, and a polyethylene production unit. The amount of investments was estimated at 60 billion rubles. The company announced a tender in 2021 for designing a polyethylene production unit with capacity of at least 250,000 tonnes per year.