Lukoil, China's CC7 sign cooperation agreement on gas chemical facility in Budennovsk

MOSCOW. Nov 13 (Interfax) - Lukoil and China National Chemical Engineering & Construction Corporation Seven (CC7) have signed a cooperation agreement on the creation of a gas chemical facility in Budennovsk, Stavropol region, Lukoil said in a press release.

The document provides for the development of project documentation in cooperation with Russian companies.

"The project will enable natural gas produced at Lukoil Group fields in the North Caspian to be monetized effectively by manufacturing carbamide, a chemical fertilizer that is much in demand in the world market," the company said.

An option to use an incentive mechanism is currently being examined jointly with the Stavropol region authorities. This mechanism could take form of a special investment contract for the project, which will create new jobs and additional tax payments.

Lukoil planned to reach a final investment decision in 2020 to build a petrochemical complex at Stavrolen by 2020 to process gas from the North Caspian into ethylene, polyethylene and polypropylene. Lukoil planned to launch a mineral fertilizers and ammonia plant costing $2 billion in 2023-2024 as part of the construction of a petrochemicals complex for Caspian fields.

Stavrolen is the second largest producer of low-density polyethylene in Russia after Kazanorgsintez , and the third largest producer of polypropylene after Nizhnekamskneftekhim and Tomskneftekhim. The gas processing plant at Stavrolen currently processes more than 2 billion cubic meters of gas per year.

CC7 is a wholly-owned subsidiary of China National Chemical Engineering Corporation (CNCEC). The latter is one of the largest companies in China with great expertise in creating chemical facilities and conducts operations in over 80 countries. CNCEC celebrates its 70th anniversary this year.