ted to 800 billion roubles. 

The main question facing the Power of Siberia relates to the demand for Russian gas from the Chinese side which is in effect not guaranteed.  The Chinese economy is hard to predict, but it would seem that estimates of gas consumption have been over-exaggerated. 

The Amur Gas Chemical Complex, being evaluated by SIBUR, is yet to be confirmed but looks tentatively a good prospect.  The decision to locate the gas processing plant in Svobodny TOR will certainly be beneficial to Gazprom and SIBUR.  Other TORs in the Amur region include Belogorsk and Priamurskaya.

Amur energy projects

Major energy projects in the region include the Nizhne-Bureya HPP, which is close to completion, whilst Russian Railways is involved in the modernisation of BAM and the Trans-Siberian railway.  Thus, the Amur region looks to possess a number of promising projects which could transform the prospects for economic development. 

In 2015 GDP for the Amur region fell by 9% against 2014 so recent performance has not been good.  Tourism is an area which is growing, particularly from China where access is to be improved from Heihe on the Chinese side of the Amur River to Blagoveshchensk on the Russian side by the construction of a cable car.  Tourism is seen as a good way and revive business in Blagoveshchensk. 

Primorsky Kray, overview 2016

Primorsky Territory in 2015 and early 2016 was in a very contradictory situation, which in this case clearly reflects the characteristics and problems of the Far Eastern regional policy as a whole.   On the one hand, the Primorye was the main and largest beneficiary of the decisions taken by the federal government aimed at improving the investment climate in the Far East and ensuring sustainable economic growth.  On the other hand, a worsening of the socio-economic situation took place last year without any sign for economic growth. 

The development of the free port of Vladivostok represents a breakthrough pilot project for trade and economic development I the Primorsky Kray.  The free port is improved from the point of view tax and financial conditions and administrative procedures version of the advanced development of the territory, which is thus clearly focused on cooperation with the outside world. 

At the same time, the project free port on the practice has encountered a number of obstacles.  One of the key ideas - turning the coastal part of the Primorsky Territory in the area with the greatest lightweight of the state border remained on paper quickly realize this idea in Russian conditions proved to be difficult.  Visa-free regime of eight stay of foreigners on the territory of the Freeport have not earned.  Free customs zone regime is also not functioning.  In other words, the gateway to the outside world that can be created at the expense of a free port in the Primorsky Kray, remain closed.

Regarding other investments, the construction of the fertiliser plant at Nakhodka is due to start next year which could take four to face years to complete.  Investments in construction of the Nakhodka plant fertiliser capacity will comprise 400 billion roubles and includes capacities of 1.1 million tpa of ammonia, 2 million tpa of urea and 1 million tpa of methanol.

Vostochny Port

Marine Technologies started in early March the creation of a dry cargo dock for the Vostochny Port.  Vostochny Port has also announced the start of commissioning of the third stage of cargo handling equipment.

National Chemical Group-Kozmino port

National Chemical Group is constructing its fertiliser and methanol complex at Nakhodka where it will be served by a new terminal constructed at the Kozmino port.  The volume of investments in the construction of the terminal is estimated at 370.5 billion roubles.  Around 600 hectares has been allocated for the construction of the fertiliser and methanol complex in the area of the Kozmino bay.  In addition to production, the project includes reconstruction of existing utilities, as well as the construction of a sea terminal. 

The plant will annually process about 8 million cubic metres of natural gas transported through the pipeline system Power of Siberia.  NHG and Gazprom Mezhregiongaz have already signed a contract for the supply of raw materials for a period of 20 years.  The complex is expected to start in 2022 with a capacity of 1.1 million tpa of ammonia, 2 million tpa of urea and 1 million tpa of methanol. 

VNKH

Russian President Vladimir Putin instructed the government to take steps to supply the necessary volume of gas to the Eastern Petrochemical Complex (VNHK).  As reported on the website of the Kremlin, Putin gave such a commission to support the project construction VNHK.  It is also reported that the Cabinet will also have to consider the inclusion in the appropriate state and federal target program of activities for construction of the external infrastructure of the Eastern Petrochemical Complex and the financing of the construction of the federal budget.  In addition, the government will decide on the allocation of land without bidding for the construction of the complex. 

The administration of Primorsky Kray will need to consider the inclusion in the relevant state program of activities for the construction of water supply facilities, public roads of regional significance and social infrastructure of the VNKH petrochemical complex co-financed from the federal budget.

VNKH

Russian Railways will ensure priority delivery of goods for the construction of the Eastern Petrochemical Complex (VNHK) near Nakhodka.  It is assumed that Gazprom and other gas suppliers will provide connection of the complex to the main gas pipelines and gas distribution networks, and Russian Railways will establish the delivery of goods for the construction VNHK. 

The VNKH complex is being designed to have a capacity of processing up to 30 million tpa of hydrocarbons.  On the one hand, the complex is to ensure the Far East quality of motor fuel whilst another objective is related to the transition from Russian raw materials exports to the production of high value Petrochemicals

The issue of the source of financing of the project of the Eastern Petrochemical Complex (VNHK).  Thus, the Primorsky Kray has recommended to consider the inclusion of measures for the construction of industrial and social infrastructure in the respective regional state program.  In addition, the federal government level decision will be taken on the financing of the construction of external infrastructure VNHK.

Rosneft-ChemChina jv on polymer coatings

Rosneft and ChemChina signed an agreement in December 2016 to establish a joint venture for the production of polymer coatings and paints in the Primorsky Kray.  The materials from the jv are to be used in the protection of buildings and the Arctic marine vessels produced at the Bolshoy Kamen shipbuilding site at Nakhodka.  The capacity of the plant will amount to 50,000 tons of paints and plastics, whilst it is expected that the joint venture will become the leader of the domestic market for the production of special marine coatings.  Rosneft and ChemChina will conduct a feasibility study of the project and the necessary preparations for the creation of a joint venture. 

Rosneft together with Japanese companies planning to develop a feasibility study (FS) project to build a gas chemical complex in the Far East.  The agreement was signed with Marubeni Corporation and Mitsubishi Heavy Industries ltd.  in the framework of the official visit of the President of the Russian Federation in Japan on 16 December.

Under the agreement, Rosneft, together with its partners will develop a feasibility study for the project, which involves the use of Japanese technology.  It is known that the new complex will be located in the Russian Far East.  The exact location will be determined by the results of the joint research.

The construction of a gas chemical complex has been selected by the Japanese government as one of the projects that will be implemented in the framework of Russian-Japanese cooperation it is expected that the project will receive financial support of the Ministry of Economy, Trade and Industry of Japan.

Rosneft and Japanese investors Far East investments

On 16 December 2016, Rosneft signed an agreement with a consortium of Japanese investors, including Marubeni, on the basic conditions of cooperation for joint exploration, development and production of hydrocarbons in the license area in the shelf zone of Russia.  The agreement is aimed at the effective monetisation of oil and gas resources, including in the promising market of Japan.

Primorsky Kray

In 2016 the Primorsky Kray continued deployment of large-scale projects whilst at the same time existing sectors of economic activity noted a decline in performance.  There were no improvements in agriculture despite the efforts to create more farmland whilst in the mining sector the Lermontov tungsten concentrate mine was closed.  Prospects in the coal industry seem weak due to the increasing use of gas and miners face an uncertain future.  The creation of the Free Port of Vladivostok and connections with China represent a major business investment whilst Rosneft’s increasing role in the region is helping to attract new funds and jobs.  The major projects being managed by Rosneft include the VNKH refining and petrochemical complex and the Bolshoy Kamen shipbuilding yard, which are both in the area of Nakhodka.  In addition, the project to build a global scale complex for the production of fertilisers and methanol is being undertaken at Nakhodka as part of the National Chemical Group. 

For its part, the Far East Development Fund continues to support the maritime TOR and allocates funds for projects related to the large federal business.  Among them, for example, the construction of a residential complex in Bolshoi Kamen and infrastructure TOR St.  Michael, which operates Rosagro.  The long term problems of the region largely relate to construction and the lack of progress. 

By still of strategic importance for the Primorsky Kray is the development of infrastructure, enabling the region to fulfil its transit function.  Slowly, but still it moves the issue with the creation of transport corridors Primorye-1 and Primorye-2.  There was an associated project toll ring road around Vladivostok (VKAD) length of 22.6 km, which was developed by the South Korean company (its construction should take place in stages in 2018 - 29 years., And will cost $.,2 billion). 

But it looks very positive momentum maritime ports, constantly increasing volumes of cargo handling, in tons.  h.  oil and coal.  The leader, of course, East Port, but the best dynamics shows a small Posiet.  In particular, due to the actual cancellation of the project of construction of the coal terminal in the Bay of Suhodol (caused protests from - for environmental issues) coal company SDS began to increase supplies through Posiet.  KRU builds a third of all the coal terminal in the East and agreed to handling coal, mined in Yakutia company Colmar.  It is possible, that all - will emerge and new coal port Vera, which deals with Rostec for the supply of coal exports from the Amur region (state examination gave a positive opinion on it). 

True, in this case the group Evraz, noticeably slowed down in the last few years, it is going to sell its port in Nakhodka.  And not all of it is now clear to the group of large, Sum, companies which are experiencing financial problems (these problems have become acute at the shipping company Fesco and caused protests of dockers of Vladivostok Commercial Sea Port).  Nevertheless, being designing a large grain terminal in Zarubino, the first start-up complex is expected to be completed until 2021.  And transport hub project East - Nakhodka, which is engaged in Sum, will receive support from the National Welfare Fund. 

In addition, completed, finally, the protracted saga with the change of ownership of the Vladivostok airport Kievich.  Surprises have happened, and the airport is moved to full ownership of the alliance FPG Oleg Deripaska, the Russian Direct Investment Fund and Singapore's Changi Airports International.  Perhaps, the arrival of the airport operator of one of the best airports in the world, located in Singapore, have a positive impact on the work Kievich. 

Thus, Primorsky Kray on the results of 2016 g.  It turned out to be a region with strong contrasts.  One of them was the contrast between the launch of numerous projects and the lack of any - or the visible results for the regional economy.  For the benefit of the region hosts a variety of federal decisions, but financial assistance is declining region.  In political life and had a lot of tension, and scandals, but now the ruling elite rather quietly kept their positions, but in the public mind with all that had happened the growth of opposition sentiment.  Probably, this situation was the result of a confluence of circumstances, and the new changes, indicating the building up a more coherent logic, the region will continue to occur.

Primorskiy Kray-Avatrade

In Primorsky Kray Avatrade entered into an agreement with the Japanese company Superfeyts on construction in Primorye recycling plant products using polymer materials.  The contract also stipulates that local company will be the exclusive distributor of Japanese technology to Russia.  According to Avatrade this is the first time this technology appears in the Russian market.  Its implementation will allow the region to move quickly to the separate collection of waste and recyclable waste.

Up to 31 companies operate on the territory of Primorsky Kray with Japanese investment, the most active in the field of wood processing and mechanical engineering.  There are joint plans for mining, in agriculture, construction and tourism. 

YATEC-gas chemical complex

Group Amount is exploring the possibility of implementing the project of construction of gas chemical complex for the sale of gas from the fields YATEC (a part of the Amount).  We're talking about several billion dollars.  This is a complex project that obviously requires a very serious partner and financing.

According to her, the payback period will be greater than 3 years, and will require significant investment.  The company is ready to invest more than 51% of funds in the implementation of a gas chemical complex.

Despite the fact that YATEC owns major assets in gas production it does not have access to gas exports.  Accordingly, the construction of the gas pipeline Power of Siberia will not solve the problem, so the company is exploring the possibility of gas processing in the chemical products for access to export.

The complex can process gas into methanol, propylene, ethylene, it could be even fertiliser.  In addition, she did not rule out the construction of an integrated large installation, which will make all of these products.

YATEC holds license for commercial development Srednevilyuisk and Mastahsk condensate fields, exploration and production of Mirny and Tolonsk areas of hydrocarbons, as well as for exploration with the purpose of exploration and evaluation of deposits within Tymtaydahsk area of the Republic of Sakha (Yakutia).  Natural gas reserves of C1 and C2 are estimated at 203 billion cubic metres of oil and gas condensate 14 million tons.

Russian Railways-Yakutia

Russian Railways plans to increase investment in 2017, but not enough to avoid project delays.  The new route connecting the BAM railway to the diamond capital Yakutsk faces funding and contractor problems which have pushed the investment plans back.  When eventually completed there are dreams of extending the line on further from Yakutsk to Magadan, Anadyr and even Alaska. 

The 1,239 kilometre (770 mile) line will be the shortest of three great Siberian lines, including the Trans-Siberian route and the more remote Baikal Amur Mainline (BAM).

From south to north, the new line links Berkakit on the BAM route with Nizhny Bestyakh which lies across the Lena River from Yakutsk.  It is hoped to bridge the Lena and give the capital of the Sakha Republic its own railway station, although this crossing, to be built on permafrost, appears to be a victim of the current economic crisis. 

Called the Amur-Yakutian Mainline (AYAM), it was supposed to start operating in 2012 but the iconic new route which involved complex construction challenges has become jinxed by a litany of delays.

It opened for the first cargo train in August 2014, but the worked needed to build stations and facilities for passengers is not completed due to the bankruptcy of a contractor.  Deadlines come and go and the project is unlikely to be completed before 2020. 

Yakutia electricity

Vladivostok.  Joint Agency Far Eastern Energy Management Company chose the general contractor to perform work on the expansion and reconstruction of electric grid facilities in Yakutia to cover promising loads of oil pipeline Eastern Siberia - Pacific Ocean (ESPO).  It is reported by the energy company.

As a result of an open one-stage tender FEEMC General Contract signed with OOO Stroy Gas Invest (Krasnodar), the price of the participant application was 630 817 582.15 roubles including VAT.

Under the terms of the agreement, all construction and installation work to be performed in 2017.  Upgradeable electric grid facilities are part of the overhead line 220 kV Chernyshevsky - Peace - Lensk - Peleduy with a tap to the NPS-14.  It is the largest in the Far East power transmission line, which provides a reliable power supply to pumping stations of ESPO and other consumers in Mirny, Lena and Olekminsk areas of the Republic of Sakha (Yakutia).

Recall that in the 2010-2014 period.  in the West power district of Yakutia FEEMC completed the construction of more than 1,800 km of transmission lines of 220 kV substations and five transformer capacity of 402 MVA.  Since 2015 FEEMC started the implementation of measures to increase its own power grid infrastructure to meet the prospective loads ESPO pipeline and connection objects pipeline Power of Siberia (Yakutia gas production centre).

According to Transneft, by 2020 the capacity of the ESPO-1 is planned to increase to 80 million tpa, and the ESPO-2 to 50 million tpa.  This will not only increase the volume of oil exports to Asia-Pacific, but also to ensure the oil both existing and planned for construction of refining capacity in the region.

Amur Oblast, electricity

DRSC branch Amur electrical networks (part of the P RAO ES of the East) began construction of the substation Factory 35/10 kV in Free for connection objects Amur gas processing plant.  The project has passed the state examination in October received a building permit, is currently the contractor has started the preparation of the construction site.

Substation Factory will be built 11 kilometres north of Svobodny, provide technological connection to electric networks of the two objects of Gazprom processing Blagoveshchensk.  One of them - a platform of temporary buildings and constructions builder’s settlement construction as part of Amur gas processing plant.  The second - the construction site and auxiliary facilities of the plant.  As part of the project to connect the objects in addition to the Amur GPP substation construction will require the construction of 35 kV and reconstruction of the substation North in free.  Construction and commissioning of the object must be completed in June 2017, because the contract of technological connection of OOO Gazprom processing Blagoveshchensk must be connected to power supply until July 1, 2017.

DRSK a major project to connect to the power supply of the gas transportation system, Power of Siberia and Amur gas processing plant (GPP).  Taking into account the performance of all applications received to date for technological connection of the gas industry load in the Amur branch networks DRSK will grow by almost 10%.  The Amur and South Yakut branches DRSK has already received 33 applications for technological connection of the main gas pipeline Power of Siberia and 11 applications for the projects of the Amur GPP.  The total declared capacity - more than 65 MW.

In addition, planned to build two new substations 35/10 kV in Skovorodinsky area and one 110/10 kV Sivak near the village, as well as high-voltage power lines.  They will ensure the supply of electricity for the operation of the gas pipeline Power of Siberia.

Silk Road Fund-SIBUR

Silk Road Fund and China Development Bank signed a framework agreement to buy 10% of SIBUR’s shares, following Sinopec’s acquisition of 10% in December 2015.  SIBUR signed an agreement with the Chinese Foundation for the Silk Road (Silk Road Fund) and China Development Bank) for the sale of shares in the company.  Co-owner of SIBUR Leonid Michelson signed an agreement to sell belonging to him a share in the company to Chinese financial institutions CDB and SRF.

Gazprom processing Blagoveshchensk

Consulting firm PwC is to develop a long-term maintenance programme on behalf of Gazprom processing Blagoveshchensk for staff of the Amur Gas Processing Plant for the period of 2016-2025.  PricewaterhouseCoopers Consulting was selected by Gazprom to develop an appropriate programme for an agreed price of 4.34 million roubles.  PricewaterhouseCoopers was also invited to Gazprom as a consultant on taxation for the Amur Gas Processing Plant and to perform several other functions.  Financial advisors to the project include Gazprombank, ING and the China Development Bank.  With the Chinese bank, Gazprom has recently signed a Memorandum of Understanding which sets out the general principles of cooperation between the parties in the organisation of the project and other financing, including the implementation of the project of construction of the Amur GPP.

NIPIGas

In order to attract personnel to Amur GPP, NIPIGas has developed a programme for the graduates for the Siberian and Far Eastern universities.  From applications of around 2,000 people only 27 were selected.  Young professionals will work in design offices NIPIGas in Blagoveshchensk and Svobodny, as well as on the construction sites of the Amur GPP.  As a result of the internship the most successful will be made a job offer.

On the improvement of social infrastructure near the Amur gas processing plant, Gazprom is to allocate 8 billion roubles from the federal budget for three years.  The funds will be spent on construction of a new neighbourhood at Svobodny, and the creation of infrastructure, sports, public facilities, objects of culture.  Minvostokrazvitiya previously reported, to create new objects of social infrastructure in the district, which is being built for the employees of the Amur GPP, need to up 4.1 billion roubles of budget financing.

At the present day, as the regional government reports, conducted engineering preparation of the territory of the Amur GPP, construction of access roads, river berth, railway facilities, temporary buildings, including rotational construction camp.

NIPIGas is responsible for designing the Amur GPP, coordinating deliveries of equipment and materials and construction.

Amur GPP-Zeya Pier

Construction of a temporary pier on the Zeya River to deliver bulky cargo on the Amur gas processing plant is 40% complete.  The work is being undertaken by Trust Zapsibgidrostroy which sunk the first pile on 5 November.  As of 28 November, 235 tons of steel have been installed.  In total, the facility will comprise 1,040 tons of steel for the construction of the quay wall of a length of 125 metres.

The next step will be to build a facility on the bank of the river, and an area of 8,400 square metres for the installation of cranes, warehouses and parking lots.  In addition, the Trust Zapsibgidrostroy performs dredging required for the carriage of goods by vessels for navigation periods.

Berthing facilities are designed for the turnover of goods up to 32 tons and are designed for unloading and temporary storage of bulky and heavy equipment.  Columns, heat exchangers, absorbers, parts of furnaces, gas turbines, generators, compressors, pumps, the integrated modules for modular assembly and metal.  Projected construction should provide unloading equipment weight of one place up to 1,200 tons.  Construction is scheduled for completion in October 2017.

The company notes that also carried out engineering surveys for further expansion of the quay with a length of 250 metres.  During construction of the Amur Gas Processing Plant equipment will be delivered along the route from the port of Sovetskaya Gavan on the Pacific coast upstream of the rivers Amur and Zeya.  The equipment will be delivered to the place of construction of hydraulic structures on the right bank of the Zeya River near the village of Chernigovka.

In order to construct the Amur Gas Processing Plant at Svobodny around 2.4 million tons of cargo will be needed to be shipped annually for the development of the infrastructure.  This involves the railway, the bridge over the river Great Pera, an overpass over the highway, the railroad uncommon length of about 45 kilometres, as well as two railway stations Factory and Factory 2 next to the objects of the Amur and the station GPZ Ust-Pera.

Blagoveschensk-Heihe bridge

The construction of a $360 million highway bridge connecting China and Russia across the Heilongjiang river has finally started after 28 years of talks.  The main span of the bridge is 1,283 metres and links Heihe to Blagoveshchensk.  The bridge is an important link, and part of the China-Mongolia-Russia economic corridor.  It will strengthen cooperation between the two regions.

The bridge will boost trade between China and Russia and China’s investment in infrastructure, energy, and natural resources in Russia.  The bridge will benefit both Russia’s far east development and China’s revitalisation of the old industrial base in northeaster provinces.  Passenger flow between the two cities is expected to reach 1.5 million a year by 2020, double the current figure.  Cargo volume will reach three million tons by then, ten times today’s figure.

Tomsk TOR

At the end of November, a new TOR for the Seversk region of Tomsk was outlined including a list of residents.  It is expected that future residents are implementing projects in the chemical, pharmaceutical, construction, IT sectors, as well as in the manufacture of cable products. 

• Siberian Chemical Combine intends to construct a plant for the production of titanium dioxide pigment by fluoride technology, the production of electrolytes for chemical current sources on the basis of lithium hexafluorophosphate, the production of commercially attractive fluorinated products of the secondary technogenic raw materials; Ltd. 
• United innovative company sells recycled ash and slag (ZSHM); NPO Rare Metals of Siberia will create a domestic beryllium production,
• LLC Village Milk will build production plants and storage facilities for the processing and marketing of dairy products;
• FSUE SPb NIIVS FMBA of Russia intends to implement the project Pharma for the production of heparin substances and dosage forms,
• LLC Profi-S is going to open a factory for the production of PVC pipes and PVC-U, LLC
• Alaid create industrial plant for the production of mullite-containing powders and ceramic materials and products based on them,
• OOO West Siberian cable plant will create industrial company in the production and sale of cables and wires, Ltd.  IT-service will be engaged in the development of high-tech IT services;
• LLC Tomsk catalysts plant will create import-substituting production of titanium-magnesium catalysts (TMK) ethylene and propylene polymerisation, Ltd. 
• Kristo starts producing aluminosilicate micropublishers; HKGO Ilmenite will create a company for the production of porous ceramic pipes by SHS;
• Scientific-Production Firm Alice will manufacture and arch tunnel of metal detectors; LLC Innovative company intends to implement the production of composite materials based on natural polymers and bio phosphates for replacement of bone tissue;
• Sandora LLC intends to establish production of polymer products, surface modified with elemental fluorine.

The Seversk TOR is being set up to attract 12.9 billion roubles of private investment over 10 years, and to create 1,700 new jobs.  The project to create the top Seversk was submitted to the Ministry of Economic Development and the Ministry of Finance of the Russian Federation in December 2015.  Then it was assumed that the top will be created in three stages: in 2016-2017 projects high degree of readiness will be launched in 2019 - projects which are still at the stage of research works in the 2021-2022.

Polyplastik-Khabarovsk

Russian group Polyplastik is to invest in the development of the industrial area of the TOR Khabarovsk including a planned capacity of more than 15,000 tpa of polyethylene pipes and fittings.  This is expected to fully meet the needs of the region in the polymer pipes for external water supply, gas distribution, sanitation and sewage, cable networks and pipelines for industrial use.  The TOR Khabarovsk was confirmed in the spring of 2016.  In the future it will provide tax benefits to reduce costs for the purchase of polyethylene pipe brands from Korea and Thailand.

Polyplastik is the largest Russian manufacturer of plastic piping systems for outdoor water supply and drainage networks.  The group includes more than 10 enterprises of the tube polymer industry, which are located in Russia, Belarus, Kazakhstan, with total capacity of over 300,000 tpa.  The annual turnover of the group is about €1 billion.

DRSC-Konsomolsk

By the end of 2017 electricity supplier DRSC intends to compete the connection of the TOR Komsomolsk to power grid facilities in the Khabarovsk Kray.  The Khabarovsk branch of JS DRSC has already started to develop the project.  Within two months of the Khabarovsk power companies planned to complete all of the necessary volume of project activities and to begin immediate implementation of construction and installation works, the estimated value of which is more than 11.5 million roubles.

For the TOR Komsomolsk eight residents have been already registered, which have announced their intention to invest more than 8 billion roubles in the creation of industries including aircraft, engineering, etc.  

Chinese involvement Khabarovsk

Investment and Development Agency of the Khabarovsk Kray is in the talks with the Chinese concern China Communications Construction Company (CCCC) for the construction in the Sovetskaya Gavan Harbour complex for transhipment of liquefied gases.   The Chinese corporation has offered cooperation to the Russian project initiator Far East Gas Company after the first presentation at the road show in Beijing. The investment project on construction of cargo complex in Sovetskaya Gavan is estimated at $270 million.  The turnover of goods produced by the company amount to 1 million tonnes, the logistics will be focused on the supply of Russian LPG market in South-East Asia.   China Communications Construction Company has experience working with Russia, participating in the construction of the port terminal and pier in St. Petersburg.

Central European refining margins & supply

PKN Orlen’s refining margins were recorded at $6.40 per barrel in May, down from $7 in April, whilst Unipetrol’s margin dropped from $3.92 to $3.4 and MOL’s from $6.8 to $6.1.  Polish refiner Grupa Lotos recorded a decline in refining margins in May to $6.7 per barrel against $8.03 in April.  Grupa Lotos increased its purchases of oil from non-Russian sources to 32% of total shipments in the first five months in 2017 against 25% in the same period last year.  For the first time, PKN Orlen has arranged for deliveries of 700,000 tons of crude this year for its Polish and Lithuanian refineries from the Kashagan field in Kazakhstan.  Orlen is also purchasing crude from Saudi Arabia and Iran in 2017. 

Central European petrochemical margins

Orlen’s petrochemical margin rose to €1017 per ton in May, the highest level since January 2016.  Margins for Orlen rarely exceed €1000 per ton for petrochemicals, except notably for a four-month period in the middle of 2015. 

In the first five months in 2017 the average amount of Orlen's petrochemical margin amounted to €959.2 per ton, which was 3% less than in 2016 (€989.6), but at the same time by 14% more than in 2015 (€841.2).  The rise in petrochemical margins is expected to help second quarter results.

MOL’s petrochemical margins have stabilised, recording €601 per ton in May after several months of lower numbers.  Unipetrol’s petrochemical margin for olefins, which are calculated differently from Orlen, rose to €435 per ton in May from €399 in April.  Polyolefin margins for Unipetrol rose to €446 per ton in April against €419 in May.  The resumption of ethylene production at Litvinov in Q4 last year has seen a rise in polyethylene export activity and a slight fall in imports.

US LNG supplies arrive for first time in Poland

PGNiG received its first American LNG cargo in June, delivered to the LNG Terminal at Swinoujscie, Poland.  It is the first type of delivery to Central and East Europe, with PGNiG claiming that it is planning to conclude further spot agreements.  The purchase of gas from the US are the consequences of the company’s strategy to diversify gas delivery sources for Poland.  PGNiG also sources LNG from Qatar, and states it is unaffected by the political difficulties in the region. 

PKN Orlen-petrochemical strategy

PKN Orlen has reaffirmed its strategic objectives intends to develop the petrochemical division and at the same time carry out projects related to new energy sources.  PKN Orlen has emphasized that the key issue for the company is to increase the efficiency of assets, including the construction of the metathesis plant at Plock, and the construction of the new polyethylene plant at Litvinov.  

MOL-LDPE plant modernisation

In line with its long-term strategy the MOL Group is diversifying away from motor fuels and expanding its petrochemicals portfolio with the aim of becoming a leading chemical company in Central and East Europe.  The group plans to invest approximately $4.5 billion on growth projects over the next decade, deepening its downstream integration throughout the value chain whilst also moving towards semi-commodity and specialty products.  MOL commissioned a new butadiene plant in 2015, while the synthetic rubber plant (SSBR), currently under construction, is scheduled to start operations in 2018.  Previously MOL hoped to start the new plant by the end of 2017, but start-up has now been delayed.  The €300-million SSBR project includes 49% owned by MOL and the remaining 51% owned by JSR.

Petrochemical and chemical investments are intended to be built upon existing hydrocarbon sites within MOL’s refineries, mostly focused on TVK and Slovnaft in addition to the Danube refinery at Szazhalombatta.  The investments should enhance MOL’s current strategy of deepening its downstream integration along the value chain, whilst also moving towards semi-commodity and specialty products.

As part of its investment programme at Tiszaujvaros MOL has selected Burckhardt Compression to modernise the Hyper Compressor at its LDPE plant.  The Hyper Compressor at the LDPE plant has been in operation at Tiszaujvaros since 1991.  Burckhardt Compression will deploy qualified service engineers and provide specific training for MOL Group both on-site and at its headquarters in Switzerland.

One of the new product areas MOL wishes to develop is polyols and the group is assessing the expansion of the propylene value chain.  Propylene oxide is a project consideration to feed the production of polyols to meet the growing demand in Central and East Europe.  The regional deficit for polyols is rising, and MOL believes it can develop the product chain to add to the only existing producer PCC Exol. 

PDH Poland contractors and share issue

PDH Poland is currently assessing general contracting companies for the turnkey propylene project to be constructed at Police.  The contract obligations, when concluded, are expected to include the installation for propylene, a sea terminal for unloading and storage of propane and the supply of electricity.  The tender provides the option in the form of construction of a plant to produce polypropylene, or to examine possible options on how to use the propylene monomer. 

Originally, the deadline for submitting claims was established on 20 February 2017, and then it was extended to 1 March.  Selecting the general contractor is expected to take place by December 2017. 

Regarding finance Grupa Azot has agreed to purchase shares of a new issue of Series C for PDH Poland for a total value of zl 22.82 million.  Shares have been created for investments into PDH Poland, valued at around zl 2.69 billion.  Up to 5.2 million shares have been offered to support the construction of the 427,000 tpa propylene plant.  In terms of strategic significance, the PDH project could refocus the main interest of Grupa Azoty towards the north of Poland rather than the south at Tarnow.  Opinions on the construction of the PDH plant at Police are varied, although from a market point of view, the extra propylene would play an important part in reversing the deficit in propylene supply. 

Rompetrol Rafinare-petrochemical investment

Rompetrol Rafinare (KazMunaiGaz) is one of the companies interested in buying the HIP Petrohemija petrochemical plant in Serbia.  Besides HIP Petrohemija, the Serbian state is trying to privatise other two petrochemical plants, namely the methanol producer MSK Kikinda and the fertiliser producer HIP Azotara.  Russian company Gazprom Neft already controls the NIS refinery at Pancevo, to the north of Belgrade.

Rompetrol is interested in Petrohemija as it is keen on developing its petrochemical activity, especially since it has remained the only polymers producer in Romania on the Petromidia refinery platform.  Rompetrol Rafinare recorded an EBITDA of $34 million in the first quarter, like the first three months of 2016.  Petromidia Navodari and Vega Ploiesti together accounted for $27 million of EBITDA based on revenues of $698 million, up 21% over the same period last year.  The majority stakeholder in Rompetrol Rafinare is the group KMG International while the Romanian state has a minority 44.7% stake in the company.  Rompetrol Rafinare aims to process around 5.6 million tpa in 2017, 3.5% up on 2016.

HIP Petrohemija owns petrochemical plants in Pancevo, Elemir and Crepaja.  The company specialises in the production of high- and low-density polyethylene and other petrochemical products.  The Serbian government owns 54.89% of HIP Petrohemija's share capital, while NIS controls 12.72%.  In 2016 HIP Petrohemija exported 118,800 tons of polyethylene against 78,800 tons in 2015. 

Spolana chlorine technology extension

Spolana has had its mercury technology permit extended to 30 November 2017 from June 2017, thus allowing it a reprieve from closing production.  By December Spolana aims to have developed alternative production processes using externally purchased raw EDC.  

Extending the existing authorisation by five months will allow Spolana to finalise preparations its new raw material arrangements.  Spolana, which is the sole Czech producer of caprolactam and PVC, reduced revenues by 27% in 2016 to Kc 3.74 and a recorded a fourfold increase in its accounting loss of Kc 473 million.  Under Unipetrol Spolana is assessing prospects for a new membrane plant, although the conflict of interest amongst smaller shareholders is providing a hurdle to reaching a final decision. 

Spolchemie chlorine comversion

Spolchemie, has invested Kc 1.9 billion in its new membrane electrolysis line, which is the only one in Europe capable of producing both sodium hydroxide and potassium hydroxide.  After completing the construction at the end of 2016, the plant contractors have been engaged in the necessary preparation, testing and tuning, and the plant is close to full start-up.  The company has already supplied the first test products of new plant to its customers and the official launch is planned by Spolchemie this September.  

At the same time, with the first launch of the membrane technology, the company shut down its production in the original amalgam electrolysis process, which the latest state-of-the-art technology is replacing due to legislative requirements from the European Union.  The new technology will also allow for a doubling of the existing production up to 60,000 tpa.  The launch of membrane electrolysis will now enable Spolchemie to consolidate the strategic position of the largest producer of potassium hydroxide in Central Europe and a major player on the European market.  Total costs for the construction of new plant at Usti Nad Labem amounted to Kc 1.9 billion, representing the largest investment in the history of the company.

Far East TORs & petrochemicals

In early June the State Duma or Russian parliament, provided an increase in funding for the Far East TORs (advanced economic development areas) in which petrochemical projects form a key part both in the Primorsky Kray and the Amur Oblast.

TORs were first started in 2014 and were created to create favourable conditions for attracting investments, ensuring rapid socio-economic development and creation of comfortable conditions for the population.  These regional industrial areas include many tax benefits, including the use of over five years of zero rate of income tax.  Advantages also include reduced deductions for insurance premiums to the Russian Federation for a period up to ten years.

The Petrochemical TOR in the Primorsky Kray is based on the VNHK refinery and petrochemical project at Nakhodka and the Bolshoy Kamen shipyard which is being constructed to provide ships for transporting chemical products.  The Primorsky Kray is also involved in the creation of social infrastructure helping to provide living areas for workers and families. 

Regarding the Amur Oblast, official approval was granted on 3 June for the creation of the Svobodny TOR, in which Gazprom’s Amur Gas Processing Plant (GPP) is being constructed and SIBUR’s gas -chemical complex is under consideration.  Creating the Svobodny TOR has been designed to promote and develop industrial cooperation and integration with China and other countries in the Asia-Pacific region.  The, strategic aim includes the development of small and medium business, attraction of investments, will create new jobs, increase tax revenues to the federal, regional and local budgets. 

Other residents in the Svobodny TOR could include the Skovorodino methanol project and the Amur Plant of Metal Construction, which intends to supply its products to the construction Amur GPP.  The minimum required capex to become a resident of the Svobodny TOR is $0.5 million.  The economic activities include the production of petroleum products, chemical products, rubber and plastic products, and machinery and equipment.  Most of the production will be exported to China.  The Russian government has instructed Minvostokrazvitiya the Russian Federation together with Gazprom and the regional government of the Amur region to prepare a long-term plan for the development of Svobodny.  The model of Tobolsk is being used as the example of how the town might develop in conjunction with the construction of gas processing and petrochemical facilities. 

VNHK, access road and gas supply

Russian state organisation Glavgosexpertiza has approved the construction of the access road to the proposed VNHK complex at Nakhodka connecting the cities of Artyom, Nakhodka and Vostochny port in the Primorsky Kray.  The project involves the construction of an access road as part of the VNHK complex infrastructure.  The length of the new highway will comprise around 15 km.  Recently, Glavgosexpertiza issued a positive assessment for the construction of the Eastern Petrochemical Company (VNHK).

Besides the VNHK complex Primorsky Kray could become a leader in attracting investments, given its geopolitical position, combined with its existing logistics capabilities.  This includes the Trans-Siberian railway, non-freezing ports, etc.  Regarding gas supply for the VNHK complex negotiations of Gazprom and Rosneft continue, which involves bringing the necessary infrastructure for the transport of gas to the complex at Nakhodka.  At the same time Gazprom believes that Rosneft should supply the gas.

Rosneft seeking financial support for VNKH

Rosneft has asked for state financial support for the construction of the VNHK complex, due to the impact of sanctions in attracting international finance.  Rosneft President Sechin has invited the Russian government to buy bonds worth around 1.5 trillion roubles, or provide sites for production or support financially the construction of oil complex.  US sanctions have limited the possibility for Rosneft to secure finance for the Nakhodka complex.  At present sanctions on US finance apply to companies Rosneft, Novatek, Gazprombank and VEB. 

Power of Siberia-construction target 1,100 km for 2017

Gazprom has outlined a target to construct over 1,100 km of the Power of Siberia gas pipeline in 2017 from its total design length of 3,000 km.  The provisional construction target for 2018 comprises over 600 km of the pipeline.  The Power of Siberia pipeline is above all a political project, firstly to intensify relations with China and secondly to reduce the dependency of gas sales to the European market. 

In June Gazprom and CPC started talks on a specific timeframe for initiation of gas deliveries to China over the Power of Siberia gas pipeline.  However, there are some reported difficulties between the two sides as Beijing seems to have dampened its interest in Russian gas at the expense of LPG supplies from the US.  Another reason for the cooling of China towards the Power of Siberia is the growing import of natural gas from other sources such as Central Asia.  China currently consumes about 200 billion cubic metres of gas per annum, of which about 130 billion cubic metres are produced in China itself and one third is imported.  Notably China receives a price of $230 per thousand cubic metres from Turkmenistan, much lower than Russia can afford to offer without losing significantly. 

The low price of $230 is partly possible as almost all payments for natural gas are going to repay the loan of $8 billion which China provided Turkmenistan in 2011 for the pipeline.  Turkmenistan does not benefit from selling gas to China, but has few alternatives.  It is often pointed out that China has plenty of options and thus can play the suppliers off against one another.  Therefore, Gazprom will most likely will have to temper ambition or bury the idea of building a western route to China, known as Power of Siberia-2, from Yamal. 

SIBUR-Amur Gas-Chemical Complex-decision by 2018

SIBUR has indicated that it intends to make an investment decision to proceed with its project for the Amur Gas Chemical Complex, to be located at Svobodny, by the beginning of 2018.  The raw material for the gas-chemical complex would form a key part of the construction of the fourth stage of the Amur Gas Processing Plant (GPP) and Gazprom would need to know whether to incorporate SIBUR’s feedstock requirements into the design set-up. 

As SIBUR is heavily involved in the development of the Svobodny area and the gas processing plant it is more than likely that the gas-chemical project will be authorised unless there are some major developments.  Moreover, SIBUR is talking to Chinese investors about possible participation in the Amur petrochemical project.  In preparation for the project SIBUR and RusHydro have recently signed an agreement for the proposed Amur chemical complex under which both parties agreed on the possibility of considering options for a sustainable energy supply. 

Amur Gas Processing Plant latest contracts

Russian engineering company NIPIgazpererabotka has signed contracts with Maire Tecnimont and Sinopec Engineering Group in June for the design, procurement and construction of common facilities for the Amur Gas Processing Plant (GPP).  The Sinopec consortium, including Tecnimont, and was selected as the EPC contractor from open competitive procedures.  Contractors participating in the construction of the Amur GPP include Podvodtruboprovodstroy, Stroytransgaz, UCSC Most, Asphalt, Svyazstroymontazh, CAP-Holding and Trust Zapsibgidrostroy.  Some of these contractors cooperate with enterprises of the Amur region, using the services of electricity, supplies concrete products and products needed for the device of external networks of water supply and sanitation.

The composition of the contractual obligations with Sinopec include equipment and premises including storage facilities for liquefied petroleum gas with loading racks, in addition to power, administrative and support objects for the gas processing plant.  The prerequisite of the contract is to attract Russian specialised organisation for the supply of automation systems.  The most important factors of the Amur GPP is the export potential of the region, as Svobodny a prime location near the competitive Asia-Pacific countries. 

Besides Sinopec, China Petroleum Engineering & Construction Corporation has won responsibility to design, manufacture, supply of equipment and construction of booster compressor stations, drying installations and gas purification, and gas fractionation for the Amur GPP.  Regarding logistics, Russian Railways Logistics has formed a joint project with VTG Rail Logistics Gmbh for the delivery of parts of the equipment for the construction of the Amur GPP at Svobodny. 

Irkutsk Oil Company (INK)

Irkutsk Oil Company (INK) has outlined plans to begin construction of the plant for polymers in the Ust-Kut area of northern Irkutsk in 2018.  Work should take about four years under which INK is exploring the possibility of building a plant for polyolefin production, up to 600,000 tpa. 

The two sites comprise 257 hectares and 173 hectares respectively, both of which are located close to the Lena River.  Construction of Ust-Kut Polymer Plant represents the third stage of the investment programme, which is to be completed in 2022.  INK is considering technology from major global licensors technologies such as Linde, Technip and CB & I.  The raw material source for production is to consist of ethane from the Yarakta oil and gas field. 

Zapsibneftekhim-logistics platform starts installation

SIBUR has started building its logistics platform for the ZapSibNeftekhim complex which is to be completed by the end of 2017.  This includes the installation of silos and storage areas designed for temporary storage prior to packaging of finished products companies.  Silos are being constructed by German company Zeppelin.  A total of forty-five silos will be installed, including twelve for storage of polypropylene, fifteen for high density polyethylene and eighteen for low-pressure polyethylene.

The logistics platform is intended for temporary storage, packaging and shipment of finished products.  In addition to silo storage warehouses in the facility will include a complex packaging, storage and shipment; three overpass pipelines, as well as the container yard with a capacity of 300 containers per day.

Astrakhan gas-chemical complex

Gazprom and Caspian Innovative Company signed a memorandum on 2 June in cooperation in the creation of gas chemical production based on the Astrakhan gas processing plant.  The memorandum provides for techno-economic feasibility assessment in Astrakhan chemical capacities oriented processing ethane to ethylene followed by obtaining a polymer product.  The project also requires reconstruction of the low-temperature gas separation plants.

Under the memorandum the Caspian Innovative Company will prepare a timeline of investment for construction of the gas chemical complex.  The capacity of the proposed polyethylene plant is expected to comprise 300,000 tpa.  According to the parent company, the construction production could start as early as the fourth quarter of 2017, with operational start-up targeted for 2020.

Nizhnekamsneftekhim cracker tender-Linde

In early June at the St Petersburg International Economic Forum (SPIEF) Linde and Nizhnekamskneftekhim signed a contract for construction of the first stage of the new ethylene complex (EP-600).  The contract includes the design, supply of equipment, provision of services and execution of works of the first 600,000 tpa unit.  Construction of the first EP-600 is expected to be completed by 2021.  

The tender for the construction was contended by four licensors including Toyo, CB & I of, Lummus, and Linde.  The final stage of selection started in February 2017 in which tenders for two plants of 600,000 tpa will be selected.  The first stage and cracker of 600,000 tpa consists of plans to produce 300,000 tpa of polyethylene, 180,000 tpa of polypropylene and 200,000 tpa of polystyrene.  The second stage of the project involves 93,000 tpa of MDI and 155,000 tpa of propylene derivatives.  The contract with Linde, signed on 2 June has become part of the memorandum of strategic cooperation between the TAIF Group and Linde.  The memorandum presupposes several contracts on gas separation and industrial gas and, most importantly, four stages of the ethylene complex.  Linde has been contracted to take responsibility for delivery of technologies, design and corresponding purchases as a licensor.  Around 85% of the funds will be borrowed against the support of Euler Hermes credit insurance agency.  Around 15% of the price of the contract will be financed by Nizhnekamskneftekhim's own money.

Nizhnekamskneftekhim estimates that it currently faces ethylene supply shortages of around 600,000 tpa to meet internal demand for its own processing and for pipeline delivery to other plants such as Kazanorgsintez and Ufaorgsintez. 

Nizhnekamskneftekhim-infrastructure improvements

The offer of NKNH to include several large-scale infrastructural projects into the federal programme was the first step in this area.  The first project is to construct a bridge through the Kama River near the Sokolka settlement in Tatarstan and a section of the M-7 federal highway.  

The second one is linked with the expansion of the Kama Railway Hub's capacity, reconstruction of the bridge through the Zay River and expansion of Nizhnekamsk-Chitepo road's capacity.  The third project is about reconstruction and construction of highways in Nizhnekamsk and Nizhnekamsk Municipal District, including reconstruction of roads leading to the industrial zone.

Apart from highways, railways also need to develop including Krugloye Pole, Agryz and Krugloye Pole–Biklyan.  These railways are used by Nizhnekamskneftekhim to receive a considerable part of feedstock for its factories and send end products to different parts for large-scale reconstruction.

SIBUR Q1 2017

SIBUR increased its external sales by 5.8% in the first quarter to 107.3 billion roubles, the increase mainly due to an increase in revenue from total sales of synthetic rubber.  Sales’ revenues of plastics, rubber and intermediate products increased by 14.2% in the first quarter in 2017, amounting to 38.2 billion roubles.  SIBUR sold 130,000 tons of synthetic rubber in the first quarter, 15.2% up on the same period in 2016.  MTBE sales remained unchanged at 179,000 tons. 

Revenues in the polyolefin division decreased by 3.3% for SIBUR in the first quarter, amounting to 21.4 billion roubles, whilst volumes rose 1.6% to 245,000 tons.   The fuel-commodity divisional results were unchanged at 41.3 billion roubles, with LPG higher revenues offset by lower sales of naphtha.  Total LPG sales by SIBUR amounted to 1.07 million in the first quarter, 6.7% down on Q1 2016 although revenues rose both for domestic shipments and exports.  The Federal Antimonopoly Service (FAS) of Russia started proceedings in May over SIBUR’s LPG prices, but by June had dropped the case.  SIBUR emphasizes that the company is working within the framework of anti-monopoly legislation and considers the current wholesale price of LPG at fair and appropriate market conditions. 

SIBUR’s total debt at the end of the first quarter amounted to 309.19 billion roubles, a decrease of 9.5%.  Debt attracted for the project ZapSibNeftekhim totalled 150.43 billion roubles, a decrease of 5.8%.  The net debt decreased by 10.4% to 251.98 billion roubles.  

Russian ethylene production Jan-Apr 2017

Ethylene production in Russia dropped 13% in April against May to 234,400 tons.  Novokuibyshevsk Petrochemical increased production by 22% to 5,900 tons, whilst planned downtime at Kazanorgsintez meant that monomer production dropped by 38% to 34,000 tons.  In addition, due to repair work at Stavrolen, ethylene production was reduced by 30% to 19,500 tons.  For the first four months in 2017, Russia produced 1.008 million tons of monomer, 9% more than in the same period of 2016.

Russian propylene production Jan-Apr 2017

Russian propylene production totalled 606,500 tons in the first four months in 2017 against 582,000 tons in the same period last year.  Regarding recent trends, propylene production stayed the same in April as in March at 150,100 tons.  Ufaorgsintez increased production by 29% to 15,100 tons, and at SIBUR-Khimprom by 20% to 7,100 tons.  At the same time, due to repair work at Kazanorgsintez in April, monomer output was reduced 2.4 times to 1,400 tons, and Stavrolen by 29% to 8,200 tons. 

Russian propylene sales Jan-May 2017

Propylene sales on the Russian domestic market totalled 160,500 tons in the first five months in 2017 against 151,800 tons in the same period last year.  Angarsk Polymer increased shipments over last year due to its repairs necessary following the cracker accident in February 2016, whilst SIBUR-Kstovo reduced merchant sales whilst increasing exports at the same time.  Saratovorgsintez remains the largest merchant buyer of propylene in Russia, using it for acrylonitrile production of which it exports a large percentage. 

Russian shipments of propane-propylene fractions to domestic consumers amounted to 12,000 tons in May, unchanged from April.  The Ryazan refinery increased its sales by 18%, to 8,300 tons, whilst Slavneft-Yanos reduced shipments by 7% to 2,600 tons.  In addition, there were no railroad sales produced by the Ufa Refinery in May.  In the first five months in 2017 sales of propane-propylene fractions fell 7% to 61,100 tons. 

Russian styrene production Jan-Apr 2017

Styrene production rose 3% in April to 59,200 tons.  Nizhnekamskneftekhim produced 23,200 tons, 4.5% less than in March.  Gazprom neftekhim Salavat produced 16,600 tons of monomer (5.8% less than in March). SIBUR-Khimprom produced 10,100 tons (1.3% more than in March), Plastik 5,700 tons (-2%), and Angarsk Polymer 3,600 tons (+ 5.2%).  From January to April 2017 styrene production amounted to 238,800 tons, which is slightly higher than the same period of 2016.

Russian styrene sales Jan-May 2017

Russian producers of styrene increased sales by 8% in May to 10,860 tons.  The main supplier of the monomer is Gazprom neftekhim Salavat, which in May shipped 5,740 tons of styrene (52.8% of the total volume), or 11% more than in April.  SIBUR-Khimprom sold 2,970 tons of monomer on the domestic market, 1.3% less than in April.  Angarsk Plant of Polymers increased sales by 76.9% to 1,790 tons, whilst Plastik reduced sales by 57.5% to 362 tons.  In the first five months in 2017, sales on the domestic market totalled 43,650 tons which is 11% up on the same period in 2016. 

Russian polyethylene imports, Jan-Apr 2017

Polyethylene imports into Russia rose 3% in the first four months in 2017 to 160,000 tons against 109,400 tons in the same period in 2016.  In April, imports amounted to 45,100 tons against 45.300 tons in March. 

HDPE imports rose in April to 18,400 tons from 17,900 tons in March, including increased deliveries from Uzbekistan.  This brought the Russian total to 61,000 tons in the first four months versus 40,000 tons in January to April 2016.  LLDPE imports dropped to 45,600 tons in the first four months this year against 62,500 tons.  The fall was due largely to the increase in production by Nizhnekamskneftekhim.  LDPE imports dropped slightly from 30,300 tons. 

Russian HDPE production, Jan-Apr 2017

HDPE production in Russia fell by 6% in the first four months in 2017 to 312,300 tons.  Kazanorgsintez increased production of HDPE by 14% to 178,800 tons.  Stavrolen increased its production by 2% to 91,500 tons, whilst Gazprom neftekhim Salavat reduced production of polyethylene by 14% to 31,300 tons.  Nizhnekamskneftekhim has produced only 10,700 tons in the first four months, having switched to LLDPE production in January.   

Russian polypropylene, Jan-Apr 2017

In the first four months of 2017 Russian polypropylene production totalled 445,600 tons against 435,900 tons in the same period in 2016.  SIBUR Tobolsk produced 173,800 tons in January to April this year against 173,300 tons in 2016.  In the first four months, this year polypropylene imports into Russia totalled 45,800 tons, against 435,900 tons in the same period in 2016. 

Russian PVC market, Jan-May 2017

In the first five months of 2017 Russian production of PVC increased by 24% to 386,500 tons.  The rise is mainly due to Sayanskkhimplast which has worked this year without interruption.  The company produced 109,400 tons in January to May 2017 against 35,300 tons in 2016.  RusVinyl produced 130,400 tons, 2% down against last year.  Paste production amounted to 2,200 tons in May.  Bashkir Soda Company produced 108,300 tons in Q1 2017 against 105,900 tons whilst Kaustik reduced the production of PVC by 4.6% to 38,300 tons. 

PVC imports into Russia totalled 23,600 tons in the first five months in 2017, 11% down on the same period in 2016 whilst exports rose 1% to 31,600 tons.  China is the main source of imports for Russia, shipping 11,200 tons in May against 6,700 tons in April.  The main export destinations for Russian PVC include Belarus and Kazakhstan. 

Sayanskkhimplast recovery in 2017

Sayanskkhimplast has increased its production of PVC to 1,000 tons per day this year following modernisation.  In June, all production facilities following comprehensive tests were completed, resulting in capacities for PVC at 350,000 tpa, caustic soda at 216,000 tpa and 183,600 tons of chlorine.  In the past fifteen years plants have been reconstructed allowing the introduction of a fully automated process control system and new technology. 

In 2006, the company switched from mercury cell technology for chlorine and caustic soda to membrane.  In addition, a new production facility for VCM of 200,000 tpa capacity was launched in 2011.  The major challenge for Sayanskkhimplast is now to establish its own cracker avoid future problems with ethylene supply.  This will only be possible when the gas pipeline system is constructed to Sayansk.

Russian polycarbonate Jan-Apr 2017

Kazanorgsintez produced 24,900 tons of polycarbonate in January to April 2017, including 6,230 tons in April and 6,660 tons in March.  The largest volume of product was extrusion polycarbonate, comprising 20,700 tons, and the remainder was Injection moulding grades.  Iranian supplier resumed deliveries to the Russian market in March after eight months of absence.  Polycarbonate is delivered to Russia through the port of Astrakhan.

Russian benzene production, Jan-Apr 2017

Benzene production in Russia dropped 19% in April to 96,800 tons, due in part to maintenance at Uralorgsintez which reduced production 3.3-fold to 2,500 tons, whilst the Ryazan refinery dropped to only 32 tons against 3,700 tons in March.  Also, Gazprom Neft at Omsk, due to the low demand of the enterprise for benzene, reduced production 3.7 times to 2,200 tons.

Overall Russian benzene production has risen this year, with the largest increases recorded by Angarsk Polymer Plant and Stavrolen.  Gazprom neftekhim Salavat also increased production this year whilst Gazprom Neft at Omsk refinery reduced operating rates.  Gazprom Neft is currently undergoing court action over the environmental performance of the Omsk refinery, particularly in relation to waste treatment, and has even suggested it might have to close the plant although this is unlikely.  Regarding projects, Nizhnekamskneftekhim has signed a contract to build the first stage of the new petrochemical complex at Nizhnekamsk where a new benzene facility of 248,000 tpa is included.

Russian benzene sales, Jan-May 2017

Benzene sales rose in total to 377,000 tons in the first five months in 2017, against 300,100 tons in the same period in 2016.  Kuibyshevazot increased purchases from 46,600 tons in January to May 2016 to 68,700 tons in the same period in 2017, due largely to the replacement of phenol for caprolactam production. 

Another aspect of sales this year has been the rise in export activity, increasing from 30,200 tons in January to May 2016 to 85,600 tons in the same period in 2017.  Whereas last year most of the export conducted by coal base producers, this year volumes have been boosted by shipments from refineries and petrochemical plants.  Despite the rise of export activity, imports continue to flow inwards from Kazakhstan.  The Atyrau aromatics complex supplied 4,100 tons of benzene to the Russian market in the first five months in 2017. 

Russian orthoxylene sales, Jan-May 2017

Russian refineries sold 17,650 tons of orthoxylene in May on the domestic market, which is 66% more than in April.  Ufaneftekhim shipped 8,330 tons (47% of all-Russian supplies), Gazprom Neft from the Omsk refinery 6,990 tons were shipped, and 2,340 tons from Kirishinefteorgsintez.  Kamteks-Khimprom increased the purchase of orthoxylene by 92% in May to 10,830 tons whilst Gazprom neftekhim Salavat reduced purchases by 36% to 360 tons.  At the same time, the Dmitrievsky chemical plant increased purchases by 33% to 640 tons. 

In addition, Russian paint and varnish manufacturers increased the volume of purchased orthoxylene in May by 40%, to 3,260 tons whilst producers of fuel, agrochemicals, pharmaceutical and other products purchased 2,560 tons (15%).  Sales on the domestic market totalled 67,830 tons in the first five months in 2017, 19% more than in the same period last year.

Russian orthoxylene exports, Jan-Apr 2017

Orthoxylene exports amounted to 8,820 tons in April against 20,790 tons in March.  Ufaneftekhim exported 3,620 tons in April, followed by 2,630 tons from Gazprom Neft and 2,550 tons from Kirishinefteorgsintez.  Most of the exports this year have been sent to Finland.  In the first four months of 2017, the volume of Russian exports abroad amounted to 39,280 tons which was 20% more than in the same period last year.

Russian toluene sales, Jan-May 2017

Sales of toluene on the Russian domestic market amounted to 16,790 tons in May 3% more than in April.  Gazprom Neft supplied 10,660 tons, Kirishinefteorgsintez 2,770 tons, Slavneft-Yaroslavnefteorgsintez 1,450 tons, Lukoil-Permnefteorgsintez 1,420 tons, West Siberian MK 250 tons, and Severstal 240 tons. 

Overall for January to May 2017 Russian sales of toluene on the domestic market were very slightly down at 74,100 tons.  In May, manufacturers of explosives reduced purchases of toluene compared to April by 36% to 1,130 tons whilst consumers that produce paint and varnish materials reduced purchases by 14% to 4,270 tons.  Manufacturers of motor fuels and additives to them increased the purchase of toluene by 19% to 4,430 tons. 

Russian phenol production, Jan-Apr 2017

Phenol production rose 20% in April over March to 21,000 tons.  Kazanorgsintez produced 6,300 tons of phenol, 3% down, whilst Novokuibyshevsk petrochemical company increased by 56% to 8,300 tons.  Ufaorgsintez increased the production of phenol by 10% to 6,400 tons.

Ufaorgsintez has restarted operation of its air separation plant after modernisation and to fully meet the needs of high-purity nitrogen.  The capacity of the air separation plant for producing nitrogen was increased to 3,500 Nm3/hour, supplying the cumene plant under reconstruction.  To remove impurities three treatment plants, in which the regeneration takes place with nitrogen will be installed on propylene feed line.  Previously nitrogen was fed to the complex through the pipeline system.

Russian caprolactam market, Jan-Apr 2017

Russian caprolactam exports totalled 69,800 tons in the first four months in 2017 against 50,000 tons in the same period in 2016.  Although Kuibyshevazot increased shipments slightly to 17,300 tons from 13,800 tons the major increase was recorded by Shchekinoazot which shipped 34,400 tons in the first four months, up from 17,100 tons in the same period in 2016. 

Azot at Kemerovo has received equipment worth over 80 million roubles from Kemerovohimmash intended for construction of a hydrogen pressure swing adsorption plant for manufacture of caprolactam.  Shchekinoazot is close to completion of its investment programme for the past year on caprolactam plant modernisation.  However, in the production of cyclohexanone the company still faces bottlenecks that require additional work, ensuring an increase in the circulation of cyclohexane.  Primarily, this reconstruction of internal devices stripper cyclohexane.  To increase the capacity of caprolactam Shchekinoazot will undertake the reconstruction of hydroxylamine separation.

Russian C4 sales, Jan-May 2017

C4 sales on the Russian domestic market in the first five months totalled 171,800 tons which was 12% up on the same period in 2016.  C4 imports continue to play a small part in Russian consumption, being sourced largely from Belarus and Azerbaijan.  Butadiene imports are necessary for Russia, being bought by non-integrated rubber producers such as Omsk Kaucuk and Efremov Synthetic Rubber Plant.  

SIBUR rubber plants Q1 2017

SIBUR increased production of synthetic rubber in the first quarter, whilst also increasing both export and domestic sales.  Production increased in all categories of synthetic rubber although a decline was recorded in thermoplastic elastomers.  Sales of thermoplastic elastomers on the domestic market dropped in the first quarter to 8,900 tons from 9,200 tons in the same period last year, whilst exports rose to 12,300 tons from 9,000 tons.    

SIBUR-Saudi rubber project?

SIBUR is assessing prospects for a project with Saudi Arabia to produce synthetic rubber.  Saudi investors have been in Russia to assess SIBUR’s capability and for information regarding a project being constructed in India.  A butyl rubber jv Reliance SIBUR Elastomers, in which SIBUR owns 25.1%, was formed in 2012.  The plant is currently in the construction stage consisting of 120,000 tpa. 

SIBUR Togliatti

SIBUR’s Togliatti site took full advantage of the favourable market conditions in 2016, by increasing synthetic rubber production by 7% to 167,200 tons and placing the plant in second place in Russia.  Voronezhsintezkaucuk produced 241,600 tons of synthetic rubber in 2016, 10% up on 2015.  Over the past few years the synthetic rubber market has been in stagnation and surplus, thus driving profit margins downwards. 

During this period SIBUR Togliatti undertook the modernisation and expansion of butyl rubber capacity increasing from 53,000 tpa to 75,000 tpa, and then isoprene monomer.  In 2016 SIBUR Togliatti produced 61,000 tons of butyl rubber which is 8% higher than in 2015, whilst the production of butadiene-styrene rubbers increased by 13% and amounted to 47,600 tons.  The production of raw materials for MTBE, isobutane-isobutylene fractions, increased by 21% and amounted to 130,000 tons.  MTBE production rose 28% to 96,000 tons. 

SIBUR is not planning further investments in domestic synthetic rubber capacity, at least at present, but does intend to increase the supply of raw materials through the launch of ZapSibNeftekhim at Tobolsk.  This will complete the production chain from raw materials through to commodity polymers, whilst at the same time facilitating the increase in C4 availability. 

Russian synthetic rubber exports, Q1 2017

Synthetic rubber exports from Russia rose slightly in the first four months to 356,800 tons against 351,000 tons in the same period in 2016, whilst revenues rose from $420 million to $651 million.  Average prices per ton have risen this year although recently have started to show signs of weakening. 

In terms of export destinations, China was the largest market for Russian rubber exports in the first quarter this year accounting for 37,500 tons followed by Poland with 35,700 tons.  Other important countries included India with 22,700 tons, Hungary 21,900 tons and the USA 16,600 tons.  Central and East Europe remains the largest geographical area for Russian synthetic rubber exports. 

Russian methanol production

Methanol production in the Russian Federation declined by 13% in April to 312,000 tons, caused by spot planned repairs at several domestic enterprises.  The only plant to report an increase in April was Shchekinoazot: rising 3% to 40,000 tons. 

Novomoskovsk Azot, Sibmetakhim and Metafrax in April reduced methanol production volumes in March by almost 4% each, producing about 25,000 tons, 83,300 tons and 92,500 tons respectively.  Tomet reduced its production figures almost twice in March to 40,300 tons, which was due to the step-by-step planned repair at the enterprise.  Russian methanol exports have risen this year in part due to higher prices om global markets.  The three largest exporters included Sibmetakhim, Metafrax and Shchekinoazot. 

Metafrax Q1 2017

Metafrax produced 280,000 tons of methanol in the first quarter, 90,000 tons of formaldehyde and 45,000 tons of urea-formaldehyde concentrate.  Pentaerythritol production increased by 379 tons to 6,100 tons, whilst hexamine production rose 12% to 8,000 tons.  Revenues of Metafrax from the sale of finished products totalled 4.853 billion roubles in the first quarter, 4% more than in the same period in 2016.  Net profits dropped to 1.3 billion roubles from 1.4 billion roubles.  Market instability for methanol has affected the company this year although capacity has been working at 100%. 

The share of exports in total sales for Metafrax in the first quarter comprised 43.2% against 30.9% in Q1 2016.  Investments made by Metafrax in January-March 2017 amounted to 2.105 billion roubles. 4 times higher than the level in 2016.  Metafrax has completed the second phase of reconstruction of methanol production, which will eventually increase the capacity of the unit up to 1.23 million tpa.  The company also continues its course of rolling stock fleet renewal having purchased 56 tanks for the carriage of methanol and formaldehyde in the first quarter.

Due to lower world prices for methanol in 2016 Metafrax recommended at the AGM not to pay dividends for 2016.  On results of 2015 the shareholders also refused to pay dividends and left the entire profit of the company in the amount of 7.212 billion roubles.  The fall in profits in 2016 was due to a 20% drop in world prices for methanol.  At the end of 2016 prices began to stabilize, but have since fallen. 

Methanol project Arkhangelsk

The possibility of constructing a methanol plant at Arkhangelsk in northern Russia has started to be revisited, having been shelved in the 1990s.  Over the next few months studies will be made of the project cost calculations and possible risks.  The access to a port terminal is a key feature to justify constructing a plant with a view towards delivering to the Rotterdam market for further distribution. 

Around 40 billion roubles have neem estimated as the base investment cost, but a gas pipeline has yet to be constructed and thus the location lacks the necessary infrastructure buildings and gas resources.  These investments are considered practical and would require less time than construction of the methanol plant itself.  Gazprom is currently examining prospects for constructing a gas pipeline to the region.  As the Arkhangelsk region has a developed timber industry complex, it has the potential to revive the production of chipboard.  Also, the project will entail and upgrade the transport infrastructure, since it will be necessary to renovate and build a certain number of roads.  Other products such as urea-formaldehyde resins could be produced onsite.  In the 1990s, a plant of 680,000 tpa was planned for Arkhangelsk but was thwarted by the lack of finance, etc. 

Timan-Pechora-methanol project

Timan-Pechora Gas Company (TPGK) is considering the possibility of constructing a methanol plant in the Inta area in the Komi Republic.  Investments into the project are estimated at 30 billion roubles.  The planned capacity of the plant is 1.3 million tpa, although construction is not likely to start for several years.  The resource potential of all sections of more than 400 billion cubic metres of gas.

Shchekinoazot-methanol, ammonia & ether projects

Shchekinoazot has completed storage facilities for its new ammonia project, 135,000 tpa, whilst the 450,000 tpa methanol project is progressing on schedule.  The general designer of the two plants Orgkhim at Severodonetsk has finished the development of the bulk of the working documents, whilst the general contractor is Neftezavodmontazh at Volgograd.  Shchekinoazot has begun to prepare the site for construction of the production of dimethyl ether perfume quality.  The decision to implement the project was taken by Shchekinoazot in 2012, together with the German company PCC SE was created by a joint venture company DME Aerosol.  ThyssenKrupp Uhde Engineering Services GmbH has been chosen as the licensor and developer of the project. 

At the end of 2015 Novomoskovsk Institute of Nitrogen Industry completed the development of project documentation.  According to her non-state examination was carried out, a positive conclusion.  Investment in the 20,000 tpa plant for dimethyl ether was estimated previously at 1.33 billion roubles.  Dimethyl ether is expected to supply manufacturers of cosmetic products in aerosol cans, manufacturers of polyurethane foam and polystyrene foam.

Akron-urea expansion

Akron continues to modernise urea production at Veliky Novgorod, increasing capacity to 3,000 tons per day from 2,800 tons per day.  The company controls five units, the fifth being launched in 2012 with a capacity of 1,000 tons per day.  In parallel, Akron is implementing a project on modernization of its fertiliser production facilities. 

Fosagro new ammonia and urea plants

Fosagro could launch a new production unit for ammonia at the Cherepovets site in July 2017, followed by the urea plant in September.  The new ammonia unit (capacity 760,000 tpa) undertook tests in late 2016 before commissioning, whilst the last delivery of components and equipment for the urea were supplied before the end of the year.  Capacity of the new unit for production of urea, which will be the third for the Cherepovets site, amount to 500,000 tpa.  Construction work on the urea unit began in 2015. 

Russian butanol production, Jan-Apr 2017

Russian butanol production dropped 2% in April against March to 23,130 tons.  The share of n-butanol in butanols production in April 2017 was 60%, and isobutanol 40%.  Gazprom neftekhim Salavat produced 9,250 tons in April (40% of the total Russian output), SIBUR-Khimprom 8,490 tons (37%), and Angarsk Petrochemical Company 5,320 tons (23%).

Production at Nevinnomyssk was stopped in April for routine maintenance.  In the first four months in 2017, Russian production of butanols production amounted to 91,660 tons which was 17% more than the same period in 2016.

Russian butanol exports, Jan-Apr 2017

Exports of butanols from Russia amounted to 5,420 tons in April against 3,040 tons in March against 15,400 tons in April 2016.  The decline against the same month last year was due to the rise in internal processing. 

The share of n-butanol in Russian exports in April 2017 was 38%, and isobutanol 62%.  SIBUR-Khimprom shipped 2,220 tons of butanols (41% of exports) to foreign markets, and Gazprom neftekhim Salavat 1,820 tons (34%).  Isobutanol was the only product category shipped from Salavat. 

Angarsk Petrochemical exported butanols in April for the first time in 2017, shipping 1,110 tons of which 1,000 tons consisted of n-butanol for delivery to China.  Other suppliers in April included Azot at Nevinnomyssk with 170 tons and the Dmitrievsky Chemical Plant with 95 tons.  Finland took 22% of Russian exports in April, surpassed by Ukraine with 34% and China 18%.  Isobutanol was the only type of butanols shipped to Ukraine, whilst only n-butanol was shipped to Finland.  In the first four months in 2017 exports of butanols from Russia dropped 2.5 times to 13,440 tons. 

Russian butanol sales, Jan-Apr 2017

Akrilat at Dzerzhinsk bought 1,886 tons in April against 2,440 tons in March, whilst Dmitrievsky Chemical Plant increased purchases by 10% to 1,500 tons.  In the first four months in 2017, merchant sales of butanols on the domestic market totalled 22,700 tons was 19% less than in the same period last year.  In the first quarter this year Akrilat, which is part of SIBUR, increased exports of acrylates and at the same time reduced domestic sales against the same period in 2016. 

SIBUR produces acrylates at the facilities of SIBUR-Neftekhim.  The capacity of the plant is 40,000 tpa, production of which is mainly sold on the Russian market.  Gazprom neftekhim Salavat started acrylate production this year, based on its plants of acrylic acid with a capacity of 80,000 tpa, butyl acrylate 80,000 tpa and glacial acrylic acid capacity 35,000 tpa.  

Butanol sales from Gazprom neftekhim Salavat and the Angarsk petrochemical company increased on the Russian market, helping to alleviate supply side pressure.  At the same time, Gazprom neftekhim Salavat raised the selling prices of its products by 1,000 roubles. 

Regarding prices, in the May and June n-butanol was offered in the Volga region at 51,000 roubles per ton, including VAT, and isobutanol at 50,870 roubles per ton, including VAT.  In the Siberian Federal District, Angarsk Petrochemical Company was offering butanols at 41,000 roubles per ton, including VAT (n-butanol) and 39,000 roubles per ton including VAT (isobutanol) respectively. 

Russian plasticizer alcohols, Jan-Apr 2017

In April, exports of dioctyl phthalate (DOP) from Russia amounted to 167 tons, including 146 tons exported to Uzbekistan by the Ural Plasticizer Plant.  In the first four months in 2017 Russian exports of DOP totalled 628 tons against 128 tons in the same period in 2016. 

Russian exports of phthalic anhydride dropped 16% in April against March to 3,880 tons.  Export destinations included Turkey (30% of total), Poland (14%), Egypt (14%), Finland (12%), Tunisia (7%), UAE (6%) and Uzbekistan (5% %).  Kamteks-Khimprom exported 17,500 tons in the first four months in 2017, 10% less than the same period in 2016. 

Production of phthalic anhydride amounted to 8,780 tons in April 11% less than in March.  Kamteks-Khimprom reduced production by 12% to 7,700 tons whilst Gazprom neftekhim Salavat increased volumes by 12% to 1,080 tons.  From January to April 2017, phthalic anhydride production in Russia totalled 36,030 tons which was 18% up on the same period last year. 

SIBUR-DOTP project at Perm

SIBUR Holding has allocated 6.9 billion roubles for the construction of the DOTP plasticizer plant at the site of SIBUR-Khimprom at Perm.  The capacity size of the intended plant has been stated at 100,000 tpa which SIBUR aims to introduce by the second quarter in 2019.  Full capacity operations could be achieved by 2020. 

The company will be fully exempt from property tax of the Perm region and will benefit from reduced from 16.5% to 13.5% income tax rate.  SIBUR-Khimprom produces butanols, styrene, ethylbenzene, propylene, and liquefied petroleum gases.

Khimprom-calcium hydroxide

Khimprom at Novocheboksarsk has signed an agreement with the Italian company Cimprogetti the supply of equipment to produce calcium hydroxide.  The first batch of products are expected in 2018 with a capacity of 40,000 tpa.  Part of the volume of calcium hydroxide will be sold on the domestic market, and some directed to the production of calcium hypochlorite.  Shipment of equipment is expected to start in July of this year.  The first batch of products, the company expects to release in late 2017 or early 2018.

Khimprom-new hydrogen peroxide project

Khimprom at Novocheboksarsk has received a construction permit to produce hydrogen peroxide based on anthraquinone technology.  The new unit will have installed by Chematur Engineering AB, involving a capacity of 50,000 tpa based on 100% concentration.  Investments in the project are estimated at nearly $75 million.  Currently Khimprom uses the two-stage isopropyl technology to produce hydrogen peroxide.  Capacity was increased from 64,000 tpa to 95,000 tpa in 2016. 

Evrokhim-ChemChina, MDI-TDI?

Evrokhim and ChemChina Corporation have signed a memorandum of intent to establish a joint production of chemicals in Russia.  The parties have agreed to form a working group to assess the prospects for cooperation.  Evrokhim and ChemChina plan to explore the possibility of joint production of chemical products, including propylene oxide (propylene glycol and polyols) and both MDI and TDI.  As a site for new construction Novomoskovsk is being considered.

Rosneft-ChemChina polymer coatings Primorsky Kray

Rosneft and ChemChina signed an agreement in June to develop the project of construction of polymer coatings plant in the Primorsky Kray.  This follows an initial agreement in December 2016.  The new document defines the conditions of the joint venture and further stages of the project on construction of the plant polymer coatings and specialised coating materials for ships.  The new production facility will be in the territory of priority development (TOR) Bolshoy Kamen in the Primorsky Kray.  The capacity of the plant is being designed to produce 50,000 tpa of paints and plastics.  The joint venture could become the leader of the domestic market to produce special marine coatings.  All the products you plan to use on a set of Bolshoy Kamen. 

Ukrainian polyethylene imports, Jan-Apr 2017

Ukrainian imports of polyethylene fell by 12% in the first four months in 2017 to 76,800 tons, including 17,500 tons in April against 19,500 tons in March.  HDPE imports declined to 7,700 tons from 9,000 tons in the first four months in 2016 whilst LDPE imports dropped 10% to 20,400 tons.  LLDPE imports saw a rise from to 19,000 tons.  Imports of EVA totalled 5,400 tons against 3,000 tons in January to April 2016. 

Most of the imports of polyethylene are sourced from European producers.  Borealis appears to be suspended from selling in the Ukrainian market for the next few months at least, as it has angered the Ukrainian cabinet in selling plastics into the rebel controlled areas of Donetsk and Lugansk in the east.

Ukrainian polypropylene imports, Jan-Apr 2017

During the first four months, the total import volume of polypropylene on Ukrainian market fell by 6% to 37,100 tons from 39,300 tons in the same period last year.  Homopolymer imports fell to 28,600 tons in January to April 2017 from 30,500 tons in 2016.  In response to demand from pipe manufacturers block copolymers rose to 3,800 tons from 3,600 tons.  Imports of stat-copolymers fell from 4,500 tons to 4,000 tons. 

Ukraine reduced imports of suspension PVC by 30% in January-April 2017 to 28,000 tons.  Local processors increased their purchases from the US, which were faced with export quotas from European suppliers.  Sources included the US with 6,800 tons, four-fold higher, whilst European sources comprised 15,400 tons which is 40% higher than last year.

Karpatneftekhim relaunches ethylene production

Karpatneftekhim resumed production of ethylene on 11 June and started preparations to launch capacities on production of polyethylene and PVC.  The first batch of commercial polyethylene and PVC were aimed for production on 15 June.  The company aims to bring the 250,000 tpa cracker to full capacity in July.  For pyrolysis raw materials, the plant has arranged to use naphtha from Lukoil’s Russian refineries.  In June around 25,000 tons was shipped from the Volgograd refinery and another 33,500 tons from the Perm Refinery.  The Kalush plant is expected to process between 50-70,000 tons for raw materials per month.  

The restart has been made possible through the amendment of the Ukrainian tax code for naphtha and diesel oil for petrochemical production.  Ukraine has established a separate division of the Energy Customs to control the circulation of raw materials, which will be delivered to Karpatneftekhim.  Karpatneftekhim could buy up to 1,170,000 litres of light distillates per annum, to 985,000 litres of heavy distillates and up to 1,070,000 litres of liquefied petroleum gas.  Preliminary agreements with supplies already have been made.  Karpatneftekhim includes capacities for ethylene production of 250,000 tpa, PVC 300,000 tpa, caustic soda 200,000 tpa, and polyethylene 100,000 tpa. 

Kazakh polymer imports, Jan-Apr 2017

In the first four months of this year, imports of polypropylene rose into Kazakhstan by 49% to 5,100 tons from 3,400 tons.  Imports amounted to 3,100 tons in February against 2,000 tons in January.  Kazakhstan produces polypropylene at Pavlodar, but does not produce polyethylene at present. 

In the first four months of the year imports of polyethylene supply into Kazakhstan increased by 15% compared to the same period in 2016 and amounted to 35,200 tons.  HDPE imports totalled 26,100 tons in January to April 2017, 17% up, whilst LDPE imports rose 8% to 7,200 tons.  LLDPE imports totalled 1,800 tons versus 1,700 tons in the first four months in 2016.  PVC imports into Kazakhstan amounted to 13,600 tons in the first four months against 11,500 tons in the same period in 2016.

Atyrau gas & chemical complex-interest from UAE

United Chemical Company (Kazakhstan) signed a memorandum of cooperation with UAE's Mubadala in Astana, regarding investments in the gas-chemical complex at Atyrau.  The possibility of joint polyethylene production in Kazakhstan was named as one of the prospective areas of cooperation between the two companies.  The agreement provides for the preparation of the project model which could be acceptable for both sides technical and economic indicators.

The construction of the infrastructure for the gas-chemical complex at Atyrau is already completed, having been supported by the Kazakh government. 

Initial investments of around $2.5 billion have been estimated to cover project costs, which could be aided by loans from China.  The project for the construction of an integrated petrochemical complex consists of two phases, the first of which involves the construction of a polypropylene plant with a capacity of 500,000 tpa and the second comprising a polyethylene plant of 800,000 tpa together with a butadiene unit.  The construction of a polypropylene production could begin in the summer of 2017 whilst the polyethylene project may not start until 2020.

Kazakh methanol project

China has agreed to provide Kazakhstan with a loan of $1 billion for the project to build a large-scale complex for methanol and ammonia in the Atyrau region.  The project to produce ammonia and methanol represents the anchor project, helping to create a raw material base to produce nitrogen and complex fertilisers.  According to the presentation of the project, United Chemical Company plans to build plants in the territory of the Atyrau special economic zone for producing 200,000 tpa of methanol, and 500,000 tpa of ammonia.  

United Chemical Company has already been involved with Chinese investors for the construction of an aromatics complex at Atyrau, where the paraxylene and benzene plants are in operation. 

The Kazakh-Chinese portfolio includes up to 51 projects totalling about $28 billion in value.  Of these, around 14 projects belong to the group of companies included in the group Samruk-Kazyna.  The projects are mainly concentrated in the oil and gas, chemical, energy, mining, agriculture and engineering sectors. 

Azerbaijan-ethylene, propylene and polyolefin projects

Azerbaijan is set to increase the capacity of propylene production by 2.5 times later in 2017 from 60,000 tpa to 150,000 tpa.  The modernisation of the ethylene-polyethylene plant at Sumgait is being undertaken in several stages aimed for completion in mid-2019.  Technip has thus far provided only an indicative timetable.  Around €30 million was invested in 2016 into the ethylene modernisation and another €80 million should be required this year.  Aside the revamping of old plants which are around thirty years old, SOCAR is working on the new SOCAR-Polymer project at Sumgait which will produce polyethylene and polypropylene. 

SOCAR-methanol production

SOCAR Methanol produced 70,000 tons of methanol in the first five months in 2017, 99% of which was exported.  Export deliveries of the plant's products are typically made to Turkey, West Europe and the Mediterranean.  The successful operation of methanol plant became possible after the transfer of the company in November 2016 to SOCAR.  This allowed the plant, starting from January this year based on new management principles and structure, to restore the production process, The Azerbaijani methanol plant in the Garadag district of Baku was built by AzMeCo.  The production capacity of the plant is 720,000 tpa of methanol.  At the end of 2015, the plant ceased production activities.  SOCAR purchased the plant from Agra credit, following a decision made by International Bank of Azerbaijan. 

This year SOCAR plans to produce 250,000 tons of methanol, twice more than any of the previous years since the plant started operations.  The longer-term aim is to raise production volumes up to 500,000 tpa.  The domestic market in Azerbaijan is small and currently accounts for only around 5% of total sales although the market is expected to rise quickly in the next few years.  Domestic consumption is driven by several companies that produce paints, varnishes, special substances used in drilling oil and gas wells, and in the process of transporting hydrocarbons. 

Uzbekneftegaz-Shurtan expansion

Uzbekneftegaz aims to expand the capacity of the Shurtan Gas Chemical Complex to create the country's first petrochemical cluster.  The expansion of capacity of the complex will be integrated with the GTL-erected plant, which will create in Uzbekistan first petrochemical cluster.  Uzbekneftegaz will introduce new projects over four years, worth $30.4 billion.  The target is to increase the capacity by 2021 four times up to 500,000 tpa, as well as 50,000 tpa of pyrolysis distillate.  Financing of the project cost of about $1 billion will be funded by loan from the Fund for Reconstruction and Development of Uzbekistan and own funds of Uzbekneftegaz.  Currently under development the extended basic design (FEED-2) and start of construction is scheduled for the second quarter of 2018.  At the beginning of 2017 Uzbekistan GTL, a wholly-owned daughter of Uzbekneftegaz, began construction of GTL-plant worth $3.7 billion.

Uzbekistan methanol to gasoline project

Uzbekistan aims to produce gasoline from methanol through the technology provided by ExxonMobil.  The investment project is planned to be implemented on the territory of the Navoiazot enterprise at Navoi. 

The plant could be able to process up to 300,000 tpa and produce more than 100,000 tpa of high-quality gasoline that meets the Euro-5 standard.   ExxonMobil's methanol production process (MTG) provides a selective conversion of methanol to commercial gasoline, which is virtually free of sulphur and low in benzene.   Currently Navoiazot is undertaking the construction project for a complex to produce PVC and caustic soda.

Uzbek tyre plant opens

Uzbekistan plans to launch the first phase of a tyre plant, worth $214 million, in Angren, Tashkent Region in August 2017.  The tyre plant’s first phase has production capacity of two million car tyres per annum.  In 2018, the production of conveyor belts and agriculture tyres will start at the plant, and it will be producing up to three million car tyres per annum.  Construction of the tyre plant started in the Angren Special Industrial Zone in 2015.  The plant’s design capacity is three million car tyres, 200,000 agriculture tyres and 100,000 linear metres of conveyor belts.

Kazakhstan-soda ash project

Kazakh company Araltuz and China's Qinghai Desheng Soda AshIndustrial signed an agreement to establish a joint venture to produce soda ash with a registered capital of over 17.5 billion Tenge.  Investments in the construction of a plant to produce soda ash capacity of 300,000 tpa will exceed 87.5 billion Tenge.  Consumption of soda ash in Kazakhstan is currently estimated at around 400,000 tpa, most of which is sourced from Russia.

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