Russia Eyes Petrochemicals As Answer To Crude Oil Reliance – On a sprawling construction site in Western Siberia, about 20,000 workers are busy building what will be one of the world’s five biggest petrochemical plants – On a sprawling construction site in Western Siberia, about 20,000 workers are busy building what will be one of the world’s five biggest petrochemical plants, part of a play by Russia to capture more of the value from the oil it produces – Russia Petrochemicals Crude Oil Reliance - Arhive

This content has been archived. It may no longer be relevant

Russia Petrochemicals Crude Oil Reliance Russia Petrochemicals Crude Oil Reliance   Russia Petrochemicals Crude Oil Reliance   Russia Petrochemicals Crude Oil Reliance   Russia Petrochemicals Crude Oil Reliance   Russia Petrochemicals Crude Oil Reliance   Russia Petrochemicals Crude Oil Reliance   Russia Petrochemicals Crude Oil Reliance  

Russia Eyes Petrochemicals As Answer To Crude Oil Reliance

Russia Petrochemicals Crude Oil Reliance

TOBOLSK, Russia (Reuters) – On a sprawling construction site in Western Siberia, about 20,000 workers are busy building what will be one of the world’s five biggest petrochemical plants, part of a play by Russia to capture more of the value from the oil it produces.

Russian energy companies, led by privately owned Sibur, have been increasingly shifting their focus to petrochemicals in a drive to capitalise on the fast-growing sector and offset the volatile market for crude oil exports.

According to the EY consultancy, Russia accounts for about 1 percent of global petrochemical output, trailing not only the United States and Europe but also Thailand, Taiwan, Brazil, Iran and China.

That is set to change, with the Sibur plant due to come on stream, while gas giant Gazprom plans to invest $5 billion in a petrochemical plant on the Baltic Sea, and oil major Rosneft has said it will ramp up its petrochemical capacity in Russia’s far eastern region.

The Sibur plant is taking shape near Tobolsk, birthplace of Dmitry Mendeleev, the inventor of the periodic table and one of the founders of modern chemistry.

It is also close to many of the fields that produce crude oil, the raw material for much petrochemical production. Most of Russia’s oil is exported as crude, a trade that has delivered diminishing returns as world oil prices have weakened over the past four years.

Sibur is banking on growing domestic consumption of petrochemical products, which are used in construction, medicine, aviation, car making, clothes, bottling, packaging and many other sectors.

“We see quite a huge potential for growth of the Russian market,” Dmitry Konov, head of Sibur, said at the construction site of the plant on the outskirts of Tobolsk.

Once in operation, the complex, known as ZapSibNefteKhim, will have an annual production capacity of 1.5 million tonnes of ethylene and 500,000 tonnes of propylene.

Banking On Growth

According to Vadim Drujina, a partner at McKinsey & Co consultancy in Moscow, petrochemicals is the fastest-growing segment of crude oil consumption.

“Growing petrochemicals demand is partly explained by substitution of traditional materials, e.g. steel, in such segments as construction and automotive,” Drujina said.

“Given the abundance of petrochemicals feedstock it makes a lot of sense for Russia to think about further growth of petrochemicals in order to create additional value.”

Denis Borisov, director of EY’s oil and gas centre in Moscow, expects that in Russia alone, demand for petrochemicals – depending on product – will grow by 2 to 3 percent a year to 2025.

The location, the Russian heartland of oil production, allows Sibur to cut transportation costs as it obtains the feedstock, such as associated petroleum gas and naphtha, from nearby fields operated by other companies.

Grigory Vygon of Vygon Consultancy in Moscow said the oil petrochemical industry is the only area of oil products consumption that will grow long-term.

“The pace of global petrochemical growth is double the growth of the global economy,” Vygon said.

As they increase in prosperity emerging economies will consume more of the products, such as personal care items, paints and furnishings, that are derived from petrochemicals, the Paris-based International Energy Agency said in a report.

“Global economic growth is lifting more people into the middle class in developing countries and higher incomes mean sharply rising demand for consumer goods and services,” it said.

Rosneft, the world’s top publicly listed oil producer, plans to produce 3.4 million tonnes of petrochemicals in the Russian Far East.

The head of the company, Igor Sechin, the most influential energy official in Russia, has said the hydrocarbon share in global energy consumption will decrease in the long term, while petrochemical products and gas consumption will offset the decline in oil demand.

Gazprom has also announced plans for a large-scale gas chemical complex on the Baltic Sea with investments of around $5 billion.

(Editing by Katya Golubkova and Christian Lowe; Editing by Dale Hudson)

Related Topics

-Asia petrochemicals outlook, w/c May 14 -Asian petrochemical prices are seen likely to continue to trend higher this week amid support from bullish crude futures – Asia petrochemicals outlook

-Asia petrochemicals outlook, w/c May 7 – Petrochemical market participants will be keeping a close eye on developments upstream this week, particularly the fate of the US-Iran nuclear agreement and its impact on crude oil, which in turn will influence aromatics and MTBE markets – Asia petrochemicals outlook

-EMEA petrochemicals outlook, w/c Apr 23 – The European ethylene market looks stable as the recent length has cleared following a spate of exports to Asia – EMEA petrochemicals outlook

-Americas petrochemicals outlook: w/c Apr 16 – Spot ethylene has been on the rise, 0.50 cent/lb higher than the record lows seen April 9 after prompt-month was heard offered at 14 cents/lb MtB Nova – Americas petrochemicals outlook

-Motiva considers ethylene, aromatics projects in US – Motiva Enterprises signed $8bn-10bn worth of memoranda of understanding (MoUs) covering process technologies for possible ethylene and aromatics units in the US – Motiva ethylene aromatics projects USA

-US spot ethylene falls to 16-year low amid tariff concerns – US spot ethylene traded at a 16-year low on Friday amid long supply and concerns about proposed Chinese tariffs on chemicals – USA spot ethylene chemicals

-The initial price for MEG in Europe for April deliveries fell by EUR20 per tonne – The initial contract price of monoethylene glycol (MEG) in Europe for April deliveries was agreed at the level of EUR965 per tonne, which is EUR20 per ton lower than the March contract prices – Price MEG Europe April

-China’s MEG up in anticipations of better supply-demand for Q2 – China’s MEG market has remained rangebound for around two weeks, and domestic spot prices shivered around 7,000yuan/mt – China MEG prices market

-Prices MEG in the US may fall in April  – It is expected that prices of monoethylene glycol (MEG) in the US will decline in April due to a weakening of demand between peak seasons – Prices MEG USA April 

-AFPM ’18: EQUATE’s US MEG plant begins construction phase – CEO – AFPM 2018 EQUATE USA MEG

-Sabic reduced the April price of MEG by USD55 per tonne – Sabic, the largest Saudi petrochemical company, has lowered the contract price of monoethylene glycol (MEG) to supply material to the Asian market in April at USD55 per tonne compared to the March price level – Sabic April price MEG

-MEGlobal lowered the April contract price of MEG in Asia by USD80 per tonne – MEGlobal, the world leader in the production of monoethylene glycol (MEG) and diethylene glycol (DG), set the April contract price for MEG for Asia at USD1,100 per tonne – MEGlobal April contract price MEG Asia4

-China polyester to drive MEG, but oversupply fears – China polyester MEG oversupply – Robust demand from polyester production in China is expected to drive the Asian monoethylene glycol (MEG) market in the first half of 2018

Russia Petrochemicals Crude Oil Reliance Russia Petrochemicals Crude Oil Reliance   Russia Petrochemicals Crude Oil Reliance   Russia Petrochemicals Crude Oil Reliance   Russia Petrochemicals Crude Oil Reliance   Russia Petrochemicals Crude Oil Reliance   Russia Petrochemicals Crude Oil Reliance   Russia Petrochemicals Crude Oil Reliance