Russia petchems in critical state, says executive

29 January 2008 13:30  [Source: ICIS news]

PRAGUE (ICIS news)--Russia’s Nikochem is calling for foreign investors to help it address the “critical” condition in which the country’s petrochemical industry finds itself, an executive from the chemicals firm said on Tuesday.  


“The Russian petrochemical industry is crying out for the realisation of construction projects of new petrochemical capacities," Nikochem general director Eldor Azizov at the 4th Annual Central Eastern European Chemical and Petrochemical Forum.


The existing capacities have become obsolete and worn, the technological inferiority of the firms on the world level has reached a critical point."


In the past two decades not a single major capital investment project had been realised in the Russian petrochemicals sector, he said.


Efforts were being focused on getting partners on board for Nikochem’s proposed Volgograd Petrochemical Complex, a facility slated to come on line by 2012 or 2013, Azizov added.

Sources on the sidelines of the conference said the project would probably cost around $3bn (€2.03bn), while adding foreign investors would need much more reassurance about the investment security they would have as a project partner before committing to putting capital into the planned complex.


“Modernisation of existing equipment is not a way out for Russian companies as it does not allow us to reach the [required] cost reduction, the current market requires not just polymer [investments] but the [development of] a wide brand assortment and competitive pricing,” Azizov added. 


Nikochem held data showing the annual per employee production output of the three dominant players in the sector - Sibur Neftekhim, Lukoil Neftekhim and Nizhnekamskneftekhim - stood at $100,000 to $120,000 compared to $400,000 at Dow Chemical, he said.


Investors in new Russian petrochemicals initiatives, he added, should enjoy cheap feedstock sourced from Russia’s huge reserves of natural resources and relatively low labor costs.


The Volgograd Petrochemical Complex is slated to produce annually 2 million tonnes of naphtha, 500,000 tonnes of polyvinyl chloride (PVC), 525,000 tonnes of polyethylene (PE), 455,000 tonnes of polypropylene (PP), as yet to be specified amounts of benzene and toluene and 240,000 tonnes of chlorine.


The Prague conference is organised by the Jacob Fleming Group and ends on Wednesday.

By: Will Conroy
+44 20 8652 3214

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