Gazprom moves further into petchems

Gazprom is becoming a player to watch in petchems.

For decades, observers have speculated that Russia might increase its petchem activity. A recent comment by Gazprom deputy CEO, Valery Golubev, seemed to bring this concept closer to reality. He said that Gazprom aimed to increase its ethylene production by 350% to 7.66 million tonnes (MT) by 2015. He also said Gazprom plastics production would rise from 400 KT to 1.7 MT in the same period.

Now Gazprom has announced a further initiative, this time with Dow. As Nigel Davis and Sergei Blagov reported on ICIS news, Gazprom and its petchem arm, Sibur, will study with Dow the potential for joint gas processing projects near the Valanzhinsk gas deposits in Russia’s Yamalo-Nenets Autonomous Region, as well as a possible joint venture based on expanding Dow’s petrochemical production units in Germany.

This agreement builds on an earlier MOU signed last year. And the concept seems well in line with Dow’s developing asset-light strategy for commodity businesses. Earlier this year, Dow’s CEO Andrew Liveris said that Dow could cooperate with Gazprom on the building of bulk chemical production facilities, in return for the sale of feedstock from it at a lower price. Liveris added that Dow is ‘a very advanced provider of technology. Gazprom would be able to achieve a great deal of synergy from it’.

BASF have also been talking about JV’s with Gazprom, and it is probably no coincidence that Gazprom chose the same day to announce the formation of a new JV with BASF, Gazprom YRGM Trading, which will trade gas from the jointly owned Yuzhno-Russkoye field. Earlier this year, of course, BASF’s own Solvin JV with Solvay announced a Sibur JV to build Russia’s first world-scale fully integrated vinyls plant in Kstovo in 2010.

Gazprom has been indicating since 2004 that it was interested in selling a 50.6% stake in Sibur. Dow and BASF were both said by Gazprom’s former deputy CEO, Alexander Ryazanov, to have made informal offers. Today’s announcements probably also bring this intriguing process one step nearer to realisation.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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