New PMMA plant for Novokuibyshevsk - Issue 236 || SANORS-plans to construct large chemical complex - Issue 268 || Russian cracker feedstocks - Issue 268 || Ricoal plans coal based chemical complex in Rostov region - Issue 268 || SIBUR, updated Q1 2013 results - Issue 271 || Synthos, Jan-Jun 2013 - Issue 274 || Eastern Petrochemical Company-challenges faced in completion of refinery & cracker - Issue 274 || Nizhnekamskneftekhim-FEED for new cracker - Issue 274 || Tobolsk-Neftekhim, gas fractionating plant - Issue 274 || Unipetrol-Ineos licence for Innovene HDPE plant - Issue 275 || Russian chemical industry projections 2013 - Issue 275 || Gazprom-Belogorsk gas-chemical & helium project - Issue 275 || Nizhnekamskneftekhim, polyolefin projects - Issue 275 || Russian benzene, Jan-Sep 2013 - Issue 275 || Russian paraxylene-PTA - Issue 275 || Nizhnekamskneftekhim-isoprene rubber - Issue 275 || TVK-butadiene project construction - Issue 275 || Russian investment in the gas-chemical industry - Issue 278 || Vyngapur to become centre for natural & associated gas - Issue 278 || VNKH-loan approved for Nakhokda petrochemical project - Issue 278 || LUKoil-Budyennovsk petrochemical investments - Issue 278 || Russian chemical production 2013 - Issue 278 || Novatek expandsf Purovsky gas condensate plant - Issue 278 || Russian styrene market 2013 - Issue 278 || Russian polycarbonates 2013 - Issue 278 || Russian synthetic rubber production 2013 - Issue 278 || Russian butanols production 2013 - Issue 278 || United Petrochemical Company-epoxy resins - Issue 278 || Russian butanol exports, Jan 2014 - Issue 279 || Russian pentanes, Jan-Feb 2014 - Issue 280 || Russian propane, Jan-Feb 2014 - Issue 280 || Grupa Azoty 2013 - Issue 280 || Synthos-Brazil - Issue 281 || Ukraine-financial performance chemcal companies 2013 - Issue 281 || Russian ethylene market, Q1 2014 - Issue 281 || Russian polypropylene, Q1 2014 - Issue 281 || Synthos-Q1 2014 - Issue 282 || Grupa Azoty investment projects - Issue 282 || Russian chemical production, Q1 2014 - Issue 282 || Prospects for Irkutsk petrochemical projects after Russian-Chinese gas deal - Issue 282 || Russian PTA import duties - Issue 282 || SIBUR-Sinopec jv for rubber production in China - Issue 282 || KZSK Silicon credit line - Issue 282 || UzIndoramaGasChemical - Issue 282 || Zapsibtransgaz-Gubkinsky - Issue 284 || Irkutsk Oil Company-Power of Siberia - Issue 284 || VNKH-Nakhodka - Issue 284 || United Petrochemical CompanyAlpek PTA & PET jv - Issue 284 || Gazprom neftekhim Salavat-acrylic project - Issue 284 || Nefis Cosmetics 2013 - Issue 284 || Air Products-new industrial gas project at Rostov - Issue 284 || Khimprom-Novocheboksarsk - Issue 284 || Uzbek petrochemical projects - Issue 284 || Turkmen PVC project - Issue 284 || SIBUR-Kstovo, ethylene expansion - Issue 285 || Russian ethylene and propylene - Issue 285 || Russian synthetic rubber market - Issue 285 || Oltchim, Jan-Sep 2014 - Issue 288 || Russian chemical industry, Jan-Oct 2014 - Issue 288 || Angarsk Polymer Plant-new polyolefin plants - Issue 288 || Synthos Q1 2015 - Issue 294 || Nizhnekamskneftekhim Q1 2015 - Issue 294 || Central European olefin production - Issue 295 || Synthos-Brazil - Issue 295 || Russian chemical production & markets, Jan-Jun 2015 - Issue 296 || Nizhnekamskneftekhim-updated ethylene project plans - Issue 296 || Russian phthalic anhydride market - Issue 296 || Saratovorgsintez-logistics - Issue 296 || Zapsibneftekhim & Yuzhniy Balyk - Issue 297 || Unipetrol-Technip polyethylene project - Issue 298 || Effects of low oil prices & rouble devaulation on Russian petrochemical industry - Issue 298 || SIBUR-energy products, first half of 2015 - Issue 299 || Rosneft project update-Eastern Petrochemical Company (VNKH) - Issue 300 || Nizhnekamskneftekhim new ethylene project - Issue 300 || Other Russian ethylene project news - Issue 300 || Kuibyshevazot, Jan-Sep 2015 - Issue 300 || Metafrax, Jan-Sep 2015 - Issue 300 || Russian phthalic anhydride, Jan-Sep 15 - Issue 300 || Samsung-aromatics complex at Ustyurt in Uzbekistan - Issue 300 || Czech petrochemical trade, Jan 2016 - Issue 304 || Czech synthetic rubber trade - Issue 304 || Kazanorgsintez Jan-Dec 2015 - Issue 304 || Nizhnekamskneftekhim Jan-Dec 2015 - Issue 304 || Angarsk cracker outage creates problems for Irkutsk petrochemical industry - Issue 304 || Russian LDPE market 2015 - Issue 304 || Russian paraxylene-PTA - Issue 304 || Russian benzene market, Jan-Feb 2016 - Issue 304 || Russian methanol domestic sales, Jan-Feb 2016 - Issue 304 || Metafrax Jan-Dec 2015 - Issue 304 || Russian butanol sales, Jan-Feb 2016 - Issue 304 || Russian DOP market-Sayanskkhimplast outage - Issue 304 || Russian phthalic anhydride market, 2015 - Issue 304 || Revised capacity of Amur Gas Processing Plant - Issue 305 || Gazprom processing Blagoveshchensk announces consultancy tender for Amur GPP - Issue 305 || Gazprom Design-Amur GPP - Issue 305 || Svobodny meeting in March, Amur GPP - Issue 305 || SIBUR starts preparations on the selection of the licensor for Amur Gas Chemical Complex - Issue 305 || Gazprom tender for 60.7 km section of pipeline Power of Siberia - Issue 305 || Work on checkpoint on Amur-China border - Issue 305 || NIPIGas-Amur GPP & domestic equipment. - Issue 305 ||
 
  

 


CIREC Monthly News, June-July 2016


Market News

§  PKN Orlen’s petrochemical margins up 18% in January to May 2016

§  Russian PVC consumption stabilising in 2016 after big falls in 2015 and 2014

§  Orthoxylene sales on Russian domestic market up 12% in Jan-May 2016

§  Russian PET consumption rises 10% in Jan-Apr 2016

§  Polymer imports into Ukraine rise significantly in first four months in 2016

Company News

§  Unipetrol purchases Spolana from Anwil to reintegrate with Czech assets

§  PCC Rokita records high profits in first quarter, polyol sales up

§  Kazanorgsintez continues to show good rouble profits from polymer sales

§  Nizhnekamskneftekhim reports increase in net profits by 1.8 times in Q1 2016

§  Sayanskkhimplast could be put for sale by shareholders

Trade News

§  Czech monomer imports continue to support polymer production & exports

§  Russian chemical imports down slightly by value in January to May 2016

§  Russian PVC imports rise in May to cover Sayanskkhimplast outage

§  Acrylic Salavat receives approval from REACH for acrylate exports to EU

Production News

§  Angarsk Polymer Plant is expected to restart ethylene production on 1 July

§  Russian formaldehyde production drops 11% in first quarter in 2016

§  Methanol sales from Azot at Novomoskovsk affected by accident in late May

§  Tomskneftekhim to complete expansion of polyethylene and polypropylene capacity

Project News

§  Unipetrol starts construction of new polyethylene unit

§  Grupa Azot selects contract engineer for PDH project at Police

§  Ustyurt Gas Chemical Complex officially opened in Uzbekistan

§  Kazanorgsintez aims to increase ethylene capacity to 1 million tpa by 2020

§ Azerbaijan looks to China to support OGPC investments

 


 

 


  • web analytics

     

Central European refining & margins

MOL is reducing its share Russian oil for refining in 2016, as the group seeks alternative supplies via the Adria pipeline.  It is not yet clear how much share will be taken by other suppliers, but the share of Russian oil to supply the Hungarian refinery Szazhalombatta comprised 85% in 2015 whilst Slovnaft is the only refinery in the MOL Group completely dependent on Russian oil.

By contrast to Slovnaft the Croatian refineries at Rijeka and Sisak only source around 35% from Russia.  The bulk of deliveries to the Croatian refineries are supplied by sea from ports on the Adriatic. Overall MOL’s share now accounts for less than 70%.  In 2016 MOL plans the first deliveries by sea well to the refinery in Bratislava, to increase supply to Szazhalombatta.

In the petrochemical sector, MOL’s margins fell in February to €692.5 per ton against €761 in January, but as shown in the graphic opposite still significantly remain higher than in February 2015 and preceding years.  In the Czech Republic Unipetrol’s refining margin dropped from $5.0 per barrel in January to $2.8 in February, whilst polyolefin margins dropped from €558 per ton to €541 in February.  Petrochemical and polyolefin margins still remain way above historical averages. In Poland Orlen’s downstream margin dropped from $13.20 per barrel in January to $11.00 in February, whilst petrochemical margins fell from €1050 per ton to €991 per ton. 

Orlen’s downstream division reported declining margins in the latter part of 2015, but overall still remained higher than in the same period in 2014. 

Czech Petrochemical Imports (unit-kilo tons)

Product

Jan-16

Jan-15

Ethylene

11.4

0.0

Propylene

14.7

2.4

Butadiene

3.9

1.6

Benzene

9.8

7.7

Grupa Lotos reported a fall in model refining margins in February to $8.6 per barrel against $5.67 in January.  Grupa Lotos reported larger than expected net profit of zl 391 million ($98.4 million) for the fourth quarter in 2016, mainly on impairment charges related to low oil prices.  Last year the Lotos group significantly increased naphtha production, which sells both in export and domestic market, whilst xylene production (mostly exported to Germany) remained unchanged. 

Czech petrochemical trade, Jan 2016

Ethylene imports into the Czech Republic in January were sourced mostly from Belgium, totalling 11,000 tons whilst propylene imports were sourced mostly from Germany, the Netherlands and Serbia.  HIP Petrohemija also supplied Unipetrol with volumes of benzene in January.  Other monomer imports in January this year which increased as a result of the cracker outage at Litvinov included ethylbenzene where shipments amounted to 5,109 tons.  By contrast in January last year, Unipetrol exported 11,313 tons of ethylbenzene to Synthos at Oswiecim.  Synthos has been forced to buy ethylbenzene from other sources while the Litvinov cracker is undergoing renovation.  Regarding the impact on Czech polyolefin trade, the supply/demand balances are only marginally down as opposed to the significant shifts that have been seen in monomers in the past half year. 

Czech synthetic rubber trade

Rubber exports have not been affected directly by the Litvinov outage and were actually higher in January this year than in January 2015.  Thus Synthos has maintained the flow of feedstocks to Kralupy, preferring to take the losses higher up the production chain.  The main rubber exports from Synthos Kralupy consist mostly of SBR and butadiene rubber.  Imports of ethylene-propylene rubber are important for Czech consumers, due to the absence of domestic production, and totalled 33,137 tons in 2015 against 29,911 tons in 2014.  Ethylene-propylene rubber is sourced from a variety of countries, with the Germany and the US acting as the leading suppliers. 

Central European ethylene

Ethylene production increased for three of the four Central European petrochemical producers in 2015, with Unipetrol unable to produce after August.  Production at Litvinov is scheduled to restart partially in July and back to full capacity at the end of the third quarter.  In the meantime, Unipetrol is undertaking an Kc 8.5 billion investment into a new polyethylene unit at Litvinov.  Based on Ineos technology, the turnkey PE3 plant is scheduled to replace one of the site’s current PE units (PE1).  The other existing plant (PE2), with a capacity of 200,000 tpa, will not be affected.  The technology will allow Unipetrol to compete the leading European producers in the area of product quality and in addition ensure better safety and reliability of production. 

Synthos Jan-Dec 2015

The Synthos Group (including assets in the Czech Republic and Poland) achieved revenues of zl 4.058 billion in 2015 against zl 4.619 billion in 2014, whilst operating profits rose from zl 450 million in 2014 to zl 480 million in 2015.  Net profits rose from zl 357 million to zl 426 million, helped by cheaper raw material costs, in particular butadiene.  In the last three years, the company's results have come under strong pressure from the weak environment in the rubber markets.

The main raw materials used by the Group include butadiene, styrene, ethylbenzene, butyl acrylate, vinyl acetate monomer, ethylene, and benzene and C4 fractions.  The Synthos Group was affected in 2015 by the cracker accident at Litvinov on 13 August, which halted deliveries by pipeline of ethylene, benzene and C4s to Synthos Kralupy.  This event had a negative impact on the financial results in the second half of 2015.  Synthos made extensive efforts to limit the effects of the accident at Litvinov in by optimising the supply of raw materials from alternative sources.

The synthetic rubber division is the main sector for Synthos.  Sales revenues have declined significantly in the past four years although the company has maintained relatively good operating profits.  For 2015 Synthos generated sales revenues of zl 1870 million against zl 2309 million in 2014, whilst the EBITDA fell from zl million to zl 276 million in 2015.  The group manufactures four different types of synthetic rubber: styrene-butadiene rubber, polybutadiene rubbers, high styrene rubbers, and nitrile-butadiene rubbers NBR.  Products from the new SSBR plant will be sold under the trade name SYNTION®.

Synthos investments

 Polish Chemical Production (unit-kilo tons)

 Product

Jan-Feb 16

Jan-Feb 15

 Caustic Soda Liquid

51.4

57.0

 Caustic Soda Solid

10.0

13.7

 Soda Ash 

192.4

170.3

 Ethylene

96.8

93.3

 Propylene

70.6

67.7

 Butadiene

10.5

9.7

 Toluene

2.7

1.6

 Phenol

5.4

5.6

 Caprolactam

28.0

28.6

 Acetic Acid

0.9

1.1

 Polyethylene

68.0

66.2

 Polystyrene

10.4

8.4

 EPS

13.4

8.5

 PVC

45.4

52.6

 Polypropylene

52.6

42.1

 Synthetic Rubber

33.4

30.6

 Ammonia (Gaseous)

488.0

242.0

 Ammonia (Liquid)

16.4

230.0

 Pesticides

3.2

6.2

 Nitric Acid

440.0

399.0

Nitrogen Fertilisers

360.0

344.0

Phosphate Fertilisers

78.8

73.7

Potassium Fertilisers

69.6

57.5

 

Grupa Azoty Sales 2015

The new SSBR plant at Oswiecim is being gradually phased in to the rest of the rubber complex.  For external investments Synthos has not completely discounted building a rubber plant in Brazil, whilst research is currently underway over a possible jv with Rosneft and Pirelli for a rubber plant in the Russian Far East.  This project is viewed in a long term context.  Synthos suspended work on the project in Brazil last year following uncertainty over feedstock supply, but remains open to reviving the investment.  Only recently however anti-dumping measures have come under consideration in Brazil which could make the Synthos project, and possibly Lanxess project, unworkable. 

 

Chemicals

Grupa Azoty Jan-Dec 2015

Grupa Azoty achieved a net profit of zl 691.85 million in 2015, against zl 265 million in 2014.  Revenues grew by 1% to zl 10.240 billion, despite the turmoil in market prices for chemical products and the downward pressure from lower prices of crude oil and natural gas.  The operating profit in 2015 amounted to slightly more than zl 830 million against zl 303.5 million in 2014.  Although performance was very strong in 2015, most of the profits for Grupa Azoty were accrued in the first half of the year.  The third quarter came under the greatest pressure from margins.  Poland accounted for 55.6% of sales in 2015 shown in the global map opposite.

Grupa Azoty raw material sources 2015

To achieve the strong financial results in 2015 Grupa Azoty benefited extensively from low commodity prices.  Gas accounts for around 40% of total costs, potassium salt 22%, coal and phosphates around 7%.  For all these commodities prices have been low in the past year, combined with the benefits of low oil prices which impacted on costs of propylene, benzene and methanol. 

For gas Grupa Azoty Group purchased 59.9% of its supplies from PGNiG in 2015, equating to 1.23 billion cubic metres.  For electricity supply Grupa Azoty purchases electricity from major Polish suppliers, i.e. PGE, TAURON Polska Energia and ENEA.  Coal is also bought mainly on the domestic market.  The group is the largest producer and consumer of liquid sulphur on the domestic market and in the region. Its sulphur procurement strategy is based on optimising supplies from sources within the group (Grupa Azoty Siarkopol) and on supplies of petrochemical sulphur.

Azoty-petrochemical feedstock purchases

For Grupa Azoty the bulk of the group’s propylene purchases are made under annual contracts, with supplementary purchases made on the spot market.  Imports into Poland equate to around 150,000 tpa, sourced from a wide range of countries including Germany and Russia.  Grupa Azoty’s procurement strategy for phenol is based primarily on supplies from the domestic and the EU markets, supplemented with deliveries from outside Europe.  Poland imports around 75-80,000 tpa of phenol most of which is sourced from Germany. 

Benzene is mainly supplied under one-year contracts, with supplementary purchases made on the spot market.  Benzene is sourced chiefly from domestic and regional suppliers.  Grupa Azoty is the largest benzene consumer in Poland.

Grupa Azoty Police 2015

Grupa Azoty Police generated zl 2.742 billion in revenues in 2015, zl 330 million up on 2014.  The EBITDA for the full year amounted to zl 293 million and is about zl 120 million higher than achieved in the previous year.

Grupa Azoty Police has finished the first stage of the documentation for the propylene-PDH project. Capital expenditures for the construction of a plant for the production of propylene will amount to around zl 1.7 billion.  The project also envisages the expansion of the Police port.

An important part of the company’s improving profitability is down to its position in Senegal, which provides access to the company’s own raw materials in addition to providing the chance to negotiate better prices from other suppliers from Africa.

Grupa Azoty ZAK 2015

Grupa Azoty ZAK increased its net profit by 10% in 2015, rising to zl 124 million from zl 111 million in 2014.  The company, however, reported a drop in revenues from zl 2.0 billion to zl 1.816 billion. The decrease in revenues resulted from the prolonged shutdown of the ammonia plant and the failure of the turbocharger.  Grupa Azoty ZAK has recently helped create Application Centre for OXO and Polymers in Poland, in order to develop and promote a model of effective cooperation between science and industry. The objective involves the research and their possible application in the field of specialty chemicals, in particular plasticisers and polymers and defining directions of research and development and innovation in the field of application of products from the area of ??specialty chemicals in selected business areas. 

Polynt-gel coat plant

Polynt has announced plans to build a new gel coat plant in Poland.  The plant will be finished by the end of 2016 at Polynt’s UPR and Compounds modern manufacturing park near Krakow at Niepolomice.  This state of the art production plant will be capable of producing the full range of Polynt’s gel coats in any colour.  Initially designed to produce 2,000 tpa, the plant can be expanded.  Polynt Composites are the global leader for gel coats, with production sites in Americas, Europe and Asia.

RUSSIA

Russian petrochemical raw materials

Russian petrochemical industry 2015

Raw materials for petrochemical production in Russia increased by 8.6% in 2015 according to the Ministry of Energy, whilst the production of bulk polymers increased by 14.6% over 2014.  In 2015 Russian petrochemical feedstocks production totalled 44.1 million tons, including ethane, naphtha, and LPGs.  Annual naphtha and LPG production in Russia has increased steadily recent years, whilst ethane remains in the range of 0.7-0.8 million tpa based on production at Orenburg and Minnibayevo.  Despite the increase of 14.7% in processing petrochemical raw materials in 2015, the interest in export activity provides the dominant target for naphtha and LPG producers.  The bulk of naphtha and LPG production is exported, primarily through the Baltic ports. 

Production of bulk polymers increased to 4.7 million tons in 2015 whilst imports decreased by 77.8%, partly due to the higher production which led to large-scale displacement of foreign material, and partly due to the fall in economic activity.  Due to falls in feedstock prices and improved margins all of the main Russian petrochemical producers reported higher revenues, operating and net profits for 2015, largely attributable to the fall in the domestic currency valuation. 

Russian petrochemical producers 2015

Kazanorgsintez Jan-Dec 2015

Kazanorgsintez increased its net profit in 2015 by 3.2 times over 2014, rising to 19.3 billion roubles.  Revenues increased by 26% to 68.6 billion roubles.  Exports rose 34.3% in 2015 to 12.1 billion roubles, whilst sales on the domestic market rose 24.2% to 56.5 billion roubles.  Production costs increased by 2.6% to 40.2 billion roubles.  Gross profits rose 1.9 times to 28.4 billion roubles.

The size of long-term loans for Kazanorgsintez declined by 46.2% in 2015 to 5.9 billion roubles, and short-term loans by 25.9% to 6.6 billion roubles.  The company aims to increase annual revenues to around 100 billion roubles by 2020.

Nizhnekamskneftekhim Jan-Dec 2015

Nizhnekamskneftekhim increased its net profit by 2.9 times in 2015 to 26.480 billion roubles, whilst revenues rose 13.3% to 150.6 billion roubles.  Gross profit increased by 67% to 38.52 billion roubles, whilst the operating profit rose from 13.27 billion roubles in 2014 to 27.28 billion roubles in 2015. Exports accounted for 48% of total sales in 2015. 

Revenues from exports grew by 15.1% in 2015 to 72.4 billion roubles, whilst domestic sales increased by 11.7% to 78.2 billion roubles.  At the end of the year the company was able to report no

outstanding long-term borrowings whilst short-term loans decreased by 2.8 times to 1.7 billion roubles.  Nizhnekamskneftekhim has recently received income from the sale of shares in local chemical plant Karpov, which specialises in the production of chemical products, medicines and building materials.

SIBUR-Tobolsk

Russian Chemical Production

(unit-kilo tons)

Product

Jan-Dec 15

Jan-Dec 14

Caustic Soda

1,115.0

1,070.0

Soda Ash

3,084.0

2,548.0

Ethylene

2,787.0

2,395.2

Propylene

1,814.1

1,645.2

Benzene

1,215.0

1,150.0

Xylenes

548.0

500.0

Styrene

657.5

645.0

Phenol

244.2

241.0

Ammonia

15,200.0

14,600.0

Nitrogen Fertilisers

8,648.0

8,200.0

Phosphate Fertilisers

3,219.0

3,000.0

Potash Fertilisers

8,056.0

8,400.0

Plastics in Bulk

7,222.0

6,386.9

Polyethylene

1,786.0

1,591.0

Polystyrene

536.0

537.0

PVC

847.0

712.0

Polypropylene

1,331.0

1,080.0

Polyamide

145.0

145.0

Synthetic Rubber

1,442.0

1,319.0

Synthetic Fibres

128.1

128.0

SIBUR has decided to combine its assets in the Tobolsk area into a separate business unit, incorporating Tobolsk-Neftekhim, Tobolsk-Polymer and Zapsibneftekhim under the same structure.  This process of amalgamation will be completed in 2016.  The construction of the ZapSibNeftekhim complex means that SIBUR will have developed the full chain of production from gas liquids through to petrochemicals and by merging the three main production complexes, in addition to the energy units, will provide the opportunity to optimise efficiencies. 

The new business unit will manage the operation of all industries, including gas fractionation capacity, production of monomers, MTBE, propylene, polypropylene, and electricity and heat.  Apart from existing operations the unified structure is being created for the ZapSibNeftekhim olefin complex when complete.   SIBUR is currently trying to buy the third-generation capacity station Tobolsk CHP from Fortum, for an estimated 9 billion roubles. The Federal Antimonopoly Commission (FAS) has already approved the transaction.  

Bashneft 2015

Bashneft reduced the production of oil products by 11.2% in 2015 whilst the output of petrochemicals increased by 3.7 times from 229,000 tons to 851,000 tons.  This significant rise in volume petrochemical production was attributable to Bashneft’s acquisition of AFK Sistem which previously held ownership of Ufaorgsintez in addition to other assets in Bashkortostan.

The Bashneft refineries, including Ufaneftekhim and the two Ufimsky refineries processed a total of 17.710 million tons of crude in 2015, 11% down on 2014.  Naphtha production dropped 1% to 4.95 million tons and diesel fuel by 0.8% to 7.3 million tons.  The volume of oil production declined by 17.6% to 2.52 million tons.  The fall in oil refining was attributed to the changes in Russian excise tax legislation in 2015. 

Ufaorgsintez Production (unit-kilo tons)

Product

Jan-Dec 2015

Jan-Dec 2014

Acetone

48.4

44.5

Ethylene

137.1

121.1

Phenol

76.9

73.0

Polyethylene

96.3

87.0

Polypropylene

126.6

121.1

Propylene

180.0

158.3

Ufaorgsintez Jan-Dec 2015

Ufaorgsintez increased its net profit in 2015 by 2.6 times over 2014, rising from 2.38 billion roubles to 6.22 billion roubles.  Revenue increased by 15.7% to 32.3 billion roubles. 

Exports for Ufaorgsintez rose 9% in 2015 to 7.8 billion roubles, whilst sales on the domestic market rose 23.3% to 20.48 billion roubles.  The cost of sales grew by 4.6% to 25.29 billion roubles.  Gross profits rose from 3.72 billion roubles to 7.0 billion roubles, whilst the operating profit grew by 2.3 times to 5.89 billion roubles.

Russian petrochemical markets

Russian petrochemical feedstocks, Jan-Feb 2016

Russian Isobutane Consumers (unit-kilo tons)

Consumer

Jan-Feb 16

Jan-Feb 15

Nizhnekamskneftekhim

36.1

19.1

Ektos Volga

18.5

16.6

Omsk Kaucuk

19.5

16.0

Togliattikaucuk

31.6

25.4

Uralorgsintez

3.8

9.6

SIBUR-Khimprom

8.1

5.6

Others

9.3

2.1

Total

126.9

94.4

Sales of natural gas liquids on the Russian market amounted to 328,440 tons in February, 13% down against January.  The reduction of NGL sales was mainly due to a reduced supply from the Surgut and Yuzhniy Balyk gas processing plants.  Deliveries to the petrochemical sector dropped 2% in February to 130,880 tons.  For the first two months in 2016 sales of gas liquids on the domestic market totalled 704,240 tons, including petrochemicals and other applications, 16% up on the same period in 2015. 

Isobutane sales on the domestic market amounted to 61,960 tons in February, 5% down on January but 47% up on the corresponding period in 2015.  Sales on the domestic market totalled 126,920 tons in the first two months in 2016, 35% up on 2015.  The vast proportion of isobutane shipments is delivered to MTBE plants.

Naphtha domestic sales totalled 257,200 tons in February, 8% up on January.  From February sales, the petrochemical sector purchased 91,600 tons which was 18% down on January.  Domestic naphtha sales have been rived this year by the restart of the Stavrolen cracker, which itself consumed 141,000 tons in the first two months in 2016. 

The Taneko refinery is planning to launch a unit at Nizhnekamsk this year for hydrotreating of naphtha and naphtha splitter, which will provide additional quantities for Nizhnekamskneftekhim’s ethylene cracker.  Last year Taneko increased volume of oil refining by 1.8% to 8.6 million tons.

Propane sales on the Russian domestic market amounted to 54,310 tons in February, 18% down on January and 6% lower than February 2015.  Petrochemical producers accounted for 8,550 tons, twice down on January.  Kazanorgsintez purchased 8,000 tons of propane, whilst SIBUR-Kstovo increased purchases by 2.9 times to 305 tons.  In January and February 2016 Russian consumers purchased 120,870 tons of propane, 4% more than in 2015.

Angarsk cracker outage creates problems for Irkutsk petrochemical industry

The accident at the ethylene plant belonging to Angarsk Polymer Plant in the first half of February has impacted not only on polyethylene, propylene, and benzene production the Irkutsk region but also the Sayanskkhimplast plant which relies on ethylene from Angarsk.  Repairs to the cracker are expected to take around three months to complete, whilst during the period of downtime Angarsk Polymer will undertake maintenance which had previously been scheduled for later in the year.

The cause of the accident in February was due to the failure of the turbocharger.  Part of the equipment needed to be sent to the Czech Republic for repairs.  Production of ethylene is expected to restart at the end of May, according to Rosneft, although local views suggest that this may be too optimistic. 

The downtime at Angarsk has brought the question of ethylene supply to Sayanskkhimplast to greater attention of the Irkutsk Administration, particularly ass the town of Sayansk relies heavily on the PVC producer for local employment.  Angarsk Polymer and Sayanskkhimplast are connected by a 230 km ethylene pipeline, constructed in the Soviet era, but the two companies are now reluctant partners.   Until the Kovykta-Sayansk-Irkutsk gas pipeline is constructed there is little scope for change. 

Angarsk Polymer Plant is focusing on the expansion of its cracker facilities which will increase ethylene production up to 454,000 tpa and the production of propylene up to 210,000 tpa.  This year around 4.4 billion roubles will be invested in the project to be completed by 2019.  The additional ethylene is intended for a new polyethylene plant at Angarsk rather than for the merchant market and thus the expansion will not benefit Sayanskkhimplast in its intended increase for PVC production.   

Gazprom neftekhim Salavat-ethylene expansion

Gazprom neftekhim Salavat expanded its ethylene capacity by 40,000 tpa in January this year, changing the status of the cracker to EP-340.  The latest project in the company has involved completion of the modernisation of the reactor for block acetylene hydrogenation in ethane-ethylene fraction.  The company is also implementing a project for the supply of steam for the production of ethylene.  Gazprom neftekhim Salavat is the first Russian petrochemical producer to build such a pipeline to supply steam.  The full length of the pipeline from the power plants to the petrochemical complex should comprise 4 km. 

In other product areas, Gazprom neftekhim Salavat is planning to expand production capacity for polystyrene and polyethylene.  Gazprom neftekhim has issued a tender for an MTBE project, comprising 20,000 tpa.  The potential contractor will also have to develop basic projects for the production of MTBE unit and isobutane alkylation unit.  The initial purchase cost is of this project was set at 97.6 million roubles.

Russian Propylene Domestic Sales

(unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Angarsk Polymer Plant

6.4

15.4

Omsk Kaucuk

0.0

3.0

SIBUR-Kstovo

19.3

15.3

Akrilat

0.0

1.7

LUKoil-NNOS

38.3

28.3

Tomskneftekhim

0.0

0.0

Gazprom neftekhim Salavat

0.2

0.8

Nizhnekamskneftekhim

0.0

2.0

Tobolsk-Polymer

0.0

4.7

Ufaorgsintez

0.0

2.8

Total

64.2

73.8

Russian propylene market, Jan-Feb 2016

Merchant propylene sales on the Russian market fell 6% in February to 31,900 tons.  The decline was largely due to inventories built up in January.  Domestic sales in January were undertaken by Lukoil-NNOS, which shipped 19,600 tons, and SIBUR-Kstovo which shipped 10,200 tons. 

At the same time, due to cracker outage Angarsk Polymer Plant reduced shipments by 3.4 times, to 1,900 tons.  Sales of propylene monomer on the Russian domestic market totalled 64,200 tons in the first two months in 2016, 9% down on 2015.

Saratovorgsintez purchased 31,578 tons of propylene in the first two months in 2016 against 30,513 tons in the same period in 2015, all of which was supplied by Lukoil-NNOS at Kstovo.  The second largest Russian consumer of propylene was SIBUR-Khimprom, which purchased 13,497 tons in the first two months in 2016 against 12,834 tons in the same period in 2015.  SIBUR-Khimprom purchases propylene mostly from SIBUR-Kstovo and Lukoil-NNOS. 

Saratovorgsintez remained the largest buyer for propylene monomer in 2015, followed by SIBUR-Khimprom.  Other buyers of merchant propylene include Akrilat at Dzerzhinsk, for the production of acrylates, Samaraorgsintez for cumene, and the Plant of Synthetic Alcohol which uses propylene for the production of isopropanol. 

Regarding propane-propylene fractions, sales on the merchant market halved in February to 7,200 tons.  The main reason for the fall was due to the reduced shipments from the Ryazan refinery, falling by 2.5 times to 3,600 tons, as greater focus was placed on more profitable exports. Slavneft-Yanos also reduced shipments to the domestic market by 21% to 3,000 tons.  Sales of propylene monomer totalled 21,700 tons in the first two months in 2016, 25% down on 2015.

Propylene production rose 3% in January over December to 154,500 tons, mainly due to increased production by Stavrolen which increased output by 33%.  At the same time, Gazprom neftekhim Salavat reduced the production of propylene by 11%, to 10,400 tons, whilst SIBUR-Khimprom reduced monomer production volumes by 11% to 3,900 tons. 

Russian Propylene Exports (unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Lukoil-NNOS

11.2

0.0

SIBUR-Kstovo

8.5

1.0

Omsk Kaucuk

0.0

0.0

Angarsk Polymer Plant

0.4

0.0

Stavrolen

2.1

0.0

Total

22.2

1.0

Exports of Russian propylene increased by 13% in February over January to 12,300 tons.  Exports totalled 23,200 tons in the first two months in 2016, 3.4 times more than in the first two months of 2015.  Stavrolen exported 2,100 tons in February, Omsk Kaucuk 68 tons, whilst Lukoil-NNOS increased exports by 1.8 times to 6,600 tons.  At the same time, SIBUR-Kstovo reduced exports by half against January to 3,500 tons.  Exports totalled 23,200 tons in the first two months in 2016, 3% up on the same period in 2015.

Exports of propane-propylene fractions amounted to 11,000 tons in February, 1.5 times more than in January.  The Ryazan refinery exported 10,000 tons in February, 1.8 times up on January, whilst Slavneft-Yanos reduced exports by 43% to 1,000 tons.  In the first two months this year Russian exports of propane-propylene fractions amounted to 18,400 tons, 1.9 times more than during the same period in 2015.

Russian Styrene Domestic Sales

(unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Angarsk Polymer Plant

2.0

1.1

Plastik

2.0

5.3

Gazprom n Salavat

6.5

3.5

SIBUR-Khimprom

5.1

1.0

Nizhnekamskneftekhim

0.0

12.8

Total

15.6

23.8

Russian styrene, Jan-Feb 2016

Russian styrene sales on the domestic market rose 16% in February over January to 7,100 tons.  SIBUR-Khimprom increased product shipments to domestic customers by 29% to 2,700 tons and Angarsk Polymer Plant doubled shipments to 1,300 tons.  Supplies from Gazprom neftekhim Salavat reduced sales by 7% to 3,100 tons.  For the first two months in 2016 Russian sales of styrene on the domestic merchant market totalled 13,300 tons which was 34% up on 2015.  Styrene exports from Russia increased by 27% in the first two months in 2015 to 26,600 tons. 

Bulk Polymers

Russian LDPE production, Jan-Feb 2016

Russian LDPE Production

(unit-kilo tons)  

Producer

Jan-Feb 16

Jan-Feb 15

Angarsk Polymer Plant

6.4

13.6

Kazanorgsintez

34.9

37.8

Gazprom neftekhim Salavat

7.0

7.6

SIBUR-Holding

42.0

41

Ufaorgsintez

17.1

16.2

Total

107.4

116.2

In the first two months this year, Russian LDPE production decreased by 6% against the same period in 2015 and amounted to 107,300 tons.  Production dropped from 58,000 tons in January to 49,200 tons in February due to the accident at Angarsk Polymer Plant on 11 February, resulting in the production outage which is expected to continue until the end of May or early June.  On a lesser scale there were technical problems at Tomskneftekhim LDPE plant in February which led to a reduction in production.

Russian LDPE market 2015

LDPE production in Russia totalled 652,400 tons in 2015, whilst consumption amounted to 551,900 tons.  Consumption has declined in the each of the past three years whilst production has remained largely unchanged.  The cost of imported polymer increased last year due to a significant reduction in value of the national currency.  In 2016 the supply/demand balance is expected to be similar to 2015, although there is a risk from the potential decline in retail and industrial packaging.  LDPE consumption for 2015 was broken down into general purpose film (61%), shrink films (27%), and cable coating and extrusion casting (6%).  

Imports of LDPE into Russia fell by 15.5% in 2015 to 79,470 tons.  The decline was due to the low solvency of end users and the high cost of the polymer, which in turn was the result of rouble devaluation.  The largest supplier of LDPE to the Russian market in 2015 was the Belarussian company Polymir, accounting for 62% of shipments. The demand for Belarusian raw materials due primarily to the fact that the qualitative characteristics of the products conform to Russian standards.  From West Europe, Ineos was the main supplier of LDPE to the Russian market, accounting for 18,150 tons, followed by LyondellBasell with 2,770 tons. 

Tomskneftekhim-expansion

A new line is under construction at Tomskneftekhim, which is targeted for completion by August 2016 with the focus on new brands.  This will increase LDPE capacity to 271,000 tpa and in addition polypropylene to 140,000 tpa. 

After the upgrade, the company will expand the range of branded LDPE products whilst adapting the polypropylene plant to produce raw materials the new BOPP film which opened in 2015.  In 2015 Tomskneftekhim produced 244,920 tons, 6% down on 2014, whilst Kazanorgsintez increased production by 2% to 207,260 tons.  Other producers included Ufaorgsintez which produced 100,200 tons, 15% up on 2014. 

Russian HDPE Imports

(unit-kilo tons)

Category

Jan-Feb 16

Jan-Feb 15

Extrusion

3.1

9.6

Pipe

2.4

3.5

Blow

2.6

3.0

Injection

6.1

6.9

Others

2.5

2.9

Total

16.7

25.9

Russian HDPE imports, Jan-Feb 2016

HDPE imports into Russia fell by 41% to 16,700 tons in the first two months in 2016.  The largest reduction was seen in extrusion coating of steel pipes of large diameter, declining from 9,600 tons in the first two months in 2015 to 3,100 tons in 2016. 

Russian Polypropylene Imports (unit-kilo tons)

Category

Jan-Feb 16

Jan-Feb 15

Homopolymers

9.9

8.4

Block

4.4

4.5

Random

3.9

4.7

Other

4.6

4.1

Total

22.8

21.7

Markets were affected both low demand for finished products and a weak rouble.  Imports of HDPE for pipe production dropped from 3,500 tons in January to February 2015 to 2,400 tons in 2016 due largely to weak demand.  Demand for HDPE imports is expected to remain affected this year by the weakness of the rouble and a serious decline in demand for finished products.  In addition, problems with customs clearance of polyethylene is impacting on volumes. 

Russian polypropylene, Jan-Feb 2016

Russian polypropylene imports amounted to 22,400 tons in the first two months in 2016, 3% up on the same period in 2015.  February imports amounted to 11,400 tons, of which 4,800 tons comprised homopolymer, block polymer 2,400 tons and random polymer 2,200 tons. 

The dependence of Russian producers in the sector of BOPP film is still strong on external supplies, while the PP-random purchases for the production of pipes was virtually nullified by Russian producers (due to the growth of its own production).

Biaksplen 2015

Biaksplen increased BOPP production in 2015 to 169,000 tons from 136,200 tons in the same period in 2014.  Capacity rose from 150,000 tpa to 180,500 tpa.  The production structure of the company consists of five factories located at Novokuibyshevsk, Kursk, Balachna in the Nizhny Novgorod region, in the Moscow region and at Tomsk.

Russian PVC market, Jan-Feb 2016

Russian PVC production totalled 139,100 tons in the first two months in 2016, 2% down on 2015.  Production fell in February to 67,300 tons against 71,700 tons in January following the production problems at Sayanskkhimplast.  RusVinyl produced 45,800 tons of PVC in January-February 2016, against 36,000 tons in the same period in 2015.  In February the company produced 26,400 tons of PVC, of ??which emulsion grade comprised 2,400 tons. 

Russian PVC Production

(unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Bashkir Soda

42.2

42.3

Kaustik

15.8

15.8

RusVinyl

49.9

37.6

Khimprom

0.0

0

Sayanskkhimplast

35.3

44.1

Total

143.2

139.8

Bashkir Soda Company at Sterlitamak produced 42,200 tons of PVC in the first two months in 2016, 9% down on 2015.  Kaustik at Volgograd produced 15,800 tons of PVC, unchanged from last year.  Sayanskkhimplast produced 35,300 tons of PVC, which is 20% lower than in 2015.  In January, the company produced 21,700 tons against 13,500 tons in February after ethylene supply from Angarsk was disrupted by the cracker outage. 

Ethylene production on Angarsk polymer plant was stopped due to the failure of the process equipment at the beginning of February. Production is not expected to restart until May or possibly June.  From 10 February Sayanskkhimplast transferred some staff to a four-day work week whilst a maintenance shutdown is taking place now rather than in August as originally scheduled.  Full production was stopped on 13 March after inventories were used up.  The company has signed an order and a detailed timetable agreed works to be undertake.  One slight problem of bring forward the planned outage is the time for some of spare parts to arrive after ordering.  As a result of the situation at Sayanskkhimplast the Russian PVC market saw a rise in prices in March of 2,500 roubles per ton.

Imports of PVC suspension grade fell sharply in the first two months in 2016 due to in part to low demand from local processors combined with the effects of rouble devaluation.  Imports amounted to 2,000 tons in January and only 300 tons were imported in February.  Currency fluctuations and excess supply from local manufacturers contributed to a drop in imports.  Imports from the US amounted to 1,100 tons in the first two months in 2016, whilst another thousand tons was imported from China.  The remaining volumes of PVC have been imported from European companies. Imports into Russia may rise whilst Sayanskkhimplast is out of the market.

Paraxylene-PTA-PET Chain

Russian Paraxylene Domestic Sales

(unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Gazprom Neft

10.5

14.4

Ufaneftekhim

20.0

21.9

Kirishinefteorgsintez

0.2

0.0

Total

30.7

36.3

Russian paraxylene-PTA

Russian paraxylene sales to Polief dropped from 36,300 tons in the first two months in 2015 to 30,700 tons in the same period this year.  Gazprom Neft reduced sales on the domestic market from 14,400 tons to 10,500 tons, whilst export activity increased taking advantage of the much weakened rouble.  Due to reduced PTA production in February Ufaneftekhim was able to enter the export market, shipping 3,044 tons.  Paraxylene exports in the first two months in 2016 totalled 22,000 tons against 12,400 tons in the same period in 2015.

Russian Paraxylene Exports

(unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Gazprom Neft

12.9

2.7

Ufaneftekhim

3.0

1.0

Kirishinefteorgsintez

6.1

8.7

Total

22.0

12.4

The zero rate of import duty on PTA for Russia is to be extended for a period up to 31 December 2017, as decided by the Eurasian Customs Union.  PTA duties will continue at 0% from the start of January 2016 until 31 December 2017, aimed at meeting the growing needs of the domestic market.  The import duty of 0% for PTA was established for the period from 2 September 2014 to 31 December 2015 inclusive, coming down from 5%. 

Tatneft-Taneko’s paraxylene project

As part of Tatneft’s investment and expansion of the Taneko refinery at Nizhnekamsk, progression has been made over the aromatics extraction installation which is to provide the paraxylene for the PTA and PET projects planned by Safpet. 

SafPet’s complex is targeted for a start-up in 2019, including 210,000 tpa of PTA and 250,000 tpa of PET.  A distinctive feature of the project is the raw material supply proximity at Nizhnekamskneftekhim and Taneko, ensuring the minimum cost of logistics for PTA and MEG.  Taneko’s extractive distillation column for aromatic hydrocarbons was manufactured by NATEK-Neftehimmash (Taganrog) under contract with Tatneft.  The Taneko complex represents probably the only new paraxylene capacity for the Russian market in the next few years unless Bashneft decides to revive plans of expanding Ufaneftekhim to 260,000 tpa. 

Russian MEG, Jan-Feb 2016

MEG sales on the domestic market amounted to 11,800 tons in February, 11% up on January.  SIBUR-Neftekhim supplied 10,600 tons or 90% of shipments, 1,200 tons up on January.  Polief purchased 6,920 tons in February, or 59% of the total purchases. 

MEG exports amounted to 11,740 tons in February, 70% up on January.  SIBUR-Neftekhim exported 7,200 tons (61% of total exports), or 70% more than a month ago. The remaining 39% belonged to Nizhnekamskneftekhim, which in February exported 4,540 tons (70% more than in January).  Belarus purchased 4,300 tons in February from Russia against 1,710 tons in January, whilst Indorama in Lithuania increased purchases from 1,290 tons to 3,490 tons.  The remaining volumes were shipped from Russia to Poland, 824 tons, Belgium 648 tons, the Netherlands 624 tons (58% less than in January), Latvia 494 tons (three times), Finland 432 tons, Kazakhstan 307 tons (+ 96%), other countries 614 tons.

SIBUR-PETF converts partly to film grade

SIBUR-PETF launched a unit for PET film production at Tver, having made the necessary adjustments of the equipment from producing bottle grade resin.  SIBUR-PETF plans to produce granules and films for food and technical purposes.  Russian consumption of films is currently estimated at 30,000 tpa, two thirds of which is imported.  SIBUR has embarked on this strategy ass the production of PET preforms used in the production of bottles continues to decline.  In 2015, the Russian PET market fell by 8% to 547,000 tons.  SIBUR-PETF operates a plant for PET with a capacity of 75,250 tpa and a production line of recycled PET with a capacity of 1,500 tpa. 

Russian PET market, Jan 2016

In January the estimated consumption of PET fell by 3.6% in Russia to 40,000 tons, compared to December of the previous year and 10% by January 2015.  Senezh produced 4,500 tons in January against 5,800 tons in December.  Alko-Naphtha produced 7,500 tons against 6,800 tons in December.

PET imports fell in January by 53% to 2,630 tons, of which 1,700 tons from China.  Import quotations of PET in Russia began to increase in March as a result of rising prices of raw materials for PET in Korea and China.  Rising costs for MEG and PTA helped increase PET import prices by around 5%.

Aromatics

Russian benzene market, Jan-Feb 2016

Benzene sales on the Russian domestic market totalled 125,900 tons in the first two months in 2016 against 130,300 tons in the same period last year.  The largest suppliers to the domestic market include Gazprom Neft at the Omsk refinery followed by SIBUR-Kstovo, Uralorgsintez, and Kirishinefteorgsintez.  Falls in deliveries were noted in February at Stavrolen and Angarsk Polymer due to maintenance repairs, planned and unplanned respectively.

Benzene supplies from refineries and petrochemical plants totalled 106,800 tons in the first two months in 2016, unchanged from last year.  The largest crude suppliers consist mostly of Magnitogorsk Metallurgical Combine and Altai-Koks.  Exports of crude benzene totalled 11,848 tons in the first two

Leading Russian Benzene Consumers

(unit-kilo tons)

Consumer

Jan-Feb 16

Jan-Feb 15

Kuibyshevazot

20.8

29.7

Azot Kemerovo

20.1

17.5

Kazanorgsintez

14.8

11.3

SIBUR-Khimprom

16.2

12.8

Uralorgsintez

13.2

11.9

months in 2016 against 8,032 tons in the same period in 2015. 

Russian Domestic Benzene Sales (unit-kilo tons)

 

Jan-Feb 16

Jan-Feb 15

Synthesis Total

100.8

105.6

Angarsk Polymer Plant

6.2

8.6

SIBUR-Kstovo

13.3

6.2

Severstal

4.7

6.3

Uralorgsintez

13.7

14.9

Kirishinefteorgsintez

10.7

9.9

West Siberian MC

11.5

10.3

Ryazan NPZ

5.6

6.6

Slavneft-Yanos

10.8

11.9

Gazprom Neft (Omsk)

17.3

21.6

Gazprom Neftekhim Salavat

1.7

6.3

Stavrolen

4.3

0.0

Ufaneftekhim

0.9

2.2

ArcelorMittal

0.0

0.7

Nitration Total

2.6

5.5

Novolipetsk MK

2.6

5.5

Crude

22.5

19.2

Chelyabinsk MK

1.4

2.1

Altai-Koks

6.6

0.5

Koks

4.6

6.3

Magnitogorsk MK

7.6

7.1

Nizhny Tagil MK

2.2

2.9

Moskoks

0.0

0.1

Ural Steel

0.1

0.3

Full Total

125.9

130.3

Regarding consumers, Kuibyshevazot reduced purchases from 29,705 tons in the first two months in 2015 against 20,792 tons in the same period in 2016.  This was due to increased purchases of toluene as an alternative feedstock for caprolactam production.  Nizhnekamskneftekhim also reduced merchant benzene purchases from 14,067 tons in January-February 2015 to 4,093 tons in 2016.  Increases for the first two months this year were noted for Azot at Kemerovo, which bought 20,051 tons against 17,511 tons in 2015, Shchekinoazot which purchased 9,328 tons against 6,551 tons, Kazanorgsintez which increased from 11,296 tons to 14,816 tons, and SIBUR-Khimprom which increased from 12,812 tons to 16,205 tons. 

Benzene production increased in 2015 due to the restart of the Stavrolen cracker, but the market remains unpredictable particularly as the Angarsk plant will be idle until at least the middle of 2016. 

Russian benzene production increased by 5% to 1.1 million tons in 2015, including an increase of 2.8 times by Stavrolen to 37.2 million tons.  In addition, SIBUR-Kstovo increased production 1.8 times up to 68,000 tons.  On the other hand, Angarsk Polymer Plant reduced production by 23% to 54,900 tons.  At the Chelyabinsk Metallurgical Combine the owning company Mechel stopped processing crude benzene.

Russian consumption of benzene increased by 5% in 2015, including increased purchases by Nizhnekamskneftekhim of 32% due to the need to increase production of styrene.  Russia's largest consumer of the commodity benzene Kuibyshevazot also increased purchases by 14% compared to 2014. Caprolactam accounts for around 40% of Russian benzene merchant market purchases.

Russian orthoxylene , Jan-Feb 2016

Russian refiners shipped 8,750 tons of orthoxylene in February, 34% less than in January and 29% lower than in February 2015.  The Omsk refinery shipped 3,350 tons, Kirishinefteorgsintez 3,180 tons and Ufaneftekhim 2,220 tons.  Kamteks-Khimprom reduced the volume of purchases of orthoxylene in February by 2.1 times compared to January, to 4,220 tons (48% of Russian consumption). 

Russian Orthoxylene Domestic Sales

(unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Gazprom Neft

9.5

5.3

Ufaneftekhim

5.9

5.7

Kirishinefteorgsintez

6.6

4.5

Total

22.0

15.4

Gazprom neftekhim Salavat resumed purchases in February, buying 990 tons (11% of consumption).  Paint manufacturers increased purchases by 27% in February to 2,110 tons (24%), whilst fuel manufacturers, agrochemical, pharmaceutical and other products bought 830. tons (10%).  Another 600 tons was purchased by trading companies.  In the first two months of 2016 orthoxylene sales on the domestic market totalled 22,020 tons which is 43% more than the same period in 2015.

Russian Orthoxylene Exports

(unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Gazprom Neft

13.3

0.0

Kirishinefteorgsintez

1.0

3.0

Ufaneftekhim

2.5

3.7

Total

16.8

6.7

Orthoxylene exports from Russia amounted to 10,540 tons in February against 6,400 tons in January, and 2,670 tons in January 2015.  Gazprom Neft exported 8,380 tons in February, 80% of shipments whilst both Kirishinefteorgsintez and Ufaneftekhim dropped shipments of 10% to 1,000 tons each.  Finland was the main destination for Russian exports in February, accounting for 98% or 10,340 tons.  For the first two months in 2016 Russian exports of orthoxylene totalled 16,800 tons which is 2.5 times more than the same period last year.

Russian Caprolactam Production

(unit-kilo tons)

Producer

Jan-Dec 15

Jan-Dec 14

Kuibyshevazot

176.3

181.1

Shchekinoazot

54.8

42.1

SDS Azot

95.9

85.1

Total

327.0

308.3

Russian caprolactam production 2015

Russian caprolactam production increased from 308,300 tons in 2014 to 327,000 tons in 2015.  Despite a fall by Kuibyshevazot from 181,100 tons to 176,300 tons in 2014, increases were noted by Azot Kemerovo and Shchekinoazot.  Last year Shchekinoazot stated a significant reconstruction of the caprolactam unit which when completed will significantly further reduce the consumption of benzene, thermal energy whilst increasing the availability of commodity cyclohexanone to 2,200 tpa, i.e. by 73% over current levels.  Production of caprolactam for Shchekinoazot totalled 54,800 tons, a 30% rise over 2014.  The increase in production of caprolactam and led to a 9% increase in production of sulphuric acid at the Efremov branch of Shchekinoazot to 386,000 tons. 

Russian Market Phenol Sales by Supplier

(unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Novokuibyshevsk PC

7.8

5.3

Kazanorgsintez

2.5

1.6

Ufaorgsintez

10.7

5.7

LUKoil-VNPZ

0.2

0.0

Borealis

0.1

0.2

Total

21.3

12.9

Russian phenol, Jan-Feb 2016

Phenol sales on the Russian domestic market amounted to 21,300 tons in the first two months in 2016, against 12,900 tons in the same period last year.  The increase was due largely to the purchase of 6,500 tons by Kuibyshevazot for caprolactam production, against zero tons in the same period last year. 

Also Uralkhimplast, which uses phenol for phenol-formaldehyde resin production, increased purchases from 1,900 tons to 2,400 tons.  The main supplier of phenol to the domestic market in January to February this year was Ufaorgsintez which shipped 10,700 tons against 5,700 tons in the same period in 2015.  Novokuibyshevsk Petrochemical Company was the second largest supplier, shipping 7,800 tons against 5,300 tons in 2015.

Russian Toluene Domestic Sales

(unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Novopiletsk MK

0.0

0.0

Slavneft-Yanos

6.6

7.0

Severstal

1.0

1.4

LUKoil-Perm

2.6

4.1

Gazprom Neft

9.6

3.1

Zapsib

0.4

0.9

Kinef, Kirishi

3.7

2.3

Gazprom Neftekhim Salavat

0.0

0.0

Others

0.0

0.1

Total

23.9

18.8

 Regarding export activity, Ufaorgsintez has been the sole Russian producer to ship abroad this year, exporting 340 tons in February against 680 tons in January.  Ufaorgsintez shipped 195 tons of phenol to the Czech Republic in February, followed by 95 tons to Latvia and 50 tons to Slovakia.  The average cost of phenol exported from Russia in February declined below the level recorded in January, almost 10% and amounted to $635 per ton DAF border of Russia.  Czech consumers were paying $595 whilst Latvian consumers were paying $740.

Borealis shipped 610 tons of phenol to the Russian market in February, more than double than in January due to increased demand by resin manufacturer MetaDynea.  At the same time Astat remains the main Russian consumer of phenol bought from Borealis, taking 515 tons in February. 

Russian toluene sales, Jan-Feb 2016

Toluene sales on the domestic market amounted to 12,800 tons in February, 15% more than in January and 31% higher than in February 2015.  Gazprom Neft at the Omsk refinery accounted for 36% of shipments (4,600 tons.), Slavneft-Yanos 25% (3,270 tons). Kirishinefteorgsintez 21% (2,680 tons), Lukoil-Permnefteorgsintez 12% (1,540 tons), Severstal 3% up (360 tons)., and West Siberian MK 3% (340 tons.).

Manufacturers of explosives in February 2016 increased purchases of toluene compared to January by 56%, to 2,510 tons (20% of Russian consumption). Companies producing paints, increased purchases of raw materials by 28%, to 3,980 tons.  Producers of lubricants and additives for motor fuels increased their purchase of toluene by 27%, to 2,260 tons (18%).  Toluene sales on the domestic market amounted to 23,880 tons in the first two months in 2016, 27% up on the same period in 2015.  The largest toluene producers in Russia comprise Gazprom Neft at Omsk, Slavneft at Yaroslavl and Ufaneftekhim at Ufa.  Production is either consumed internally or sold domestically, with no export activity. 

Synthetic Rubber

Russian C4 Supplies (unit-kilo tons)

Supplier

Jan-Feb 16

Jan-Feb 15

Angarsk Polymer

3.2

13.2

Krasnoyarsk Synthetic Rubber

0.0

0.1

Kazanorgsintez

7.5

5.9

Stavrolen

12.4

12.2

SIBUR-Kstovo

14.8

5.7

Gazprom neftekhim Salavat

0.0

0.0

Tomskneftekhim

12.1

13.3

Ufaorgsintez

3.8

4.9

Naftan (Belarus)

9.7

10.2

SANORS

0.0

0.0

Azerkhimya

0.7

2.2

Others

0.0

0.2

Total

64.2

67.9

Russian C4 sales, Jan-Feb 2016

C4 sales on the domestic market totalled 64,200 tons in the period January-February against 67,900 tons in the same two months in 2015.  The main domestic suppliers this year have included SIBUR-Kstovo and Stavrolen, which supplied 39,300 tons in 2016 or 61.6% of sales.  The Belarussian producer Naftan supplied 9,700 tons in the first two months this year against 10,200 tons in the same period last year. 

Nizhnekamskneftekhim purchased 30,900 tons of C4s in January to February 2016 against 19,700 tons in 2015, and Togliattikaucuk bought 27,000 tons against 24,200 tons.  Supplies from domestic plants have been tightened following the accident at Angarsk Polymer in February.  Deliveries of C4 from Angarsk to the domestic market declined by 2.3 times in February against January to 957 tons.  Angarsk Polymer Plant’s cracker is expected to remain inoperative until April after repairs have been completed.  Nizhnekamskneftekhim was the only Russian rubber producer to import C4s in February, importing 5,100 tons from Belarus.  Imports totalled 10,500 tons in the first two months, 26% down on the same period in 2015. 

Omsk Kaucuk was forced to switch suppliers of C4s in March from Angarsk Polymer Plant, which is down for repairs as part of the cracker renovation, to Tomskneftekhim, Kazanorgsintez   and   Ufaorgsintez.  In addition, the company buys C4s from Azerkhimya in Azerbaijan.  The Angarsk outage has impacted on C4 prices in March, Kazanorgsintez increased by 4% and Ufaorgsintez by 7%.  Naftan in Belarus expects to increase prices in April. 

Russian synthetic rubber production & trade

The Russian synthetic rubber market saw a volume improvement in 2015 over 2014, but was still slightly lower than in 2013.  The much weaker rouble in 2015 helped domestic rubber product manufacturers to acquire business from vacated importers, besides the economic attractiveness of exports.  Tyre manufacturers in Russia saw a direct benefit from the weak rouble, as numerous importers without production sites inside the country left the market, whilst at the same time export activity rose.  Continental at its Kaluga plant, which opened in 2013, expects to double the export of tyres in 2016 due to the currency advantages of producing inside Russia.

Russian Chemical Commodity Exports

 

Jan-16

Jan-16

Jan-15

Jan-15

Product

Kilo tons

$ Mil

Kilo tons

$ Mil

Ammonia

267

82

304

154

Methanol

117

23

135

39

Nitrogen Fertilisers

648

129

634

155

Potash Fertilisers

440

106

699

190

Mixed Fertilisers

509

173

548

199

Synthetic Rubber

77

93

67

114

Production of synthetic rubber totalled 1.442 million tons in 2015 against 1.319 million tons in 2014 and 1.482 million tons in 2013.  Russian rubber producers started to raise capacity utilisation in the latter part of 2014, as the rouble declined in value making exports more profitable.  International markets also made a small recovery in the first half of 2015, but that seems to have since weakened and Russian production has slowed over the past few months.  Currently around 70% of synthetic rubber production in Russia is exported, with the main destinations including Central Europe, China and India.  Exports totalled 936,600 tons in 2014 against 826,100 tons in 2014 and 943,600 tons in 2013. 

Regarding investments in the synthetic rubber industry, the main flagship project involves Rosneft’s proposed jv with Synthos and Pirelli at Nakhodka in the Russian Far East.  At this stage the project concept remains in the early stages of assessment and depends on the time-scale for the construction of the refinery and petrochemical complex.  As part of the petrochemical complex Eastern Petrochemical Company (VNKH), butadiene capacity is planned at 200,000 tpa. 

Russian Synthetic Rubber Exports, Jan-Dec 15

Country

Vol (kilo tons)

$ million

Belarus

37.8

51.5

Belgium

14.3

21.0

Brazil

57.9

91.5

Canada

19.8

29.9

China

94.6

131.0

Czech Republic

28.6

44.7

Germany

24.5

33.2

Hungary

74.8

132.0

India

86.7

123.0

Italy

10.6

13.1

Japan

33.7

57.6

Latvia

13.7

21.4

Lithuania

12.4

18.1

Poland

120.1

171.0

Romania

39.5

53.9

Serbia

14.4

20.1

Slovakia

31.2

49.7

South Korea

9.9

14.6

Spain

6.8

9.7

Taiwan

17.7

19.9

Turkey

40.2

58.1

Ukraine

17.3

22.6

USA

56.4

86.5

Thailand

5.9

8.1

Vietnam

8.1

10.4

Others

60.0

84.5

Total

937.0

1377.0

Krasnoyarsk Synthetic Rubber Plant

Krasnoyarsk Synthetic Rubber Plant is implementing an automated laboratory information management system (LIMS) to improve the quality control of products, will provide a more efficient management of laboratory processes.  The programme will bring together central laboratory and offices into a single network, automates the work on integration of the research and analysis.

Commissioning is planned to complete the information system into operation by the fall of 2016.  Krasnoyarsk Synthetic Rubber Plant KZSK) specializes in the production of high-quality NBR as a joint venture between SIBUR and Sinopec, entitled SIBUR-Sinopec Rubber Holding. Sinopec’s share in the authorized capital of the jv is 25% plus one share against 75% would belong to SIBUR minus one share.

Omsk Kaucuk-latex modernisation

As part of the modernisation of the latex plant at Omsk Kaucuk, heat exchange equipment has been installed.  The plant is expected to start in two months.  Omsk Kaucuk may restart latex production after producing pilot batches of three brands.  During 2014 Russia imported about 20,000 tons of latex, more than half of which would be accounted from Finland, followed by Germany and Belgium. The latexes used in the manufacture of paper and cardboard, carpet and other floor coverings, mattresses and textiles, paints and varnishes.

Kurskrezinoteknika 2015

Russian rubber hose and fittings manufacturer Kurskrezinotekhnika increased revenues by 41% in 2015 to 4.634 billion roubles.  The rise was associated with a reduction in competition from foreign companies due to the fall in the rouble.  In 2015, Kurskrezinotekhnika paid tax payments of 208.9 million roubles, 176% up on 2014.  Major investments for Kurskrezinotekhnika will be directed to the production of technical fabrics, which are used for the manufacture of conveyor belts. The equipment has already been imported and commissioning started.

Methanol

Russian methanol domestic sales, Jan-Feb 2016

Domestic sales of methanol in February amounted to 128,000 tons, unchanged from January.  Metafrax, Sibmetakhim and Tomet accounted for 80% of shipments, whilst the largest rise was recorded by Ammoni (Mendeleevskazot) which increased shipments by four-fold over January to 9,300 tons.  Less significant sales growth was noted for Metafrax and Sibmetakhim, rising 6% to 39,400 tons and 4% to 32,700 tons respectively.  Tomet reduced sales by 20% in February to 30,000 tons, whilst Azot

Russian Methanol Domestic Sales by Producer

(unit-kilo tons)

Supplier

Jan-Feb 16

Jan-Feb 15

Azot Nevinnomyssk

1.9

3.3

Azot Novomoskovsk

16.4

23.7

Metafrax

76.5

63.7

Sibmetakhim

64.3

86.7

Togliattiazot

66.8

68.0

Shchekinoazot

12.4

4.1

Ammoni

11.5

0.0

Others

6.9

7.7

Total

256.6

257.2

at Novomoskovsk reduced sales by 10% to 7,800 tons.  Shchekinoazot shipped 6,200 tons in February, virtually unchanged from the previous month.  MTBE consumers accounted for 37% of shipments in February, whilst gas consumers accounted for 25% and formaldehyde producers 12%. 

Russian Methanol Exports (unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Azot Nevinnomyssk

0.0

0.0

Azot Novomoskovsk

31.0

26.8

Akron

0.0

0.0

Metafrax

56.8

49.1

Sibmetakhim

64.3

58.3

Tomet

29.5

40.6

Shchekinoazot

58.8

61.6

Total

240.4

236.5

Russian methanol exports tended to slow in February due to seasonal patterns, dropping 15% against January to 111,000 tons.  Sibmetakhim accounted for 25% of exports in February, or 28,100 tons, Metafrax (23% or 25,600 tons) and Shchekinoazot (25% or 27,800 tons).  Azot and Tomet exported 15,700 tons and 14,000 tons respectively.  Despite the drop in February Russian methanol exports increased in the first two months in 2016 to 240,400 tons against 236,500 tons in the same period in 2015. 

Finland purchased 54,000 tons of methanol from Russia in February, 20% down on January.  Smaller shares went to Poland's share (17,700 tons), Romania (12,400 tons) and Slovakia (13,000 tons).  Romanian consumers increased volumes of Russian methanol in comparison with January by almost 85%, while Slovakia and Poland, on the contrary, decreased by 28% and 31%, respectively.  

Exports through the Odessa terminal amounted to 6,100 tons in February and similar volume was planned for March.  Shchekinoazot is the only Russian producer using this route at present, shipping solely to Romania.  Ukraine purchased 1,800 tons of Russian methanol in February, 2.3 times higher than January and the highest inward flow of product for some time.  Russian export prices averaged $180 per ton DAF border in February against $190 per ton DAF border in January. 

For the whole of 2015 Russian methanol exports were virtually reversed against the volume of domestic shipments.  Total export shipments equated to almost the same as for domestic sales in 2014 and exports for 2014 almost the same as domestic sales in 2015.  Shchekinoazot and Metafrax reduced exports to concentrate on internal processing in the formaldehyde sector, whilst Sibmetakhim and Tomet came close to maintaining export volumes. 

Metafrax Jan-Dec 2015

Metafrax increased revenues in roubles by 23.8% in 2015 against 2014, whilst the net profit rose by 52% to 7.1 billion roubles, which was a record level for the company. Revenues amounted to 16.280 billion roubles against 13.140 billion roubles in 2014.  The share of exports in total sales decreased by 5.5% to 38.7% as the company focused more on the domestic market. 

Methanol production totalled 929,000 tons in 2015, 4.3% down on 2014.  The decline was due to the outage which was conducted in August and September. With the end of the first phase of reconstruction of its production of methanol daily capacity increased from 3,000 to 3,060 tons per day.  Urea-formaldehyde concentrate production fell by 9% to 182,400 tons whilst formaldehyde increased by 1.5% to 352,400 tons.  Hexamine production totalled 28,500 tons, 4% up, whilst pentaerythritol totalled 22,300 tons (2% up) and block polyamide 700 tons (2% up). 

The fall in methanol production by Metafrax in 2015 impacted on domestic sales, which fell from 418,900 tons to 361,000 tons, whilst captive consumption increased from 248,000 tons in 2014 to 270,900 tons in 2015.  Exports declined slightly from 299,500 tons to 297,500 tons. 

Russian methanol investments

The second fertiliser/methanol complex at Mendeleevsk has been brought to the table involving Tatneft and Mitsubishi Heavy Industries.  The first Ammoni complex, which started production in the second half of 2015, is to be expanded through the construction of a second plant Ammoni 2.  The success of the first complex and perceived demand possibilities has led to the second complex being promoted as an investment project.  In addition to Mitsubishi Heavy Industries, Sojitz Corporation is also participating in Ammoni-2, as in the first Ammoni complex. 

A company entitled Arakel has agreed with the local government at Novoulyanovsk on the Volga river to invest around five billion roubles into a wood processing plant.  The industrial facility will include a plant for the production of oriented strand boards with a capacity of 120,000 cubic metres per annum and a line for logging and manufacturing pallets.  The investor will begin work on preparing to enter the construction site in May 2016.

This plant will involve the use of formaldehyde and methanol in the production of resins and OSB plywood and plates, which has not been received well by the local population.  The prospect of using Chinese equipment instead of European equipment has raised questions over safety. 

Wood is available in the Ulyanovsk region at an average price of 500 roubles per cubic metre, and to achieve full capacity of 120 thousand cubic metres of OSB would require about 200-250,000 cubic metres of round logs. That would require around 250,000 pine trees to be cut down annually, or 600,000 birch or 1,000,000 limes, etc.  The promise of jobs is not enough for the local population to compensate for the loss of forestry combined with the lack of safety of the Chinese equipment. 

For 2016 Metafrax is expecting an increase of 8-10%.  Over the past year the company has invested in the development of the capacities of 2.67 billion roubles, which is 2.5 times more than in 2014. In 2016 investments are planned in the amount of 5.7 billion roubles.

Metafrax updated rolling stock last year after acquiring railroad tank cars for methanol transportation, whilst completing the first stage of reconstruction of the methanol unit including the modernisation of the reformer furnace.  The company has continued construction of a second production unit of low methanol concentrated formaldehyde.

During 2016 Metafrax intends to complete construction and installation work under the second phase of reconstruction of the methanol unit with bringing plant capacity to 3,375 tons per day.  Other projects include the completion of construction and installation of the 55% formalin plant (capacity-90,000 tpa.)

Organic chemicals

Russian butanol sales, Jan-Feb 2016

Russian butanol producers shipped 12,000 tons to the domestic market in the first two months in 2016 against 10,100 tons in 2015.  Exports of normal butanol were significantly down in the first two months this year, freeing up more product for the domestic market.  SIBUR-Khimprom increased sales from 3,400 tons in January-February 2015 to 7,700 tons in 2016 due largely to increased purchases by SIBUR subsidiary Akrilat at Dzerzhinsk.  The general trend for SIBUR in recent years for oxo alcohols in total has been lower export sales at the expense of domestic sales. 

 

Russian Butanol Domestic Sales

(unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Gazprom n Salavat

3.1

2.9

SIBUR-Khimprom

7.7

3.4

Angarsk Polymer Plant

0.5

0.1

Azot Nevinnomyssk

0.7

0.7

Others

0.0

3.0

Total

12.0

10.1

Domestic butanol sales amounted to 7,710 tons in February, 44% up on January and 75% up on February 2015. The proportion of n-butanol in gross sales in February 2016 was 69%, and the isobutanol 31%.

Regarding consumers Akrilat purchased 2,350 tons in February, comprising around 30% of total Russian purchases.  Dmitrievsky Chemical Plant, which uses butanols for the production of butyl acetate, as well as exporting on behalf of Gazprom neftekhim Salavat increased butanol purchases in February by 2.7 times to 2,190 tons. 

Russian N-butanol Exports (unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 15

Gazprom neftekhim Salavat

4.6

5.0

SIBUR-Khimprom

0.8

1.8

Angarsk Petrochemical

0.0

1.3

Azot Nevinomyssk

0.1

1.9

Dmitrievsky Chemical Plant

0.7

0.0

Total

6.1

19.3

Russian Isobutanol Exports (unit-kilo tons)

Producer

Jan-Feb 16

Jan-Feb 2015

Gazprom n Salavat

0.7

0.0

SIBUR-Khimprom

5.7

0.0

Angarsk Petrochemical

0.0

2.0

Dmitrievsky Chemical Plant

0.0

0.4

Total

6.4

2.5

Other major consumers of butanols in February included the gas station network Nefttorgservis (the company purchased 1,490 tons of isobutanol, or 19% of Russia's consumption of butanols.), Volzhskiy Orgsintez (420 tons, or 5%), Plant of Synthetic Alcohol (390 tons, or 5%) and Roshalsky Plasticizers Plant (230 tons, or 3%). Market prices for butanols went unchanged in March against February, with normal butanol priced at 50, 000-53,000 roubles per ton including VAT, and isobutanol 44,000-50,370 roubles per ton including VAT.

Russian pentaerythritol, Jan-Feb 2016

Metafrax produced 2,100 tons of pentaerythritol in January, followed by 1,700 tons in February.  Production for the first two months in 2016 totalled 3,800 tons, which was 5% down on 2014.  Metafrax produced 22,140 tons of pentaerythritol in 2015, 2% more than in 2014.

Russian DOP market-Sayanskkhimplast outage

The forced stoppage at Sayanskkhimplast, due to the lack of ethylene, has resulted in a significant reduction in demand for plasticizers in Russia.  DOP prices saw a fall in March of around 2%.  Sayanskkhimplast’s PVC plasticizer plant is expected not to restart until the end of May when repairs to the Angarsk cracker. 

Russian Phthalic Anhydride Market

(unit-kilo tons)

 

Jan-Dec 15

Jan-Dec 14

Production

93.8

95.4

Export

48.6

64.4

Import

6.5

15.3

Consumption

51.7

46.2

Russian phthalic anhydride market, 2015

The most significant feature of the phthalic anhydride market in Russia in 2015 involved the restoration of commercial activity between Kamteks-Khimprom and the Neftekhimprom Group.  At the end of 2012 Kamteks-Khimprom and Neftekhimprom (which controls the Roshalsky and Ural Plasticizer Plants) could not agree on the supply of phthalic anhydride, mainly over a conflict of interest regarding DOP. 

For 2013 and 2014 Neftekhimprom sourced phthalic anhydride from other sources and only restarted negotiations for resumed supply in 2015.  This was due to a number of factors, partly down to devaluation which changed the economic climate and partly due to the fact that the Neftekhimprom Group does not produce DOP now and concentrates on the production of DINP and DOTP.  Ural Plant of Plasticizers began to produce DOTP in 2013, as an analogue of traditional DOP. This product is based on PTA and not phthalic.  As a result, the DOP produced by Kamteks-Khimprom does not face direct competition from the Neftekhimprom Group. 

The Roshalsky Plant of Plasticizers was the major domestic buyer of phthalic anhydride in 2015, accounting for 63% of shipments followed by Kaustik at Sterlitamak with 19%, and paint manufacturer Empils with 5%. 

In total, the Neftekhimprom Group purchased 3,600 tons of phthalic anhydride from Kamteks-Khimprom for usage at the Roshalsky Plant of Plasticizers.  As an exception in January this year the group purchased 1,000 tons of phthalic from South Korea. 

Other products

Gazprom Neft-catalyst plant

This year Gazprom Neft plans to mount a catalytic cracking pilot plant at the Omsk refinery, where tests will be carried out on experimental batches of new grades of catalysts.  In February, Gazprom Neft held the first Russian industrial tests hydrotreating catalyst, developed by the Institute of Boreskov.  Over the period 2015-2025 Gazprom Neft has scheduled investments in catalysts up to 11 billion roubles.  

Russian Import Dependency of Catalysts

Type

2015

2020 target

Hydrotreating

97%

55%

Catalytic cracking

65%

25%

Catalytic reforming

60%

25%

Ethylene oxide

45%

0%

PTA

45%

0%

Ethylene polymerization

100%

45%

Gazprom Neft aims to increase cracking catalysts from 3,000 tpa to 15,000 tpa and hydrotreating and hydrocracking catalysts up to 6,000 tpa.  Despite the political calls for import substitution the Russian Energy Ministry has received criticism for not helping enough to advance the development of catalyst production in Russia.  Ambitious targets have been set by the Russian Energy Ministry for reducing the import dependency of catalysts by 2020 in both refining and petrochemicals.  Hydrotreating catalysts are currently 97% dependent on imports which should fall to 55% by 2020, whilst catalytic cracking catalysts and catalytic reforming at 65% and 60%, respectively, have been set a reduction to 25%.

In the petrochemical division the targets are the most ambitious, reducing ethylene oxide and PTA from 45% to 0% and catalysts for ethylene polymerization, propylene and styrene to be reduced from 100% to around 45%.  These targets are approximate goals, and almost inevitably may require longer time periods to achieve. 

Egregor Biotech-bioethanol project for Komi

In the Komi Republic Russian company Egregor Biotech is undertaking investment into large-scale production of bioethanol, valued at €136 million.  This would in effect represent Russia's largest investment project in the field of biotechnology.  Capacity of the new plant is planned at 100,000 tpa of bioethanol, based on technology of enzymatic hydrolysis, which has already been tested in the US, China, Brazil, and the EU.  The plant is being designed to produce bioethanol from non-food raw materials, including waste lumber. The raw material needs are estimated at up to 400,000 tpa.  The Komi region produces more than 1 million tpa of wood waste that can be recycled.

Mitsui & Co Deutschland has already signed a five-year contract with Egregor Biotech to purchase the entire volume from the new plant.  Egregor Biotech was established in 2013 in accordance with the state program of development of the biofuels market in Russia. The company specializes in projects of construction of new modern plant for the production of second generation bioethanol.  

Polyplastic-pipe anti-corrosion coatings

Leading Russian plastics converter Polyplastik has set a target to take a 30-33% share in the domestic market for anti-corrosion coatings for large-diameter pipes (LDP) by 2018.  More than 10 million tpa of steel pipes are produced in Russia, most of which is consumed by the Russian fuel and energy complex.  The current market size of coatings for corrosion protection is estimated at 80-85,000 tpa.  Production capacities of the company comprise 90,000 tpa, which exceeds the level of current consumption.  Overall Russian polymer pipe production fell 21% in 2015, whilst imports dropped by more than third. 

Under the production of polymer compositions for the LDP, the company is willing to allocate around 30% of its capacity, i.e., to produce about 27,000 tpa of production at the sites at Saratov and Togliatti.  This year the company expects to produce about 7-9,000 tons of polymer compositions for the protection of large-diameter pipes.

Borealis had until recently accounted for around 80% of the Russian coatings market for corrosion protection, but started to lose market share in 2015 when Metaclay bought out the subsidiary company from Gazprom.  Metaclay and Polyplastik are now domestic competitors in the Russian market. 

Metaclay to develop anti-corrosion coatings

Bor-Dalnegorsk

GCC Bor at Dalnegorsk in the Primorsky Krai increased boric acid production by value by more than 30% in February against January, in physical terms amounted to 7,845 tons against 5,972 tons.  The company has set a production target of 80,000 tons of boric acid in 2016, around 11% up on 2015.

Metaclay is in the process of opening a new unit for the manufacture single-layer anti-corrosion coating of steel pipes used in the oil and gas industry.  From its Bryansk site in western Russia Metaclay intends to provide around 80% of the needs of the Russian market of materials for pipe insulation by the start of 2017.  Metaclay is a leading Russian producer of nanosilicates.  The technology used in the company are provided through the development of Russian scientists from leading research organisations in the country.

Kuibyshevazot-Praxair

Kuibyshevazot intends to buy a 25% stake in Praxair Samara from Praxair.  In October 2014 Praxair Samara has started construction of a plant in the SEZ Togliatti for filling containers of industrial and special gases. Running an air separation plant with a capacity of 1,400 tons of oxygen, nitrogen and argon per day was originally scheduled for 2016.  According to the latest information, the project is in the active stage. The volume of investments is estimated at 4 billion roubles.

Belarus

Azot Grodno Production (unit-kilo tons)

Product

Jan-Dec 15

Jan-Dec 14

Methanol

12.9

15.3

Caprolactam

19.2

19.4

Polyamide primary

15.9

13.1

Polyamide filled

1.4

1.2

Ammonia

197.2

191.7

Urea

182.9

183.6

Fertilisers

137.4

136.2

Fibres

5.0

4.2

Belarussian chemical production, Jan-Feb 2016

Azot at Grodno recorded a decline in methanol production of 15% in the first two months in 2016 against the same period in 2015.  Reduced production was due to lower demand according to the company.

LDPE production in Belarus amounted to 10,900 tons in January, 4% up on December, followed by 11,400 tons in February.  Polymir at Novopolotsk produced 120,100 tons of LDPE against 124,000 tons in 2014.  Naftan produced 128,100 tons of benzene in 2015, 5% more than in 2014.  Production of benzene amounted to 11,500 tons in January followed by 11,100 tons in February.

 Ukraine

Ukrainian polymer imports, Jan-Feb 2016

Polymer imports into Ukraine rose significantly in the first two months in 2016 against 2015.  PVC imports into Ukraine increased by 31% in the first two months in 2016, totalling 18,700 tons against 14,300 tons in the same period in 2015.  Imports amounted to 14,600 tons in February against 4,100 tons in January.  The US supplied 12,500 tons in the first two months in 2016 compared to 6,600 tons in 2015.  Imports from Europe amounted to 2,900 tons in February against 1,700 tons in January, although overall volumes were down against 5,300 tons in the first two months last year.  Imports from Russia amounted to 340 tons in January and 1,200 tons in February, against 2,400 tons in those two months in 2015. 

Ukrainian Polymer Imports

(unit-kilo tons)

Product

Jan-Feb 16

Jan-Feb 15

PVC

18.7

14.3

LDPE

10.7

6.7

LLDPE

7.9

6.7

HDPE

18.7

12.1

PP

17.6

13.9

In January-February 2016 polyethylene imports into Ukraine rose by 36% over 2015 and amounted to 38,900 tons.  Imports amounted to 21,500 tons against 17,100 tons in January.  HDPE imports totalled 19,100 tons in the first two months in 2016 against 12,100 tons in 2015.  LDPE imports amounted to 6,500 tons in February against 4,200 tons in January, whilst LLDPE rose from 3,100 tons to 4,800 tons. 

Ukrainian polypropylene imports increased by 27% in the first two months in 2015, amounting to 17,600 tons.  Imports amounted to 8,900 tons in February, against 8,700 tons in January.  One reason for the significant growth in imports is due to low prices in foreign markets, and efforts by processors to form a low-cost raw material inventory in readiness for the seasonal increase in demand.

Central Asia

Kazakhstan-polymer imports Jan-Dec 2015

Imports of HDPE into Kazakhstan decreased by 11% in 2015 to 76,200 tons against 86,000 tons in 2014.  The production of plastic pipes and fittings in Kazakhstan increased by 7% to 127,600 tons.  The second largest consumer sector for polyethylene is the film sector accounting for around 10% of the market.  In 2015 the Kazakh converters produced 37,600 tons of polymer films, 12% more than in 2014.  As Kazakhstan is completely dependent on imports of polyethylene, Russia tends to be the main supplier accounting for 68% of shipments in 2015.  The second and third place in terms of the supply of polyethylene fall to South Korea and Uzbekistan.

n 2015, imports of PVC in Kazakhstan decreased by 23% to 49,900 tons.  The fall was due to the reduced volumes for re-exports to Russia.  The manufacture of plastic windows and window sills fell 20.5% in Kazakhstan in 2015 to 26,000 tons.  China accounted for around 98% of PVC imports into Kazakhstan in 2015.

SOCAR seeks new partners for OGPC project

Azerkhimya-propylene production

Azerkhimya reduced propylene production by 30% in February against January to 3,400 tons, whilst isopropanol production dropped 3% to 1,500 tons.  In total Azerbaijan produced 8,300 tons of propylene in the first two months in 2016, 5% down on last year. 

Despite SOCAR announcing a freeze early in 2016 on work for its OGPC project, due to low oil prices, the group is undertaking talks with potential partners in Japan and China.  Mitsui is already involved in the project, but is revising some of its cost calculations due to changes in the world oil market.

SOCAR’s OGPC project comprises two stages to be introduced by 2020 according its provisional schedule. The first stage includes the launch of a gas processing plant with a capacity of 12 billion cubic metres per annum for which raw materials will come from the Azeri-Chirag-Guneshli field, Umid, Babek, and Shah-Deniz field.  The second stage involves the petrochemical complex, including large plants for the production of polyethylene and polypropylene with a total capacity of 860,000 tpa. 

Navoiazot-Casale

Swiss company Casale has started the modernisation of the nitric acid plant for Navoiazot at a cost of $177 million. The reconstruction will help to increase production of non-concentrated nitric acid by 1.4 times to 500,000 tpa.  The project will be financed from Navoiazot’s own resources, a loan of Fund for Reconstruction and Development of Uzbekistan, loans of foreign banks, as well as loans of the contractor.  The Reconstruction and Development Fund (RDF) has allocated Uzbekistan Uzkhimprom loans amounting to $392.7 million for the implementation of two projects at Navoiazot.  In particular, the Fund has allocated $320 million for the construction of production of ammonia and urea. 

Navoiazot is also working on projects for the production of polyvinyl alcohol, and ethylene vinyl acetate.  Navoiazot is looking at options for using excess chlorine from the plant started chlorine and caustic soda plant, having been installed by Lurgi in 2001.    

Ustyurt Gas Chemical Complex

Uzbekneftegaz intends to spend $295 million this year in the development of gas production for supply to the Ustyurt Gas Chemical Complex, which finished construction in 2016.  It is expected that the project will facilitate an increase in production by 15% to 2 billion cubic metres per annum providing the raw material base for the gas chemical complex.  This involves the construction of a booster compressor station at Surgil deposit, with agreement for equipment already reached with the Ukrainian company Sumy Machine Building Scientific Production Association.  The project will be financed by a loan from the Fund for Reconstruction and Development of Uzbekistan and the own resources of Uzbekneftegaz.

Revised capacity of Amur Gas Processing Plant

Gazprom has decided to reduce the design capacity of the Amur Gas Processing Plant from 49 billion cubic metres per annum to 42 billion cubic metres.  The project has been revised down from seven plants each of 7 billion cubic metres per annum to six plants.  In addition to the six plants another three will be constructed for the production of helium and nitrogen.  The project revision was made after deciding that 42 billion cubic metres would be sufficient to meet the contractual requirements to China. The contract or at least an understanding was s concluded for a period of 30 years and involves the supply of 38 billion cubic metres per annum.  The launch of the plant is planned for 2021.  The revised capacity will have no impact on developments at the Chayanda and Kovytka fields according to Gazprom.

Gazprom processing Blagoveshchensk announces consultancy tender for Amur GPP

Gazprom processing Blagoveshchensk undertook a tender in March for the provision of consultancy services for the development of the business plan and the financial and economic study for the Amur Gas Processing Plant.  The starting price was 25,882,000 roubles including VAT. 

Key Points for Amur Gas Processing Plant

Location

Svobodny, Amur Oblast

Revised Capacity

49 billion cm per annum

Number of Units

6 gas, 3 helium & nitrogen

Start of Construction

July 2016

First Production

2021

Full Production

2024

Feedstock Sources

Chayanda/Kovytka

Investment for 2016

790.6 billion roubles

International Enginnering

Linde

Domestic Enginneering

NIPIgaspererabotka

According to the documentation, the consultant will prepare and provide the financial and economic criteria for the construction of a gas processing plant, justifying calculations before 1 June 2016.  It will also consider the business plan of the project in view of updating the financial and economic feasibility up to 2 September 2016. 

The service will be implemented in two phases. In the first phase it is necessary to evaluate the effectiveness of the project as a whole to Gazprom and separately for the Gazprom processing Blagoveshchensk, including the development of two financial and economic models, and justifying those calculations.   In addition, the document notes that the consultant is expected to evaluate the financing scheme for the project of construction of the Amur GPP, including short-term loans for Gazprom processing Blagoveshchensk, and interest accrued thereon.  The second phase is required to develop a business plan for the project of construction of the Amur GPP and implement the requirements set out in the first phase.  

The Amur Gas Processing Plant will be built near the town of Svobodny in the Amur Oblast. The design capacity of the plant will amount to 49 billion cubic metres of gas per annum.  The GPP will include the world's largest unit for helium production.  Through the pipeline Power of Siberia will come multicomponent gas Yakutsk and Irkutsk gas production centres, created by Gazprom in the framework of the Eastern Gas Programme. The construction of gas processing plant is scheduled for July 2016, previously reported by CEO of Gazprom processing Blagoveshchensk Ivan Afanasyev.   Gazprom estimated that it will invest 790.6 billion roubles in the project in 2016.

Gazprom Design-Amur GPP

Gazprom Design has been selected to undertake the design of power supply facilities for the Amur GPP and develop project documentation for at least one of the process units.  VNIPIgazdobycha and Gazprom Design signed a contract for a power plant of as part of the fourth phase of the Amur GPP project. 

Gazprom Design was founded in 2015, 100% owned by Gazprom.  The company specializes in the design and survey work, R & D, headquartered in St. Petersburg.  Under the contract, the company shall carry out all work to 15 April 2016.  The contract value is approximately 120.9 million roubles (including VAT).  The transaction was approved by the board of directors VNIPIgazdobycha at the beginning of March 2016.

Svobodny meeting in March, Amur GPP

In March a working meeting took place at Svobodny in the Amur Oblast regarding the construction of the Amur Gas Processing Plant and up to around 40 local companies that might benefit from the project.  Companies from Svobodny, Uglegorsk and Blagoveshchensk attended the meeting, which was also attended by the Mayor of the Amur Oblast, a representative of the President’s office and the General Director of SIBUR in the Amur Oblast (Vasily Orlov).   

SIBUR is following developments for the gas processing plant very closely and asked fundamental questions about the project including the number of contractors, the schedule, etc., all of which is considered vital information in preparation for the gas-chemical complex.  The NIPIGas office at Svobodny was opened in March 2016, starting with the employment of 27 people on the gas processing project, and this should rise to 50 by September 2016.  The office is located on Kruchina Street. 

Base Investments for the Amur Gas Processing Plant

Construction of the railway station

Construction of internal roads

Construction of temporary towns for contractors

Development of energy resources

Currently preparations are underway for the initial parts of the project.  In the near future work will begin on construction of the railway station, internal roads, temporary towns for the contractors, energy sources, etc. 

The peak of the construction process for the gas processing plant is expected in 2019 when up to 15,000 people could be involved in the project.  Energy for gas production is not yet organised, the local energy plant Bureysk hydro power plant is only capable of producing up to 320 megawatts against requirements of 300 megawatts.  Thus extra energy sources need to be constructed, whilst it will also be necessary to construct a railway station at Ust Pere.  SIBUR is particularly interested in the gas processing complex being constructed at the highest standard possible, taking into account the need to control costs. 

SIBUR starts preparations on the selection of the licensor for Amur Gas Chemical Complex

SIBUR intends to select the technology and project licensors for the Amur Gas Chemical Complex in 2016.  Potential licensors for the Amur Gas Chemical Complex include CB & I, KBR, Technip, Linde and Sinopec.  According to reports and statements made by SIBUR, a decision on the project of construction of the Amur GCC is not expected to be adopted prior to the end of 2017.

SIBUR’s Possible Licensors for

Amur Gas-Chemical Complex

CB & I, KBR, Technip, Linde and Sinopec

The Amur Gas-Chemical Complex is currently at the pre-development stage. Work is underway on the analysis and selection of the optimal pyrolysis capacity configuration depending on market factors and the volume of raw materials available from the Amur GPP.   Fluor and NIPIGas are involved in the pre-project analysis.  NIPIGas is also acting as the EPC-contractor for the Amur GPP which aims to extract helium, ethane, propane, butane and other fractions of the gas that will be supplied to China through the pipeline Power of Siberia.   Ethane will also be made available for SIBUR for the Amur Gas-Chemical Complex.  Funding for the complex has to be organised and SIBUR expects these arrangements to be similar to the project Yamal LNG, but that stage will only come after the project configuration has been decided.

Ethane from the Amur GPP is being considered as the potential feedstock for the Amur Gas-Chemical Complex, which is not expected to be completed before 2022-2023.  The acquisition late in 2015 by Sinopec of 10% ownership of SIBUR naturally provides some advantage over potential rivals for the licensing and contracting for the gas-chemical complex, but the decision is yet to be made.

 

 

Power of Siberia

Power of Siberia 2016

Gazprom will invest 92 billion roubles in the construction of gas pipeline Power of Siberia in 2016, whilst total costs are estimated at 800 billion roubles.  The length of the IHP Power of Siberia will be approximately 4,000 km (Yakutia- Khabarovsk-Vladivostok, 3200 km) and about Irkutsk region-Yakutia 800 km.  The pipeline route passes along the route of the main oil pipeline of the East Siberia Pacific Ocean (ESPO).  The capacity of the pipeline at peak rates will be 61 billion cubic metres per annum.  The resource base for the pipeline includes Chayanda with reserves of 1.2 trillion cubic metres and Kovytka at 1.5 trillion cubic metres.

Gazprom tender for 60.7 km section of pipeline Power of Siberia

Projects awarded by Gazprom for the Power of Siberia & Amur GPP by allocation rather than open tender

Company

Majority Owners

Billion roubles

Billion euros

Project Description

Stroygazmontazh

Arkady Rotenberg

197.7

2.474

Pipeline

NIPIgazpererabotka

Leonid Michelson

790.6

9.879

Gas Processing Plant

Stroytransgaz

Gennady Timchenko

46.5

0.581

Pipeline

Neftegazstroy has won the tender for construction of the section of the gas pipeline for the Power of Siberia, length of 60.7 km, put out to tender by Gazprom.  The winning company offered close to the maximum starting price which was set at 7.818 billion roubles.  Neftegazstroy from Kaluga beat four competitors by offering a price of 7 billion 814.8 million roubles (+VAT).  Other competitors included Yuzhneftegazstroy, Nova, EVRAKOR, and Tatnefeprovodstroy.  Gazprom has offered to European consumers the lowest price in eleven years about $200 per thousand cubic metres.  In 2015 Gazprom reduced gas production by 6% to 417.2 billion cubic metres.  

This plot length of 60.7 km (975-1035,7 km) located in the area of compressor stations Amga and Nimnyrskaya, whilst the duration of the project will last from February 2016 to December 2017.  The track is the first stage of the main gas pipeline Power of Siberia from by Chayanda to Blagoveshchensk which has a length of almost 2,200 km.

Power of Siberia-1 Project Overview

Stage 1

Chayanda-Belogorsk & Blagoveshchensk

2018-2020

Stage 2

Chayanda-Kovytka

2020-2025

Stage 3

Belogorsk-Port Komino (Vladivostok)

2025-2030

Gazprom cancelled two tenders in late 2015 worth 20.041 billion roubles for the Chayanda field, and has run into conflict with the Federal Monopoly Service (FAS) over an absence of competition.  Half of the pipeline construction project has been awarded without competition to Stroygazmontazh and Stroytransgaz.   Krasnodargazstroy recently was included in the group Stroygazmontazh, owned by Arkady Rotenberg and part of Putin’s inner circle, and will take responsibility for building the section 1029.8-1290.7 km. 

 

Gazprom purchases compressors for Power of Siberia

In March Gazprom ordered a three gas pumping unit GPA-32 Ladoga for the main gas pipeline Power of Siberia for 2,771 billion roubles.  The equipment will be delivered to the Zeya compressor station.  The contract is concluded with a single supplier, but it is not clear when the unit will be put into operation.  The Power of Siberia pipeline will include eight compressor stations with a total capacity of MW 1331.

In 2015 Gazprom completed the construction of 80 km of pipeline for the Power of Siberia project, and in 2016 the aim is construct around 800 km.  Investments in the construction of the pipeline, taking into account the development of Chayanda field in 2016 are estimated at 168 billion roubles.

Work on checkpoint on Amur-China border

Work will begin on the checkpoint between the Amur region and China in the area of ??Blagoveshchensk this year as the region continues preparations for the construction of gas pipeline Power of Siberia.   Agreement for the underwater crossing of cross-border gas pipeline across the Amur River was reached in December 2015.  The total first stage of the pipeline length will be 2200 kilometres, connecting the Chayanda field in Yakutia and the capital of the Amur region Blagoveschensk.

The pipeline will cross the Amur region diagonally, passing through the areas Natalinsk, Novopetrovsk, Michael, Markov Chigirinsk and village councils.  The width of the corridor for the pipeline is about 100 metres.  Land has had to be purchased from owners, although not all land users are willing to take up the offer.

Omsktransmash develops piles for permafrost, mainly for Power of Siberia

Specialists of Omsktransmash was sent to the city of Lensk Sakha machine for screwing piles ISM-219 and eight special test piles in permafrost conditions.  Equipment designed for work on thawed, frozen and rocky grounds. Tests will be conducted on-site home of one of the crawler linear sections of the pipeline Power of Siberia.  The purpose of the test - to prove the possibility of screw piles in the area of ??frozen ground to ensure all customer requirements.

NIPIGas-Amur GPP & domestic equipment.

SIBUR subsidiary NIPIGas, which was selected by Gazprom for the project management of the Amur GPP, is considering the possibility of attracting Russian equipment suppliers to replace imports.  The supply of auxiliary materials - concrete, cable, metal -will be carried out by Russian companies, which could also be extended to placing orders for shut-off control valves, separators, tanks, etc. 

NIPIGas is in close contact with the Russian machine builders and is ready to place orders with domestic suppliers if they can meet the project criteria.  The goal is not only location, but also the schedule, budget, cost-effectiveness, and the ability to attract project financing.  However, some imported equipment has already been ordered such as column equipment, heat exchangers, etc.  The imported pieces of equipment represent the most expensive part of the project, and the devaluation of the rouble has forced NIPIGas and Gazprom to examine local sources in much greater detail to achieve savings.  Investment in the project is evaluated at 790 billion roubles.

Surgutneftegaz, Jan-Feb 2016

Surgutneftegaz increased oil production at its fields in Yakutia by 5.8% up to 1.408 million tons in the January-February 2016 compared to the same period in 2015.   Total production of Surgutneftegaz for the period totalled 10.766 million tons, which is 1.4% more than in the first two months of 2015 (9.937 million tons).  Gas production in January-February this year amounted to 1.621 billion cubic metres. 

Power of Siberia Feedstocks

Kovytka-well drilling 2016

Four exploration wells are set to be built on the Kovykta gas condensate field in 2016.  Arrangements for well construction and completion of the exploration fields to the end of 2016 were made in February.  These wells take into account the interests of the region Buryatia to the south of the Irkutsk Oblast and the Trans-Baikal Territory.  In 2015 two wells underwent construction at Kovytka

Kovykta gas condensate field will become a deposit base of the Irkutsk gas production centre, its reserves of C1 + C2 category (subject to the license area and Khandinsk, Chikansk deposits) account for more than 2.6 trillion cubic metres of gas.  With full development, the field could produce up to 35.3 billion cubic metres of gas per annum.

Gas from the Kovykta field is also intended for part of the resource base for the Power of Siberia, which is planned for delivery to China.  Kovykta will be connected to the system in 2022 through the construction of a gas pipeline, connecting it to the Chayanda field, with a length of about 800 kilometres.

Winter road Chayanda-overloaded lorries

According to the Federal Road Agency, inspection of the winter road to Chayanda was carried out over three days, from 16 to 18 February, revealing that almost 90% of lorries travelled with too much weight.  The road travels from the south, in the direction of Ust-Kut in the Irkutsk Oblast, to the to Chayanda field in Yakutia using the federal highway A-331 Viluy.  Officially, the winter road will be closed on 1 April.

Amur project update

In late 2015 Gazprom and CNPC signed an agreement on the design and construction of cross-border gas pipeline Power of Siberia across the Amur River.  Agreement defines the basic technical requirements for the communication system, and the principles of its organisation during the construction and operation of cross-border area.   In December, Gazprom and the Chinese National Petroleum Corporation (CNPC) signed an agreement on the design and construction of cross-border gas pipeline Power of Siberia across the Amur River.

Construction of the pipeline Power of Siberia, which is being designed to pump 38 billion cubic metres of gas per annum, began on 1 September 2015.  The 30-year contract between Gazprom and CNPC stipulates that the launch date of the GTS into operation can be pushed together for a couple of years if China does not have time to prepare the necessary infrastructure for receiving Russian gas.  Commercial negotiations for this contract are being continued whilst there is an analysis of prospects for the creation of the second line and to increase the total volume of deliveries to 60 billion cubic metres per annum. 

The Power of Siberia will contribute to the development of Chayanda and Kovykta gas fields, as otherwise there is no way that would allow the resources to bring them to market. These deposits can be not only the resource base of the project Vladivostok LNG, and gas chemical enterprises in the region, especially since the Kovykta gas and Chayanda rich in gas chemicals used in components such as ethane and helium.

Amur gas processing plant-Linde

In late 2015 Gazprom selected Linde as the plant licensor for the Amur Gas Processing Plant (GPP), undertaking the project in five phases the last of which will be completed by 2024.  The first phase includes the construction of allocation blocks for ethane and wide fraction of light hydrocarbons (propane, butane, pentane, hexane), and the installation of the helium unit.  After the completion of the Amur GPP will be one of the largest companies in the world production capacity of 42 billion cubic metres of gas per annum (revised downwards from 49 billion originally. 

Linde is looking at the prospects for cooperation in projects and technologies that will contribute to Gazprom’s strategy of transforming the market for natural gas and by-products.  The agreement with Linde covers technology, engineering, expertise in purification and liquefaction of natural gas, as well as localisation of the equipment.  

In July 2015, it was announced that a subsidiary of SIBUR NIPIgazpererabotka will carry out the design, coordination, supply of equipment and materials, to manage the construction and give the customer the plant in the mechanical state of readiness.

The configuration of the project requires that the facilities of the Amur GPP will stand out from the incoming raw materials to the forces of Siberia, ethane, propane, butane and pentane-hexane fraction. It is also expected to create a large plant for helium production.  Part of raw materials will be exported, and some sent to the Amur Gas Chemical Complex which SIBUR is planning. 

The gas processing plant depends on the opening of a section of the Power of Siberia gas transmission system when ready.  2019 has been signalled as the earliest the gas plant could start production, but even then it could take several years to reach its full capacity.  The gas chemical plant is currently envisaged for a start-up date of around 2022, but this remains a provisional guideline. 

Regarding markets, the Russian Far East might only provide moderate opportunities for selling products from the Amur Gas-Chemical Complex, whilst China would provide the largest opportunity, particularly after Sinopec had gained the right to acquire 20% of SIBUR’s capital.  From the point of view of exports, the Asia-Pacific markets are attractive, but competition in them is greater, hence much will depend on the opportunity to compete in quality and price.

SIBUR-Tobolsk Gas Processing Expansion

SIBUR plans in mid-2016 to complete the expansion project for the gas fractionation capacity at Tobolsk-Neftekhim industrial site up to 8 million tpa.  The project involves increasing the capacity of the second gas fractionation plant (HFCs) from 2.8 to 4.2 million tpa by retrofitting internals, heat exchanger and pump equipment, the construction of the tower and expansion of commodity and raw material base.  As a result, the performance of the entire gas fractionation complex in Tobolsk will grow by 21% to 8 million tpa.

As a result of expansion the production of LPGs will rise to more than 6.5 million tons, which will fully cover the needs not only of existing production facilities, but also ZapSibNeftekhim which will need 2.5-3 million tpa of LPG.  According to preliminary estimates, investment in the project will amount to 5.5 billion roubles.

Tobolsk-Neftekhim was opened in 1984 with a capacity for gas fractionating of 2 million tpa of NGL. Since 2005, its performance gradually increased and reached 3 million in 2009.  A year later, the installation could take the processing of 3.5 million tons of natural gas liquids, two years later - 3.8 million tons.   In 2014, with the commissioning of the second gas fractionation plant total power Tobolsk site reached 6.6 million tpa.

SIBUR has launched the second stage of Vyngapur GPP, expanding infrastructure for the collection and processing of associated gas.  With the launch of gas processing plant ?2 (UPG-2) the capacity rose from 2.8 to 4.2 billion cubic metres to the degree of extraction of target hydrocarbon fractions up to 99%. The project was also laid 114 kilometres of gas pipeline to supply the processing of associated gas compressor station Variogan to GPP.  SIBUR investments totaled 16 billion roubles.

Expanding Vyngapur GPP is one of the final chords of infrastructure for the collection and processing of associated gas in West Siberia in the past 10 years.  SIBUR has in that time doubled the capacity for receiving APG in the region.  The project was implemented for the reception in the fields of associated gas processing with NK RussNeft.  The gas is sent to the Variogan compressor station and then transported by pipeline Variogan COP-Vyngapur GPP on Vyngapur GPP.  Produced on GPP dry stripped gas is sent to the gas transport system of Gazprom, broad fraction of light hydrocarbons (NGL).   At the Noyabsrk loading rack and product pipeline Purovsky-Tobolsk for further deep processing into polymers and other petrochemical products.

RussNeft is already supplying associated gas to the Nizhnevartovsk Gas Processing Plant and Belozerny SIBUR. In 2013, it signed a new long-term gas transportation agreement until 2025 to Vyngapur GPP. During this period, planned to supply about 16 billion cubic metres of associated gas.

Due to the continuous expansion and modernisation of the gas refining and petrochemical facilities and transport infrastructure SIBUR increased APG processing with 8.3 billion cubic metres in 2002 to 21.5 billion cubic metres in 2015. In recent years, the company in West Siberia were built and put into operation more than 10 billion cubic metres of gas processing capacity and more than 1,700 km of pipelines.

Irkutsk-Kovytka

To resolve the problem of ethylene supply to Sayanskkhimplast the government of the Irkutsk Oblast is considering alternative supply of raw materials that would provide a long term solution.  Dependency on Angarsk Polymer Plant for ethylene supply not only affects investment projects for Sayanskkhimplast but also existing production operations.  The current outage at Angarsk Polymer Plant, which started in February and is expected to last until the end of May, has forced Sayanskkhimplast to suspend full production of PVC, caustic soda, PVC plasticizers, etc.   The lack of alternative raw material supply could be overcome through the construction of the Kovytka-Sayansk-Irkutsk gas pipeline, which would allow Sayanskkhimplast to construct its own pyrolysis unit, but such a pipeline would take several years to construct and provides no short term solution to the question of ethylene supply. 

The previous owners of the Kovytka gas condensate field, TNK-BP, had formative plans more than a decade ago to construct a pipeline to Sayansk, but its successor Gazprom has shown little interest in the project.  However, Gazprom remains key to the project and the Irkutsk Administration is trying to persuade the gas company to change its development plans for Kovytka from 2024 to 2021.  In short the regional administration has indicated that without Gazprom bringing forward the development plans for the Kovytka field Sayanskkhimplast could be threatened by closure.

Rosneft suspends cracker project for Novokuibyshevsk

Rosneft’s plans for a petrochemical complex to be constructed at Novokuibyshevsk Petrochemical Company (SANORS) have been suspended or postponed.  Plans to construct a large-scale cracker of around a million tpa were confronted by numerous factors, including finance and the weakness of the domestic economy.  To some extent the Novokuibyshevsk cracker project depends on the construction of the Yamal-Volga gas liquid pipeline which shows no sign of starting. 

In fact, without support from the federal government, it is hard to envisage how construction of a pipeline transporting gas liquids from the Nadym-Pur-Taz region in Yamal will ever be undertaken.  Targets have been established to supply 2.6 million tpa of NGLs to Nizhnekamsk and 2 million tpa of NGLs to Novokuibyshevsk.  Other goals include supplying Kazanorgsintez with 1 million tpa of ethane and 500,000 tpa of propane.  Rosneft now is exploring options on how to use the existing assets that it acquired from SANORS in 2015.    

Nizhnekamskneftekhim to select licensors for ethylene project

Nizhnekamskneftekhim is conducting a tender for the selection of the licensor for the proposed olefin complex, which is planned to be constructed in two stages of 600,000 tpa.  Suppliers of equipment will be determined after the company chooses the licensor of the project.  The first stage of 600,000 tpa is provisionally targeted on completion and start-up by 2020 and the second stage of 600,000 tpa by 2025.

The first stage is planned to produce 300,000 tpa of polyethylene, 180,000 tpa of polypropylene and 200,000 tpa of polystyrene, 163,000 tpa of propylene derivatives and 110,000 tpa of ethylene derivatives. In the future, it planned to organize the production of 600,000 tpa of polyethylene, 180,000 tpa of polypropylene, 200,000 tpa of polystyrene, 93,000 tpa of MDI and 155,000 tpa of propylene derivatives.

Novy Urengoy Gas Chemical Complex

The VIS group of construction companies continue to build the Novy Urengoy Gas and Chemical Complex, and has assembled more than sixty% of the equipment, produced almost 164 thousand weld joints.  Technological pipe lines - the most important artery of the complex, which will supply raw materials, intermediates and final products. They connect with each other all the production sites Novy Urengoy Gas and Chemical Complex, closing the complex in a single technological chain. Installation work is done on plants produce ethane / ethylene and polyethylene.

Although this project has been dragging on for over two decades, the construction process is gradually heading towards conclusion.  Deadlines seem to have lost any significance in this project’s timetable, but the sheer fact that Gazprom has been determined to complete the construction process means that it should start production at some stage.  The plant design of 420,000 tpa of LDPE is intended to serve both domestic and export markets, including around 200,000 tpa intended for China.  In addition to polyethylene, the company will produce a wide fraction of hydrocarbons and methane fraction. The raw material for the production of ethylene and polyethylene is to be sourced from the Urengoy gas condensate field.

Gazprom plans to invest 150 billion roubles in the development of capacities for the processing of condensate in Urengoy.  The need for expansion is due, including, the start of the development of the Achimov deposits of the Urengoy gas condensate field.  OMV expects to complete the transaction on the exchange of assets with Gazprom in 2017.

Fitch Ratings downgrades SIBUR

Fitch Ratings has revised its assessment of SIBUR from a stable to negative outlook to BB + level.  The negative long term outlook was appraised in view of SIBUR’s high leverage in the 2017-2019 period due to the multi-billion-dollar petrochemical project ZapSibNeftekhim (ZapSib-2) in a period of low and volatile prices for petrochemical products.

Fitch expects net adjusted leverage funds from operations to grow to over 2,8x in 2017-2019 period, and 2x in 2020.  This increase is expected, despite the fact that the operating performance of SIBUR experience a beneficial effect of a weak rouble and a prolonged period of drawdown on the newly obtained credit lines for project ZapSib-2.  Fitch believes that after the project is completed in 2020, a significant improvement in the operational profile of SIBUR will be provided. 

The creditworthiness of the company is estimated the agency in the rating category BBB, which reflects its leading market position and a low cost base in the petrochemical sector, diversified portfolio and to demonstrate the access to raw materials at competitive prices.  It is expected that the ZapSib-2 project, at a cost of $9.5 billion, will provide an increase in the pyrolysis capacity by 1.5 million tpa and polymers by 2 million tpa will lead to the transformation of the operational profile of SIBUR.  By tripling the production capacity of polymers and doubling the domestic processing of LPGs the project will have a profound effect on the company’s revenues and profitability. 

The ZapSib-2 complex will reduce exposure to revenue risks associated with the volatility and associated to LPG and energy products, meaning that petrochemicals could rise from, around 40% to 60% around 401% of the group’s income to around 60%.   For ZapSib-2 SIBUR has attracted long-term debt financing, including funding from export credit agencies of $2.3 billion and credit from the National Welfare Fund worth $1.75 billion.  Another loan of $210 million has been sourced from the Russian Direct Investment Fund.  Fitch expects SIBUR’s capex to peak in 2016-2018. 

Products in the energy sector are diversified and include LPG, natural gas, naphtha, etc., and most of them have a significant correlation with the oil price.  Recent oil prices have led to a sharp drop in profitability in the segment of fuel and energy products in SIBUR, but had a less significant impact on the revenue from petrochemicals and supported margins due to lower raw material costs. 

The Amur Gas Chemical Complex (MCC) potential project is expected to be financed with project financing.  The 10% share of Sinopec represents a neutral factor whilst Fitch positively views this strategic partnership, as China is a growing market for petrochemical products.  SIBUR's costs are denominated in roubles, while around half of the group revenues comes from export and thus yields dollars. 

The overall impact of a weak rouble and low oil prices is neutral as the rouble smoothest out weak oil price environment.  However, the weak rouble affect the investments and dividends for SIBUR.  The overall weak   rouble has a positive effect on the side of the operating free cash flow, but, all things being equal, increases investments, dividends and debt. 

Overall SIBUR’s debt situation is manageable, and should be largely self-correcting after start-up of the ZapSib-2 complex.  Until then SIBUR will to some extent be dependent on oil prices and their association to energy product exports.  Historically SIBUR has a substantial short-term debt, which is 25%-35% of the total debt and cash exceeds the size of the company.  At the end of 2015 SIBUR had short-term debt in the amount of 84 billion roubles.

Svobodny meeting in March, Amur GPP

In March a working meeting took place at Svobodny in the Amur Oblast regarding the construction of the Amur Gas Processing Plant and up to around 40 local companies might benefit.  Companies from Svobodny, Uglegorsk and Blagoveshchensk attended the meeting, which was also attended by the Mayor of the Amur Oblast, a representative of the President’s office and the General Director of SIBUR in the Amur Oblast (Vasily Orlov).    

SIBUR is following developments for the gas processing plant very closely and asked fundamental questions about the project including the number of contractors, the schedule, etc., all of which is vital information in preparation for the gas-chemical complex.  Currently in the NIPIGas office at Svobodny, opened in March 2016, 27 people are employed on the gas processing project, and this should rise to 50 by September 2016.  The office is located on Kruchina Street. 

Currently preparations are underway for the initial parts of the project.  In the near future work will begin on construction of the railway station, internal roads, temporary towns for the contractors, energy sources, etc.  The peak of the construction process for the gas processing plant is expected in 2019 when up to 15,000 people could be involved in the project.  Energy for gas production is not yet organised, the local energy plant Bureysk hydro power plant is only capable of producing up to 320 megawatts against requirements of 300 megawatts.  Thus extra energy sources need to be constructed, whilst it will also be necessary to construct a railway station at Ust Pere.  SIBUR is particularly interested in the gas processing complex being constructed at the highest standard possible, taking into account the need to control costs. 

 
New User? Sign up Here  |  Log in  
Latest News from 2016
Jan Feb Mar Apr
May Jun Jul Aug
Sep Oct Nov Dec
 
Chemical Links
Kazanorgsintez
Kuibyshevazot
Galopolymer
Metafrax
PCC Rokita
CEFIC
Akron
Evrokhim
SIBUR
 
FORTHCOMING EVENTS
7 April 2016 Moscow
CIS Petrochemicals


type="text/javascript">
Home | Subscription | Monthly News | Search Engine | Statistical Database
About Us | Contact Us
Chemical Industry Consulting for the CIS & Central-East Europe
Copyright 2000-2016 Cirec.net, All Rights Reserved