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Russian investment climate for petrochemicalsRussian chemical producers have reported weaker profit results for the first half of 2014, although in many cases revenues have increased. Declines in profits are attributable to a variety of factors, including global and internal markets and exchange rate factors.
It is too early to gauge the impact of sanctions on Russian chemical production and the chemical industry, but adding to an already weakish economy there are few positives to be seen. Numerous Russian companies have already stated that how sanctions may affect West Europe, but the sanctions have been introduced not for economic reasons but for Russian aggression in Ukraine. The flight MH17 was the final straw for many countries, not the cause of the crash which may never be proven conclusively, but the cold reaction of the Kremlin which has only been interested in avoiding the blame. Thus, reversing these sanctions may prove hard if not impossible without significant change in Russian policy and that seems unlikely under the current President.
US Department of Energy (DOE) has already imposed a ban on scientists from Russia working in its laboratories, which include some of the largest physics and chemical centres in the world.
Over the past few months the emphasis of Russian petrochemical investments has moved eastward, a process which has been driven and accelerated by the political climate. Moreover the weakness of the domestic economy has slowed down investments in the western parts of Russia. The Zapsib petrochemical complex at Tobolsk may not start in 2017 as planned, whilst projects at Ufa and Novokuibyshevsk are not likely to be undertaken quickly. Nizhnekamskneftekhim is probably only producer that aims to complete its one million tpa cracker on schedule or by 2017.
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