UPDATE: Rosneft may invest 796 bln rbl in Eastern Petrochemical Co

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NOVOBUREISKY VILLAGE, Amur Region, Aug 3 (PRIME) -- Russian oil major Rosneft may invest 796 billion rubles in construction of oil refining and petrochemical capacities of its Eastern Petrochemical Company, Energy Minister Alexander Novak said on Thursday at a meeting on implementation of large investment projects in the Far East.

“Project operator Rosneft plans to build three stages. The first and the second stages should be launched before 2022, they include an oil refinery with a refining capacity of up to 12.5 million tonnes and petrochemical capacities of up to 3.4 million tonnes of crude a year. Investment in the two stages will amount to 796 billion rubles,” he said.

Technical specifications for all external infrastructure have been developed. “We are working on sources and mechanisms of financing with all companies – with Russian Railways, with FGC (Federal Grid Company of Unified Energy System), with Transneft. There are proposals here and we see no serious problems,” he said.

Rosneft CEO Igor Sechin said that the refinery of Eastern Petrochemical Company will completely cover demand for gasoline in the Far East Federal District.

“Two large refineries in the cities of Komsomolsk and Khabarovsk produce about 1.1 million tonnes of gasoline per year. Today, demand in the Far East Federal District exceeds supply by about 400,000 tonnes a year, and it may grow to 1–1.5 million tonnes by 2030,” he said.

He added that Eastern Petrochemical Company will cover demand and become the anchor for the future petrochemical cluster of the region.

“In the long run, we expect the petrochemical market to maintain fast development, especially in the Asia–Pacific region. Consumption of major petrochemical products in the Asia–Pacific region will grow by 34% by 2020, and by 47% more in 2020–2030. Taking into account significant reserves of petrochemical crude in Russia, we have a unique chance to develop the petroleum chemistry in the Far East and occupy the niche at the emerging markets of the Asia–Pacific states,” he said.

But Rosneft still has not reached a deal with Russian gas giant Gazprom on supplies of natural gas to the facility despite all government rulings, undermining the launch date of the project.

“It is not a large amount, the issue is only about 2.3 billion cubic meters of gas mainly for power generation. We are to launch a 550-megawatt power plant by 2021. It will supply power to the facility and closest localities. The lack of necessary solutions threatens the terms of implementation of the project…We are in dialogue with Gazprom. Gazprom suggests we search for internal resources from affiliates of Rosneft. But we have no such resources,” Sechin said.

President Vladimir Putin said that the government should not issue direct rulings for Gazprom on the issue, as any two companies should solve their problems reasonably and on market principles, even if these two companies are state-owned.

Sechin also said that Rosneft suggested the Far East Development Ministry include construction of an 8 million tonne sea terminal into the Eastern Petrochemical Company project.

“There is a lack of confirmation of full financing of infrastructure facilities of our Eastern Petrochemical Company from the federal budget…We are now in dialogue with the Far East Development Ministry and we think that we may reach a compromise on some expenditures. For instance, we may include the sea terminal into the project, but only on condition of provision of long-term project financing,” he said.

(60.5819 rubles – U.S. $1)

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