Petrochemistry: an island of growth in the ocean of crisis RusEnergy presentation Embassy of the Republic of Korea Moscow March 23, 2016

Transcription

1 1 Petrochemistry: an island of growth in the ocean of crisis RusEnergy presentation Embassy of the Republic of Korea Moscow March 23, 2016

2 2 In 2015, Russia s petrochemistry developed defying the economy s general adverse trends Source: Russian State Statistics Committee

3 3 Reasons behind the growth of petrochemistry in Russia: production capacity expansion, favorable prices on the market Major polymer production plants, which were launched back in , reached their design capacity in 2015, including Poliom (Omsk region), Tobolsk-Polymer (Tyumen region) and RusVinyl (Nizhny Novgorod region). Due to the fall of the oil prices, drastic fall of the ruble to the dollar and the so-called tax maneuver in the oil industry, domestic exporters of petrochemical products found themselves in a favorable situation.

4 4 Exports of petrochemicals demonstrate stability in the situation of weakening oil prices Nine months of 2015 compared to nine month of 2014, world prices had fallen as follows: Crude oil: 48% Petrochemical feedstock (LPG, naphtha): 47-54% Petrochemical products: 16-30% only

5 5 Global prices downfall, % Crude 48,2 LPG 0 54,2 Naphtha 47,5 BA 30,1 PP PET 24,9 23,9 LDPE MEG 16,4 19,1 Source: Sibur Notes: LPG liquefied petroleum gases BA butylacrylate PP polypropylene PET polyethyleneterephtalate LDPE low density polyethylene MEG monoethylene glycol

6 6 Despite the economic crises and Western sanctions, Russian companies keep on developing major petrochemical projects Russia s leading petrochemical company, Sibur, launched the construction of Zapsibneftekhim, a major polymer production complex in the city of Tobolsk, West Siberia, which is poised to become Russia s largest of its kind. Pyrolysis plant: 1.5 mln tpy of ethylene, 500,000 tpy of propylene. Polymer production plants: 1.5 mln tpy of polyethylene, 500,000 tpy of polypropylene. Project cost: $9.5 bln. Start of construction: Construction completion: Current stage: infrastructure construction, installation of foundations.

7 7 One-third of investments in Zapsibneftekhim are expected to come from foreign investors Zapsibneftekhim funding structure: $1.75 bln from the RF National Prosperity Fund; $3.3 bln from international investors; $4.45 bln Sibur s own funds. Source: Sibur

8 8 Despite the sanctions, Sibur is receiving loans from international banks As things stand today, Sibur has signed loan agreement with foreign lenders totaling $2.5 bln (out of $3.3 bln planned), including: In December 2014, an agreement was signed on raising EUR bln from a consortium of 12 European banks under the guarantees of German export credit agency, Euler Hermes, as project financing for the acquisition of technologies and equipment from Linde AG and ThyssenKrupp Industrial Solutions. In September 2015, an agreement was signed on taking EUR 412 mln under the guarantees from French ECA, Coface, for funding the installation of a Technip PE production unit. In December 2015, an agreement was signed on raising $210 mln from the Russian Direct Investment Fund with the involvement of several Arab funds. Moreover, in 2015, Sibur received a $1.75 bln loan from the National Prosperity Fund.

9 9 Zapsibneftekhim is not Russia s only ongoing development project in the field of petrochemistry The main regulatory document governing the development of Russia s petrochemical industry is the Chemistry and petrochemistry development strategy until 2030 approved by the RF government in The document sets the following goals: Development of six petrochemical clusters to be provided with feedstock by the domestic oil and gas industry. Increasing pyrolysis capacity from 3.2 mln t in 2010 to 16.2 mln t by Increasing domestic consumption of the end products of petrochemical industry from 4.5 mln t in 2010 to 16.4 mln t by Increasing exports of polymer products to 7 mln t by 2030.

10 10 In terms of general capacity development, the program has been running on schedule over the last three years The following basic polymers production plants were put into operation in : Product Capacity tpy x 1,000 Company Location Owners Propylene Polypropylene Tobolsk-Polymer Tyumen region Sibur Polypropylene 210 Poliom Omsk region GK Titan, Sibur, Gazprom Neft ABS-plastics 60 Nizhnekamsknef Tatarstan TAIF tekhim Polyvinyl- 330 RusVinyl Nizhny Sibur, SolVin chloride Novgorod region Polyethylene Polief Bashkortostan Sibur terephthalate Polystyrene Nizhnekamsknef tekhim Tatarstan TAIF Source: RusEnergy based on company data

11 11 Present and future production facilities are wellprovided with petrochemical feedstock Forecasts of production growth of basic feedstock for petrochemistry and gas chemistry in Russia (mln t) Source: RF Ministry of Energy, Technon, Alyans-Analitika, RusEnergy

12 12 Construction of future facilities will be organized within the framework of six petrochemical clusters Source: VNIPIneft

13 13 Company Zapsibneftekhim Novy Urengoi gas chemistry complex Nizhnekamsk- Main Russia s petrochemical projects Capacity tpy x 1,000 Year of launch Cost, $, bln Location Owners 1,500 of PE Tyumen region Sibur and 500 of PP 400 of PE Tyumen region Gazprom 600 of PE Tatarstan TAIF neftekhim 400 of PP 2025 Angarsk Polymer of (being Irkutsk region Rosneft Plant PE 350 of PE 250 of PP 2020 revised) Sanors 1,000 of PE Samara region Rosneft Far East Petrochemical Company (Stage I and II) Primorsky territory Rosneft Gazprom Neftekhim Salavat Amur gas chemistry complex 60 of PE Bashkortostan Gazprom 2,400 of PE (preliminary estimate) (preliminary estimate) Amur region Sibur Source: RusEnergy based on corporate data

14 14 Upgrading its petrochemical industry Russia is relying primarily on foreign technologies Source: Russian State Statistics Committee

15 15 Foreign companies are actively involved in Russia s petrochemical sector: Major foreign companies, such as Solvay, BASF, Pirelli and Sinopec, are owners or co-owners of large petrochemical enterprises in Russia. Western companies (Linde, CB&I, UOP Honeywell, INEOS, LyondellBasell, Sunpor, Technip, Mitsubishi) are readily supplying licensed technologies for Russia s petrochemical projects. Design, procurement and installation of sophisticated process modules are provided mostly by Western companies (Tecnimont, Technip, Linde, Uhde, etc.) on EPC terms.

16 16 As an example: Zapsibneftekhim licensors For all kinds of technologies and equipment: Contracts are in place with deliveries scheduled for Agreements have been signed with Western banks on the provision of loans under project financing terms to be repaid over 10 years from the enterprise s launch. OOO ZAPSIB- NEFTEKHIM (Tobolsk) Ethylene Plant - 1,500 kta Polyethylene Plant - 1,500 kta Polypropylene Plant kta Linde Linde INEOS Technip Lyondell Basell Licensor FEED, PD Licensor FEED PD Licensor Uhde FEED, PD

17 17 Asian companies are much less involved in Russia s petrochemical projects than European and American companies In 2013, Sinopec acquired 25% + 1 share in the Sibur s Krasnoyarsk synthetic rubber plant. In 2015, Sinopec acquired 10% of Sibur with an option to buy another 10% over the next 3 years. ChemChina signed a memorandum with Rosneft on acquiring controlling stake in the Far East Petrochemical Company (Stage 1 and Stage 2) in exchange for investments. From 2013, Mitsubishi has been provider of technologies and EPC contractor for the Gazprom Neftekhim Salavat project of building an acrylic acid production complex (Gazprom).

18 18 Import substitution program for Russia s petrochemical sector is a long term program Based on the already built facilities and projects being implemented Russia plans to implement an import substitution program on the petrochemical market: In 2014, domestic production of polypropylene outpaced the demand for that polymer on the Russian market thanks to the commissioning of new production facilities (polypropylene is the only such example for the moment). The market of polyethylenes still remains to be deficient, and the deficit is expected to be overcome only by 2020 with the launch of the Novy Urengoi gas chemistry complex, new plants at the Angarsk Polymer Plant and Zapsibneftekhim. Russian market remains to be strongly deficient in ABSplastics, polyethylene terephthalate, medium-scale and special-purpose and some other products.

19 19 Proportion of imports in the supply of basic petrochemicals to the Russian market Chemical and petrochemical industry Basic (large-scale production) polymers Medium-scale/special purpose products Higher value added products Product Linear low-density polyethylene (LLDPE) ABS plastics PVC Polyamide-6.6 Epoxy resins Polyester resins Polyurethane resins Chemical reagents Fibers and filaments Proportion of imports, % Source: RF Ministry of Industry and Trade

20 20 Opportunities for Korean companies Supply of licensed technologies, equipment, design and EPC for Russian projects currently on preparatory phase. Joint participation in the construction of individual plants projected as part of the large-scale petrochemical projects. Participation in projects developing the production of certain types of basic polymers and a large number of types of medium-scale and special-purpose petrochemical items. Possibility of penetrating the rapidly growing Russian market with certain kinds of Korean products in exchange for strategic partnership with relevant Russian companies.

21 21 Possible advantages of Korean suppliers Competitive advantages compared to European suppliers (efficiency, price, shorter shipment distance, services, etc.). Provision of project financing for offered services through export-import agencies. Taking part in marketing Russia-made products at foreign markets. Contracting Russian consulting companies for selecting right partners on the Russian market.

22 22 Thank you. Any questions? RusEnergy has provided services to foreign investors in Russia s oil and gas sector for more than 20 years now Tel.: +7 (495) Website: