Vedomosti: Total volume of oil and gas chemical projects with VEB.RF participation exceeded RUB 10 trillion

VEB.RF participates in oil and gas chemical projects with investments of RUB 2 trillion. This was announced by Nikolay Tsekhomsky, First Deputy Chairman of VEB.RF, at the ceremony of the construction start of the olefin EP-600 complex of the GC Titan in Omsk. Tsekhomsky noted that chemical and petrochemical industry are "critically important" for Russian economy.

VEB.RF estimates that global polyethylene production will increase to 153 million tonnes by 2024, with Russia's share increasing up to 6.6% (10.8 MT). The share of projects involving VEB.RF will be 3.7% (5.7 MT). The share of net exports in 2024 will be 13.2% (VEB projects - 8.9%).

VEB.RF sees great potential in the project of GC Titan, Tsekhomsky emphasized. "This is exactly what we need to do today to solve the problems of import substitution and ensure technological sovereignty," he believes.

Stake on import substitution

Under sanctions pressure, the petrochemical industry operates with limited access to Western technologies and traditional sales markets. Experts note that in the wake of these events large investments in domestic production facilities are extremely important. Moreover, increasing the share of high-value-added products in the economy will create advantages for the country not only in terms of its own security and independence from imports in the future, but also in relations with new foreign partners.

"In the long term, reorganisation of the global petrochemical industry will continue, resulting in the development of production facilities primarily in the countries having their own raw materials for processing. At the same time, there may be a decrease in primary processes in feedstock-importing countries, as resource holders will concentrate processing capacities on their territories, while the main volume of petrochemical products will be exposed to recycling after disposal," Senior Lecturer at the Faculty of Marketing and International Cooperation of the Institute of Management and Regional Development of the Presidential Academy of the Russian Academy of National Economy and Public Administration, Tamara Safonova believes.

Earlier, Russian Vice-Prime Minister Alexander Novak, who is in charge of the fuel and energy sector, reported that the total volume of planned investments in the petrochemical sector would amount to about RUB 3-3.5 trillion by 2030. Five such agreements have already been concluded within the framework of the applied since 2021 mechanism of investment agreements on creation of new capacities and upgrading of existing ones. The total volume of investments in the petrochemical industry in 2022-2027 will make 800 RUB bn.

In 2018, when Igor Shuvalov became VEB's head, he set a task for the corporation to increase investments in oil and gas chemistry projects. Now VEB.RF participates in almost all major projects for the production of methanol, ammonia, urea and various types of polymers in Russia. The total value of implemented and ongoing projects, including those under the Project Financing Factory, is over RUB 10 trillion.

In October, Shuvalov announced on the sidelines of the One Belt and One Road forum that VEB planned to attract about RMB 300 bn of investment from Chinese investors for projects in Russia. "We take into consideration several major projects at once, which are ready now to attract money from Chinese investors on mutually beneficial terms," he said. First of all, we are talking about projects in the oil and gas chemical industry, Shuvalov explained.

He specified that VEB together with Chinese investors, was already involved in six major projects with a total volume of more than RUB 3 trillion, or RMB 220 billion. These projects include construction of gas chemical complexes, manufacture of petrochemical products, construction of mining and processing integrated plants, as well as projects in mechanical engineering.

New milestone in oil refining

The construction of GC Titan's production facilities in Omsk is expected to be completed by 2030. The new facility will process hydrocarbon feedstock into ethylene, propylene, butylene-divinyl fraction, pyrolysis condensate and their derivative products, which are in short supply for the domestic market (butadiene, benzene, ethylene glycols, polyethylene, propylene oxide, propylene glycols, etc.). Customers of the products will likely be enterprises in the chemical, automotive, microelectronic, pharmaceutical, perfumery and cosmetics, and textile industries. Project implementation will make it possible to provide other production sites of the Group with the necessary feedstock for production of more advanced products.

The construction start ceremony was also attended by Vitaly Khotsenko, Governor of Omsk Region, and Mikhail Sutyaginsky, Chairman of the Board of Directors of GC Titan.

According to Sutyaginsky, GC Titan has already implemented several projects in Omsk Region in partnership with VEB.RF and expects further co-operation. He also thanked Khotsenko for supporting the holding's engineering centre in Omsk.

Khotsenko, in his turn, reminded of the task set to domestic industrialists by President Vladimir Putin to import substitution of chemical products and strengthen the technological sovereignty of Russia. Almost annual start of new production facilities of GC Titan, Khotsenko noted, made the country technologically strong and increased its export potential.

"Omsk Region is a major centre of petrochemistry, oil refining, natural gas conversion, and the region firmly holds these positions <...> We will move further in this direction, maintaining the best environmental standards," the governor said. The implementation of the EP-600 project of GC Titan would increase revenues to the regional budget and create up to 1,200 new jobs, he added.

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