Irkutsk oil company has found a partner from China

China Pingmei Shenma Energy Chemical Group will help it implement gas processing projects.
Until the end of 2018, the Irkutsk Oil Company (INC) and China Pingmei Shenma Energy Chemical Group will create a joint venture in the Irkutsk Region to process natural and associated petroleum gas. On the signing of the relevant agreement, the INC reported on July 18. How the shares of the JV participants will be distributed, what kind of contribution the parties will make, the representative of INC did not disclose. Project feasibility studies are being developed by Chinese and Russian design organizations, the INC said. In addition, "a principled agreement was reached on the acquisition of the future production of equipment produced in both countries."

The total cost of the project is estimated at 361 billion rubles, according to the website of the INC. In 2015, the main owner and chairman of the Board of Directors of the INC Nikolai Buynov told Vedomosti that the investment in the project would amount to about 170 billion rubles. Why the project has risen in price twice, the representative of the INC did not specify.

Initially focused on oil production, INC in 2010-2017. increased hydrocarbon production by 13 times (from 0.66 million to 8.6 million tons). In addition, that to search for a way to monetize associated petroleum gas forced an annual increase in production, the company discovered natural gas reserves. Since 2013, INC has invested 44 billion rubles in the gas processing project. The first stages - the construction of plants for the separation of propane and butane, the complex of LPG shipment - are partially completed. By 2022 in the vicinity of Ust-Kut it is planned to build facilities for deep processing of raw materials. In 2017, Buynov said that the capacity of the five gas processing plants will be about 7.6 billion cubic meters. m of gas per year. The final product of gas chemistry will be polyethylene (up to 600 000 tons per year).

The partner was looking for a partner in the project for several years. "All our partners - they are clear and clear: EBRD, Goldman Sachs, JOGMEC, Itochu, Inpex. We are trying to find the same clear international partner, "Buinov said in an interview with Vedomosti. China Pingmei Shenma Energy Chemical Group is a large industrial holding company with annual revenue of $ 23 billion.

The ethane complex INC promises to be very competitive: for etana produced locally, there will be no price benchmark, except production costs and return on investment in the GPP, says Andrei Kostin, head of the Rupec Information and Analytical Center. "Partnership with the Chinese is important if China has a target market. In the absence of experience in international trade in polymers, INC, as a new player in this market, needs a local sales provider, while also ready to take on the risks of the project, "says Kostin.

The market advantage of the INK project can only be achieved quickly, Vyacheslav Akishin, Vygon Consulting project manager, believes: it will be necessary to compete with Zapsibneftekhim and Amursky MCC (both Sibur), as well as VNKhK (Rosneft) with a total capacity of more than 4 million tons of ethylene . In addition, there are new projects in China, the expert recalls: "In the next 10 years, the country plans to increase its petrochemical capacity by more than 1.5 times - up to 46 million tons of ethylene per year."