Russia to pay China for Gazprom’s new megaproject

The Russian government has officially given the green light to Gazprom’s new megaproject, a $12 billion gas and chemical complex in Ust-Luga, reports

On Tuesday November 5, the state-owned company VEB.RF and the Baltic Chemical Complex (a fully-owned subsidiary of RusGazDobycha) signed a credit agreement to allocate 111 billion rubles ($1.75 billion) to the project.

The enterprise’s raw materials will be ethane-containing natural gas from Gazprom’s fields in the Nadym-Pur-Taz region.

VEB’s loan will be used to pay for the preparation of pre-project documentation and advance payments on license agreements and contracts, including for equipment, the state-owned corporation said in a statement.

The money will effectively go to the China National Chemical Engineering Group Corporation (CNCEC), which has been chosen as a contractor for the project.

CNCEC and RusGazDobycha signed a contract on October 11 in the city of Chengdu, the capital of the Sichuan province in south-western China.

The result will be “the largest industrial cluster”, one that is unparalleled in Russia, said RusGazDobycha CEO Konstantin Makhov on Tuesday, as cited by VEB’s press service.

“A vertically integrated system of gas supply and processing in Russia is in fact a new economic model for the gas sector. The output of the future complex will have export potential to countries in Europe, Asia, to India and to China. We plan to commission the first line in 2023-2024, and we will reach full capacity in 2025,” Makhov announced.

The complex will process 45 billion cubic meters of gas every ear, producing roughly 13 million tons of liquefied natural gas (LNG), up to 3.8 million tons of ethane fraction, up to 2.4 million tons of hydrocarbon gas liquids (HGL) and 200,000 tons of pentane-hexane fraction.

The natural gas which remains after processing (roughly 19 billion cubic meters) will be transported using Gazprom’s gas transport system. A gas and chemicals enterprise will process the ethane received from the complex, and produce up to 3 million tons of various grades of polyethylene. The commissioning of both companies will be synchronized: the first lines in the final quarter of 2023 and the second lines in the final quarter of 2024.

The complex will be operated by the special company RusKhimAlyans (which is owned by Gazprom and RusGazDobycha on a parity basis).

(c) UAWIRE 2019

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