Page 16 - FSUOGM Week 29

FSUOGM POLICY FSUOGM

Russia mulls new support for

petrochemicals

RUSSIA THE Russian government plans to hold a meet- use, and will amount to RUB9,000 ($117) per
ing to discuss potential extra incentives for the tonne when it comes into force in 2022. To get
Russia's petrochemicals country’s growing petrochemicals sector, Dep- the subsidy, projects must have planned ethane
sector is fairly uty Prime Minister Yury Borisov said in a state- processing capacities of 300,000 tonnes per
undeveloped, despite its ment on July 21. year (tpy) and must have an investment cost of
prowess as one of the The meeting will be chaired by Russian Pres- at least RUB65bn.
world's major oil and ident Vladimir Putin in September at Zapsib- Sibur and other petrochemicals producers
gas producers. neftekhim, a major new petrochemicals complex are now struggling, due to the economic fallout
being commissioned by Sibur in Tobolsk, West- from the coronavirus (COVID-19) pandemic.
ern Siberia. Sibur swung to a RUB52.3bn loss in the first
Despite its prowess as one of the world’s larg- quarter, after ruble devaluation drove up the
est oil and gas producers, Russia’s petrochemicals value of its foreign-denominated loans. Its rev-
sector is fairly undeveloped. But the government enues were also down 7.8% year on year owing
wants to change this, to maximise value from the to the collapse in prices, although the blow was
country’s resources and diversify away from raw cushioned somewhat by rising production at
oil and gas revenues. Zapsibneftekhim.
Moscow already supports the sector with Speaking at an energy ministry meeting
a so-called reverse excise duty on ethane, on July 21, Borisov said additional measures
derived from gas and the main choice of feed- would be discussed to stimulate production
stock for Russian petrochemicals developers. of petrochemicals, beyond subsidies for feed-
This is effectively a subsidy on domestic ethane stock. ™

Russian oil industry prepares study

on strategic crude reserve

RUSSIA RUSSIAN oil and gas trade association, the Rus- Fund (NWF) and other public funds, along with
sian Gas Society (RGS), has prepared a feasibil- private financing.
Russia stands out ity study for establishing a strategic oil reserve, At present, the nearest thing Russia has to a
among other major Vedomosti reported on July 20. strategic reserve is the storage facilities belong-
oil suppliers and Russia has discussed setting up a strategic oil ing to state pipeline operator Transneft, which
consumers in lacking reserve for years, but the plan has been criticised can hold up to 9.7mn cubic metres of oil, or
such a reserve. for being costly and unnecessary. However, the around 220mn barrels. This is about 20 times
RGS has called for the development of a reserve less storage than the US has.
equal to 10-20% of Russian oil production, or Oil producers have additional storage capac-
56-112mn tonnes (410-820mn barrels). ity but there is no open data on the size of their
Russia stands out among other major oil sup- facilities.
pliers and consumers such as Saudi Arabia and The RGS’ study proposes storing oil in rock
the US in lacking such a reserve. salt deposits. The most promising candidates
The RGS undertook a feasibility study on the are in the Caspian, Volga-Urals, Kaliningrad
project at the request of Deputy Energy Minis- and Central and Northern Caucasus regions,
ter Pavel Sorokin, according to Vedomosti. The according to the study. Preparing them for
study assesses four options for its size: 30mn, storage would take at least 10 years, or less
60mn, 90mn and 120mn cubic metres. This time if the government strongly supports the
roughly corresponds to 5%, 10%, 15% and 20% initiative.
of Russia’s annual oil production. Having a strategic reserve would not only
The smallest option would cost RUB103.5bn improve Russia’s energy security, but enable its
($1.47bn), whereas the largest would cost producers to continue flowing oil when prices
RUB216bn. The RGS proposes funding the are low but store the supplies until prices are
venture with support from the National Wealth higher. ™

P16 www. NEWSBASE .com Week 29 22•July•2020