Page 10 - FSUOGMWeek92020

FSUOGM INVESTMENT FSUOGM
Gazprom unveils $14.1bn Yamal petchem hub
RUSSIA
Gazprom wants to maximise value from its gas resources.
MORE details have emerged concerning Gaz- prom’s plan to build a major gas petrochemical complex on the Yamal Peninsula.
The project has a $14.1bn price tag, Russia’s Vedomosti reported on March 1, citing docu- ments of the Russian Fund for Direct Investment (RDIF), which may help finance the venture. Gazprom has also held talks on bringing on board Azeri national oil company SOCAR and Saudi petrochemicals giant SABIC as partners. The company is now preparing a detailed assess- ment of the project’s economics.
Gazprom has seen record levels of spend- ing in recent years, after building costly new gas pipelines to Europe and China. In a recent investor presentation in New York the company said it would aim to keep capital expenditure at an annual average of less than RUB1.2 trillion ($17bn) over the next 10 years, versus a record RUB1.8 trillion in 2018. However, major new projects may mean it struggles to keep a lid on spending.
The Yamal petrochemical complex would process up to 40bn cubic metres of gas from Gazprom’s giant Bovanenkovskoye field and other deposits in the area, and produce 37.8 bcm of purified methane, 2.3mn tonnes of ethane and 0.8mn tonnes of liquefied petroleum gas (LPG). The ethane and LPG will then be used to manu- facture 2.1mn tonnes of polyethylene.
Gazprom expects to attract $9.9bn in debt financing, covering 70% of total project costs, while investors will pay for the remaining expense, Vedomosti reported. A final investment decision (FID) is still some way off, but the pro- ject’s details have been worked out in full and it is likely to be realised, the newspaper said, citing a federal official.
Gazprom also unveiled a joint plan last year with Russia’s Rusgasdobycha to establish a $13.2bn gas processing and LNG production hub on the Baltic Sea.
Bovanenkovo is working up to its third-stage production capacity of 115 bcm per year, and Gazprom plans to commission the first phase of the neighbouring Kharasaveyskoye field in 2023, adding an extra 32 bcm per year of supply. Gaz- prom believes its fields on Yamal could eventu- ally yield as much as 360 bcm per year of gas. But the company is apprehensive about approving additional projects because of demand uncer- tainty in Europe, where most of the gas would flow.
Establishing petrochemical production will help de-risk and maximise the value of Gaz- prom’s investments. In a similar vein, the com- pany is working with its subsidiary Gazprom Neft to exploit oil at Bovanenkovskoye and Kharasaveyskoye, instead of just gas, to maxim- ise revenues. ™
P10
w w w . N E W S B A S E . c o m Week 09 04•March•2020