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FSUOGM INVESTMENT FSUOGM

Rosneft revives plan for Far Eastern

refining, petchem hub

RUSSIA ROSNEFT has revived plans for a major pet- The government is currently reviewing this
rochemical hub in the Russian Far East and has proposal, a representative told RBC. FEPCO
The project's first stage requested government support for the plan, RBC will also run on liquid petroleum gases (LPGs),
alone has a cost of reported on September 8 citing sources. therefore benefiting from a reverse duty the gov-
$9.3bn. The state oil company’s CEO, Igor Sechin, ernment introduced on this resource last year.
sent a letter to Russian President Vladimir Putin While state support would improve FEPCO’s
in August requesting benefits for the Far East economies, analysts at BCS Global Markets were
Petroleum Co. (FEPCO) venture. Rosneft had sceptical that the scheme would be realised.
been trying to advance the project for a decade “We doubt it will be built. Rosneft has been
before quietly shelving it last year. The company studying this potential project for at least 10
failed to find investment partners and had diffi- years, but never committed to it due to low pro-
culty working out a means of supplying the com- jected returns,” BCS said in a research note on
plex with raw materials. September 9.
Under its first stage, priced at RUB700bn Besides exporting products to Asia-Pacific
($9.3bn), FEPCO is slated to process up 12mn markets, FEPCO would also bolster fuel supply
tonnes per year (240,000 barrels per day) of security in the Far East and create some 100,000
crude oil and produce 8mn tpy of gasoline, diesel jobs, according to Rosneft.
and other refined fuels, along with 3.4mn tpy of Rosneft has reached out to a number of
petrochemicals. Its output would double under potential investors to share FEPCO’s costs and
a second stage, which would bring overall costs risks over the years, including Japan’s Mitsui,
to RUB1.5 trillion. China’s ChemChina and US major ExxonMobil.
Sechin reportedly told Putin in a meeting last But it has never managed to secure any binding
month that Rosneft would be ready to return to commitments.
the project in Primorsky Krai if tax conditions Many Russian oil firms are moving into pet-
improve. The Rosneft chief has asked for nega- rochemicals to hedge against oil market volatil-
tive excise duties – effectively subsidies – to be ity and produce higher-value products. Rosneft
applied on the naphtha and crude oil feedstock made petrochemicals expansion a core aim in its
that FEPCO will consume, in order to lower pro- five-year strategy outlined in 2017, but has had
duction costs. difficult advancing any projects. ™

P14 www. NEWSBASE .com Week 37 16•September•2020