Page 4 - FSUOGM Week 21

FSUOGM COMMENTARY FSUOGM
Kazakhstan’s petrochemicals push suffers setback
Kazakhstan’s efforts to monetise gas by establishing a petrochemicals industry have suffered a major setback
KAZAKHSTAN
WHAT:
Austria’s Borealis is
no longer interested in developing a PE complex in Kazakhstan.
WHY:
The company said the decision was linked to the COVID-19 pandemic and uncertain market assumptions.
WHAT NEXT:
Kazakhstan is struggling to develop its petchem industry.
AUSTRIA’S Borealis has scrapped plans to build a multi-billion dollar polyethylene (PE) complex in western Kazakhstan, marking another setback in the Central Asian country’s efforts at develop- ing a petrochemicals industry.
Like neighbouring Turkmenistan and Uzbek- istan, Kazakhstan is looking to exploit more of its domestic gas resources to produce higher-value products at home, rather than exporting them cheaply to neighbouring China and Russia. But it has had difficulty attracting the investment needed to advance projects.
The government has been pushing for the development of a large gas chemical complex in the Atyrau region near the Caspian Sea shore for over a decade. The complex would produce up to 1.25mn tonnes of PE and 500,000 tonnes of PP annually, for sale in Central Asia and markets further away. It would have featured a cracker that would prepare gas-derived ethane from the Tengiz oilfield for use as feedstock.
South Korea’s LG Chem initially signed up to the project but pulled out in 2015 following the oil price crash and Kazakhstan’s resulting economic recession. The scheme was finally revived in 2018, with United Chemical Co. (UCC), wholly owned by Kazakhstan’s national wealth fund Samruk-Kazyna, replacing Kazakh oil giant KazMunayGas (KMG) as its operator.
Borealis entered the scene later that year, signing a joint development agreement with UCC for its cracker and twin polyethylene units. They also signed a memorandum of understand- ing (MoU) on its polypropylene unit. The pair set up a 50:50 joint venture and had aimed to take a final investment decision (FID) this year, with the complex’s launch due in 2025. UCC esti- mated its cost at $6.8bn.
In a statement on May 19, however, Borealis said it had decided to withdraw from the ven- ture, “based on a thorough assessment of all aspects of the prospective venture and impacted
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w w w . N E W S B A S E . c o m Week 20 20•May•2020