Russian Baltic Chemical Complex PE project aims to add 3 million tonnes / year by 2025

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The pyrolysis technology for the ethane cracker will come from Lummus, headquartered in the United States, with the two companies also supplying all catalysts and reactors.

The project has an Engineering, Procurement and Construction (EPC) contract with China National Chemical Engineering & Construction Corporation Seven.

An engineering and supply contract is in place with the American group McDermott for pyrolysis and with the South Korean Daelim for PE and linear alpha-olefins (LAO).

It comprises approximately 1.6 million tonnes / year of high density polyethylene (HDPE) and 1.3 million tonnes / year of linear low density polyethylene (LLDPE) and metallocene LLDPE (MLLDPE).

“The first line will be in the mechanical completion phase by the end of 2023 and we expect to complete all start-up and tuning work by mid-2024,” CEO of RusGasDobcha, owner, told ICIS. of the project.

“The second line will be in the mechanical completion phase by the end of 2024 and production will start in 2025,” Konstantin Makhov added.

RusGazDobycha is owned by the country’s National Gas Group. The CEO refused to name the shareholders of National Gas Group, citing commercial confidentiality.

The site was chosen because of the access to the largest and deepest port in the Baltic Sea, as well as to an important main gas pipeline which passes nearby.

“We would like to stress that our structure is completely transparent – we have been subject to due diligence by large companies in different countries, including the United States. Of course, we do this subject to non-disclosure agreements signed with our counterparts, ”Makhov said.

Out of 10 billion euros of investment (capex) for the gas and polymer processing plant, about 6 billion dollars of the funding in place.

Construction began in 2020 and currently the piles are poured and the foundation prepared for the project.

The CEO indicated that in October 2021 the first equipment should be delivered to be installed on the foundations.

The project includes LAO, with technology licensed from Axens for a plant producing 120,000 tonnes / year of butene-1 and 50,000 tonnes / year of hexene-1.

These will be built in parallel with the gas to chemical installation with the same completion times.

NO POLYMER OVERCAPACITY
Makhov said the plant’s capacity would be absorbed by growing global demand for PE, which he said would increase by about 20 percent, or 20 million tonnes, from 2020 to 2025.

“We are in the top quartile for costs and we don’t think an oversupply situation is likely. We believe that the general consumption growth of the market will absorb all volumes from new profitable installations, ”he said.

According to CIHI analyst James Wilson, ICIS predicts that global demand for PE will increase by about 20% in 2020-2025 to reach about 200 million tonnes / year.

“The current wave of mostly US and Chinese expansions will be over by 2022/2023, so the Baltic project will come into service at a time when demand catches up to capacity, pushing up operating rates,” said Wilson.

Source: ICIS Supply and Demand widget, ICIS dashboard

IPO PLAN
The CEO said that an initial public offering (IPO) would be an important step in the development of the company.

“So far we can’t tell you the exact year as we would like to complete this huge project first and start paying off our senior debt. We do not believe that an IPO initiative is reasonable before 2027, ”concluded Makhov.

Photo on the front page: Installations of the Baltic Chemical Complex in the Leningrad Oblast region of Russia
Source: Baltic Chemical Complex

Interview article by Will beacham


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