OJSC Rosneft and China National Chemical Corp. (ChemChina) have signed a memorandum of understanding to cooperate on development of Rosneft subsidiary Far East Petrochemical Co.’s (Fepco) plan to build the largest integrated refining and petrochemical complex in Russia’s Far Eastern Federal District (FEFD), near the city of Nakhodka.
The MOU outlines ChemChina’s offer to buy a majority stake in Fepco to become the Russian operator’s strategic partner on the long-planned project, Rosneft said.
The proposed refining and petrochemical hub comes as part of Rosneft’s plan to reduce fuel costs in FEFD that have resulted from persistent supply shortages in the local market, the company said.
In addition to paving the way for a future petrochemical cluster in FEFD, the phased development also would enable increased Russian fuel and petrochemical exports to reach fast-growing markets elsewhere in Asia-Pacific, the operator said.
Scheduled for completion in 2020, Phase 1 of the project would involve construction of a 12 million-tonne/year refinery with the following production capacities: gasoline, 1.57 million tpy; diesel, 6 million tpy; kerosene, 790,000 tpy; and bunker fuel, 140,000 tpy.
A second phase of the project, due to complete construction in 2022, would deliver a petrochemical plant that includes a 3.4 million-tpy naphtha steam cracker capable of producing 1.4 million tpy of ethylene and 600,000 tpy of propylene, Rosneft said.
The cracker will use ethylene production technology licensed by Chevron Lummus Global (CLG), a joint venture of CB&I and Chevron Corp., CB&I said in a December 2011 release.
Rosneft said the grassroots petrochemical plant additionally will include the following production capacities: polyethylene, 850,000 tpy; polypropylene, 800,000 tpy; butadiene, 200,000 tpy; benzene, 230,000 tpy; and monoethylene glycol, 700,000 tpy.
Rosneft currently is preparing project documentation for Phases 1 and 2 of the project, with engineering surveys due to be completed in 2016, Rosneft Chairman Igor Sechin told investors earlier this month.
The company said it expects combined construction costs on Phases 1 and 2 to run about 660 billion rubles, including capital investments for infrastructure.
Should market conditions warrant it, a potential third and final phase of the project designed to double both refining and petrochemical production capacities at the complex could be built by 2028, Rosneft said.
Rosneft previously signed an MOU with Mitsui & Co. to jointly develop the proposed FEPCO integrated complex (OGJ Online, Apr. 29, 2013).
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