During his presentation at the TNF 2020, Russian Deputy Prime Minister Yuri Borisov said that support for investment in petrochemicals should continue as far as high value-added products are concerned. “A bill has been submitted to the State Duma, aimed at enhancing the industry’s investment appeal by introducing a reverse excise tax and tax deductions for ethane and LPG production. But I don’t think we should stop there. For the time being, the law only encourages upstream investment at the first stage of the petrochemicals production process chain. We also need to discuss the next stages of the process chain, which are closer to finished products. It makes sense for us to do this because many petrochemicals are not produced in Russia today,” said Yuri Borisov, noting that this is also a matter of national security.

Commenting on the Finance Ministry’s proposal to increase the tax burden on the oil industry, Yuri Borisov noted that “the Government was forced to make changes to the rules of the game that had already been set,” which will have an adverse effect on certain companies – Tatneft, Gazprom Neft and LUKOIL to a greater extent, and Rosneft and Gazprom to a lesser extent. “Let’s hope that these will turn out to be stopgap, ‘firefighting’ measures, and if the economy recovers, we will be able to reintroduce more attractive mechanisms faster, say from 2021 or 2022, to give preferential treatment to our industry champions and help them to develop certain market segments more dynamically,” said the Deputy Prime Minister in conclusion.

Dmitry Konov, Chairman of the Management Board at SIBUR, gave his assessment of the state of the oil and gas industry. “With the new stimulus package, Russia’s petrochemical industry has an opportunity to make the next confident stride towards beating global competition,” said SIBUR’s Chairman of the Management Board Dmitry Konov. “Significant regulatory or economic developments that lead to cuts in production [of oil and gas] will reduce the feedstock volumes available to us for conversion into new materials. This poses a secondary threat to the industry’s growth. Arguably it is not today’s threat, but looking ahead, both carbon footprint implications and fiscal regulation of the oil and gas industry will reduce the opportunities available to industry players.” According to Dmitry Konov, sidestepping this would also require the creation of incentives for oil and gas companies to expand production.

Fielding questions from journalists during the event, Mikhail Karisalov, Member of the Management Board at SIBUR, said that ZapSibNeftekhim will achieve 100% utilisation rate in 2021. “Ramping up to 100% will depend on the grade mix and technical preventive maintenance activities, but I would say the utilisation level of 90% at the year-end is quite likely.”

“We completed construction and installation works in May 2019, proceeded with pre-commissioning activities during the third quarter and produced test batches in the fourth quarter. We started this year with a utilisation rate around 60%, and have production capacity utilisation of around 80% for 9M 2020,” he added.

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