Fuel for Thought

  • Russian petrochemical producers are well-positioned for market recovery post-COVID-19

Russian petrochemical producers are well-positioned for market recovery post-COVID-19

Oct 24 2020 Read 362 Times

The COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData, a leading data and analytics company.

Dayanand Kharade, Oil and Gas Analyst at GlobalData, comments: “Oil and gas majors in the country are reducing spend in response to a substantial drop in crude prices and disruptions caused by the COVID-19 outbreak. Sibur Holding, one of the largest petrochemical producers in Russia, has lowered its capital expenditure (capex) outlook for 2020, which is approximately 30% lower in comparison to its initial budget. However, companies continue to evaluate their capital structure and focus on key projects ensuring sustainable growth.”

The majority of the upcoming projects in Russia are in the early stages of development, for example, pre-construction phase. Changes in supply/demand patterns, due to reduced economic activity across the globe, is likely to affect the pace of progress of these projects. Major announced projects such as Baltic Chemical project and EuroChem- Northwest Kingisepp project in Leningrad Oblast, and Gazprom and Novatek projects in Yamalo-Nenets Autonomous Okrug could face delays in startup. However, companies should continue to assess the impact based on prospective developments.

Kharade concludes: “With economic growth correlated to petrochemicals growth, the short-term outlook is expected to result in lowered petrochemical demand in the country. However, with an improving market environment, Russian producers are well-positioned to derive full benefit with the country’s access to low-cost feedstock.”

Reader comments

Do you like or dislike what you have read? Why not post a comment to tell others / the manufacturer and our Editor what you think. To leave comments please complete the form below. Providing the content is approved, your comment will be on screen in less than 24 hours. Leaving comments on product information and articles can assist with future editorial and article content. Post questions, thoughts or simply whether you like the content.

Post a Comment





Digital Edition

Petro Industry News November 2020

November 2020

In This Edition Fuel For Thought - Special offer for computer program for chemical thermodynamic and energy release evaluation - Acquisition to combine French expertise for moisture analysis...

View all digital editions

Events

Interlab Africa

Dec 05 2020 Algiers, Algeria

ASTM - D02 Meeting - CANCELLED

Dec 06 2020 Austin, TX, USA

Biogas Convention 2020

Dec 08 2020 Virtual event

CISILE 2020 - NEW DATES

Dec 08 2020 Beijing, China

View all events