The high prices that Europe is willing to pay for Russian gas has impeded the development of gas-based ethylene crackers in Russia, the President of Siberian Ural Petrochemical Company (Sibur) -- Russia's state-run petrochemicals company -- Dmitry Konov, told Platts Thursday.
"In Russia, ethane along with methane is being sent through pipes to Europe," Konov said. "It does not make any economic sense to extract ethane as Europe pays Russia $300/1,000 cubic meters for natural gas, and this is the best price in the world."
Russia has the largest natural gas transportation system in the world, and the country distributes gas into Europe through 155,000 km, or 96,100 mils, of gas pipelines and through 24 gas storage facilities.
According to the latest available data, even though Russia holds the largest gas reserves in the world, it has a total ethylene capacity of three million mt/year, which is small when compared to 33 million mt/year ethylene capacity in North America, 34 million mt/year in Northeast Asia, 25 million mt/year in the Middle East and 24 million mt/year in Europe.
"Ethane's extraction, due to low content [less than 5%], results in high capital expenditure. Therefore, new projects, in the near future, are mainly based on C3 [hydrocarbons with molecules comprising three carbon atoms]," Konov earlier explained in a presentation made at the Fifth Annual Gulf Petrochemicals and Chemicals Association forum in Dubai.
Other feedstocks such as naphtha and LPG are not being used sufficiently in Russia to produce ethylene because of alternatives that are being used, Konov added. "Practically, Russia has no pipelines for NGLs or olefins. And historically our feedstock prices are not competitive with the Middle East."
"In Russia, ethane along with methane is being sent through pipes to Europe," Konov said. "It does not make any economic sense to extract ethane as Europe pays Russia $300/1,000 cubic meters for natural gas, and this is the best price in the world."
Russia has the largest natural gas transportation system in the world, and the country distributes gas into Europe through 155,000 km, or 96,100 mils, of gas pipelines and through 24 gas storage facilities.
According to the latest available data, even though Russia holds the largest gas reserves in the world, it has a total ethylene capacity of three million mt/year, which is small when compared to 33 million mt/year ethylene capacity in North America, 34 million mt/year in Northeast Asia, 25 million mt/year in the Middle East and 24 million mt/year in Europe.
"Ethane's extraction, due to low content [less than 5%], results in high capital expenditure. Therefore, new projects, in the near future, are mainly based on C3 [hydrocarbons with molecules comprising three carbon atoms]," Konov earlier explained in a presentation made at the Fifth Annual Gulf Petrochemicals and Chemicals Association forum in Dubai.
Other feedstocks such as naphtha and LPG are not being used sufficiently in Russia to produce ethylene because of alternatives that are being used, Konov added. "Practically, Russia has no pipelines for NGLs or olefins. And historically our feedstock prices are not competitive with the Middle East."
