Active chemical reaction

Oil refineries and chemical plants affected by falling oil prices expect to see the situation ease in the second half of 2016

Oil refineries and chemical plants affected by falling oil prices expect to see the situation ease in the second half of 2016. Meanwhile, Belneftekhim Concern leadership believes that its branch could leave the crisis with heads held high, thanks to timely modernisation.

Oil workers constantly expanding extraction volumes of black gold

The Concern’s Deputy Chairman, Igor Bobyr, explains that prices for oil products rely on oil prices so, if the latter rises, so do the cost of oil products. He notes, “Our two refineries — Naftan and Mozyr — produce fuel, benzene and paraxylene (a product for further chemical processing which is very closely connected to oil). Prices for the latter fluctuate, depending on oil prices.”

Mr. Bobyr admits that the financial state of the petrochemical industry has worsened this year. In 2015, oil traded at an average of $50 per barrel and return on sales stood at an average of 9 percent. By early 2016, prices had collapsed to below $30 per barrel and profitability stood at 4 percent. Sales volumes actually rose, but lower prices reduced profits.

According to Mr. Bobyr, enterprises have managed to avoid difficulties through wise modernisation. From 2011-2015, the Concern invested about $ 8.9bn in enterprise development. The list of those involved is too long to enumerate. It’s enough to assert that ‘Made in Belarus’ produce is sold to 146 countries, and that we worthily rival our competitors.

The Director of Svetlogorsk Khimvolokno JSC, Vasily Kostyukevich, enjoys offering tours of his factory. In early 2016, several new projects were launched, allowing them to increase export volumes. Few can rival innovations from the Svetlogorsk chemical giant, which has introduced production of pneumo-textured threads. According to Mr. Kostyukevich, the project aims ‘to diversify the range of polyether textile threads via production of a new range, with higher linear density and added value’.

Pneumo-textured dyed polyether threads are thin and resemble a spring. They can come in a variety of colours and can be impregnated with additives: anti-bacterial, flame-retardant, whitening, or anti-static. The thread is most commonly used for upholstery and furniture fabrics.

“We plan to sell new products to Russia and, of course, on the domestic market. Among potential customers are such enterprises as Brest Carpets, Vitebsk Carpets, Mogilev’s Mogotex and Lenta, and Kobrin Textile JSC. Our target markets are Lithuania, Europe and Turkey, where pneumo-structured threads enjoy demand among furniture manufacturers and car concerns,” Mr. Kostyukevich adds.

A new dyeing workshop has come into operation at the Plant of Polyester Textile Threads. Duplicated non-woven polypropylene fibre has been launched at the Plant of Artificial Fibres too, with an output of 3,000 tonnes annually of the breathable plastic membrane, and 85 percent oriented for export. It’s ideal for disposable sanitary products (70 percent in its production structure) and for roofing materials.

Investment into the development of enterprises is ongoing. In the first quarter of 2016, Belneftekhim organisations injected $4.3bn into their basic capital. In addition to work at Svetlogorsk Khimvolokno, major investment projects have been implemented at Mozyr Oil Refinery and at Polotsksteklovolokno, where a workshop for production of basalt fiber launched in March. By the end of the year, the Concern plans to realise at least six more major projects.

Not long ago, Belneftekhim adopted a concept of development for its organisations through until 2025, with about $8.2bn of capital investments set aside. Mr. Bobyr says that, if planned major investment projects take place, it should protect against volatility regarding production of oil-related goods. By 2025, the Belarusian oil industry will be mining at least 1.48m tonnes of black gold, with greater depth of processing (90 percent at two oil refineries) and 75-77 percent of light oil products produced. Production of innovative chemical products is being encouraged, involving oil coke, methyltertiary butylether, highly refined paraffin, polyester fibres (like conjugate) and polyester threads. A new range of carbon fiber and paint materials will also appear in Belarus.

“Investment will be aimed at developing manufacture of products which are not yet made in Belarus but which enjoy market demand. In addition, deepening of processing is under focus, to create products with high added value,” notes Mr. Bobyr.

The Concern also plans to significantly increase output of chemical products. Over the next decade, production volumes of urea will grow 2.2-fold, while that of complex NPK-fertilisers is to rise 1.5-fold, that of non-woven polypropylene material by 50 percent, and of polyester technical threads by 80 percent. Let’s hope the world market situation will develop advantageously for our producers, as it would be great to return the money injected into development as soon as possible.

By Alexander Benkovsky
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