East European potential to be realised over decade

The petrochemical industry in central and eastern Europe will ‘fulfil its potential’ within the next decade, allowing players to compete with their west European rivals.

Addressing delegates at the third ICIS-LOR World Olefins Conference in Amsterdam, Dmitrii Styrkas of consultancy Nexant ChemSystems said the region offered immense opportunity over the next few years, particularly as its economies continue to perform strongly in a weak global market. GDP growth, he added, is outstripping that of western Europe.

‘Central and eastern Europe are relatively small markets compared to western Europe,’ he said, ‘but fuelled by fast economic growth, there is potential for the domestic market to expand. ‘Equally, as the regions are next to the large western markets, it is also worth looking at export opportunities.’

While capacities are currently lagging behind the larger Western producers, there are ‘ambitious expansion plans’ that would lead to increased competitiveness.

Polish producer PKN Orlen and TVK of Hungary are among those leading this growth, with several projects planned or under construction. Both firms are expanding ethylene capacities to over 600 000 tonne/year, providing them with production capabilities similar to some larger west European counterparts.

Russia is also showing signs of recovery after an indifferent period for its petrochemicals industry, said Styrkas. The market for olefins and derivatives is displaying improved market growth and stronger pricing. ‘The picture has changed significantly from 1999 when the industry was struggling and had low operating rates.’

As the world’s second largest oil producer, Russia also boasts the largest gas reserves and offers enormous potential. However, he warned that the development of its petrochemical industry may be hindered by its limited infrastructure. The average age of a Russian cracker is between 25 and 30 years.

Nevertheless, after years of limited investments, there are suggestions that existing sites will be upgraded and that there will be opportunities to construct large greenfield olefin complexes.

Last year, Russia produced around 2m tonne of ethylene with naphtha used as its key feedstock. Styrkas added that new crackers could be developed that could use alternative feedstocks.