Future of the Russian Gas and Petrochemical Sector Depends on the Economic Development Model the Country Adopts

4 september 2015

The Analytical Center experts discussed innovative technologies for deep processing of hydrocarbons, mechanism for supporting innovations, currently available capabilities to supply innovative technologies with local skilled labor, equipment and raw materials.

The Director of the Analytics Department at CJSC Alliance-Analytics Ms. Tamara Khazova identified the innovative trends in the development of the gas and petrochemical sector. According to her, all innovations can be broken down into five categories. “The first category is technological innovations.  Here we see growing efficiency of production systems achieved through introduction of new technologies, plant and equipment. The second category is innovative products, that is where products with completely new consumer properties are brought to market. The third category is organizational innovations, that is where companies improve and refine their management systems,” the expert explained. She then went on to mention marketing innovations, i.e. the use of new approaches to promote products and services and develop pricing strategies and social innovations that seek to improve the environment, make natural gas available to more households etc.

“The present and the future of the gas and petrochemical sector depends on the economic development model that Russia adopts. We need to adhere to the investment-in-innovations model that implies the implementation of the Plan to Develop the Gas and Petrochemical Industry in Russia through 2030,” Ms. Khazova said. The 2030 plan sets out key strategic goals and priorities as well as tools and mechanisms for achieving them that are based on the implementation of major investment projects to build industrial facilities for processing natural resources into next generation petrochemical products for which there is a lot of demand in the market (polymers, rubber, organically synthesized products). “The document defines the basic ideology for the development of markets and production of gas and petrochemical products all the way from extracting natural resources to manufacturing high added value finished goods. It also outlines a plan for moving away from natural resource-based economic development,” Ms. Khazova said. At the same time, the expert believes that if investments in innovations are to work the current market economy paradigm has to be changed.

The Head of the Innovative Research Sector at OJSC VNIPIneft Elena Chernysheva talked in more detail about the key problems holding back the development of oil processing and the petrochemical industry in Russia. “First of all it is the financial sanctions imposed by the US and the EU and significant dependence of the industry on imports,” the expert believes.  Other problems, she mentioned, include rising costs of equipment brought about by the depreciation of the ruble, the continued imbalance between extraction of natural resources and production of basic semi-finished goods, polymers and products from polymers and creation of new production capacity in countries that have access to large quantities of relatively cheap raw materials (Saudi Arabia, Iran) and relatively cheap labor (China, South Korea). “To expand the share of Russian equipment Russian banks need to finance industrial projects, projects need to be managed by Russian engineering companies and joint ventures need to be set up in cooperation with global industry leaders,” said Ms. Chernysheva.  In addition, when biddings are held, with everything else being equal, preference should be given to domestic suppliers of equipment, the expert noted.

Also during the event, PJSC Gazprom presented some of its new technologies for processing natural gas and gas condensate, an energy efficient process for extracting ethane, helium and nitrogen from helium bearing East Siberian gases, a resource conserving process for processing gas condensate and cleansing gas from acid components.  Projects developed by OJSC VNII NP to develop innovative technologies for deep processing of hydrocarbons were also presented. In the future the company plans to get involved with developing and organizing catalyst production. Experts believe that an experimental R&D center needs to be set up for that in order to significantly reduce dependence on imports.