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Ust-Luga CPECG to triple Russia's share in the global oil and gas chemicals market

Published by , Editorial Assistant
Hydrocarbon Engineering,

The complex for processing ethane-containing gas (CPECG), under construction in the Leningrad Region, will drive an increase in Russia's share in the world oil and gas chemicals market from 2.5% to 6 – 7%.

The CPECG construction project, set to become Russia's largest gas processing facility and the largest LNG facility in Europe, is being carried out by RusGasDobycha and Gazprom with the support of the state corporation VEB.RF. The complex is also poised to become the world leader in polymer production.

Construction of the first stage of the complex will be completed in 4Q23, with the second stage to be phased in exactly one year later.

"Once the facility in Ust-Luga is fully operational, Russia will take a leading position in the global LNG and petrochemical markets. The country can increase its share in the global LNG market to 15 – 20%, and to 6 – 7% in the petrochemical market," said Deputy Prime Minister Alexander Novak, adding that currently Russia's share in the petrochemical market is about 2.5%.

According to Alexey Kalachyov, an Analyst at the investment and brokerage firm FINAM, the construction of the complex in Ust-Luga will ramp up Russia's presence in two fast-growing segments, LNG and polyethylene production. "The facility's LNG capacity of about 13 million tpy will significantly boost Russia's share in the global LNG market and, first of all, in European countries, which appear to be the primary focus of the project while the construction of a gas chemical facility with a capacity of up to 3 million tpy of polyethylene will immediately make the project the world leader in terms of volume," said the expert.

Kalachyov added that the CPECG will primarily serve Western markets. "The output of the new complex will have a number of advantages versus its European competitors, in particular, it will benefit from its own inputs and cost-effective ethane-based gas processing," Kalachyov said.

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