KazMunayGas, Sinopec to build PE plant in Kazakhstan

State-owned KazMunayGas (KMG) and China Petroleum & Chemical Corporation (Sinopec) signed a heads of agreement on the joint implementation of a project to produce polyethylene (PE) in the Atyrau region of Kazakhstan, the Kazakh oil and gas company reported.

The agreement was signed during President Kassym-Jomart Tokayev’s state visit to China.

“The document calls for Sinopec to join the project as a full-fledged partner on par with [Russian petrochemical group] SIBUR. As part of Sinopec joining, in future the parties will sign a contract on the purchase of an equity stake and other binding documents,” the firm added.

The project participants are expected to make a final investment decision in 2024, the company said.

Sinopec joining the project as an equal partner is expected to make it possible to use the company’s technology and expertise in the construction of petrochemical facilities, as well as set the stage for future sales of finished product in China.

Kazakhstan’s sovereign wealth fund Samruk-Kazyna, KMG, Sibur Holding and participants in the operating companies of the PP and PE petrochemical projects signed the main documents on the formation of joint ventures based on Kazakhstan Petrochemical Industries Inc. (KPI Inc., PP project) and Silleno (PE project) in November 2022.

The parties defined the terms of their partnerships in the joint ventures in the National Industrial Petrochemical Technopark special economic zone in Atyrau region, including investment in the project to build a polyethylene plant with capacity to produce 1.25 million tonnes/year, as well as the procedure for selling the finished product of a PP plant with capacity of 500,000 tonnes/year.

Sibur holds a 40% stake in each joint venture. The KPI Inc. PP plant was launched in November 2022 and has been gradually increasing production since then.

Meanwhile in related news, KMG and China’s Sinopec International Energy Investment Limited have signed an agreement on cooperation in geological exploration of mineral resources in Kazakhstan.

The document was signed on May 18 during the official visit by President of Kazakhstan Kassym-Jomart Tokayev to China.

According to the agreement, the parties will jointly implement exploration projects at 17 locations in the sedimentary basins in Kazakhstan. Should any of these locations prove to be prospective fields, the parties will consider a possibility of obtaining a license for hydrocarbons exploration and production, according to the press release.