Kazakhstan Seeks A Foreign Partner for a Five-Billion-Dollar Petrochemical Project

By the end of 2007, KazMunaiGas and SAT & Company hope to find a partner to build a new petrochemical complex in Kazakhstan. The speaker of the Kazakh national oil company announced that KazMunaiGas is currently conducting talks with a number of foreign companies, including Netherlands-based Basell, US-based Dow Chemical, and also several Chinese and Japanese companies. The plant would annually produce 1.2 million tons of ethylene, polyethylene and polypropylene and would process gas from the Tengiz oil field, led by U.S. Chevron, in its first stage. It would later also process gas from the Kashagan field, led by Italy’s Eni.

Currently, KazMunaiGas is conducting negotiations with Tengizchevroil, the operator of the Tengiz field, about the price of the crude that will be used in the new complex. These negotiations should be concluded within a month when KazMunaiGas – along with SAT & Company – will announce its foreign partner. The new foreign partner will receive an equity stake in the $5 billion project although it is not yet clear which of the current partners will cede its stake.

The construction of the project is set to begin in 2008 and finish in 2012, and it appears likely that its capacity will be expanded to accommodate crude from Kashagan. The construction of this complex is part of Kazakhstan’s drive to take ownership of and develop its domestic petrochemical industry.

For more information on Kazakhstan’s effort to develop its petrochemical facilities, read here.

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