Shurtan, Uzbekistan


The new petrochemical plant is located in the Shurtan region of Uzbekistan. It is about 400km south of Tashkent, the capital of the country and its main centre of population.

Uzbekneftegaz is the national oil and gas company of Uzbekistan and it will supply the petrochemical plant with its own natural gas. The produce is aimed mainly at the domestic market and is likely to consist primarily of agricultural and related materials.

PETROCHEMICAL COMPLEX

The new petrochemical plant deal was finalised in 1998, with construction beginning shortly afterwards. The Shurtan Gas-Chemical complex was completed in December 2000 and went into operation in March 2001 at a cost of $1 billion. This covered the majority of Uzbekneftegaz's 2000 budget.

The project consisted of gas treatment and separation units, a 140,000t/yr ethylene project, a butene-1 copolymer production plant, a 125,000t/yr low-density polyethylene (LLDPE) plant and the necessary off-site works and utilities ancillary to such a plant. Processes include the SRT VI ethylene cracker heater from Lummus and the Sclairtech linear polyethylene technology from Nova Chemicals.

The ethylene production can be used as feedstock for the polyethylene plant, producing the advantages of both low-cost and security of supply. The raw material for the process comes from locally supplied and ethane-rich natural gas, which has similar advantages.

INTERNATIONAL CONTRACTORS AND FINANCE

The order was given to a consortium which consisted of the Japanese Mitsui, the Japanese Toyo Engineering Corporation, the Japanese Nissho Iwai Corporation and the well-known Asea Brown Bovari Group (ABB Lummus Global GmbH, ABB Soimi SpA). The two ABB subsidiaries are based in Germany and Italy respectively.

A ¥38.4 billion loan was secured from the Export-Import Bank of Japan (Jexim), the Industrial Bank of Japan (which was the lead bank), the Bank of Tokyo-Mitsubishi and Sumitomo Bank. There were also loans from the US Export-Import Bank (of $220 million) and German Hermes Krediversicherungs AG (Hermes) (of Deutsch Mark 90 million). The financing deal includes export credits provided by the Japanese, US, and German governments. In addition, Japan's Ministry of International Trade and Industry (MITI) and German financial institutions agreed to provide trade insurance. Insurance is usually seen as extremely important in emerging markets such as Uzbekistan.

FUTURE DEVELOPMENT OF UZBEKISTAN

Uzbekistan is landlocked and heavily dependent on Russian pipelines for export routes. This makes foreign markets especially insecure, particularly given the political instability of some of Uzbekistan's neighbours. Similar fears may apply to imports. The country is particularly keen to develop its petrochemical production, as it tends to suffer from over-exposure on the commodity markets. This is a consequence of being dependent on crops, such as cotton, for exports. The country suffers from a trade deficit which makes it more eager to develop potentially exporting industries. As well as the petrochemicals themselves, it is hoped that Uzbekistan will develop its own chemical engineering industry, although this remains at a rudimentary stage.