Naftogaz strengthens its position in the liquefied gas market. What is known about the future plant

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Photo: Facebook.com/NaftogazGroup

Photo: Facebook.com/NaftogazGroup

NJSC Naftogaz of Ukraine has announced a tender for the supply of equipment that will be used in constructing a plant for the liquefied gas (LPG) production in the Kharkiv region.

According to the tender documentation, the winner of the auction must ensure the unit production, delivery to the plant location in the Kharkiv region, provide services for the construction supervision and the equipment installation, the commissioning supervision, the plant start-up and personnel training.

The expected cost of the purchase, taking into account the life cycle cost, is $145.7 million. Bids are accepted until March 1, 2021 (inclusive).

An advanced hydrocarbon recovery unit is needed for deep preparation and processing of natural gas in order to obtain up to 99.9% of valuable components from it for the production of liquefied petroleum gas (LPG), gas condensate and stripped natural gas.

"The construction of the Krestishchensky LPG plant will allow us to increase the share of Ukrainian oil products on the domestic market by 115,000 tons per year. The duration of this process is about 2.5 years, and the first batch of finished products from the new plant can be expected already at the beginning of 2024".

Sergiy Fedorenko

Sergiy Fedorenko

Chief Commercial Officer, Ukrgasvydobuvannya

As Sergiy Fedorenko explained to The Page, the new plant will be designed for the existing raw material base, for the flow of natural gas from which liquid hydrocarbons will be extracted. The payback period of the project is from 2 to 4 years.

In 2020, the overall balance of the liquefied gas market amounted to about 2 million tons, an increase of approximately 3%. Ukrainian enterprises (Ukrgasvydobuvannya, Ukrnafta, Ukrtatnafta and private gas producers) produced about 450,000 tons of gas, or 25% of the market. The remaining 75% are imports, of which 44% are imports from the Russian Federation, about 30% are imports from Belarus.

The demand for this product in Ukraine in the past 10 years has traditionally been high. In recent years, the market for liquefied petroleum gas in retail sales has approached, and in some regions has surpassed the motor gasoline market, says Gennady Ryabtsev, Director of special projects of the Psyche Scientific-Technical Center "Psyche".

"The increase in domestic production will reduce our dependence on gas supplies from the Russian Federation and the Republic of Belarus, and will ensure the stability of supplies and price stability for motorists."

Gennady Ryabtsev

Gennady Ryabtsev

Director of special projects of the Psyche Scientific-Technical Center "Psyche"

According to Artem Kuyun, an analyst of the Consulting Group A-95, the construction of the plant is a rather serious event for Ukraine.

Artem Kuyun
Artem Kuyun
analyst of the Consulting Group A-95

"The new plant will create new jobs. The very principle of Ukrgasvydobuvannya's business is to sell raw materials (natural gas). Another thing is to produce products with increased added value, in our case it is propane-butane. The propane-butane market will not grow as fast as it used to. But in any case, it will remain very large.

But let's not forget that announcing a tender and building a plant are two different things. When the tender is won, a contractor is found and work has begun, then it will be possible to say that the business has moved off dead center."



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