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Deputy Russian PM Borisov sees “solid pluses” in developing deep oil and gas chemistry industry

Photo: Julia Yakimenko / TASS

Russian Deputy Prime Minister Yury Borisov, responsible for the fuel and energy sector, called for the development of the deep oil and gas chemistry industry as the best way to tackle the world economic crisis linked to the COVID-19 pandemic and volatile oil prices.

“You don’t need to be knocked in the head half a dozen times to understand that it is vital to make a transition to deeper processing and the creation of a market for manufactured goods,” he told a panel discussion at the Tyumen oil and gas forum chaired by Sergey Brilev, President of the Global Energy Association.

“We have to move towards the oil and gas chemistry industry – there is here a different notion of surplus value, different demand for the good produced. This is for space, defence industries, agriculture.”

Borisov told participants that the world economy had entered a crisis phase: demand for oil products had fallen and petrol prices had consequently sunk as a result of a slowdown in transport.

“The OPEC+ deal which cut extraction of oil and, in essence, revenues for our companies, was clearly going to affect behaviour and future development trends,” the deputy prime minister said.

“According to expert opinion, by the 2040s, the share of petroleum products will cease to be the dominant force in the overall mix of fuel consumption. Coal consumption will be sharply reduced, though the trend for gas use may remain stable. All this makes us think hard about the direction of the sector’s development, where our efforts are being directed.

“Rates of development are higher in the oil and gas chemistry industry than rates of world GDP growth and currently stand at 5 to 7 % annually. The sector is producing good results, surplus value is several times greater than in oil extraction. A rouble invested in this sector generates 4 roubles in adjacent sectors. On the whole, there are solid pluses.”

Borisov said the oil and gas chemistry industry currently accounts for about 2 % of Russia’s GDP “and that is clearly very little. In Arab countries, for instance, the gas and oil chemistry industry accounts for 4%. In other words, there is room for manoeuvre. If we expand production of oil and gas chemistry products up to about 10-15 million tonnes, we will then have a steady share of the world market of technological products with a high added value.”

The deputy prime minister said a state stimulus was vital for the oil and gas chemistry sector to generate greater interest among companies to boost investment in the sector.

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