Question of the day: Does Russia need petrochemical megaprojects?

Question of the day: Does Russia need petrochemical megaprojects?

26 January , 13:55
The creation of giant factories producing traditional petrochemical products in our country is at least risky from a marketing point of view.

About a year ago, Russian media reported proudly that Russia was launching a new megaproject "cooler than Yamal LNG". They talked about the Vostok Oil project, which is being implemented by Rosneft on the Taimyr Peninsula. It was promised that in 5 years Taimyr will become the real driver of the growth of the domestic economy...

Is this really so in a situation where the entire civilized world has switched to an active policy of decarbonization of the energy sector?

The famous Russian sociologist Sergey Belanovsky, a chemist by first education, pondered on this topic, wondering what grandiose plans for the development of the petrochemical industry will give our country:

“It is dangerous to increase the production of motor fuels - the world is planning to switch to electric vehicles. The production of hydrogen in volumes capable of at least partially replacing natural gas, and even without a carbon footprint, seems to me a utopia. The production of plastics and many other synthetic materials, I think, is unpromising. Due to the plastic pollution of the world's oceans, there is a worldwide search for biodegradable plastics. Environmentalists insist on an urgent solution. Unfortunately, they are actively looking for a solution only at the laboratory level. But in 10 years, when the investment cycle ends, the situation can change dramatically. Even the composition of raw materials may change (switching to vegetable). A very risky direction.

So far, I see only one promising direction: synthetic rubber. Humanity will not give up on car tires in the foreseeable future. Here, of course, there is also a risk of changes in technology, but it will not be so radical, it will be possible (probably) to rebuild the existing production. It should also be borne in mind that this is a highly competitive market. This needs to be studied, but still there is something to talk about. The tire industry has a recycling problem, but this is no longer petrochemicals.

The market for lubricants is limited and competition is extremely high. What else? Asphalt?

I am no longer a chemist for a long time, I may not know something. In any case, both infrastructure and petrochemicals require very serious expertise and containment of lobbying pressure. Unfortunately, our situation is very bad.

For example, there was a report that a large port was being built in the Far East to transport coal for export. Considering that the demand for coal will fall (it is a very dirty type of fuel, even in comparison with natural gas), the port's specialization will have to change at best. I'm not even talking about political projects such as a bridge to the Russky Island and a tunnel / bridge to Sakhalin.

The development of petrochemicals - they write about this openly - is motivated by the presence of large volumes of raw materials (oil and gas). There are two approaches in marketing: to produce what is technologically convenient, or what consumers need. The world has long since switched to the second model. Russia needs diversified investments. But even the Soviet State Planning Committee did poorly with this problem, not to mention today's oligarchic counterparts.

Thus, I believe that the creation of mega-factories producing traditional petrochemical products is at least risky from a marketing point of view. Innovative products are more promising, but megaprojects for their release are too risky. We need medium-scale production.

The bet on GDP growth through megaprojects looks too one-sided. And if infrastructure projects can be justified, if they are not politicized, then a lot of questions arise about petrochemicals. In my opinion, it is better to think about how to fill the "scorched economic space". But it requires completely different approaches and different thinking..."


In the comments to this post, the power engineer, one of the authors of the so-called "Hydrogen Memorandum" Dmitry Chugunov explained:

“The fear that the oil and gas workers instilled in Putin was the motivator for the impulse in the oil and gas chemistry. Fear is based on decarbonization and energy transition. There is simply no one to advise the Putin Politburo on something expedient. Although there are many "strategic institutions". Everyone is terribly afraid to give advice on changing course or adapting to world changes. The oil and gas lobby crushed everyone. And they will press on all export positions of foreign trade with a growing front. The same so-called. The think tank should have given signals for a change in course long ago. But cowards and the FSB dug in there.

From the point of view of economic management, Russia is ALREADY late with the start of adaptation. Putin's classic is to be late everywhere. And this will have an extremely unpleasant effect on the economy, export earnings will fall. There is no internal development either. They will probably wake up when life is pressing. Russia is far from being the leader in the petrochemical markets and will not become a leader. I see several strategic lines on the hydrogen theme and energy transition, as I have been working on the topic for almost 20 years.

I can explain all and any questions of the "Hydrogen Economy" to any degree of detail, but this is not required.

I'll start with the basics. The impetus for the whole avalanche of change was the results of scientific research on anthropogenic climate warming. The Paris Agreement was born. It became clear. In the current way, when everyone was mining and burning hydrocarbons, civilization will not survive even 100 years. They offered to decarbonize.

Russia is exactly orthogonal, he lived with fossil hydrocarbons. The Russian representatives of the Kremlin, young and old, began to shout - everyone in the world is fools and there is a cold snap. The world has made a decision, both at the UN in general and by country. National decarbonization strategies were born everywhere.

Russia promises to release an official hydrogen strategy in mid-2021. I am afraid that it will be clearly "hunchbacked" adapted to the current oligarchic monopoly.

So, in the very near future the EU will introduce green taxes on ALL goods and will levy them taking into account the carbon footprint of CO2. According to the methods agreed in the UN. And everyone followed this road, both the United States and China. It turns out that greener steel, aluminum, cement, energy will be bought more preferable. All goods must be greened, even gas, oil and their derivatives. What should Russia do when it has already been confronted with a fact for three years - the EU (and the world too) is starting to switch to hydrogen instead of fossil fuels. Prostration in the Kremlin has been going on for three years, counter-measures have failed.

The question arises - what to do with oil and gas, since sales have been falling for a year now and will continue to fall with acceleration. Saudi Arabia will win the oil war. Russia can try to export hydrogen, either pure or in compounds. However, sanctions are growing and in the EU Russian gas and hydrogen do not look competitive at all.

There is no solution in the Kremlin.

As for the use of hydrogen as an energy carrier in the country, it is promising, but it breaks the gashfits of all hydrocarbon bosses. Including Sechin and his Vostok-Oil.

There are several schemes for producing hydrogen. All this is bumped into two questions in the Kremlin:

1) And what for when there is gas;

2) Everyone speaks expensively.

But it is possible, and rather quickly, within a year, to develop an optimal strategy for Russia's adaptation to world decarbonization..."

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