Analyst: "There is no hope that Russia will sell plastics instead of oil and gas"

Analyst: "There is no hope that Russia will sell plastics instead of oil and gas"
Analyst: "There is no hope that Russia will sell plastics instead of oil and gas"
29 July 2020, 10:05
It makes no sense to develop the petrochemical industry in the regions of production and sell products "close to the places of production" under the current economic system in the country.

Analyst Mikhail Krutikhin has published a reasoned post on the unique features of the Russian economy:

“Myths in the subcortex live long.

And the myths formed by the long practice of the Soviet "national economy" (in the rest of the world called the economy) are especially stable.

I remember one deputy minister (now deceased and even legendary; the field was even named after him), with whom I had heated discussions. He categorically did not perceive such a concept as commercial profitability, and insisted that all discovered oil and gas reserves be considered recoverable. He brushed aside my questions about the cost of the reserves extracted from the bowels: “Even if they are not technically recoverable now, someday they will come up with technologies that will allow their extraction. And we don't count the costs. The bourgeoisie invented it all".

Now we have moved away from this approach. But another myth persists. Every now and then I hear or read calls to replace the export of crude oil and gas with the export of petrochemical products as "value-added" goods.

Those who advocate this cannot answer simple questions:

  1. How is the cost of Russian, say, polyethylene compared to the same product from Saudi Arabia or China? Ours is much more expensive in production.
  2. What about the market niches? There are no free ones, but there is a fight for the future.
  3. To develop oil and gas chemistry in the regions of production and sell products "close to production sites"? Have you looked at the prospects for demand for polyethylene, for example, in Siberia and the Far East? Tears ... And how much will it cost to carry it from the same future Amur plant by rail, and then by sea to the Asian markets, where the Chinese and Arabs dominate?

So feel free to send such initiatives and arguments unsupported by answers to three questions into the ass where this industry of ours, by and large, is located.

The hope that Russia will sell plastics and other petrochemical derivatives instead of oil and gas is weak, to put it mildly..."

Blog readers gave a few more examples of this mythology:

- Now the Ministry of Energy Gazprom and Rosatom are shouting about the export of hydrogen. But they do not understand that hydrogen markets are formed from the best world technologies, which we do not have at all. And they lie about the timeline for bringing the goods to the markets by 2024. But in fact, H2 will not work at a price, first you need to provide both the appropriate technologies and people and also fit into the green laws of the new time... ...One leader said - cadres decide everything. So, the level of education of these very cadres, wherever you go, you want to cry.

- I also wrote about this once. A couple of buckets of some ordinary plastic dowels for screws cost like a thousand cubic meters of gas. And a couple of buckets of those same screws are like a ton of steel. If we sold not raw materials, but the final product from these raw materials, we could earn ten times more. But our entire politics and economy is built around the trade in raw materials, and everything else only interferes with this.

In fact, our products are non-competitive. But this does not mean that it cannot be competitive in principle.

It is obvious that if we, relatively speaking, opened an offshore near Nizhniy Tagil, within which all economic conditions would be like in China, and the Chinese would buy steel from NTMK at world prices and make screws from it at the same cost as in China, they would be competitive in the global market. The cost of transportation to world markets would not spoil anything here. Per unit of the cost of finished products, it is many times less than for raw materials.

- As a person who has worked directly in the Russian petrochemistry for more than 7 years (rubber, polypropylene, polystyrene), I can say that even in this area everything is very "Russian-style"...

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