Rosneft has intentions to construct a plant specializing in petrochemical production close to the Pacific Ocean coast. The plant will allow Rosneft, the largest producer of oil in Russia, to boost its exports to Asia, according to the Governor of Primorye region Sergei Darkin.

The plant’s first-phase production units capable of processing 20 million tons of crude oil annually should be completed by 2012. The second stage of the facilities will come online by the year 2017.

Rosneft intends to build a refinery at the end of the Eastern Siberia – Pacific Ocean pipeline that is to be constructed in the future.

Peter O’Brien, Rosneft’s vice president for finance stated that market analysis and engineering and design work is now underway. Once the review of these plans is complete, the optimal configuration for the plant will be chosen.

Rosneft and Transneft, Russia’s pipeline operator will commence deliveries of crude oil to China by the year 2011 through the extension of the Eastern Siberia – Pacific Ocean pipeline. China Development Bank extended to both companies loans totaling USD 15 billion in 2009.

The delay of three years between the time Rosneft would be obligated to supply oil to China and the receipt of funds gives Rosneft the resources for initiating the refinery project, industry analysts suggest. 

According to Mr. O’Brien, the location of the refinery close to the end of the second phase of Eastern Siberia – Pacific Ocean pipeline offers tremendous prospects, but at the same time presents execution challenges. Rosneft is prepared to work with governmental authorities to make sure its project is successful economically, operationally, and environmentally. 

Rosneft is also getting ready to start production at the Vankor oilfield in Eastern Siberia. The company’s chief executive Sergei Bogdanchikov noted earlier that production can begin in the third quarter of the current year. The volume of oil produced is expected to be 3 million tons in 2009 and 11 million tons in 2010. At its peak, production at the oilfield could reach 25 million metric tons. Since Rosneft would not have to pay export tariffs on the oil it ships out in the first few years, the company would stand to gain close to USD 4 billion a year from the exploration of the Vankor field. The company would be able to invest these funds in the construction of the refinery.