Ukraine, Lukoil approve memorandum to restart Karpatnaftokhim works
The Ukrainian government and Russia's Lukoil have approved a memorandum to restart LLC Karpatnaftokhim, a Lukoil-controlled petrochemicals plant in Kalush in the Ivano-Frankivsk region, Ukrainian Deputy Prime Minister Yuriy Boiko said on Ukrainian television late Thursday.
Boiko said the government approved the memorandum on April 10.
"The government [on Wednesday] approved a memorandum on cooperation with Lukoil to launch Karpatnaftokhim - this is a large enterprise with approximately 4,000 employees and which makes a considerable contribution to gross national product," Boiko said.
The memorandum obliges the owners to start the enterprise up within three months and to achieve the commercial output level that it had before it was stopped, Boiko said.
"The state, for its part, has undertaken to support [the enterprise] by safeguarding the domestic market - customs safeguards for feedstock and finished products which are imported from other countries and some preferences regarding tariff policy, which will also make a normal production cycle possible," he said.
Boiko said three of five major idling industrial enterprises slated for re-commissioning this year as part of an anti-crisis program had already started work. They are the Zaporizhia and Stakhanov ferroalloy plants and Odessa Oil Refinery.
"We still have one to go, the Lysychansk Oil Refinery, with the owner of which [Rosneft] we are also holding talks about a restart," Boiko said.
Karpatnaftokhim was established on October 29, 2004 on the basis of OJSC Oriana's capacities. Its founders were CJSC Lukor (Kalush), with 24%, and Lukoil Chemical B. V. (Netherlands), with 76%.
Karpatnaftokhim began production of PVC with capacity for 300,000 tonnes a year in 2011. However, it halted operations in September 2012 due to the VAT refund issue and the inadequate protection for Ukrainian producers from imports. Lukoil believes that in order to improve the situation, Ukraine needs to conduct an anti-dumping investigation in relation to PVC imports from the U.S., introduce a 6.5% duty on PVC imports, and cancel duties on gas and oil feedstock from Russia for ethylene production at Karpatnaftokhim.