13:53 03.06.2013

Lukoil to restart Karpatnaftokhim works on Aug 2 after 12-month pause

Russia's Lukoil will restart LLC Karpatnaftokhim, a Lukoil-controlled petrochemicals plant in Kalush in the Ivano-Frankivsk region, on August 2.

"The launch is scheduled for August 2," Oleksandr Kalenkov, first deputy head of the State Agency for Corporate Rights and Property, told reporters.

The plan has incurred losses of UAH 10 million a month since it came to a standstill in August last year.

The plant is being restarted thanks to a memorandum that the government signed with Lukoil on April 18.

The owner committed to safeguard jobs and invest $100 million in the plant by 2016. The state, for its part, undertook to support the enterprise by safeguarding the domestic market, adjusting heat tariffs and tariffs to ship feedstock by rail. The government will also think about lowering excises on some types of feedstock, namely liquefied gas and heavy distillates, as well as PVC imports.

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 believed 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 petroleum feedstock from Russia for ethylene production at Karpatnaftokhim.

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