RUSSIA - LUKoil Petrochemicals.

Since 1997, LUKoil has been actively developing its petrochemicals sector in line with a strategic development programme it adopted in that year. The company's petrochemicals plants have a combined capacity of more than 3 million tons/year. The following are LUKoil's basic petrochemicals-producing subsidiaries:

- OOO Stavrolen, based in the Russian city of Budenovsk.
- OOO Saratovorgsintez, based in the Russian city of Saratov.
- ZAO LUKOR, in Ukraine, based in the city of Kalush.
- AO LUKoil NeftoKhim Burgas AD, in Bulgaria based in the city of Burgas.
- AO Petrotel-Lukoil, in Romania.

LUKoil says it has the biggest petrochemical asset base in Russia and East Europe. The company meets a major part of domestic demand for various chemicals. It is a leading exporter of chemical products to more than 50 countries in Europe, Asia, Africa and America.

LUKoil petrochemicals plants in 2007 produced 2.95 million tons, up from 2.26m tons in 2003 and 1.65m tons in 2002. Its output in 2007 included almost 2m tons of pyrolysis. The company recently said LUKoil was working on substitution of distillate fractions with cheaper gas as raw material for pyrolysis. It said the share of natural gas as petrochemical feedstock in its system in 2007 23%, up from less than 20% in 2005, 18.1% in 2003 and 14.2% in 2002.

LUKoil supplies over 80% of total inputs to its petrochemical facilities from its own subsidiaries. It produces almost 2m tons/year of petrochemicals at its Russian and Ukrainian plants. The Bulgarian unit, LUKoil-NeftoKhim Burgas, produces more than 400,000 tons/year of petrochemicals, including organic synthesis and polymers.

LUKoil said in its 2006 report for 2005: "At present, the Company is a leader in the petrochemical sector of Russia, the CIS and East Europe being:

Major producer of olefins (total production capacities exceed 1 million t/y) in East Europe;

"Major producer of polyethylene (total production capacity 480,000 t/y) in East Europe;

"Major producer in East Europe and in Russia the only producer of acrylonitrile (a feedstock for production of synthetic fibers - production capacities rank 4th in Europe);

"Owner of a vinyl chloride-monomer (VCM) plant - the largest in Europe -(production capacity is 370,000 t/y);

"The only producer of nitron polyacrylic fibers in Russia;

"Major producer of methyl methacrylate in Russia.

"The Company manufactures...pyrolysis, organic synthesis, fuel fractions and polymer materials at its refineries in Russia and the Ukraine".

LUKoil-Neftekhim, a Russia-based unit, in late 1999 entered into a co-operation deal with Fina Research to help LUKoil penetrate the European market for its surplus production of polyethylene. LUKoil has expanded polyethylene capacity with a new plant which came on stream in late 2007. It is planning to have a petrochemicals plant build in one of the Baltic countries.