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Gazprom and U.S. company Dow Chemicals may set up a joint venture to complete the Novy Urengoi gas-chemical factory
Gazprom and U.S. company Dow Chemicals may set up a joint venture to complete the Novy Urengoi gas-chemical factory, a project that could cost up to $500 million, Vedomosti, an economic daily, reported. A U.S. delegation visited Novy Urengoi in the Yamal-Nenets autonomous area, just below the Polar Circle. Dow Chemicals vice-president Christopher Gann said his company was interested in the project. "Gazprom plans to complete this enterprise in line with its cost estimate," a spokesperson said. It will take an estimated $740 million to implement this project. Gazprom hopes to attract $250 million worth of strategic investment in exchange for a stake in the Novy Urengoi factory. The rest will be borrowed, thereby making it possible to retain control over the enterprise. "Our company is now looking for a partner to complete this factory. There could possibly be several partners," a Gazprom official said. Polyethylene is a highly promising product. "However, the Russian market lacks the required production facilities," Alexander Kotikov, a Troika Dialog analyst, said. Russia produced 1,066,000 tons of polyethylene last year. The country exported 260,000 tons, with domestic demand standing at 978,000 tons. Consequently, Russia had to import 172,000 tons of polyethylene. "Polyethylene demand grows by 7.3 percent each year. One can say that a new market player will assert itself," he said. "This would become an extremely interesting and promising project, if Dow Chemicals teams up with Gazprom," Kotikov added. The Novy Urengoi gas-chemical factory belongs completely to Gazprom. It was decided to build this enterprise in May 1993. However, all construction work stopped in 1996 for lack of money. This factory could produce about 300,000 tons of granulated and film polyethylene, as well as over 300,000 tons of ethylene per year.
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