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«Kazanorgsintez» and «Gazprom» came to agreement

  OJSC «Kazanorgsintez» (KOS) and OJSC «Gazprom» managed to settle a longstanding dispute on the volumes and prices of the supply of raw materials. This was announced on November 17 by the Head of the Russian Government Mr. Vladimir Putin at the meeting on the development of petrochemistry and gas chemistry in the Russian Federation.
The price on raw materials will be pegged to the price on polyethylene (it is produced by KOS). Provided polyethylene costs RUB 30 thousand per ton (average per quarter), one ton of ethane will cost RUB 6750 (excl. VAT and delivery). The period of the contract is five years as indicated in the document with supply conditions and parties’ signatures, - “Vedomosti” learned from two participants of the meeting. The volumes of supply are different though: “Gazprom” accounts for 270 thousand tons per year, and KOS - 390 thousand tons, as the participants say.
The agreements have been reached, a representative of “Sibur” (the agent of “Gazprom”) confirmed, however, not revealing the essence of the documents until they are signed. A representative of “TAIF” (principal owner of KOS) refused to give comments.
KOS used to receive up to 315 thousand tons of ethane per year from “Gazprom dobycha Orenburg”. The plant used to purchase half the volume and the rest was processed on a tolling basis. TAIF reported that processing yielded losses to the plant to the amount of (RUB 2,96 bln. according to IFRS in 2008). Now KOS must quit the tolling scheme — under this condition the enterprise will receive a RUB 35 bln. loan from Sberbank (which is needed in order to refinance the debt of RUB 29 bln.).
The main business lines of OJSC “Gazprom” are as follows: geologic exploration, production, transportation, storage, processing and distribution of hydrocarbon as well as production and sales of electricity and thermal energy.
OJSC «Kazanorgsintez» produces over 38 % of all Russian polyethylene, gas transmission polyethylene pipelines, phenol, acetone, coolants, and chemical agents for oil production and natural gas dehydration. “TAIF” Group owns 51,74 % of its shares, and 28,57 % more belong to the Government of Tatarstan via PSC “Svyazinvesthim”.


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