KazMunayGas (KMG, Astana, Kazakhstan; www.kmg.kz) has announced the inclusion of Sinopec (Beijing; www.sinopecgroup.com) in its domestic polyethylene project planned in Atyrau, with the company now the second major financier in addition to the Russian petrochemical group Sibur (Moscow; www.sibur.com).

The Kazak firm said corresponding agreements were signed in mid-May, with front end engineering and design (FEED) starting this month and a final investment decision expected in 2024.

As KMG described Sinopec as an “equal partner” to Sibur, the Chinese company is also likely to acquire 40% of the shares in the joint ventures involved, which Sibur also holds according to the latest information.

Two PE lines are planned, each with a capacity of 625,000 t/y, KMG said, noting that it has entered into licensing agreements with Chevron Phillips Chemical for its MarTECH ADL technology and Univation Technologies for the Unipol PE process.

Related: Sibur plans to build domestic PP line at the facilities of ZapSibNeftekhim in Western Siberia

Statements by KMG supervisory board chairman Magzum Myrzagaliyev suggest that significant parts of PE made there could flow to China.

Citing a source at Sibur, local media reported that by the time the production capacities in Kazakhstan become operational, the market in Russia and CIS regions would have a PE surplus. Although the company expects the demand in the region to grow, a substantial part of the production from the Kazakh complexes is due to be exported.

The necessary ethane is to be extracted from the Tengiz gas field and then converted into ethylene by a cracker before polymerisation. According to Plasteurope.com’s Polyglobe database (www.polyglobe.net), the capacity of the cracker under construction is 840,000 t/y, plus downstream aromatics production, with output details not yet specified. Notably, Reuters quoted a Sinopec inhouse newspaper as saying the site will feature ethane to ethylene processing of 1.275 mn t/y.

KMG said a 500,000 t/y polypropylene line began production at the site in November.

Sibur and KMG are also due to invest USD 7.6 bn into a polyethylene production complex known as Silleno in Kazakhstan, the Kazakh government recently disclosed in a statement.

The deal leaves a lot of open questions, especially about Sinopec working with Sibur. According to a Reuters report in March 2022, the Chinese company suspended talks about extensive petrochemical investments in Russia, including for the gas facility in the Amur region in the eastern part of the country.

But Ekaterina Mojarova, head of the corporate rating department at Russian thinktank AKRA, said in the wake of sanctions, Sibur faces restrictions on exporting its products to Europe. However, having a stake in the Kazakh capacities should help the company gain a foothold in other Asia-Pacific countries.