The reopening of the Karpatneftekhim complex in Kalush in June following its sale by Lukoil inFebruary to a consortium of investors has helped revive Ukrainian petrochemicals production. Yet, fallingpolymer imports in H117 suggest demand is sluggish and the local market will not be sufficient to absorbthe extra supply if the complex achieves full operational capacity. The market cannot achieve its past levelof consumption without a resolution of the political crisis that has seen the Kiev government lose Crimeaand two breakaway eastern republics.
Karpatneftekhim's reopening following a five-year standstill brings online plants with nameplate capacitiesof 250,000 tonnes per annum (tpa) ethylene; 300,000tpa of polyvinyl chloride (PVC); 110,000tpa ofpolyethylene (PE); 20,000tpa of caustic soda; and 180,000tpa of chlorine. This was made possible with stateassistance, including the alteration of the Ukraine tax code which ensured zero rate excise tax on importedliquefied gases and butane, and a ban on the import of products including PVC from two major Russianchemicals groups, RusVinyl and JSC Kaustik. Lukoil had previously closed the plant due to tax hikes,sales restrictions and Western sanctions. This has had significant impact on the functioning of the Ukrainianpetrochemicals industry, which has been brought to a standstill by the political and economic crisis. Lukoil'sexit from the petrochemicals sector with the sale of Karpatneftekhim could remove a political obstacle tofuture development.