LUKOIL's petrochemical business is one of the biggest in Russia, CIS
and Eastern Europe. Company plants in Russia, Ukraine and Bulgaria produce
pyrolysis and organic synthesis products, fuel fractions and polymer materials.
LUKOIL meets a major share of Russian domestic demand for various chemicals and
is a major exporter of chemicals to more than 30 countries
In accordance with its development strategy in the petrochemicals
sector, LUKOIL is steadily increasing production of chemicals with high value
added (polymers, monomers and organic synthesis products) and reducing
production of chemicals with low value added (secondary pyrolysis products and
petrochemical plants including Neftokhim Burgas produced 1,466 million tonnes of
petrochemicals in 2011, which is 41.5% more than in 2010. The increase was due
to launch of production at Karpatneftekhim in September
The price environment on the petrochemical market was
unfavourable in 2011. Sales prices in Russia for polyethylene rose by 3.8%, but
prices for polypropylene fell by 9.5%, and prices for benzol fell by 5.8%.
Prices for the same outputs also declined in Europe, by 3.1% for polyethylene,
17.2% for polypropylene and 6.7% for benzol.
LUKOIL implemented various measures in 2011 for modernization of
existing production and installation of new facilities as part of its strategy
for development of the petrochemical sector. Capital expenditures in the sector
were $89 million in 2011, which is 17% more than in