Joint Venture To Construct $2 Billion Petrochemical Plant in Siberia
STAMFORD, Conn. (AP) _ Combustion Engineering Inc. said Wednesday it has entered a joint venture with the Soviet Union and a Finnish company to build a $2 billion petrochemical complex in western Siberia.
The complex in the town of Tobolsk will produce petrochemicals such as propylene and polypropylene, using western Siberia’s rich supply of natural resources, the industrial services company said.
The petrochemicals are to be used in consumer goods, as well as products for the automotive and medical markets.
The first three plants in the complex in Tobolsk, located 1,100 miles east of Moscow, are expected to be finished in 1993, Combustion Engineering spokeswoman Karen Amour said.
A second phase would add more plants that would produce different chemicals, while the third phase calls for another complex in the Soviet town of Surgut, 270 miles northeast of Tobolsk.
The joint venture is between Tobolsk Petrochemical, formed by the Soviet department of chemicals and oil refineries, and a consortium of Western companies led by Combustion Engineering and Neste Corp. of Finland, a petrochemical company.
Combustion Engineering is to manage the project and handle foreign currency financing. Neste is to market the products worldwide.
Armour said Combustion Engineering and Neste have agreed to put up a total of 15 percent of the seed capital, with the Soviets contributing the rest.
She said most of the project’s $2 billion cost will be raised through debt financing. Several banks are providing the credit, including the First Bank of Chicago, Credit Lyonnais of France and a Finnish bank.
Plans for the second complex would be developed during the second construction phase in Tobolsk, Amour said.
Combustion Engineering also produces software programs as well as instrumentation and control products used in the hydrocarbon business under a 1987 joint Soviet venture. Armour said the venture has been operating since early this year.
Combustion Engineering, which had sales of $3.5 billion last year, provides products and services used in the power and process industries, including power plants, oil refineries and waste-to-energy plants.