Supported by FAS, “Rosneft” and “Sayanskkhimplast” reached an amicable settlement

A compromise solution for providing ethylene to “Sayanskkhimplast” was reached in the course of negotiations supported by the Federal Antimonopoly Service (FAS Russia), involving the federal executive bodies and V. Suba, a member of the Federation Council of the Federal Assembly of the Russian Federation.

“Rosneft” NK” PJSC and “Sayanskkhimplast” JSC reached arrangements  on all disagreements, emerged  throughout concluding a contract for ethylene supplies, and reported the intention to enter into the 2017-2018 ethylene supply contract under mutually acceptable conditions.

The amicable settlement was reached with active FAS involvement. The Antimonopoly Service organized negotiations between the parties upon instructions from the Government of the Russian Federation.

In 2014-2015 ethylene was supplied at a fixed price which, according to “Rosneft” NK” PJSC, did not cover the costs of its production.

The present ethylene supply contract, approved by the amicable settlement, provides for formula pricing for the entire contract validity period.

The price formula of the ethylene producer and supplier factors in changes in the end product prices: PVC-S and high pressure polyethylene, manufactured using ethylene at “Sayanskkhimplast” JSC and “Angarsky Polymer Works” JSC accordingly. The costs of naftha, which is a raw material for ethylene production, is also accounted for at the price of a possible export alternative.

“Thanks to the active FAS position, the parties reached a compromise solution on the scope and ethylene supplies”, emphasized Deputy Head of FAS Andrey Tsyganov. “Also the balance of interests was achieved, accounting for the costs of the end products (PVC-S and high pressure polyethylene) in the ethylene price. When Russian Rubles is stabilized against world currencies, the risks of abrupt changes of ethylene price, calculated using the new formulae, are insignificant”.