Petrohemija to be Sold to Russians for EUR 150 Million? – NIS Might Become Majority Owner Through Construction of Polypropylene Factory

Naftna Industrija Srbije (NIS) will most probably invest in the construction of a new polypropylene factory and through this investment, through recapitalization, become the majority owner of HIP Petrohemija, Novosti has learned. The value of the factory is between 100 and 150 million euros.

As an expert familiar with the issues of this chemical giant told Novosti, NIS, a stakeholder in Petrohemija, would recapitalize it this way, whereby it would acquire a majority stake in the ownership structure. It would amount to an exchange between the two companies under a commercial principle.

– The construction of the polypropylene factory is of great interest for Petrohemija itself, because propylene, which is produced through the process of cracking in ethylene, will be revalorized in market terms – the source explains. – So far, it has been sold with great difficulty in the foreign market as a raw material, and once the factory is built, propylene would be processed into polypropylene, whose market price is much bigger, as is the demand. Petrohemija would thereby realize an even better business result and be better represented in the foreign polymer market.

NIS also has an interest in the privatization of HIP Petrohemija. According to the expert, the Pancevo Oil Refinery, through the operations of its deep processing facility, will also have larger quantities of propylene for processing at the future polypropylene factory. Petrohemija uses primary petrol from the refinery, which is only one of the byproducts of oil cracking and NIS sells them this based on the contract.

– Petrohemija has never had such a factory before – the source explains. – This kind of a factory exist only in Odzaci, namely, Hipol, but its capacity is small. Since the Russians came to NIS, it has not always been clear whether they are interested in Petrohemija or not, but the fact is that it is a cost-effective investment. If they happen to buy and build that factory, it will be a great investment for everyone.

Petrohemija among largest exporters

Petrohemija exports more than a half of what it produces. Last year, of the income of RSD 29.2 billion, foreign purchasers accounted for RSD 17.7 billion. In 2018, of the income of EUR 332.8 million, 63% came from the exports. In the past years, they’ve always been in the top 15, and sometimes, like in 2018, among the top 10 exporters. Their exports make up 1-3% of the total exports of Serbia.

HIP-Petrohemija a.d. Pančevo

NIS a.d. Novi Sad

Međunarodni monetarni fond-MMF Beograd

HIP Petrohemija

Naftna industrija Srbije NIS

International Monetary Fund

IMF

Ljubodrag Savic

construction of polypropylene factory

polypropylene

recapitalization

ethylene

propylene

polymer market

synthetic rubber