Oil Giant Rosneft to Invest $500 Million for a New Chemical Plant in Armenia

YEREVAN — Rosneft, Russia’s largest oil company controlled by the Kremlin, plans to invest $500 million in the construction of new chemical factory in Armenia, according to the Armenian government.

Prime Minister Tigran Sarkisian said that the issue was on the agenda of his latest talks with Russian counterpart Dmitry Medvedev that were held in Sochi.

Sarkisian said Rosneft’s influential chairman, Igor Sechin, briefed him and Medvedev on the company’s “investment project” in Armenian worth around $500 million.

“In the coming weeks we will hold substantive discussions as to what conditions we have to create for those investments so that they become a reality in the shortest possible time,” he told reporters. “Naturally, the project has to do with the Nairit plant because the main employees of the new plant will be Nairit workers.”

The premier referred to Armenia’s largest chemical enterprise that has stood idle for almost four years. The Yerevan-based plant nominally employing over 3,000 people specializes in the production of chloroprene rubber. It has struggled to remain afloat since the early 1990s, repeatedly changing foreign owners and operators in murky deals overseen by successive Armenian governments. Nairit’s current nominal owner, Rhinoville Property Limited, is an obscure firm registered in a British tax haven.

President Serzh Sarkisian similarly announced on February 15 that “in all likelihood: Rosneft will start building “a Nairit” this year. He said the Russians might also reactivate the existing plant.

Rosneft has issued no press releases on Sechin participation in Medvedev’s meeting with Tigran Sarkisian.

A figure close to Russian President Vladimir Putin, Sechin visited Armenia at least three occasions in 2013. The most recent of those trips ended in the signing on December 25 of an agreement on the creation of a joint venture between Rosneft and the Italian group Pirelli, one of the world’s largest tire manufacturers. The signing ceremony took place at the presidential palace in Yerevan.

Few details of that deal were made public. Official Armenian sources said only that the Russian-Italian venture will manufacture synthetic rubber in Armenia. The Russian ambassador in Yerevan, Ivan Volynkin, clarified on February 11 that car tires will be its principal end product.

The Armenian government said late last year that it is negotiating with Rosneft on the possibility of Nairit’s acquisition by the Russian oil giant. A senior Russian government official revealed afterwards that the main stumbling block in the talks is the question of who will clear Nairit’s huge debts.

In particular, Nairit owes $107 million to the Moscow-based Inter-State Bank of the Commonwealth of Independent States. Another $12 million is owed to several hundred Nairit workers entitled to some pay despite being idle most of the time.

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