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KIOGE-2026

Polyethylene: New Stage in Kazakhstan❜s Industrial Development

Petrochemical industry development has become one of the key priorities in Kazakhstan’s efforts to diversify its economy. In an increasingly competitive global environment, greater emphasis is being placed not only on the export of raw materials, but also on establishing domestic manufacturing facilities that produce high value-added products, strengthening national industry, and creating new export-oriented sectors.

Polyethylene Plant construction in Atyrau Oblast is designed to address precisely these objectives. It is the largest gas chemical project in the history of independent Kazakhstan, with total investments of USD 7.4 billion and a planned production capacity of 1.25 million tonnes of polyethylene per year. Approximately 1.6 million tonnes of ethane annually, extracted from Tengiz dry gas, will serve as the primary feedstock for polyethylene production.

Upon reaching full design capacity, the facility is expected to account for approximately 1% of global polyethylene production. Its annual output will exceed the combined capacities of comparable facilities currently operating in Uzbekistan, Turkmenistan, and Azerbaijan.

From Raw Material Exports to Value-Added Processing

For many years, Kazakhstan’s economy relied heavily on the export of raw materials, while most of the value added from processing these resources was generated outside the country.

Polyethylene Project is set to transform this model. Dry gas from Tengiz field will be processed domestically: Gas Separation Complex will extract ethane, which will then serve as the primary feedstock for polyethylene production. Polyethylene is one of the world’s most widely used polymers, finding applications across industry, utilities, construction, agriculture, packaging, healthcare, and numerous other sectors.

This project therefore represents far more than the construction of another industrial facility. It marks a significant step toward deeper processing of hydrocarbon resources and creation of substantially greater value within Kazakhstan’s economy.

The potential of this sector is supported by industry forecasts. According to Eurasian Development Bank (EDB), unlocking production and export potential of the petrochemical industry across Eurasian region by 2035 could generate an additional USD 153 billion in cumulative GDP growth, while exports of petrochemical products could increase by a factor of 3.2.

Multiplier Effect for Economy

Petrochemical industry development enables Kazakhstan to move beyond raw material exports toward the production of higher value-added products, while simultaneously reducing reliance on imports and creating new export opportunities.

At present, Kazakhstan’s demand for polyethylene is largely met through imports. According to Bureau of National Statistics of the Republic of Kazakhstan, domestic market amounted to approximately 310 thousand tonnes in 2024 and 267 thousand tonnes in 2025, with demand projected to reach 400 thousand tonnes by 2035. This existing demand creates substantial import substitution potential, making domestic market one of the priority destinations for project’s products.

Silleno’s planned production capacity is 1.25 million tonnes of polyethylene per year. Project will manufacture more than 20 grades of polyethylene, covering two principal product categories: high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE). Approximately 40% of the product portfolio will consist of premium-grade materials. This will enable the company to meet domestic demand across a wide range of polyethylene grades, reduce import dependency, and direct surplus volumes to international markets.

Project’s economic impact extends far beyond polyethylene production itself. According to EDB estimates, every additional dollar of output generated by petrochemical industry can contribute USD 2.62 in total economic output, while each job created within the sector can support creation of two to seven additional jobs across related industries.

This multiplier effect will stimulate demand for logistics services, industrial support activities, engineering and manufacturing, construction, digital solutions, and numerous other business sectors. Furthermore, establishment of a large-scale domestic polyethylene industry will provide a strong foundation for development of downstream processing and manufacturing industries within Kazakhstan.

According to project estimates, once polyethylene production reaches full design capacity, its contribution to Kazakhstan’s GDP is expected to be approximately 0.5%.

Project will also have a significant impact on the labour market. During construction phase, the site will employ up to 15,000 workers, while more than 1,000 permanent jobs will be created once facility enters commercial operation.

Local Content as Driver of Kazakhstan’s Industrial Development

One of the project’s key priorities is development of local content and promotion of Kazakhstan’s industrial capabilities. To date, contracts worth a total of USD 1.205 billion have been awarded to Kazakhstani companies.

Domestic enterprises are involved at virtually every stage of project execution, from engineering and design to equipment manufacturing, material supply, and construction activities. Kazakhstan-based manufacturers are producing a range of unique equipment for project, including main fractionation column, quench tower, deaerator, transformer equipment, steel structures, pipe products, as well as various construction materials and structural components.

The scale of this equipment is truly remarkable. Standing 101.8 metres tall, project's Fractionation Column is higher than a 30-storey building. Measuring 7.5 metres in diameter and weighing approximately 1,500 tonnes, it is one of the most impressive structures on the site.

In addition to Ethylene Fractionation Column, Kazakhstani manufacturer AtyrauNefteMash is producing another major component for the project: a quench tower weighing approximately 700 tonnes, standing more than 50 metres high and measuring 10 metres in diameter.

Fractionation Column transportation from manufacturing facility to Silleno construction site presented a significant engineering challenge. The equipment travelled approximately 50 kilometres along a specially prepared route. The operation became one of the largest heavy-haul transportation projects ever undertaken in Kazakhstan for oversized industrial equipment.

Preparations are currently underway for next major phase of construction: installation of project’s first large-scale process equipment, Fractionation Column. To support this operation, one of the world’s largest crawler cranes, with a maximum lifting capacity of 4,000 tonnes, has been delivered to Atyrau region and assembled on site.

In practical terms, Project is serving as a catalyst for development of Kazakhstan’s manufacturing sector, construction industry, engineering companies, and producers of industrial equipment.

Advanced Technologies and Engineering Talent Development

Polyethylene Project is being delivered using world’s most advanced technologies. Project’s technology licensors include Lummus Technology, Chevron Phillips Chemical, Univation Technologies, and Axens, while construction is being carried out by leading international EPC contractors from Spain, Italy, and China.

Equally important is the project’s focus on human capital development. In partnership with international industry leaders, comprehensive engineering training programmes are being implemented. Over a four-year period, more than 400 graduates from Kazakhstani universities will undergo training under internationally recognised programmes. Already, several participants from the first cohorts have received employment offers from global engineering companies.

As a result, Project contributes not only to construction of a state-of-the-art manufacturing facility, but also to development of a new generation of Kazakhstani engineers equipped with world-class skills and expertise.

Without exaggeration, Polyethylene Project represents a comprehensive investment in Kazakhstan’s future. Its implementation is fostering petrochemical industry development, strengthening country’s industrial base, creating new manufacturing value chains, enhancing competitiveness of domestic enterprises, and supporting emergence of a modern export-oriented economy.

Projects of this scale and significance form the foundation of Kazakhstan’s long-term economic diversification strategy and accelerate country’s transition from a resource-based model toward an economy driven by advanced manufacturing and high value-added production.