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Ukraine's Zarya to build $59-mil ethanol facility by 2015

Kiev (Platts)--17 Jan 2014 616 pm EST/2316 GMT


The state-owned Ukrainian chemical company Zarya has begun construction of $59 million ethanol facility in the Luhansk region bordering Russia, the regional council's press service said Friday.

The facility, which is expected to begin operation in 2015, will have capacity to produce 30,000 metric tons of ethanol annually.

Zarya will use wheat, corn, rye and other grains as raw material, the press service said in a statement.

"There are not such facilities yet in Ukraine," Dmytro Drozhzhin, the head of the industry and energy department at the Luhansk regional administration, said in a statement. "About 70% of equipment will be supplied by leading European producers."

The development underscores efforts by the government to increase production of ethanol after recent report from the Agriculture Ministry suggested Ukraine had been facing shortage of the fuel.

The shortage, among other things, will probably force the government to postpone by six months a requirement that ethanol must be mixed with gasoline to the level of at least 5% starting this month, according to Energy and Coal Industry Minister Eduard Stavytskiy.

The law, put in effect in July 2013, requires a 5% ethanol mix in 2014 and 2015, and increases the level to 7% in 2016.

Ukraine will expected to be able to produce 133,000 mt of ethanol in 2014, short of 225,000 mt that are needed for oil traders to comply with the law, according to the Agriculture Ministry.

Demand for ethanol is expected to further increase to 315,000 mt in 2016, according to the ministry.

Ukraine increased ethanol output to 50,600 mt in 2012 from 2,700 mt in 2010, according to the ministry.

The ministry has been working on a program that would encourage alcohol producers to retool for producing ethanol to be used in automobile engines.

Zarya is one of the largest producers of a wide range of industrial explosives, emulsion explosives and special grades of TNT in Ukraine.

--Alexander Bor, newsdesk@platts.com --Edited by Derek Sands, derek.sands@platts.com




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