How Sanctions Revitalized R&D in Petrochemicals — Natalia Ivanova, Director of Napor

Expert commentary by Natalia Ivanova, Director of the petrochemical company NAPOR JSC, has been published by *Tsargrad*; the piece examines the impact of sanctions pressure on the development of research and development (R&D) within the petrochemical industry. The article discusses the transformation of R&D approaches, the substitution of Western technologies with domestic solutions, and the key constraints and prospects for the sector's technological development in the medium term.

Many expected that the fourth year of sanctions pressure on the Russian economy would paralyze R&D in the petrochemical industry. In reality, the outcome was quite different. Natalia Ivanova, Director of the petrochemical company Napor, discussed the reasons why these restrictive measures acted as a catalyst for R&D development in the sector, as well as the challenges currently being faced.

In early 2025, the U.S. Department of the Treasury imposed a new package of sanctions targeting major Russian oil producers—including Gazprom Neft and Surgutneftegas—as well as over 180 tankers belonging to the so-called "shadow fleet."

At the same time, the general license permitting Russian banks to act as intermediaries in energy-related transactions was revoked.
In late October 2025, Rosneft and Lukoil were targeted by the 19th sanctions package. EU and U.S. authorities banned the import of Russian liquefied natural gas (LNG) into the European Union and expanded restrictions on dealings with Russian oil companies. The price cap on Russian oil was set at $47.60 per barrel. Transactions involving Rosneft and Gazprom Neft were completely prohibited.

The 20th sanctions package, announced for early 2026, is expected to target the re-export of Russian oil via third countries and aim to reduce the size of the shadow tanker fleet.

Sanctions pressure affects not only energy exports but also access to key technologies, equipment, and international scientific and technological cooperation. This has impacted the petrochemical and refining sectors, where Western technologies previously played a vital role in the production chain. The process of import substitution requires time and significant resources.

One of the primary constraints facing the petrochemical and energy sectors is the loss of access to foreign engineering solutions, processing equipment, catalytic systems, and complex chemical reagents. This has necessitated the development of domestic alternatives.

Prior to 2022, available data indicated that the Russian petrochemical industry lagged behind the US by at least 15 years. The Russian sector’s share of the global market was less than 2%, whereas the US, China, and Saudi Arabia controlled a significant portion of global production. The exodus of personnel during the 1990s—when a large number of academics and researchers emigrated—is cited as a historical reason for this lag.

Sanctions disrupted supply chains while simultaneously spurring R&D efforts. The fifth sanctions package noted that the list of low-volume chemical products used in oil extraction and refining that were banned for import into Russia comprised between 3,500 and 5,000 items. Import dependency was high in certain categories: around 80% for antifoaming agents, over 90% for corrosion inhibitors and demulsifiers, and more than 95% for neutralizers. These figures drove increased efforts by both the state and the business community to achieve technological independence, though a number of obstacles have arisen along the way.

In February 2025, a US ban on providing oilfield services to entities located in Russia came into effect. The measure covers both extraction operations and scientific-technical support. Developing competitive domestic solutions requires a long timeframe, significant investment, and the accumulation of practical experience.

The oil sector, which accounts for a significant share of federal revenue, has lost some of its export markets. Sanctions are driving down profits and placing the industry under pressure. Market players are being forced to curtail R&D investment, causing the pace of innovation to slow.

Some companies are redirecting funds to maintain current production and operations while cutting budgets for new technology development. Major market players are focusing on domestic processing to reduce reliance on export logistics routes.

Organizations that stockpiled Western reagents and chemicals in advance are gradually depleting their reserves. Experts estimate that companies planning for a three-year horizon are already factoring in a need for domestic chemical products. However, the market does not yet fully meet this demand.

Despite financial challenges, the past three years have seen an increase in investment by Russian companies in the development of new reagents, corrosion inhibitors, catalysts, and other materials previously sourced from abroad. Research organizations are conducting laboratory tests of new products at the facilities of their clients—major oil companies. Scientific and technical centers are establishing R&D budgets, while major oil and gas players are setting up their own in-house research units.

In several regions, technology parks and clusters are focusing on these areas. One example is the Tyumen Oil and Gas Cluster, which concentrates on research, construction, and related fields.

The development of oil and gas clusters, Skolkovo programs, and the activities of the Foundation for Assistance to Small Innovative Enterprises in Science and Technology have created a system of grant support for participants. This system helps offset shortages in funding and technology partners. Skolkovo residents have access to the following grants:

• up to RUB 10 million for project implementation;
• up to RUB 50 million for R&D activities for promising technology leaders (in partnership with the Ministry of Industry and Trade);
• between RUB 20 million and RUB 700 million for strategically important import substitution projects..

Holding the status of a Skolkovo resident or a participant in programs for small technology companies offers tax benefits:

• corporate profit tax at 0% instead of the standard 20%;
• VAT exemption for the duration of program participation;
• reduced social security contributions—15% instead of 30%;
• customs privileges for the import of R&D equipment.

Given the plans to raise the VAT rate to 22% starting in 2026 and the phased reduction of the annual revenue threshold from 60 million to 10 million rubles, these measures take on added significance for the sector.

The reality of sanctions necessitates a search for alternative sources of supply. China is a major supplier of the chemical components, organic petrochemical products, reagents, and catalysts required for industrial processes. Shifting to Chinese suppliers entails certain risks:

• potential geopolitical shifts;
• differences in product quality compared to European counterparts;
• pricing specifics, including premiums associated with sanctions-related risks.

Companies are turning to research centers with requests to recreate old formulas and reagent compositions developed in the USSR, a time when many technological processes were carried out domestically. While this strategy helps replenish the product range, it has limitations: in many areas, Soviet technologies lag behind modern foreign counterparts in terms of efficiency and environmental performance.

State support for R&D in the petrochemical industry is expected to continue in the coming years, given the role of energy resources in shaping GDP. The grant system is projected to expand, and major oil and gas companies are expected to increase their R&D budgets. Tax and customs incentives are in place for strategic projects targeting the petrochemical industry.

Industry experts note that new sanctions will continue to exert external pressure on the sector. Challenges regarding R&D funding will persist, and the outflow of skilled professionals abroad may continue, as training new personnel takes a long time. In certain areas where Soviet-era scientific expertise and technical documentation remain available, replicating technologies appears feasible. However, the launch of major projects that fully replace imported technologies in the short term is unlikely.

According to estimates by various specialists, the Russian petrochemical sector could grow by approximately 3–5% annually over the next 15 years, with the bulk of demand likely driven by the domestic market.

R&D in the oil industry is undergoing a period of transformation. Sanctions have spurred an increase in domestic research and development, expanded state support, and led to the establishment of in-house research centers at companies. At the same time, achieving technological sovereignty will require systematic effort over the next 10–15 years, as well as significant work in workforce development, investment attraction, and the modernization of the technological base.

With the active involvement of the state and oil and gas companies, the Russian petrochemical sector has the potential to strengthen its scientific and technological standing. The pace and scale of this strengthening will depend on external market conditions, the volume of targeted investments, and the effectiveness of import substitution programs.