A large-scale investment programme. Global-scale production projects
After Alexander Dyukov moved on to Gazprom Neft, Dmitry Konov took over as head of the management team. The management was aware that SIBUR’s production and financial achievements were largely the result of well-timed organisational measures. To ensure long-term and sustainable growth, they had to balance production capacities across various processing stages, build the necessary infrastructure and new plants capable of competing with the leading Russian and global peers, and bring the production culture and labour productivity in line with the international standards.
SIBUR’s main way of tackling these challenges was a large-scale investment programme implemented over the following years. It galvanised the company into a new mobilisation stage and boosted its potential. SIBUR's gas processing capacity grew from 8 bcm in 2003 to 25 bcm in 2016, while the recovery of desired fractions in APG processing increased from 62% in 2003 to over 90% in 2016. This was a huge contribution to the beneficial use of APG in Russia, as SIBUR helped prevent GHG emissions of over 70 mt of CO2 equivalent per year. The accumulation of processed hydrocarbon feedstock and depreciation of Soviet-built pipelines called for new transport infrastructure. To that end, SIBUR spent upwards of RUB 50 bn to build a more than 1,000 km long high-tech pipeline connecting NOVATEK’s Purovsky Gas Condensate Processing Plant to the Tobolsk Production Site. This was an extremely important project for SIBUR, providing the company with a stable and guaranteed access to Western Siberia’s feedstock and a launch pad for future petrochemical investment projects.
The Tobolsk Site saw its fractionation capacity for processing feedstock from the northern GPPs into LPG increase manyfold. As a result, the company boosted its feedstock base by upgrading and expanding its feedstock and energy capacities at every stage, including gas processing, logistics infrastructure and gas fractionation. To export the surplus feedstock from the Russian market, SIBUR built the first transshipment facility in Russia’s north-west (and the largest one in the Baltic Sea) with a capacity of up to 1.5 mt of LPG and up to 2.5 mt of light oils per year. The facility started to handle export flows previously channelled through the ports of the bordering countries.
The company continued to launch large-scale and technologically advanced production facilities (including greenfield projects), becoming one of the most active customers in the industrial construction market. Over a very short period of time, SIBUR’s management had to acquire a slew of new engineering and project management competencies. At present, SIBUR is proud to be the sole manager of all its projects.
The expanded feedstock and energy segment unlocked new opportunities for developing the petrochemical business. SIBUR kicked off a number of key import substitution medium-tonnage projects, such as the construction of facilities in Perm and Voronezh producing 100 ktpa of expandable polystyrene and 50 ktpa of thermoplastic elastomers, respectively, and the ramp-up of PET production from 140 to 210 ktpa.
After upgrading and expanding the feedstock capacities, along with improving its industrial construction competencies, SIBUR proceeded to implement unprecedentedly large-scale projects in the petrochemicals segment. In 2013, the company built a 500 ktpa polypropylene facility in Tobolsk followed by a 330 ktpa PVC production site in Kstovo (a joint venture with SolVin) a year later. Large-scale production capacities made the company’s cost per tonne profile more competitive.
In order to expand the application range of its petrochemical products, SIBUR started producing certain higher added value products. For example, the company bought an acrylates business (paints and coatings industry) and BIAXPLEN, a manufacturer of BOPP films for food and other products, later substantially scaling up the output.
The 2008–2009 financial crisis proved to be a serious challenge for SIBUR, while also highlighting the resilience of its integrated business model. Following the drop in demand from the automotive and other industries, the company had to shut down a number of facilities (primarily at its tyre and rubber production sites), effectively suspending its investment programme. SIBUR emerged from the crisis armed with new experience of business growth amid the economic downturn and a newfound confidence.
SIBUR successfully sold its non-core production assets, namely the tyre and mineral fertiliser businesses, generating stable profits thanks to the company’s efforts.
The proceeds from selling the non-core assets, as well as profit from core businesses were used to finance polymer projects. Throughout 2006–2016, the company implemented over 150 large- and mid-scale investment projects. Its CAPEX for the decade exceeded RUB 650 bn.
In the meantime, Gazprom Group continued searching for a strategic investor in SIBUR which it still viewed as a non-core asset. In 2010–2011, Leonid Mikhelson, a Russian entrepreneur and a co-owner of NOVATEK, acquired a controlling stake in the group. After that, other Russian investors bought SIBUR's shares, and so did the current and former managers of the company.