International consortium to invest in SIBUR's LPG terminal at Baltic Ust Luga

An international consortium including Russia Direct Investment Fund, Gazprombank and foreign investors, has agreed to invest over $700 million in an LPG and light oil products transshipment terminal in the Baltic port of Ust Luga, terminal owner Sibur  said in a statement Thursday.

"As part of the transaction, the consortium will gain complete control over the terminal, which is not only the largest in the CIS but also the only LPG transshipment terminal in the Russian North-West," the statement said.

The investment "will allow the terminal to optimize its capital structure and expand its capacity for both LPG and the wide range of light oil products it processes," Sibur said.

The terminal currently operates at a nominal transshipment capacity of 1.5 million mt/year of LPG and 2.5 million mt/year of light oil products, petrochemicals company Sibur said. The company completed construction of the terminal and related infrastructure in 2013.

Under the agreement, due to be signed during the St. Petersburg Economic Forum and closed after regulatory approval is received, Sibur will retain exclusive rights to utilize all of the LPG transshipment capacity on pre-agreed terms, the company said.

The complex is to be operated by a joint venture comprising the consortium and Sibur.

"A modern LPG terminal in the Baltic Sea is a crucial step in the future development of Russian infrastructure. This latest development has a significant role to play in reducing domestic dependence on foreign ports as well as responding to the growing European consumer demand for LPG and light oil products," RDIF CEO Kirill Dmitriev said, according to the statement.

RDIF is a subsidiary of Vnesheconombank and was set up in 2011 to make equity co-investments, primarily in Russia, alongside international financial and strategic investors.

"As a result of the deal, Sibur returns its investment in the project while gaining long-term guarantees on capacity utilization in return. This will allow us to then expand our investments in other, more specialized core business projects in the sphere of byproducts of oil and gas monetization along with the manufacturing of a wide range of petrochemical products for Russian consumers," Dmitry Konov, CEO
of Sibur, said.