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«SIBUR» LLC is the managing organization of PJSC «SIBUR Holding».

117218, Moscow, Krzhizhanovsky st., 16/1

SIBUR: New projects will change petchem dynamics in Russia

Sibur (Moscow), Russia’s largest petrochemicals player, will help change the dynamics of the industry in the next two years when its flagship $9.5 billion ZapSibNeftekhim project comes on line at Tobolsk. Mechanical completion of the facilities is expected by end of 2019, earlier than originally planned with commissioning still expected in 2020. ZapSibNeftekhim will double polylefins capacity in Russia. Sibur outlined its strategies and gave an update on progress with ZapSibNeftekhim as well as Amur, a major project it is considering in the far eastern part of Russia at a press briefing in London on Thursday. Sergey Komyshan, member of the management board of Sibur and executive director (responsible for olefins and polyolefins, projects and sales and marketing development), summarized the company’s development plans. The company has already mobilized almost 200 people to operate the ZapSibNeftekhim plants after completion, he told CW in a separate interview. The complex will include a steam cracker designed to produce 1.5-million metric tons/year (MMt/y) ethylene and 500,000 metric tons/year propylene, feeding downstream units with combined capacity for 1.5 MMt/y of polyethylene (PE) and 500,000 metric tons/year of polypropylene (PP). In total, the new site—Sibur already operates a propane dehydrogenation and a 500,000-metric tons/year PP plant at Tobolsk—will require 1,700 people to operate and maintain the facilities, he says. As of end of February, the steam cracker was 44% complete, the PE units 30% and the PP facility 33% complete. More than 11,000 construction workers are engaged at the site. ZapSibNeftekhim will help boost domestic consumption of polyolefins, which is well below Europe, North America and China, Komyshan says. “We believe that offering domestically produced polyethylene will give a huge boost to Russia’s processing industry. We are already seeing this with polypropylene,” Komyshan says. Asked about Sibur’s take on the major build up in polyolefins capacity in North America, Komyshan said that the volumes which will start coming onstream in North America will hurt the global supply/demand balance, leading to more competition and lower margins. But Russia is not overly worried. “We are well positioned to supply our European neighbors, Turkey and the Chinese and Asian markets and we believe that we will be competitive on a cash-cost basis,” he says, adding that, nevertheless, everybody’s margins will be affected. Meanwhile, Sibur is still in negotiations with Gazprom on the supply of ethane feedstock to the Amur complex, which will be built in the town of Svobodny, near Blagoveshchensk, the capital of the Amur region. This is where Gazprom is building a large gas processing plant, which will supply the ethane to the facilities. Komyshan says that the strategy for selecting technology for the Amur steam cracker will be different from previous projects. Sibur will launch a tender for extended basic engineering (EBE) for the plant, when there is a decision, which will be designed to produce 1.5-2 MMt/y of ethylene and downstream products. It will sel ect two contractors to perform the EBE and eventually choose one fr om among the two. ZapSibNeftekhim’s cracker uses the Linde technology. Sibur recently witnesses a change in shareholders’ structure with Sinopec and the Silk Road Fund (Beijing) acquiring 10% each in Sibur. The company does not split the holding but says that Leonid Mikhelson is still the largest shareholder. The new investors could help with funding some of Sibur’s projects. Asked whether the expected build up in petrochemical capacity in Russia—Rosneft, Lukoil, Nizhnekamskneftekhim, and others are planning large investments—Komyshan said that companies with proven track record in investing in projects will likely be the most successful in adding capacity. Sibur last year reported sales of 411.8 billion Russian ruble ($6.1 billion), an 8.4% increase on the year earlier. Operating profit rose from RR90.7 billion in 2015 to RR103.1 billion. Feedstock and energy accounted for RR170.7 billion, olefins & polyolefins for RR86.8 billion, and plastics, elastomers & intermediates for RR130.7 billion. Komyshan sees the split changing in the future as Sibur increases its own consumption of hydrocarbons it currently sells. Separately, Komyshan confirmed that RusVinyl, the polyvinyl chloride joint venture between Sibur and Solvay, has been notified by Ukraine authorities that export of PVC and caustic soda from the company’s facilities have been banned. “This does not affect RusVinyl because our target market is Russia. RusVinyl sells just a few tons of PVC in Ukraine.” He also said that Solvay considers RusVinyl an interesting joint venture to stay in. Solvay sold all its other PVC assets.

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