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

117218, Moscow, Krzhizhanovsky st., 16/1

SIBUR announces limited operational update for Q1 2016

Moscow, 21 June 2016. PAO SIBUR Holding, an integrated gas processing and petrochemicals company and a leader in the Russian petrochemicals industry, today publishes limited operational update for the three months ended 31 March 2016.

KEY HIGHLIGHTS

  • Associated petroleum gas (APG) processing volumes increased by 10.1%1 year-on-year
  • Natural gas production volumes increased by 11.2%1 year-on-year
  • Raw natural gas liquids (raw NGL) fractionation volumes increased by 7.0%2 year-on-year
  • Liquefied petroleum gas (LPG) sales volumes increased by 12.3% year-on-year
  • Polypropylene sales volumes increased by 12.1% year-on-year
  • Total revenue increased by 12.5% year-on-year
  • Revenue from sales of energy products increased by 4.9% year-on-year
  • Revenue from sales of petrochemicals increased by 15.7% year-on-year
  Three months ended 31 March Change
Tonnes, except as stated 2016 2015 %
Processing and production volumes      
APG processing1 (thousand cubic metres) 5,646,581 5,128,636 10.1%
APG processing, SIBUR's share3 (thousand cubic metres) 5,522,146 5,107,400 8.1%
Natural gas production1 (thousand cubic metres) 4,897,244 4,403,952 11.2%
Natural gas production, SIBUR's share3 (thousand cubic metres) 4,801,525 4,387,659 9.4%
Raw NGL fractionation2 2,015,845 1,884,079 7.0%
Raw NGL fractionation, SIBUR’s share 1,715,845 1,584,079 8.3%
Sales volumes      
Natural gas sales volumes (thousand cubic metres) 4,574,721 4,205,797 8.8%
LPG sales volumes 1,143,630 1,018,192 12.3%
MTBE, other fuels & fuel additives sales volumes 179,291 148,480 20.8%
Petrochemical products sales volumes 709,858 646,310 9.8%
Plastics and organic synthesis products 228,580 223,026 2.5%
Basic polymers 201,958 184,454 9.5%
Synthetic rubbers 113,033 105,354 7.3%
Intermediates and other chemicals 166,287 133,476 24.6%
Revenue (RR millions)      
Total energy products sales revenue 47,071 44,873 4.9%
Total petrochemical products sales revenue 48,607 42,024 15.7%
Other revenue 5,704 3,222 77.0%
Total revenue 101,382 90,119 12.5%

OPERATIONAL HIGHLIGHTS

Energy Products Sales Revenue

  Three months ended 31 March Change
RR millions, except as stated 2016 % of energy products sales revenue 2015 % of energy products sales revenue %
LPG 20,089 42.7% 20,293 45.2% (1.0%)
Natural gas 11,551 24.5 9,918 22.1% 16.5%
Naphtha 7,683 16.3% 8,057 18.0% (4.6%)
MTBE 5,699 12.1% 5,148 11.5% 10.7%
Raw NGL 1,184 2.5% 537 1.2% 120.5%
Other fuels and fuel additives 864 1.8% 920 2.0% (6.1%)
47,070 100.0% 44,873 100.0% 4.9%

In the first quarter of 2016, our revenue from sales of energy products increased by 4.9% year-on-year to RR 47,070 million on higher revenue from sales of natural gas and increase in raw NGL and MTBE revenue, which was partially offset by lower revenue from LPG and naphtha sales. The increase in natural gas revenue was a result of a 7.5% indexation of the regulated natural gas prices and higher production volumes following expansion of Vungapurovskiy GPP and launch of Yuzno-Priobskiy GPP. The increase in raw NGL revenue was a result of temporary sale of excess volumes of raw NGL available pending our fractionation capacity expansion in Tobolsk later in 2016. The increase in revenue from MTBE sales was attributable to higher production volumes following capacity expansion. Russian rouble depreciation was a natural hedge for our effective average selling prices from the collapse in market prices for most products.

  • LPG: sales revenue down 1.0% year-on-year to RR 20,089 million. Effective average selling price down 11.9% in RR terms largely following the dynamics of international market prices in RR terms. Sales volumes up 12.3% year-on-year on an 8.5% increase in production primarily as a result of higher raw NGL supplies from NOVATEK’s expanded gas condensate production.
  • Natural gas: sales revenue up 16.5% year-on-year to RR 11,551 million. Sales volumes up 8.8% on higher production volumes following increase in APG processing as a result of recent capacity expansions. Effective average selling price up 7.1% on a 7.5% indexation of the regulated natural gas prices.
  • Naphtha: sales revenue down 4.6% year-on-year to RR 7,683 million. Effective average selling price down 13.5% in RR terms largely following the dynamics of international market prices in RR terms. Sales volumes up 10.3% year-on-year despite flat production largely due to the launch of a temporary trading arrangement.
  • MTBE: sales revenue up 10.7% year-on-year to RR 5,699 million. Sales volumes up 22.4% year-on-year on a 24.9% increase in production following capacity expansion, as well as higher feedstock availability due to shutdowns at the production of feedstock for MTBE a year earlier. Effective average selling price down 9.6% in RR terms following the dynamics of international market prices in RR terms.
  • Raw NGL:: sales revenue up 2x times year-on-year on a 58.1% increase in purchases from our existing supplier pending our fractionation capacity expansion in Tobolsk in 2016.

Petrochemical Products Sales Revenue

  Three months ended 31 March Change
RR millions, except as stated 2016 % of petrochemical products sales revenue 2015 % of petrochemical products sales revenue %
Plastics and organic synthesis products 15,890 32.7% 14,564 34.7% 9.1%
Basic polymers 15,632 32.2% 12,125 28.9% 28.9%
Synthetic rubbers 9,606 19.8% 9,292 22.1% 3.4%
Intermediates and other chemicals 7,479 15.4% 6,043 14.4% 23.7%
Total petrochemical products sales revenue 48,607 100.0% 42,024 100.0% 15.7%

In the first quarter of 2016, our revenue from sales of petrochemical products increased by 15.7% year-on-year to RR 48,607 million on strong performance across all petrochemicals product groups. The growth was primarily attributable to higher sales of basic polymers. We increased sales of certain intermediates and other chemicals on higher production as compared to the first quarter of 2015. Growth in revenues from sales of plastics and organic synthesis products was largely attributable to higher BOPP-film sales. Increase in revenues from synthetic rubbers was largely a result of completed homologation of thermoplastic elastomers with key clients. Russian rouble depreciation strongly supported our petrochemicals products sales.

  • Plastics and organic synthesis products: sales revenue up 9.1% year-on-year to RR 15,890 million primarily driven by higher BOPP-film sales volumes on increased production volumes and moderate inventory accumulation versus substantial inventory build-up a year earlier.
  • Basic polymers: sales revenue up 28.9% year-on-year to RR 15,632 million primarily driven by higher PP sales volumes on increased capacity utilisation rate at our production site in Tobolsk. The growth was also attributable to higher average selling prices for PP and LDPE due to the Russian rouble depreciation and favourable market environment on the domestic market.
  • Synthetic rubbers: sales revenue up 3.4% year-on-year to RR 9,606 million mainly due to completed homologation with key clients for thermoplastic elastomers, which resulted in the respective sales volumes growth. Total synthetic rubber sales volumes increased by 7.3% year-on-year to 113,033 tonnes. Prices for commodity and specialty rubbers were under pressure due to higher market competition. Increase in average selling prices for thermoplastic elastomers was in line with the respective benchmarks dynamics.
  • Intermediates and other chemicals: sales revenue up 23.7% year-on-year to RR 7,479 million as a result of higher revenue from sales of styrene, ethylene and benzene due to the increase in production as compared to a low base of the first quarter of 2015 attributable to shutdowns at our cracking facility in Kstovo.

Other Revenue

  Three months ended 31 March Change
RR millions, except as stated 2016 % of other revenue 2015 % of other revenue %
Sales of processing services 509 8.9% 318 9.9% 60.3%
Trading and other sales 5,194 91.1% 2,904 90.1% 78.9%
Other revenue 5,704 100.0% 3,222 100.0% 77.0%

In the first quarter of 2016, other revenue increased by 77.0% year-on-year to RR 5,704 million, which was primarily attributable to the revenue from NIPIGAZ services as a contractor within Gazprom’s Amur GPP project and sales of power following the acquisition of Tobolsk Heating and Power Plant in February 2016.

Key Feedstock Purchases

  Three months ended 31 March Change
RR millions, except as stated 2016 2017 %
NGLs 6,283 5,003 25.5%
APG 6,276 5,533 13.4%
Paraxylene 1,863 1,580 17.9%

In the first quarter of 2016, we observed an increase in our expenses related to hydrocarbon feedstock purchases attributable to higher volumes due to expansion of our gas processing capacitites and additionally available NGLs feedstock from NOVATEK. The increase in paraxylene purchases was attributable to higher purchase price.

  • NGLs: purchasing expenses up 25.5% year-on-year to RR 6,283 million. Purchasing volumes up 51.7% due to the increase in availability of raw NGL from NOVATEK on higher gas condensate production. Average purchase price down 17.2% year-on-year following the respective netbacks dynamics as a result of lower international market prices and increased transportation tariffs.
  • APG: purchasing expenses up 13.4% year-on-year to RR 6,276 million. Purchasing volumes up 8.1% following the launch of Yuzhno-Priobskiy GPP and expansion of the Vyngapuroskiy GPP. Purchase price up 4.9% year-on-year due to a 7.5% indexation of regulated natural gas prices.
  • Paraxylene: purchasing expenses up 17.9% year-on-year to RR 1,863 million on a 20.2% increase year-on-year in average purchase price on the Russian rouble depreciation and largely flat market benchmarks. Paraxylene purchasing volumes were largely flat year-on-year.

CAPITAL EXPENDITURES

The following table presents data on financing of our key investment projects for the three months ended 31 March 2016 and 2015:

RR millions, except as stated Three months ended 31 March  
Location Description 2016 2015 Completion
Tobolsk ZapSibNeftekhim 42,733 7,355 2020
Tomsk Expansion of PP and LDPE production 994 627 2016
Tobolsk Second GFU expansion 547 542 2016

BORROWINGS

Total Debt and Net Debt

RR millions, except as stated As of 31 March 2016 As of 31 December 2014 Change, %
Total debt 392,267 457,149 (14.2%)
Cash and cash equivalents 94,894 172,083 (44.9%)
Net debt 297,373 285,066 4.3%
Net debt(4) / EBITDA(5), including 2.2x 2.1x  
Conventional net debt 1.6x 1.8x  
Net debt raised for ZapSibNeftekhim 0.6x 0.3x  
Net debt(4) / EBITDA(5) (in US Dollar) 2.0x 1.7x  

Debt Currency Structure

RR millions, except as stated As of 31 March 2016 % of total borrowings As of 31 December 2015 % of total borrowings Change, %
Denominated in:  
US Dollar 242,746 61.9% 306,583 67.1% (20.8%)
Russian rouble 123,180 31.4% 131,096 28.7% (6.0%)
Euro 26,341 6.7% 19,470 4.3% 35.3%
Total debt 392,267 100.0% 457,149 100.0% (14.2%)
  • Total debt: a 14.2% decrease vs. 31 December 2015 to RR 392,267 million was attributable to the repayment of debt denominated primarily in foreign currencies, as well as to Russian rouble appreciation as RR/USD rate decreased by 7.2% to 67.6076 as of 31 March 2016 from 72.8827 as of 31 December 2015.
  • Net debt: a 4.3% increase vs. 31 December 2015 to RR 297,373 million, which was attributable to financing of ZapSibNeftekhim capital expenditures from the sources provided by the National Wealth Fund.
  • Credit lines: RR 277,479 million available under existing credit facilities denominated in Russian roubles, US dollars and euros, both short- and long-term, of which an equivalent of RR 164,113 million committed.

The published data may be revised when we publish the IFRS unaudited consolidated interim condensed financial information for the first half of 2016 and supporting MD&A.


1Including Gazprom Neft’s share in the processing / production volumes of Yuzhno-Priobskiy GPP starting September 2015.

2Including fractionation volumes under processing arrangements.

3Excluding Gazprom Neft’s share in the processing / production volumes of Yuzhno-Priobskiy GPP starting September 2015.

4Net debt is calculated as total debt less cash and cash equivalents.

5Unaudited EBITDA for the first quarter of 2016.

Contacts for Media

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Anna Lebed

International Media Relations

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