SIBUR and Gazprom Agree a Long-term Supply Contract for NGL

Moscow, 13 February 2012: CJSC SIBUR Holding and OJSC Gazprom have signed a long-term contract to supply natural gas liquids (NGL) from the Surgut Condensate Stabilisation Plant to the Tobolsk-Neftekhim facility up to 2021.

The annual supply of NGL between 2012 and 2016 will increase from 440,000 tonnes to more than one million tonnes. Agreement on the volumes of hydrocarbon feedstock to be supplied in subsequent years will be reached at a later date.

The contract provides for formula pricing with reference to market conditions for NGL product processing and the cost of transportation and NGL fractionation.

In addition, the parties agreed to continue talks on supplying hydrocarbon feedstock to SIBUR gas-petrochemical enterprises located in other regions of Russia.

Dmitry Konov, CEO of SIBUR, said: “Issues surrounding long-term raw material supplies are important for the company’s investment development. Through a strategic partnership with Gazprom and other leading oil and gas companies, SIBUR is able to multi-source light hydrocarbons, providing a base for the sustainable growth of petrochemical production”.

Editors Notes:

NGL produced by SIBUR at its own gas processing plants, as well as additional NGL volumes purchased from oil and gas companies, are transported by the SIBUR-owned product pipeline to the Tobolsk production facilities for further fractionation and the production of liquefied petroleum gases. The increasing volumes of feedstock delivered to the production site are synchronised with the implementation of large investment projects. In particular, work is underway on the construction of the second stage of the gas fractionation plant, which will bring the total output capacity to 6.6 million tonnes of NGL per annum. In the third quarter of 2012, the company plans to complete the construction of Europe's largest polypropylene production complex with an output capacity of 500,000 tonnes per annum, for which the raw material is propylene produced from liquefied petroleum gas (propane).

Natural gas liquids (NGL) constitute a product obtained by processing associated petroleum gas or natural gas and gas condensate. It is a mixture of volatile hydrocarbons. It is used as a valuable raw material for producing a wide range of petrochemical products (polymers, synthetic rubbers, organic synthesis products), as well as clean gas-engine fuel (autogas).

SIBUR is the leading petrochemical company in Russia and Eastern Europe. The Company operates across the entire petrochemical process chain from gas processing, production of monomers, plastics and synthetic rubbers to the processing of plastics. SIBUR is a vertically integrated company with its gas processing facilities providing feedstock for its petrochemical production