SIBUR and TNK-BP Expand Their APG Processing Joint Venture

SIBUR and TNK-BP have agreed to expand their joint venture, Yugragazpererabotka LLC, by merging Nyagangazpererabotka LLC, a gas processing entity, held until this time by the petrochemical holding, with and into the JV.

Upon integration of this asset, the general principles of associated petroleum gas (APG) deliveries to Nyagangazpererabotka, as well as those governing gas processing services and product sharing, will be aligned with the terms and conditions agreed at the time of Yugragazpererabotka establishment.

Nyagangazpererabotka is currently capable of processing up to 2.14 bcma of associated petroleum gas. In  2010, the entity processed 1.3 bcma of APG, producing 1.18 bcm of dry lean gas, 88 ktons of straight-run gasoline, and 247 ktons of liquefied petroleum gas used mostly as fuel in utility/household and motor vehicle applications.

Once Nyagangazpererabotka has become part of the JV, APG deliveries from TNK-BP fields will grow from 0.9 bcm in 2010 to over 1.3 bcm by 2013. Therefore, the entity's total APG throughput will exceed 1.7 bcm in 2013.

"This expansion of our partnering relations with TNK-BP provides yet another proof of the mutual benefits brought about by our decision made three years ago," says SIBUR CEO Dmitry Konov, "associated petroleum gas production and quality processing volumes are on the rise, pushing up deliveries of this valuable petrochemical input stock to the Russian facilities. This cooperation format, which we recommend to all other domestic oil majors, may boost efficiency of associated gas processing on a national scale."

"By developing this mutually beneficial partnership between TNK-BP and SIBUR we facilitate further efficiency improvements of TNK-BP's gas business which is a strategic goal for us to develop," says TNK-BP Chief Operating Officer Bill Schrader, "Besides, this project, once implemented, will assure 95% APG utilization level at our Company's Talinskiy and Em-Egovskiy license areas."

Note for editors:

Yugragazpererabotka LLC is a joint venture established in 2007 between TNK-BP oil company (49%) and SIBUR petrochemical holding (51%). The entity owns the Nizhnevartovskiy and Belozerniy gas processing plants, and pipeline infrastructure.

In accordance with the JV terms and conditions, Yugragazpererabotka provides APG processing services. The joint venture founders own the purchased APG and the product outputs in proportion to their respective shareholdings. SIBUR then sells its share of the dry lean gas to TNK-BP and purchases the oil company's share of NGLs.

Following a number of upgrade and expansion projects (restoration of the gas processing unit at the Belozerniy GPP and setting in operation of the oil absorption unit at the Nizhnevartovskiy GPP), the entity's associated gas processing capacity has grown from 7.3 bcm based on full 2007 results, to 9.4 bcm in 2010. Over the period from 2007 to 2009, Yugragazpererabotka produced more than 21.5 bcm of dry lean gas and 7.2 mmt of natural gas liquids, used as feedstock in the petrochemical industry.