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

117218, Moscow, Krzhizhanovsky st., 16/1

The Ministry for Economic Development of the Russian Federation has approved a second phase expansion of the Yuzhno-Balyksky GPP

Moscow, January 24, 2011. The Ministry for Economic Development has approved a second phase expansion of the Yuzhno-Balyksky gas processing plant as a project in accordance with Article 6 of the Kyoto Protocol to the UN Framework Convention on Climate Change. The overall reduction in greenhouse gas emissions under the second phase is planned to be of the order of 7.1 million tons of CO2 equivalent.

Also, in 2010, the Ministry for Economic Development approved a draft for the first phase of the expansion of Yuzhno-Balyksky GPP of the order of 0.7 million tons of CO2 equivalent.

The total reduction of greenhouse gases in the implementation of the project for expansion of the Yuzhno-Balyksky GPP, implemented with the support and resource base of Rosneft, is expected to reach 9.6 million tons of CO2 equivalent. The relevant calculations have been confirmed by an independent accredited agency DNV (Norway), which carried out an audit of the project design documents (PDD).

SIBUR has invested over 8.5 billion rubles in the expansion of Yuzhno-Balyksky GPP. The capacity of the enterprise has increased by 1.5 billion cubic meters of associated petroleum gas (APG) per year, and extraction of the target fraction across the whole plant rose to 95%. The new complex consists of a booster compressor station, dehydration and low-temperature condensation units, a propane refrigeration unit, as well as other ancillary facilities. In fact, the complex is a separate GPP, the first facility of this scale to have been built in Russia in the last decade.

A further sale of emission reduction units is planned under an agency agreement with Sberbank of Russia. The proceeds will go towards financing investment projects for the deep processing of APG.

SIBUR is consistently implementing its strategy to increase the capture of APG. From 2007 to 2010, the volume of APG rose by 13 billion cubic meters to more than 17 billion cubic meters per year, and in coming years will reach 20 billion cubic meters per year.

Background information:

Implementation of the Kyoto Protocol to the UN Framework Convention on Climate Change allows Russian companies to sell to foreign organizations emission reduction units of greenhouse gases attained in the implementation of investment projects.

In October 2009, the Government of the Russian Federation approved the "Regulations on Implementation of Article 6 of the Kyoto Protocol to the UN Framework Convention on Climate Change", under which Sberbank of Russia was appointed as the administrator of carbon units in Russia. Its duties include conducting contests and the further examination of applications. According to the results of the examination, the decision on project approval is taken by the Ministry for Economic Development.

In future, independent accredited monitoring will be conducted on projects of the company gaining approval by the Ministry, which will confirm the volume of emission reductions for a certain period. Sberbank of Russia will then assign the corresponding volume of carbon units to the company. Subsequently, in line with the sales contract (ERPA - Emission Reductions Purchase Agreement), the company receives funds from the buyer of carbon credits through the bank.

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Anna Lebed

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