MOSCOW (MRC) -- SIBUR Holding, a leading Russian gas processing and petrochemicals company, may slow some project spending as the Russian petrochemical producer seeks to curb risks from the economy amid US and European sanctions against the country, reported Bloomberg.
"This is to avoid risks for the company in 2016 and 2017 if the price and economic situation does not change," Chief Executive Officer Dmitry Konov said in an interview in Davos, Switzerland, without identifying any specific projects.
Russia, the largest oil and gas exporter, faces a recession this year as crude prices fell more than 50% in six months. The US and Europe also sanctioned people and companies after Russia annexed Crimea in Ukraine and supported a separatist insurgency in its neighbor. Billionaire Gennady Timchenko, who owns more than 15% of SIBUR, is among those sanctioned.
While SIBUR isn't on any sanctions list, it doesn’t have any borrowing plans as wider debt costs have risen, Konov said.
"Due to the economic situation and existing sanctions against a number of Russian companies and banks, public debt sales for any Russian company will be extremely expensive if possible at all," he said.
Even if annual spending falls, SIBUR expects higher output in its crude and petrochemicals operations as recently completed projects expand capacity, Konov said.
As MRC informed previously, in May 2014, SIBUR signed a contract with China Petroleum and Chemical Corporation (or "Sinopec") to establish a joint venture for the construction of a 50,000 tpa butadiene nitrile rubber (or "NBR") plant at the Shanghai Chemical Industry Park, 50km south of Shanghai. Sinopec’s share in the joint venture will be 74.9% and SIBUR’s will be 25.1%.
SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. We own and operate Russia’s largest gas processing business in terms of associated petroleum gas processing volumes and are a leader in the Russian petrochemicals industry. As of 31 March 2014, SIBUR operated 27 production sites located all over Russia, had over 1,400 large customers engaged in the energy, chemical, fast moving consumer goods (FMCG), automotive, construction and other industries in approximately 70 countries worldwide and employed over 27,000 personnel.
MRC