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SIBUR and Sinopec set up a JV at Amur Gas Chemical Complex

December 30/2020

MOSCOW (MRC) -- SIBUR Holding, Russiaís leading petrochemicals company and one of the most rapidly growing petrochemicals businesses globally, and China Petroleum & Chemical Corporation (Sinopec), Chinaís leading energy and chemical company, have closed the deal to set up a joint venture (JV) at the Amur Gas Chemical Complex after obtaining all the necessary approvals from the regulators of both countries, as per SIBUR's press release.

SIBUR and Sinopec will hold interest in the JV in the amount of 60% and 40%, respectively.

In June 2019, the parties agreed on the main terms and conditions of the potential JV. Following the investment decision, all corporate and regulatory approvals were obtained as required to close the deal. Following the deal, the parties will gain joint control over the JV. (This will result in deconsolidation of the asset from SIBURís balance sheet in the consolidated financial statements under the IFRS.)

Set to become the worldís largest basic polymer production facility, Amur GCC will have a capacity of 2.7 mtpa, including 2.3 mtpa of polyethylene (PE) and 400 ktpa of polypropylene (PP), and will be producing a wide range of grades. The construction of Amur GCC proceeds in synch with the gradual ramp-up of Gazpromís Amur Gas Processing Plant to its full capacity, so that the latter could supply ethane and LPG to Amur GCC for processing into high value-added products. The completion of construction and commissioning is scheduled for 2024.

The Amur GCC project will help attract international investments in the Russian economy while also making a considerable contribution to the national programme of growing the nationís non-commodity exports. Given the facilityís geography, its products will be targeting Asian markets, primarily China, which is the largest consumer of polymers globally. The Amur GCC project is expected to be included in an intergovernmental agreement between Russia and China.

Amur GCC will set the tone in global environmental and technology standards, in particular through its reliance on renewable energy sources.

Amur GCCís budget is tentatively estimated at USD 10 bn to USD 11 bn and is subject to adjustments as the project progresses. In December, Amur GCC attracted USD 1.5 bn in bridge financing from a syndicate of Russian banks. Gazprombank acted as the lead arranger and lender, with Otkritie and Sberbank as arrangers and lenders.

Dmitry Konov, Chairman of the Management Board at SIBUR Holding: ďSIBUR and Sinopec have a long track record of jointly delivering on large-scale investment projects and implementing advanced production technologies. Creating a joint venture is a major milestone in our Amur GCC project. With Sinopecís involvement, we will be able to maximise the projectís efficiency, in particular optimising and balancing the facility's future debt portfolio, while also enhancing its expertise in distribution across Asian markets.Ē

ZHANG Yuzhuo, Chairman of Sinopec: ďAmur GCC is a milestone in the cooperation between Sinopec and SIBUR, and will also become  a model for Sino-Russian energy cooperation to extend to downstream chemical industry. The success of Amur GCC will inject new impetus into advancing the high-quality cooperation between the two countries in the fields of energy, chemical industry, investment, economy and trade and play a positive role in effectively promoting the sound interaction of domestic and international markets as well as the economic development, employment and social well-being of the Far East region.Ē

Ethylene and propylene are feedstocks for producing PE and PP.

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. We own and operate Russiaís 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.

Sinopec Corp. is one of the largest scale integrated energy and chemical company with upstream, midstream and downstream operations. Its principal business includes: exploring, developing, producing and trading crude oil and natural gas; producing, storing, transporting and distributing and marketing petroleum products, petrochemical products, synthetic fiber, fertilizer and other chemical products. Its refining capacity and ethylene capacity rank No.2 and No.4 globally. Sinopec listed in Hong Kong, New York, London and Shanghai in August 2001.
Author:Margaret Volkova
Tags:PP, PE, homopolymer PP, propylene, HDPE, ethylene, gas processing, petrochemistry, Sibur Holding, Sinopec, China, Russia.
Category:General News
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