SIBUR undergoing business transformation to focus on Russian market

Sibur Holding PJSC (Moscow), Russia’s biggest producer of petrochemicals, has announced plans to transform the business management model of its plastics and synthetic rubber activities to focus on the Russian market, starting in April. Since the war in Ukraine began in 2022, Russian exporters have faced international sanctions that have limited their ability to ship products to many countries, said the company.

Sibur said in a statement March 22 that it would transition from a structure focused on product divisions to an industry-based model.

The company currently has three plastics and rubber divisions: basic polymers, plastics and organic synthesis, and synthetic rubbers. Sibur plans to replace these by creating 11 industry-based divisions. The new divisions are agribusiness, recycling, flexible packaging, rigid packaging, engineering and transport infrastructure, healthcare, oil and gas processing and production, consumer goods, construction, transport and e-commerce and partnerships.

Sibur said that the primary goal of the reorganization is to satisfy demand from Russian customers that are meeting the needs of “socially important industries.”

Sibur noted that it has more than doubled output of the company’s core products since 2014 and brought new products to market every year to replace items that are “less eco-friendly and less energy-efficient,” as well as substitute imports and expand niches for well-established products. In 2023, the company said it launched 27 new grades of petrochemical product with potential sales of 111,000 metric tons per year. In the past 10 years, consumption of polypropylene (PP) and polyethylene in Russia has increased by 35%, but the country’s overall imports of polymers have decreased by more than 30%, Sibur said.

The gradual ramp-up to design capacity at Sibur’s previously announced Amur gas chemical complex in Russia’s Far East and the company’s new PP production facility at Tobolsk, Western Siberia, which is expected to begin operating in the next few years, will help further increase polymer consumption in Russia and facilitate the development of import-substitution programs for finished products, it said.

“Sibur’s vision is to support the comprehensive development of every petrochemical-consuming industry, to meet growing demand and to promote the use of high-tech materials,” the company said.

Russia has strong growth potential for polymers, according to Sibur. Polymers are used in 37% of packaging in Russia, well below an average of 50% in other countries, it said. Russian consumption of polymer solutions in the housing and utilities sector is about 40%, less than half the figure of 85% in Europe, the company said. Per capita consumption of polymers in “developed countries” is ahead of demand in Russia, it said. Sibur cited the example of Turkey, which consumes 52 kg of polymers per capita, compared with 30 kg in Russia.

The transition to an industry-based model will expand opportunities for Russian manufacturers to sell their products by encouraging the use of domestic solutions and finding new niches for their use, the company said. “Sibur’s new model will enable its customers to work alongside the company to test ideas and hypotheses for the development of product lines and applications,” it said.

We remind, SIBUR, Russia's largest producer of polymers and rubbers, summarised the company's key operational results for 2023 at the Ruplastica international trade fair, which was held in Moscow on 23–26 January 2024, said the company. In 2023, SIBUR ramped up the sales of its key products, with the share of supplies to the Russian market rising to 75%.

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Abu Dhabi National Oil Co. and Austria’s OMV AG are nearing a deal to create a petrochemical firm worth more than EUR30 billion (USD33 billion), according to people with knowledge of the matter, said Bloomberg.

An agreement to combine Abu Dhabi-listed Borouge Plc with Borealis AG could be announced as soon as Thursday, according to the people, who asked not to be identified because the agreement isn’t yet public.

A representative of OMV declined to comment. A spokesperson for Adnoc wasn’t immediately available to comment.

OMV owns 75% of Borealis, with the remainder held by Adnoc, while Borouge is a partnership between Adnoc and Borealis. The proposal calls for OMV to inject about EUR1.7 billion of cash into the joint company to ensure its stake is equal to Adnoc’s, they said.

We remind, Adnoc announced that it has formally closed the acquisition of a 24.9% shareholding in OMV AG, a global energy and chemicals group, headquartered and listed in Vienna, Austria, from Mubadala Investment Company. The transaction accelerates delivery of ADNOC’s global chemicals growth strategy, and reinforces its status as a responsible, long-term partner and growth-oriented investor. Financial details were not disclosed.

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ITT Inc. announced an approximately USD11 mln investment to expand testing capabilities at three of its industrial process sites to enhance capacity for large project awards in its flow business, reinforcing the company’s commitment to an exceptional customer experience, said Hydrocarbonprocessing.

The investments at IP facilities in Obernkirchen, Germany, Vadodara, India and Dammam, Saudi Arabia will increase ITT’s power capacity in pump, motor and control systems testing, enabling the company to locally test larger, more complicated pump packages. The investments are expected to be completed in the third quarter of 2024.

At ITT’s Goulds Pumps sites in Saudi Arabia and India, the investments will support future growth as part of ITT’s ‘in region, for region’ strategy. At ITT’s Bornemann pumps site in Obernkirchen, Germany, the company will have the unique ability to replicate field conditions through complete unit multiphase fluid testing once the investments are completed, including a special focus on pump packages deployed in carbon capture and decarbonization applications globally.

“These strategic investments will further enhance our capabilities and customer experience and continue to differentiate ITT from the competition,” said Luca Savi, ITT’s Chief Executive Officer and President. “Our added capabilities will be a critical part of our commitment to becoming the preferred global flow provider by offering a superior solution through innovation, world-class customer service and flawless execution.”

IP is a global leader in centrifugal and twin-screw pumps for the chemical, energy, mining and industrial markets with ~$1.1 billion in revenue in 2023. The segment has 17 manufacturing locations and ~3,300 employees globally.

We remind, Russian oil company Gazprom Neft has opened a plant to recycle plastic packaging into secondary granules in Gatchina, Leningrad Region with annual capacity of 8,600 tonnes. The new plant will handle the complete cycle of recycling plastic packaging made of polypropylene and polyethylene into feedstock for subsequent use, the company said.

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The Supervisory Board of Borealis and Thomas Gangl have come to a mutual agreement regarding a termination of Thomas Gangl’s mandate as CEO of Borealis AG, as well as the related employment contract effective June 30, 2024, said the company.

“Thomas Gangl is a seasoned executive with a wealth of experience at OMV, followed by his most recent role as Borealis CEO. I thank him for his valuable contributions to the OMV Group spanning over two decades and wish him all the best for his future endeavors,” said Daniela Vlad, Member of the Executive Board of OMV Aktiengesellschaft and Chairwoman of the Supervisory Board of Borealis AG.

Thomas Gangl started his career at OMV in 1998 as a process engineer before holding various management positions in OMV's refining business. In 2019, he became a member of the OMV Executive Board as Chief Downstream Operations Officer and oversaw the increase of OMV's shareholding in Borealis to 75 %. During his tenure, the investment decisions for the electrolysis for green hydrogen and the plant for the production of green biofuels at the Schwechat refinery were taken and OMV's chemical recycling process ReOil was established.

Thomas was appointed CEO of Borealis in April 2021. He has been instrumental in refining Borealis’ Strategy 2030 with sustainability at its core, and accelerating the company’s transformation towards a circular economy. Key milestones during his tenure included the sale of Borealis’ nitrogen business, the acquisition of Rialti Spa, a polypropylene (PP) compounder of recyclates in Italy, along with the signing of the acquisition of Integra Plastics AD, an advanced mechanical recycling player in Bulgaria. Furthermore, he steered the prolongation of Borealis’ joint venture agreements with Borouge, the successful IPO of Borouge at the ADX, and the final investment decision of the Borouge 4 plant in Ruwais, UAE, which upon completion, will be the world's largest single-site polyolefin complex.

We remind, Borealis announces that it has signed an agreement for the acquisition of Integra Plastics AD, a Bulgarian advanced mechanical recycling player. Closing of this transaction is subject to customary regulatory approvals.

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Celanese Corporation, a global specialty materials and chemical company, announced that the International Sustainability and Carbon Certification (ISCC) has certified its Low Carbon CCU (carbon capture and utilization) Methanol under the ISCC Carbon Footprint Certification (CFC) system, said the company.

The newly certified Low Carbon CCU Methanol demonstrates a greater than 70% reduction in carbon footprint relative to a global average benchmark for fossil-based methanol production, as included in EU legislation.

Celanese began operating one of the largest active CCU facilities in the world at its Clear Lake, Texas, site in January 2024. By leveraging CCU, Celanese now offers customers low-carbon options across its Acetyl Chain and Engineered Materials products under the ECO-CC name. CCU takes CO2 industrial emissions that would otherwise be emitted into the atmosphere and applies reduced-carbon-intensity hydrogen to chemically convert the captured CO2 into a methanol building block used for downstream production.

“We’re proud to be the first to receive ISCC CFC certification for CCU materials, which allows us to strengthen our ability to offer customers a wider range of lower-carbon footprint products,” said Kevin Norfleet, global sustainability director, Acetyls at Celanese. “This is another industry-leading step Celanese has taken to provide third-party validation of sustainable product benefits while helping our customers to meet the growing demand for more sustainable solutions.”

The ISCC CFC system establishes a structure and methodology to validate appropriate accounting for the CO2 capture benefits of the CCU process as well as tracking of sustainable feedstocks using the mass balance system.

Jan Henke, director ISCC and MEO Carbon Solutions, emphasized the importance of this collaborative effort: “We have observed an increasing interest, especially from the chemical industry, in certifying the carbon footprint of their products and making credible claims towards their customers. With our new carbon footprint certification, we provide the respective solution. For us, the integration of CCU and CCS into the new certification is only the start. Step-by-step, we will optimize the scheme together with our stakeholders and taking into account existing standards.”

We remind, Celanese plans to close an Engineered Materials compounding site at Mechelen, Belgium that was part of its USD11 billion acquisition of DuPont’s Mobility & Materials business in 2022, said the company. The closure would help optimize production costs across Celanese’s global network, it said in a financial filing.

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