Sibur Mulls Extended Amur Project

06.09.2019 -

Russian petrochemicals and plastics giant Sibur is considering extending the configuration of its proposed Amur Gas Chemical Complex (AGCC) in Russia’s far east following another feedstock supply deal with Gazprom.

The Russian gas group has signed a preliminary agreement to supply Sibur with 1.5 million t/y of LPG and ethane on formula-based prices. Consequently, Sibur said it will be able to increase AGCC’s output from 1.5 million t/y of PE to 2.3 million t/y of PE and 400,000 t/y of PP. This latest agreement follows a previous contract between the two for the supply of around 2 million t/y of ethane.

“The signing of the agreement opens up an opportunity for us to increase the amount of hydrocarbon feedstock to be processed in Russia. If we opt for an extended version of the project, LPG will be processed domestically instead of being exported, thus providing additional feedstock for related industries and enabling us to manufacture more high-tech export-oriented products,” said Dmitry Konov, chairman of the management board at Sibur Holding.

If the extended option goes ahead, Sibur said the Amur complex will become the world’s largest producer of PE and PP. The company expects to finalize a decision on the project’s configuration by the end of 2019.

Currently, contracts for technology and front end engineering and design have been agreed with (undisclosed) engineering companies and the site is being prepared for construction. Sibur is also expecting a potential decision by the government to introduce a negative excise tax on LPG that would “create equal processing conditions for various petrochemical resources”.

Chinese state-owned conglomerate Sinopec, which owns 10% of Sibur, is expected to take a 40% share in AGCC, subject to a final investment decision in the project, which is anticipated in 2020.

In separate news, Sibur is planning to sell several assets at its site in Togliatti to Tatneft. The assets, registered in the name of Sibur Togliatti and Togliattisintez, include production facilities for various types of synthetic rubber, MTBE, butadiene, isoprene and other intermediates, along with infrastructure at the industrial park that accommodates a number of chemical and technology companies.

After the acquisition, Tatneft intends to further develop the assets in line with its gas and petrochemical strategy. Sibur said it will continue to cooperate with the Togliatti-based companies as partners.

The deal is expected to close by the end of 2019. Financial terms were not disclosed.