The story
Background
AK Sibur, the group's predecessor, was established by government decree in March 1995. The integration was underpinned by the production cooperation of petrochemical enterprises from the former Soviet Union (FSU), while Gazprom became the driving force of petrochemical asset consolidation around SIBUR. Although petrochemicals were not its core business, the gas company embarked on the mission set by the government to create a powerful national player in the deep hydrocarbon conversion market.
In 1995, the new company absorbed gas processing plants and infrastructure assets of Sibneftegazpererabotka; Permsky Gas Processing Plant producing petrochemical products and NIPIgaspererabotka, a design institute.
In 1998, in addition to Gazprom, entrepreneur Yakov Goldovsky became a co-owner and head of SIBUR. Towards the end of 1998, AK Sibur started its transformation into a vertically integrated petrochemical holding with a full production chain from the processing of raw materials through to the manufacture of finished goods. AK Sibur subsequently built up assets by buying stakes in petrochemical companies all over Russia, including some 60 companies. As a result, the company accumulated huge debts in excess of US$1 bn with no finance to repay them.
By 2001, Gazprom had acquired a 51% stake in AK Sibur, thus gaining control of the company. In 2003, Alexander Dyukov was appointed as the chief executive officer (CEO) of AK Sibur, and a new management team was formed. Under new management, the company improved its operational and financial results and reached an agreement with its creditors.
Reorganization
In 2005, in accordance with a debt restructuring plan, AK Sibur established SIBUR Holding (whose legal successor is today's SIBUR), which consolidated all the assets of AK Sibur. A 25% interest in SIBUR was sold to Gazprom, and the remaining 75% was sold to Gazprombank, while the proceeds were used to repay the debt owed to Gazprom. In December 2005, AK Sibur Holding was renamed SIBUR Holding.
In 2007, Gazprom, as part of its strategy to exit from non-core businesses, disposed of its interest in the company by selling its 25% stake to the Gazfond private pension fund. In 2008, Gazprombank attempted to sell its 75% stake in the group as a part of a management buyout. However, the sale was not completed due to the unavailability of financing. In a series of transactions completed between November 2010 and November 2011, Leonid Mikhelson, a Russian entrepreneur and a co-owner of NOVATEK, acquired a controlling stake in the group. That same year energy trader Gennady Timchenko, ex-co-owner of Gunvor trading house, acquired a 37.5% stake in SIBUR. Between 2012 and 2017, there were several changes in shares. In 2013 member of Board Kirill Shamalov bought 3.8% shares of the company. As a result, Mikhelson's equity interest totalled 42.23% of the Group's share capital, Timchenko's stake stands at 17%, Kirill Shamalov has 3.9%; Chinese Sinopec and Silk Road Fund got 10% each and the total stake of current and former managers amounted to 10.6%.
Since 2011, SIBUR completed a number of selective divestments, selling its tyre and mineral fertiliser businesses. Instead, the company focused on investing in polymers. At the end of December 2011, SIBUR exited SIBUR-Russian Tyres, having sold a 75% stake to the company's management and the remaining stake to the partners of Vadim Gurinov, the CEO of SIBUR-Russian Tyres. At the end of December 2011, SIBUR sold its mineral fertiliser assets to Uralchem (Mineral Fertilisers, Perm) and Siberian Business Union (Kemerovo Azot and Angarsk Azotno-Tukovy Zavod).
Expansion
After the decision has been made to focus on polymer business the company started investing into the expansion of the midstream infrastructure, which, once in place, would provide the necessary feedstock for SIBUR's polymer facilities. Overall, between 2012 and 2019, the Company completed 14 large-scale investment projects, with total capital expenditures amounting to 210 billion roubles. The expansion and modernisation of its assets allowed the company to capitalise on growth opportunities in both gas processing and petrochemical markets in Russia. The new strategy was supported by the rebuilding of the company's management in 2016, replacement of a CFO and the devolving of power to regional operations. It provides more efficient way of management when important solutions can be made operatively without long way of approval from central office.
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Midstream
The first expansion stage included the construction of an extensive transport infrastructure, including pipelines to deliver APG, as well as an increase in gas processing fractionation capacities.
In 2012, the Yuzhno-Balykskiy gas processing plant launched a low-temperature condensation and rectification unit.
In 2014, SIBUR completed construction of the linear part of the Purovsky GCP–Tobolsk–Neftekhim product pipeline, which has a total length of 1,100 kilometres.
In 2014, SIBUR commissioned the second fractionation unit, which made the total capacity of the Tobolsk site hit 6.6 mtpa up from 3.8 mtpa in 2011. In 2016, SIBUR completed another project aimed at further expansion of the gas fractionation capacity in Tobolsk from 6.6 to 8 million tonnes a year.
In 2016, Stage 2 of the Vyngapurovsky GPP was commissioned.
As a result, SIBUR's gas processing capacity grew to 25 bcm in 2016, while the recovery of desired fractions in APG processing increased to over 90% in 2016.
Polyolefins
In 2013, SIBUR launched a new world-class polypropylene (PP) plant in Tobolsk (previously named Tobolsk-Polymer), one of the largest PP facilities globally and No 1 in the Commonwealth of Independent States (CIS). With an annual capacity of 500 kilotonnes of PP, the plant significantly increased the Group's polyolefins production capacity.
In 2014, production was started at the RusVinyl plant.
That same year, SIBUR made a final investment decision to proceed with ZapSibNeftekhim (ZapSib) – the largest state-of-the-art petrochemical facility in Russia and one of the five largest global investment projects in the petrochemical industry. The project envisaged greenfield construction of a new world-class petrochemical complex in Tobolsk, within SIBUR's petrochemical hub, that would include an ethylene cracker with an annual capacity of 1.5 million tonnes and polyolefins production (annual PE capacity of 1.5 million tonnes and annual PP capacity of 0.5 million tonnes). Construction started in 2015.
In 2019, the company completed construction and start-up procedures at all of ZapSib's production and processing facilities ahead of schedule, and production of PP and PE got under way.
ZapSib reached 68% production capacity at the end of the first quarter of 2020. During the quarter, ZapSib produced 115,000 tonnes of polypropylene and 259,000 tonnes of polyethylene.
The total investment budget for the ZapSib project was revised downwards from $9.5 billion to approximately $8.8 billion as of 31 March 2020. The Group has already invested $8.2 billion as of 31 March 2020, with residual capital expenditures estimated to be around $0.6 billion. The group had committed credit lines available for the project in the sum of $0.4 billion as of 31 March 2020.
In June 2019, SIBUR and Sinopec signed a distribution agreement to supply PE to China from the group's ZapSibNeftekhim plant. In 2022, the company's revenue amounted to 26 billion rubles.
Niche segments and new products
In 2012, second phase of AlphaporTM expandable polystyrene production line was officially launched at SIBUR's production site in Perm. The design capacity of the new line is 50,000 tonnes of EPS per year, and with its launch the company's aggregate polystyrene design capacity in Perm has reached 100,000 tonnes per year.
In 2013 SIBUR commissioned its new chemical complex at Voronezh – Thermoplastic Elastomer Production (TEP) Plant. The new plant has increased Sibur's production of TPEs from 35,000t yearly to 85,000t a year. According to the company's webpage, in 2022 the capacity was increased up to 135,000t a year.
In 2018, SIBUR completed the construction phase of the production of TPE at its compounding site in Voronezh, which added an annual capacity of about 50,000 metric tonnes.
In September 2019, SIBUR and Sinopec signed a framework cooperation agreement to produce SEBS (styrene, ethylene and butylenebased block copolymers) and a Memorandum of Understanding to cooperate in nitrile butadiene rubber (NBR) production.
In 2022, SIBUR has launched production with design capacity 45 ktpa production of a maleic anhydride (MAN) production facility at SIBUR Tobolsk. MAN was previously not produced in Russia and domestic demand was covered by imports.
Future projects
In 2020, SIBUR has begun works on a new major petrochemicals project Amur Gas Chemical Complex.
The Amur GCC project envisages construction of a basic polymer production facility with a total capacity of 2.7 mtpa (2.3 mtpa of polyethylene and 400 ktpa of polypropylene).
SIBUR and Gazprom signed agreements in May 2018 and September 2019, respectively, on long-term ethane (final) and LPG (preliminary) supplies totalling 3.5 million tonnes per annum. Amur GCC will be launched in synch with the gradual ramp-up of Gazprom's 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.
Sinopec got 40% in this project.
In 2018, SIBUR has launched the construction of a maleic anhydride (MAN) production facility at SIBUR Tobolsk. Maleic anhydride is used in the construction, agriculture, automotive, paint and varnish, furniture, pharmaceutical and other industries. It serves as feedstock for films, synthetic fibres, pharmaceuticals, detergents, fuel components and oils. MAN improves the durability of end products, enhances their waterproof properties, resistance to temperature stress and mechanical impacts. With a planned capacity is 45 ktpa, the facility is scheduled to go online in 2021, bringing new high-tech jobs to the market. MAN is currently not produced in Russia and domestic demand is covered by imports.
From Wikipedia’s article on Sibur, shared under CC BY-SA 4.0.4