SIBUR (PJSC SIBUR Holding) is a Russian petrochemicals company founded in 1995 and headquartered in Moscow.
SIBUR is the largest integrated petrochemicals company in Russia and one of the fastest-growing companies in the global petrochemicals industry. Company purchases hydrocarbons and processes them into plastics, rubbers and other high value added products.
According to the company's webpage, the Group sells its petrochemical products on the Russian and international markets in two business segments: Olefins & Polyolefins (polypropylene, polyethylene, BOPP films, etc.), Plastics & Intermediates (EPS, PET, etc.), and Elastomers.
SIBUR's petrochemicals business utilises mainly its own feedstock, which is produced by its Midstream segment using by-products purchased from oil and gas companies. The group owns and operates Russia's largest and most extensive integrated midstream asset base for processing and transportation of APG and NGLs, located primarily in Western Siberia, which is the largest oil and gas producing region in Russia and where the Group sources most of its feedstock.
SIBUR's production facilities are located in over 20 Russian regions and employ over 44,000 employees as the company indicates. The company's products are used in the chemical, fast-moving consumer goods, automotive, construction, energy and other industries in 80 countries worldwide. According to Forbes magazine's ranking of Russian companies by revenue for 2019, Sibur was the 13th-largest in Russia.
The company has international presence: an office in Vienna, four offices in China, and an office in Istanbul. SIBUR has an extensive portfolio of clients in key regions for the company – Russia, Europe and China.
As of today, SIBUR is a leading emerging markets petrochemical group and the largest petrochemical producer in the Russian market, according to IHS.
SIBUR's newest petrochemicals facility ZapSibNeftekhim ranks in Top-5 largest petrochemicals projects in the world and is Europe's largest petrochemicals plant by capacity.
The Group is currently working on a new project Amur Gas Chemical Complex, which is set to become the largest base polymer facility globally by capacity.
Operating segments According to the company, SIBUR has four operating segments: two petrochemicals sub-segments – olefins & polyolefins and plastics, elastomers & intermediates – and a midstream (LPG, naphtha, natural gas) segment. These business segments vary in their end-user markets, supply and demand trends, value drivers, and, consequently, their profitability, however, they are highly integrated with most of the feedstock for the petrochemicals business supplied by the company's own Midstream segment.
Midstream SIBUR acquires by-products of oil and gas extraction (APG and raw NGL) and transports them to gas processing plants (GPP) and gas fractionation units (GFU). GPPs process APG to produce marketable natural gas, as well as raw NGLs feedstock, while GFUs fractionate NGLs to produce LPG and naphtha, which are the main feedstock for petrochemical production.
The LPG and naphtha produced by SIBUR is then either sold externally or secured as feedstock for the Group's petrochemical business.
SIBUR's feedstock processing infrastructure includes seven out of the nine existing GPPs in Western Siberia, five compressor stations and three gas fractionation units.
Midstream facilities:
Yuzhno-Balykskiy GPP based in Ugra region) Belozerniy GPP based in Nizhnevartovsk Gubkinskiy GPP based in Gubkinskiy Vyngapurovskiy GPP based in Purovskiy region Nizhnevartovskiy GPP based in Nizhnevartovsk Yuzhno-Priobskiy GPP (50%) (joint venture with Gazprom Neft Group) Zapsibtransgaz based in Nizhnevartovsk
Olefins & polyolefins (O&P)
SIBUR uses NGL to create olefins, which are then turned into polyethylene and polypropylene via polymerisation. Polypropylene is also used to produce BOPP films, which is an important material for packaging.
O&P facilities:
ZapSibNeftekhim (100%) Poliom (50%, JV with Gazprom Neft Group) BIAXPLEN (100%) Tomskneftekhim (100%) NPP Neftekhimia (50%) (joint venture with Gazprom Neft Group) Sibur-Kstovo (100%) RusVinyl (100%) Kazanorgsintez (64%) (though SIBUR RT).
Plastics, elastomers and intermediates SIBUR's PE&I facilities produce the following products:
– plastics and organic synthesis products (PET, glycols, expandable polystyrene, DOTP, alcohols and acrylates)
– elastomers (rubbers)
– methyl tertiary butyl ether (MTBE) and fuel additives
– intermediates
These are used in the chemicals, FMCG, construction, automotive, agriculture and other industries.
Plastics, elastomers and organic synthesis facilities
Sibur-Neftekhim (100%) Sibur-Khimprom (100%) Polief (100%) Sibur-PETF (100%) Voronezhsintezkauchuk (100%) Nizhnekamskneftekhim (83%) (through SIBUR RT) Krasnoyarsk Synthetic Rubber Plant (100%, JV with SINOPEC through Sibur-Sinopec Rubber Holding Company Limited, 74.99%) Reliance Sibur Elastomers Private Limited (25.10%) (joint venture with Reliance Industries Limited).
History
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.
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.
Petrochemicals
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.