21 April 2013 09:15 [Source: ICB]
Russia-based petrochemical major SIBUR will make a final decision on whether to proceed with its planned 1.5m tonne/year gas-fed ethylene cracker at Tobolsk by the end of this year, according to the company's CEO.
A decision on approval of the ZapSibNeftekhim project, which is currently at the front-end engineering design (FEED) phase - being carried out by engineering group Linde - will be made at a board meeting towards the end of 2013, CEO Dmitry Konov said.
CEO Konov said shareholders will decide on any SIBUR IPO
Speaking to journalists in London, Konov said: "It will be fed by ethane and liquefied petroleum gas (LPG) from our own gas processing plants, plus third parties delivered by our existing pipeline network. The decision will be made at the end of the FEED phase at the end of 2013. If there is an investment decision, construction would begin immediately."
He added: "We are more competitive with feedstock prices than the US is with its shale-based ethane prices."
TOBOLSK PP STARTUP
SIBUR's new 500,000 tonne/year propylene dehydrogenation (PDH) technology PP plant is expected to start production by Friday 26 April.
Initially, propylene production will use feedstocks from SIBUR's other sites. The PDH part of the plant will start up in late May or early June.
Konov added: "We do not expect to see the full effect of this plant on our financials until full year 2014 but that doesn't mean we expect a long ramp up: we expect a pretty steep ramp up."
Russia and CIS will be the primary targets for the PP. Konov explained that Russia imports 250,000-300,000 tonnes/year of PP and close to 1m tonnes/year of goods made of PP, prompting his belief that fundamentals in Russia will support the product.
On the prospect of an initial public offering for SIBUR, Konov said: "The company is prepared for an IPO in terms of our financial reporting and business structure. It is up to the shareholders to decide if and when to do this."
"Our decision to invest [in India is based on] availability of feedstock and a good market"
Mikhail Gordin MD
In January SIBUR successfully raised a $1bn five-year issue from the Eurobond market.
Konov said that market conditions in the first and second quarters of 2013 are worse than in the same period last year, but not dramatically. "We've seen some slowdown - specifically in the rubbers businesses - in the year to date. But conditions are more or less flat compared to Q4 2012."
Asked if the seasonal pick-up normally experienced had taken place this year, he said: "In Russia the seasonal pick-up happens when the temperature becomes warmer. We didn't see this in March, but now, in mid-April, things are looking more positive."
Through a joint venture, SIBUR and India's Reliance began construction of a 100,000 tonne/year butyl rubber plant at Jamnagar in India in February 2013.
According to Mikhail Gordin, head of SIBUR's synthetic rubbers unit, India is an attractive country for investment in the rubber industry with its large and growing market, population and economy.
"It is also a place where monomers for rubber are available at a large refinery like Jamnagar - so our decision to invest is a combination of availability of feedstock and a good market. We'd like to benefit from this growth potential."
He said Reliance was interested in developing its synthetic butyl rubber and they are a very strong partner in the country. "We brought our technology, skills and experience in manufacturing and engineering and they brought skills, world class infrastructure, availability of feedstocks and market presence in the country."
There is no decision yet about whether to brand the product SIBUR or Reliance but the JV will use Reliance and SIBUR's marketing channels. He said the project is at the detailed engineering and procurement phase and completion is scheduled for 2015. The preliminary estimate for the cost of the facility is around $450m.
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