History in the making

26 July 2013 08:51  [Source: ICB]

The company's rapid development has seen it become a major force in the feedstock & energy and petrochemical markets

It is not even two decades since SIBUR was founded, but the company is now the largest integrated petrochemicals company in Russia, Commonwealth of Independent States and central and eastern Europe in revenue terms and one of the leading producers. With access to advantaged feedstock through the development of world-scale production facilities and infrastructure in Western Siberia - home of the largest proven oil and gas reserves in Russia - SIBUR has developed a strong vertically integrated business model that compares favourably with its peers.

 Gazprom HQ: home to SIBUR's majority owner from 2001-2008, since when the two have been partners with no affiliation between them

Copyright: Rex Features

The company has grown rapidly since it was established in 1995, reporting increased revenues of roubles (Rb) 271.3bn ($8.63bn, €6.66bn) for 2012 and recently raising $1bn through its debut Eurobond listing.

The company was founded by an act passed by the government of the Russian Federation in March 1995, with 38% of its shares state-owned. The remaining 62% of the company was made public.

Towards the end of 1998, 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.

SIBUR subsequently built up assets by buying stakes in petrochemical companies all over Russia. Some 60 companies soon belonged to the company.

By 2001, Gazprom had acquired control of SIBUR with a 51% stake. Alexander Dyukov was appointed president in February 2003 and oversaw significant reform with the introduction of a long-term growth strategy.

By September, the stock was divided between Gazprom (25%) and Gazprombank (75%). Dyukov was succeeded by Dmitry Konov as SIBUR's new president towards the end of 2006.

Gazprom decided that the petrochemical business was a non-core asset in 2008, and SIBUR shares were sold to Gazfund in exchange for its energy assets. Both Gazprombank and Gazfund also withdrew from the Gazprom group. In December 2010 Gazprombank began a phased sale of SIBUR to a private shareholder, Leonid Mikhelson.

In 2011, its non-core tyre and mineral fertilisers segments were sold. SIBUR's focus was now its main polymer business.

The past few years, in particular, have seen the Russian giant embark on a series of landmark projects and joint ventures, which will provide access to new markets and help boost profitability. With the likes of its Tobolsk-Polymer, RusVinyl and Ust-Luga projects nearing completion, and joint venture agreements established with global petrochemical players such as India's Reliance and China's Sinopec, the future for SIBUR is certainly looking bright.

Since July 2013, SIBUR Holding is 82.5% owned by Mikhelson and Gennady Timchenko, as well as some current and former members of the management of OOO SIBUR and OAO SIBUR Holding, who own 17.5%.

By: Andy Brice
+44 20 8652 3214

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