SIBUR, Gazprom Neft link up for west Siberia gas processing JV

24 December 2013 10:10  [Source: ICIS news]

LONDON (ICIS)--Russia-based SIBUR and Gazprom Neft have signed an agreement for the construction of a new gas processing plant (GPP) with an annual associated petroleum gas (APG) processing capacity of 900m cubic metres (mcm), SIBUR said on Tuesday.

The GPP, to be built on the site of the existing Yuzhno-Priobskaya compressor station in the Khanty-Mansi Autonomous Area in west Siberia, is designed to have a liquids recovery ratio of at least of 95%, in line with global practices, it added.

The project will be implemented by Yuzhno-Priobskiy GPP, a 50:50 joint venture of oil company Gazprom Neft and gas processing and petrochemicals producer SIBUR, the owner of the compressor station.

Under the companies’ memorandum of agreement, Gazprom Neft will supply APG to Yuzhno-Priobskiy GPP on a long-term basis while SIBUR will pay for half of the volume.

The partners plan to process APG and produce refined products pro rata their stakes in the JV. SIBUR will then sell its share of dry gas to Gazprom Neft and purchase Gazprom Neft’s share of natural gas liquids (NGLs). All the contracts, with the price formula agreed, will be long term, the SIBUR said.

Dry gas will be transported to the Khanty-Mansiysk Gas Supply gas transmission pipeline, while NGLs will be supplied to the pipeline connected to SIBUR’s Tobolsk production site, it added.

“Cooperating with oil producers, we continue to ramp up our feedstock supply and develop the West Siberian gas processing facilities and infrastructure,” said Mikhail Karisalov, SIBUR's executive director.

“SIBUR's competencies in GPP construction and operation combined with Gazprom Neft's resource potential enable us to develop the project so that it is efficient for both parties,” he added.

Commenting on the project, Vadim Yakovlev, first deputy CEO at Gazprom Neft, said: “More efficient use of associated petroleum gas is one of the key targets for Gazprom Neft. Since we expect further APG production growth at our Khanty-Mansi fields, we are launching the new project to increase APG processing volumes - the construction of a new GPP.

“This is the best solution possible; it enables our partners and us to gain maximum economic benefit from feedstock processing and utilisation using our companies' industry experience,” he added.

By: Will Conroy
+44 20 8652 3214

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