SIBUR Signs a Contract with ChelPipe to Buy Pipes for Its New Products Pipeline

SIBUR petrochemical holding has signed a three-year contract with Chelyabinsk Tube-Rolling Plant (ChelPipe) for integrated supply of pipes to build a products pipeline connecting Purovsky Gas Condensate Processing Plant and Tobolsk-Neftekhim. The new 1,100 km pipeline will transport natural gas liquids (NGL) used in petrochemical production of plastics, synthetic rubbers, organic synthesis products, and gas engine fuel. The pipes, which have three-layer polyethylene coating for corrosion protection, will be supplied to SIBUR in several shipments from 2012 to 2014.

The engineering design for the pipeline construction project is currently being finalised. SIBUR has successfully completed all engineering works while also signing land lease agreements and receiving the permits required from the Ministry of Regional Development. Environmental impact assessment for the southern site of the project is positive. In a tender procedure, SIBUR selected contractors for construction and installation works on one of the sites. Subject to a positive report from the Main State Expert Review Board (Glavgosexpertiza), the company will roll out full-scale pipeline construction.

The annual capacity will exceed four million tonnes of NGL for the pipeline’s northern section, stretching from Purovsky Plant to Yuzhno-Balyksky GPP, and eight million tonnes for the southern section going from Yuzhno-Balyksky GPP to Tobolsk-Neftekhim.
All NGLs produced at SIBUR’s own gas processing plants and purchased from oil & gas companies are transported via SIBUR’s pipelines and national railroads to petrochemical facilities for further fractionation and pyrolysis. The rising output of petrochemicals in the Yamal-Nenets and Khanty-Mansi Autonomous Areas is aligned with the progress of SIBUR’s large investment projects at the Tobolsk site, in particular the second stage of a gas fractionation plant, which will bring its total annual NGL capacity to 6.6 million tonnes. In Q3 2012, SIBUR plans to complete its 500,000 tonnes polypropylene production facility – the largest in Europe – to run on propylene derived from LPG (propane). Meanwhile the company is looking into the possibility of building a large monomer and polymer production complex.

“We are committed to our strategy of deeper processing for light-end hydrocarbon feedstock, mostly in West Siberia,” said Dmitry Konov, CEO of SIBUR. “Capitalising on the direct ties with our Chelyabinsk partners, we are well-positioned to build reliable pipeline infrastructure for bringing associated petroleum gas and gas condensate processing products to petrochemical facilities.”
“The focus for ChelPipe is to provide high-tech pipes to the energy sector, and we aim to deliver our top quality LDPs within the time limits announced,” said ChelPipe’s CEO Yaroslav Zhdan. “We place great value on our collaboration with SIBUR and have every confidence that our partnership will be long-lasting while benefitting both parties.”

SIBUR is the largest petrochemical company in Russia and Eastern Europe, one of the fastest growing petrochemical companies in the world, top-3 EBITDA margin in petrochemical industry globally. The Company is among top-2 European synthetic rubbers producers.
SIBUR operates across the entire petrochemical process chain from gas processing, production of monomers, plastics and synthetic rubbers to the processing of plastics. SIBUR is a vertically integrated company with its gas processing facilities providing feedstock for its petrochemical production. Company has trade houses in Europe and China.

ChelPipe is one of the leading industrial groups in Russia’s steel industry. In 2011, the company’s share in total Russian shipments was 18%. ChelPipe comprises a number of facilities and companies of the iron and steel industry: Chelyabinsk Pipe-Rolling Plant, Petrouralsk New Pipe Plant, scrap metal collection and processing company META, Trade House Uraltrubostal, and the oil service unit Rimera.

Source: SIBUR