Gazprom Neft and SIBUR to Build New GPP in Khanty-Mansi Autonomous Area

24 December 2013

Gazprom Neft and SIBUR have signed an agreement for construction of a new gas processing plant (GPP) with an annual associated petroleum gas (APG) processing capacity of 900 million cubic metres on the basis of existing Yuzhno-Priobskaya compressor station in the Khanty-Mansi Autonomous Area.

The GPP is designed to have liquids recovery ratio at least of 95%, in line with global practices.

The project will be implemented by OOO Yuzhno-Priobskiy GPP, a joint venture of Gazprom Neft and SIBUR (each having a 50% stake) and the owner of the Yuzhno-Priobskaya compressor station. Under the memorandum, 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 NGLs. All the contracts, with price formula agreed, will be long-term.

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. The GPP construction project will include setting up infrastructure to handle and store NGLs, and modernisation of the pipeline to deliver dry gas to the gas transmission pipeline.

The decision to build a compressor station and a system for collection of APG at the Yuzhno-Priobskoye field to supply gas to Yuzhno-Balykskiy GPP was made back in 2010. To deliver hydrocarbon feedstock from the field to the compressor station, Gazprom Neft has also built a 90 km APG collection system and 5 vacuum compressor stations. In summer 2013, the compressor station (with a designed annual capacity of 500 million cubic metres of gas) constructed as part of the joint venture processed first APGvolumes as part of commissioning stage. Growth in expected APG volumes from Gazprom Neft’s fields triggered the decision to develop the project further and build the new Yuzhno-Priobskiy GPP.

“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,” commented Vadim Yakovlev, First Deputy CEO at Gazprom Neft.

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