Gazprom Neft, SIBUR and Titan Group Establish a Joint Venture Based on Poliom Plant in Omsk

23 May 2014

Gazprom Neft, SIBUR and Titan Group signed an agreement to establish a joint venture based on Omsk Polypropylene Plant (Poliom). As part of the deal, Sibgazpolimer, a joint venture of SIBUR and Gazprom Neft (each having a 50% stake), acquired a 50% stake in Poliom from Titan Group.

Under the agreement, Gazprom Neft is to supply Poliom with raw materials (propane-propylene fraction from Omsk Refinery), with SIBUR to sell Poliom’s products through its distribution network.

Poliom’s Board of Directors is to consist of an equal number of representatives of Titan Group and Sibgazpolimer, with the plant’s operations handled by CEO. Currently, this position is held by Oleg Moloshtanov.This partnership will help enhance the efficiency across the entire production chain, from feedstock delivery to sales.

“We are convinced that SIBUR’s competencies in polypropylene production and solid understanding of the Russian polymer market will contribute to enhancing Poliom’s operational excellence and performance,” Dmitry Konov, SIBUR’s CEO, said.“The acquisition of Poliom’s stake by Gazprom Neft will provide the plant with smooth feedstock supplies to manufacture high-quality petrochemicals, improve our refining efficiency and add value across all production stages,” said Anatoly Cherner, deputy CEO for logistics, processing and sales at Gazprom Neft.

“Cutting-edge production facilities with a high level of environmental protection, advanced technologies, and highly qualified personnel enabled Omsk Polypropylene Plant to become a market leader within the very first year of operations. I believe that the majors’ engagement in the project will help increase investor appeal of the Omsk Region and boost SME development, marking the growing point of various industrial sectors in Russia,” said Mikhail Sutyaginsky, Chairman of the Board of Directors at Titan Group.

REFERENCE

Omsk Polypropylene Plant (Poliom) can produce 210 kt of polypropylene of about 100 grades per year. Spheripol process developed by LyondellBasell Industries (Netherlands) is applied in the production. The project is based on public private partnership and funded by the Bank for Development and Foreign Economic Affairs (Vnesheconombank) State Corporation. The opening ceremony was held on 25 April 2013.

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. SIBUR owns and operates Russia’s largest gas processing business in terms of associated petroleum gas processing volumes, and is a leader in the Russian petrochemicals industry.

As of 31 March 2014, SIBUR operated 27 production sites located all over Russia, had over 1,400 large customers engaged in the energy, chemical, fast moving consumer goods (FMCG), automotive, construction and other industries in approximately 70 countries worldwide and employed over 27,000 personnel.

Gazprom Neft is Russia’s largest producer of a variety of basic petrochemicals: aromatic hydrocarbons (benzene, paraxylene, orthoxylene, toluene) and propane-propylene fraction (propylene-containing liquefied hydrocarbon gas). The company has production capacities located in Russia (Omsk, Moscow and Yaroslavl) and Serbia.

Titan Group is the largest petrochemical company in Siberia and one of the Omsk Region’s priority investors. The holding company embraces petrochemical, agricultural and infrastructure facilities. The group’s employee headcount exceeds 6,000 people. As at 2013 year-end, Titan Group’s shares of the Russian phenol and MTBE markets amounted to over 25% and 17%, respectively.