MOSCOW (MRC) -- SIBUR, Russia’s biggest producer of petrochemicals, has cut the timeline and reduced the estimated cost of its large-scale petrochemical project in Russia’s Far East, near the border with China, said the company.
The company is now targeting mechanical completion of the Amur Gas Chemical Complex (Amur GCC) in mid-2024, having previously said that the project would likely be completed in late 2024 or 2025. Sibur also says that the budgeted cost of building the complex has been reduced to USD10 billion or below, from a previous estimate of USD10-11 billion.
The company’s experience of building the USD8.8-billion ZapSibNeftekhim (ZapSib) petchem complex at Tobolsk, western Siberia, together with the sheer size of the Amur GCC, which will produce 2.3 million metric tons/year (MMt/y) of ethylene and have downstream polymers capacity totaling 2.7 MMt/y, have enabled the revisions, Alexander Petrov, board member/plastics, elastomers, and intermediates at Sibur, told CW in an interview after the release of the company’s fourth-quarter and full-year 2020 financial results.
"We have experience and we are going for scale,” Petrov says. "We learned a lot of lessons with ZapSib. It was our largest project, and we had built a propane dehydrogenation and polypropylene [PP] complex at Tobolsk seven years before. All this helped us to find a lot of new and smart solutions."
Construction on the Amur GCC began last August, and SIBUR and Sinopec formed a 60/40 joint venture (JV) in December for the complex. Sibur and Sinopec have a “good understanding,” Petrov says. “We believe we have a lot of reasons to do the project jointly. The Far East is a new territory for us, and the complex will definitely serve China because of the close proximity. And the Amur GCC is pretty capital intensive. So, it’s a new type of risk for us, and we know Sinopec as a shareholder.” Sinopec has a 10% stake in SIBUR.
ZapSib, based on a 1.5-MMt/y steam cracker, started up at the end of 2019 and reached its design capacity in the fourth quarter of 2020, ahead of schedule. The complex had an average operating rate of 92% during the quarter and attained an operating rate of about 97% in December, Petrov tells CW.
The ramp-up of supply from ZapSib had a hugely positive impact on Sibur’s fourth-quarter and full-year 2020 results. But the company also benefited from robust demand for polymers in packaging and medical applications, among others, during the pandemic.
The packaging sector gained from greater home-consumption of food and increased use of online delivery services for consumer goods. “Packaging demand inside and outside Russia was pretty good,” Petrov says. He estimates some decline in the first half of 2020 but only of a few percentage points, with demand in some segments improving.
Demand for Sibur’s plastics in medical applications benefited from the increase in consumption of PP in personal protective equipment such as face masks. However, there was a “deep decline” in demand from other sectors such as automotive and construction, particularly in the first half of 2020, caused mainly by COVID-19, Petrov says. “We experienced a fast recovery in construction, especially in residential housing, in the second half,” Petrov says.
SIBUR serves the automotive industry with synthetic rubber to manufacture tires. Petrov estimates there was a decline of about 20% in tire demand in Russia during 2020.
Meanwhile, SIBUR launched construction in September 2020 at its Polief site at Blagoveschensk, Bashkortostan, Russia on a project to produce primary polyethylene terephthalate (PET) granules partly from recycled PET. Polief will need to source 34,000 metric tons/year of used PET in the form of flakes, made from recycling PET packaging, that will be melted and mixed with 110,000 metric tons/year of virgin PET at the plant to produce 144,000 metric tons/year of PET. Start-up of the plant is scheduled for the second half of 2022. “The challenge is to accumulate enough flakes,” Petrov says. SIBUR has signed several contracts to receive PET flakes from recyclers, he says.
SIBUR, meanwhile, is building Russia’s first maleic anhydride (MA) plant. The unit, with capacity for 45,000 metric tons/year of MA, is taking shape at Tobolsk and completion is expected in the second half of 2022. “It is making good progress,” says Petrov. “There are 1,000 construction workers on site, and we are waiting for certain pieces of heavy equipment."
SIBUR started up a plant making phthalate-free dioctyl phthalate (DOTP) plasticizer at Perm, Russia, in 2019. The unit has a design capacity of 100,000 metric tons/year, making it Europe’s biggest facility for the product, but this has been “improved by capacity creep,” Petrov says. DOTP is a new product for Sibur and the Perm plant has seen double-digit growth in demand in Russia during the last two years, Petrov says. “It has not just replaced imports but has stimulated demand in the Russian market,” he says.
Russia imported about 63,000 metric tons of plasticizers in 2018, which dropped 43% to 36,000 metric tons in 2020 following completion of the Perm DOTP plant, Sibur says. Meanwhile, DOTP accounted for 49% of plasticizer consumption in Russia last year, jumping from 2% in 2018. The Perm plant sold 81,500 metric tons of its 100,000-metric tons output in Russia in 2020, according to SIBUR.
SIBUR started up a styrene butadiene styrene (SBS) plant at Voronezh, Russia, with capacity for 50,000 metric tons/year in early 2020 and the unit is running at full capacity, Petrov says. The plant accounts for 5% of worldwide SBS capacity, according to Sibur. It sells in Russia and “supplies a lot of tons for export to China and the US,” Petrov says. The facility makes five new SBS grades. “The focus is to develop new grades for different applications,” Petrov says.
As per MRC, SIBUR’s fourth-quarter adjusted profit rose 9% year on year on the back of the ramp-up of capacity at its ZapSibNeftekhim petrochemicals complex, which reached its full design capacity. The company’s EBITDA margin increased to 37.2% in the fourth quarter from 32.3% a year earlier. The ramp-up to full design capacity ahead of schedule at ZapSibNefthekhim, the company’s world-scale petrochemical complex at Tobolsk, Russia, drove earnings and sales higher
As MRC informed earlier, SUBUR also began construction on a large-scale gas chemical complex in Amur, near the Chinese boarder, to be carried out as a 60-40 joint venture with Sinopec.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).
SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. We own and operate Russia’s largest gas processing business in terms of associated petroleum gas processing volumes and are 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.