MOSCOW (MRC) -- Russia's Sibur and TAIF will combine their petrochemical businesses to create one of world's top five producers of polyolefin and rubber products, said companies.
Russian energy companies, led by privately owned Sibur, have increasingly been shifting their focus to petrochemicals in a drive to capitalise on the fast-growing sector and offset the volatile market for crude oil exports. "This combination will make the new company's petrochemical operations more competitive in the global market, improve its resilience to market fluctuations, and also unlock further growth potential of Russia's petrochemical industry," the companies said in a statement.
TAIF said the deal would help TAIF Group accelerate key projects in its 2030 strategic development programme that will see more than 1.5 trillion roubles (USD20 billion) of investments over the next 10 years. Sibur, the largest petrochemicals producer in eastern Europe, said existing TAIF shareholders would receive a 15% stake in PJSC Sibur Holding in exchange for transferring a controlling interest in TAIF's group of petrochemical and energy firms. The remaining stake in TAIF can be subsequently purchased by the combined company.
The deal will close subject to completing relevant corporate procedures and receiving necessary regulatory approvals. RIA news agency, citing the head of Sibur, said the deal could be closed by the end of the year.
Leonid Mikhelson, head of and major shareholder in Russia's largest gas producer Novatek, owns 48.5% of Sibur.Gennady Timchenko, Mikhelson's business partner owns another 17%, while China's Sinopec and Silk Road Fund have 10% each. Some former and current managers own 14.5% of the company.
TAIF, located in the Russian Republic of Tatarstan, accounts for 64% and 28% of Russia's total output of rubbers and plastics respectively.
Earlier it was reported that SIBUR increased sales of polypropylene and polyethylene last year amid growing utilization of the ZapSibNeftekhim complex. This led to an increase in the company's revenue in the olefins and polyolefins segment by 77.1% to RUB 187.3 billion. This growth was mainly due to an increase in sales of polypropylene and polyethylene as a result of increased utilization of the ZapSibNeftekhim complex and was partially offset by a decrease in prices for these types of products.
It was also noted that TAIF plans to receive more than 1.75 trillion rubles of revenue per year by 2030. In 2020, the proceeds from the sale of commercial products amounted to 582 billion rubles. To implement more than 30 large-scale investment projects, TAIF will require a colossal amount of investments. Their size over the next 10 years will amount to 1.6 trillion rubles. This is 2 times higher than investments in the entire history of TAIF Group from 1995 to 2020. Taking into account the implementation of the Development Strategy for 2021-2030. the total investment of TAIF Group for 1995-2030 will amount to 2.5 trillion rubles.
According to MRC's ScanPlast report, Russia"s estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
SIBUR is the largest vertically integrated gas processing and petrochemical company in Russia, uniting a number of production sites in various regions of the Russian Federation. The company sells products to consumers in the fuel and energy complex, automotive, construction, consumer goods, chemical and other industries in more than 80 countries around the world.
PSC "TAIF" was established in 1995, is the parent company of the group of the same name, which includes enterprises structured in four business areas: oil and gas processing, chemistry and petrochemistry (energy); investment and financial services; building; telecommunications and complex services, including trade. TAIF Group of Companies is a large Russian holding that controls 96% of the chemical, petrochemical and oil and gas processing industries in Tatarstan. The most important of its areas is the Chemistry, Petrochemistry and Oil and Gas Processing Division, which includes the leading Russian polymer producers Nizhnekamskneftekhim and Kazanorgsintez.