Sibur Polyolefins Plant, Russian Federation

Sibur Group is one of the largest petrochemicals companies in Russia. Founded in 2002, there are 75,000 staff across the company, which operates across the entire petrochemical process chain. Sibur's interests include gas processing, production of monomers and plastics, methanol, mineral fertilisers, tyres and industrial rubber items, as well as the processing of various plastics.

In early October 2009 the company launched a new 3kta unit for flat geogrid production under the trademark Apropat at its Plastik plant. Geogrid is a plastic mesh produced from polypropylene for use in ground stabilisation. In August 2009 Orton (Kemerovo Region), another Sibur subsidiary, had launched a similar 3kta geogrid production unit.

In 2010 Sibur will begin production of polypropylene nonwoven geomaterials for use in road, rail, oil-and-gas and industrial-and-civil construction. For all this additional production polypropylene will be required and Sibur has begun to make an investment in this area as well. Sibur hopes to be able to produce 20% of Russia's requirement for geosynthetic materials.

Polyolefins plant

In August 2009 Sibur announced the launch of the first phase in the construction of a new polyolefins production complex at Tobolsk in the Tyumen region. Construction was delayed in September 2009 and now major equipment for the new plant will be delivered at the construction site during 2010 and 2011.

The Tobolosk project is expected to occur in two stages and will start with the construction of a 500,000tpa polypropylene plant adjacent to Tobolsk-Neftekhim (another Sibur subsidiary). The polypropylene plant and propane drying unit (510,000tpa propylene) are expected to be completed by the second quarter of 2012 and commissioned by the end of the third quarter of 2012.

The second phase of the project will see the construction of a 500,000 tpa polyethylene plant which is expected to be ready for start up in 2014. Both phases will cost around RUB52bn.

The environmental impact study was carried out by Branan Environment in early 2009 and this resulted in the plant being granted an approval permit for construction.

Linde-KCA-Dresden of Germany is engineering the project design, ordering equipment and managing the construction of the polypropylene production unit in a FEED capacity in conjunction with Tecnimont SpA acting as engineering, procurement and construction (EPC) contractor.

The 510,000tpa propylene plant will use propane dehydrogenation methodology based on US company UOP's Oleflex technology. Polypropylene from the new plant is expected to be employed for the production of base polymer for geo-textile canvas and geo-grid for use in a Tyumen project to build the new railway line linking Salekhard and Nadym.

The polyethylene plant will have Linde-KCA-Dresden as the EPC contractor and this will make use of UK company INEOS' technology. Fluor was the company chosen in 2007 for the management of both phases of the project; it helped Sibur to determine which technology should be licensed for use in both plants.

Finance

The Tyumen regional government and Sibur subsidiary Tobolsk Polymer LLC signed an investment agreement in 2007 regarding state support for the project to build a propylene and polypropylene complex in Tobolsk.

The Tyumen government will provide tax breaks while Tobolsk Polymer will construct the two plants and create jobs, while also stimulating growth in small and medium-sized businesses. The investment agreement will last until the end of 2017.

In September 2009 Vnesheconombank, the Russian state-run bank, opened a $153m credit line for Tobolsk-Polymer LLC, as the first tranche of the financing for the polypropylene production project.

In October 2009 Sibur Holding JSC and Sberbank of Russia JSC signed two agreements to open $400m worth of credit with a four-year term. These funds will be used to finance the company's current activities including replacement of credit allocated by other banks.

Russian economy

The construction of the Sibur polypropylene complex at Tobolsk is part of the "Strategy for the Development of the Chemical and Petrochemical Industry in Russia for the period up to 2015".

The project will focus on improving the efficiency of the use of Russia's natural resources as well as protection of the country's ecology and environment. This is also expected to provide a boost to industry areas such as housing, communal services and car manufacturing.