Sector News

Sibur proceeds with $9.5-billion petchem project at Tobolsk

September 16, 2014
Chemical Value Chain
Sibur (Moscow), Russia’s largest petrochemical company, said today that, following the completion of the front-end engineering design (FEED) contracts and assessment of the design documentation, it is proceeding with the previously announced ZapSibNeftekhim megaproject at Tobolsk, Russia. Sibur’s board of directors approved increased funding for the project in 2014, with overall capital expenditure budget for 2014 increasing from 53 billion Russian rubles ($1.4 billion) to R74 billion.
  
The ZapSibNeftekhim project will include a Linde-process steam cracker designed to produce 1.5 million m.t./year of ethylene; 500,000 m.t./year of propylene; and 100,000 m.t./year of butane-butylene fraction, along with units with a total capacity to produce 1.5  million m.t./year of various grades of polyethylene (PE) and 500,000 m.t./year of  polypropylene (PP). Ineos is providing its PE technology and LyondellBasell Industries its PP process.
  
FEED work on the cracker, PE, and PP plants has been completed, and Sibur has signed an agreement with NIPIgazpererabotka (Moscow), Russia’s leading engineering center in the gas processing industry, to design the infrastructure and off-site facilities.
  
According to preliminary estimates, the total investment in ZapSibNeftekhim will amount to approximately $9.5 billion, including the expenditure already incurred and costs budgeted for commissioning. Construction of the project is expected to be completed within five to five and a half years. 
  
“Sibur has a strong financial position. Over recent years, the company has delivered on ambitious projects to expand its gas processing and fractionation capacity, improve transport infrastructure reliability, and build its first large polymer production capacities, providing the basis for a smooth transition into the next stage of the project,” says Dmitry Konov, CEO.
  
Sibur’s projects in the Tyumen region are part of the investment agreement with the Tobolsk regional government and the Tobolsk city administration aimed at comprehensively developing the Tobolsk production site. This agreement covers, among other projects, constructing the Tobolsk-Polymer PP production facility, commissioned in 2013; expanding a gas fractionation plant; and developing railway infrastructure, commissioned in 2014, along with constructing the main pipeline between Purovsky gas condensate processing plant and Tobolsk-Neftekhim. The parties provide support for the project under applicable law, and the current agreement to ensure a comprehensive development of the Tobolsk production site. It has now been agreed to extend the current investment agreements until 2024.
 
The use of cutting-edge processes will ensure safety and reliability of production. Prior to the implementation of the project, Sibur commissioned a Russian team from Environmental Resources Management, a global leader in HSE advisory services, to estimate ZapSibNeftekhim’s environmental footprint. Comprehensive analysis showed that the prospective operations comply with the applicable Russian laws and environmental requirements. ZapSibNeftekhim’s construction and operations will neither exceed environmental standards nor have a material adverse effect on the environment.
 
The facility will create new jobs, provide more tax and other payments to the budget, and contribute to the social development and quality of life in Tobolsk, Sibur says.
 
By Natasha Alperowicz
 

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