Moscow, 28 August 2014. In late August, SIBUR signed a long-term contract with a Chinese customer for regular liquefied petroleum gas (LPG) supplies to the growing Chinese market.
The product will be shipped by rail from Nyagan GPP (gas processing plant), a subsidiary of SIBUR. Initial supply volumes will total around 20 ktpa with further increase outlook.
SIBUR will be the first Russian company to supply LPG to China. When planning the transportation route, it was important to take into account that there are no LPG transshipment facilities on the Russian–Chinese border. It was therefore decided to supply the product in tank containers and further transport them through China by low loaders. A test shipment of LPG to China was made in July, and this proved the efficiency of this approach.
LPG consumption in China is growing rapidly. According to IHS, it amounted to 27.6 mt in 2013, up 9% y-o-y, with 3 mt imported annually.
Projects to expand hydrocarbon processing in Russia boost LPG output. SIBUR's strategic priority is to convert this feedstock into bulk polymers as end product locally in Russia. For this purpose, the company is running large-scale petrochemical construction projects in the Tyumen Region, Nizhniy Novgorod Region, and other regions. However, the domestic LPG demand from the petrochemical industry, utilities, and natural gas powered vehicles is much lower than supply. Thus, further LPG output growth requires efficient export channels. Having launched its LPG transshipment terminal in Ust-Luga last year, the company gained access to new markets in Northwestern Europe. Currently, the Ust-Luga terminal's LPG transshipment capacities are fully utilised. As LPG output is expected to grow, supplies to China are expected to become another step towards further LPG market expansion.
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.