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Sinopec to acquire interests in Sibur synthetic rubber

Sinopec to take shares in Russia Sibur’s facility

On October 2012China Petroleum and Chemical Corporation (Sinopec) and the Russian company Sibur signed Heads of Agreement to sell to the Chinese company shares of the Krasnoyarsk Synthetic Rubbers Plant JSC (KSRP).

Sinopec is the second largest Chinese national oil company after PetroChina (CNPC) and among the Top 10 largest companies in the world.

The other partner of the deal, Sibur, is the largest petrochemical company in Russia.

By the revenues, Sibur is also the leading chemical company in CIS and Central and Eastern Europe.

Sibur’s rubber business is represented by three Russian plants: Voronezhsintezkauchuk, Tolyattikauchuk and Krasnoyarsk Plant of synthetic rubber

Exporting 45% of its sales to Europe and China, Sibur is the second largest European producer of synthetic rubbers but is active all along the petrochemical chain after refining.

Procuring the raw materials, liquefied petroleum gases (LPGs)natural gas and naphtha,  from the oil and gas companies, Sibur produces a large spectrum of basic chemical products covering basic polymers, synthetic rubbers, plastics, products of organic synthesis, intermediates and other chemicals.

Regarding the production of synthetic rubber, Sibur managed to develop a large portfolio of elastomers based on local and competitive feedstock of associated gas and liquid hydrocarbons (NGL, LPG).

Because of its long standing experience Sibur is producing these elastomers with very costs effective processes which have attracted Sinopec’s interest.

Used more  and more in all industries in beginning with automobile, aerospace, oil exploration, textiles, printing sectors and of course tires, Sinopec is struggling to ramp up domestic production.

Even if China is investing massively in petrochemical industry, it will remain a net importer of petrochemical products until 2035.

Sinopec and Sibur extend cooperation in elastomers

In April 2012, Sinopec and Sibur signed a first agreement to increase the production of synthetic rubber in China.

Sinopec and Sibur agreed to establish a joint venture in Shanghai Chemical City to manufacture nitrile butadiene rubber (NBR) and isoprene rubber (IR) based on Sibur’s patents and technologies.

The plan is to build first the NBR production unit with 50,000t/y capacity.

In a second step, Sibur and Sinopec would add the isoprene rubber (IR) facility with the same capacity of 50,000 t/y.

The feasibility study for NBR had been completed.

At the completion of the feasibility study for the IR facility, Sinopec and Sibur will make the final investment decision (FID) of the Shanghai synthetic rubber project.

At that time Sinopec and Sibur had also signed Heads of Agreement to increase the production capacity of nitrile butadiene rubber (NBR) at the Krasnoyarsk facility in Russia.

Sibur‘s industrial infrastructure includes its own local railways, piers for the delivery of raw materials and the shipping of finished goods, as well as capacity for the storage of raw materials and finished products.

The project is to ramp up Sibur’s plant current annual output of 42,000 t/y to 56,000 t/y.

In October 2012, Sinopec and Sibur are moving the Heads of Agreement about the Krasnoyarsk project into a joint venture where Sinopec will take 25% plus one share of the whole Krasnoyarsk plant reflecting the proposed production increase of 14,000 t/y of the future 56,000 t/y NBR plant.

In establishing this joint venture, Sinopec and Sibur are getting closer to the final investment decision (FID) planned by the end of 2012 of the NBR Krasnoyarsk expansion to be completed in 2015.

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