Petrochemicals Giant Sinopec Agrees New Joint Venture in Siberia

What’s new: Russia’s petrochemicals company Sibur Holding and China Petroleum and Chemical Corp. (Sinopec) on Monday concluded a deal establishing a joint venture at the Amur Gas Chemical Complex (Amur GCC) after receiving approval from both countries.

Sibur and Sinopec will hold 60% and 40% interest in the joint venture, respectively. The Amur GCC project, which has been under construction since August this year, will cost an estimated $10 billion to $11 billion, according to Sibur’s statement, which didn’t elaborate on the financing commitments of each side.

What’s the background: “With Sinopec’s involvement, we will be able to maximize the project’s efficiency, in particular optimizing and balancing the facility's future debt portfolio,” said Dmitry Konov, chairman of Sibur’s management board.

Amur GCC is set to be the world’s largest basic polymer production facility, says Sibur, with annual capacities of 2.3 million tons of polyethylene and 400,000 tons of polypropylene. The construction is expected to be completed in 2024.

“Amur GCC … will also become a model for Sino-Russian energy cooperation to extend to downstream chemical industry,” said Sinopec’s Chairman Zhang Yuzhuo. Starting 2019, China has been using natural gas flowing from Russia through the “Sino-Russia Eastern Route” jointly built by Gazprom PJSC and China National Petroleum Corp.

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Contact reporter Lu Yutong (yutonglu@caixin.com) and editor Heather Mowbray (heathermowbray@caixin.com)

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