Rosneft and SIBUR sign new contracts for APG and dry gas supplies

Igor Sechin, Rosneft's President and Chairman of the Management Board, and Leonid Mikhelson, Chairman of SIBUR Holding’s Board of Directors, have signed a set of documents for supplies of associated petroleum gas (APG) from Rosneft's fields to Nizhnevartovskiy, Belozerniy and Nyagangazpererabotka gas processing plants (GPPs), and a contract for sales of dry gas from Nizhnevartovskiy and Belozerniy GPPs to Rosneft.

SIBUR has also completed the purchase of the 49% stake in Yugragazpererabotka, which owns and operates Nizhnevartovskiy, Belozerniy and Nyagangazpererabotka GPPs, from RN-Holding, Rosneft’s subsidiary. As a result of the transaction, SIBUR has gained full control of Yugragazpererabotka.

Previously, SIBUR and Rosneft reached an agreement on increasing guaranteed supplies of APG from Rosneft's fields to Yugragazpererabotka’s gas processing facilities up to 10 bcm per annum through 2032.

The APG price will be formula-based and indexed in line with changes in prices for APG derivatives: dry gas and raw natural gas liquids (raw NGLs).

Commenting on the new contracts, Igor Sechin said, “These are integrated deals that enable both Rosneft and SIBUR to optimise their asset portfolio while securing a strategic partnership in gas processing and petrochemistry and benefitting from long-term synergies. As announced at the end of last year, we will use proceeds from the deal to further reduce our debt.”

“This long-standing partnership will bring SIBUR and Rosneft stronger competitive positions in gas processing. With the long-term contracts in place, SIBUR will enjoy a stable flow of APG supplies to its processing facilities and contribute to Rosneft’s higher APG utilisation rates,” commented Leonid Mikhelson.

Previously, RN-Holding owned 49% in Yugragazpererabotka, a joint venture that owns and operates three gas processing plants (GPPs): Nizhnevartovskiy, Belozerniy and Nyagangazpererabotka, three compressor stations, along with the pipeline infrastructure that transports APG from the compressor stations to the GPPs. The total capacity of Yugragazpererabotka's processing plants is 13.4 bcm per year.

SIBUR (www.sibur.com) 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 30 September 2013, SIBUR operated 27[i] production sites located all over Russia, had over 1,500 major customers engaged in the energy, automotive, construction, fast moving consumer goods (FMCG), chemical and other industries in approximately 60 countries worldwide and employed over 28,000 personnel.