(Adds details on deal, background, and comments)
VLADIVOSTOK, Russia, Sept 5 (Reuters) - Sibur, Russia's
largest petrochemicals company, said on Thursday it has reached
an agreement with Gazprom GAZP.MM on liquefied petroleum gas
(LPG) supplies to a yet-to-build Sibur plant, ahead of Russia's
natural gas pipeline launch to China.
The deal could expedite an investment decision by the
petrochemicals company to build a gas and chemical complex in
the Amur region near Russia's border with China.
Under the deal, Gazprom will supply the new complex between
1.1 million tonnes and 1.5 million tonnes of LPG, and may
increase potential deliveries of ethane by 400,000 tonnes
annually.
"We would like to make an investment decision by the end of
the year," Sergey Komyshan, executive director of Sibur, told
Reuters.
LPG, one of the by-products of gas processing, is the key
feedstock for production of petrochemicals at Sibur's latest
complex.
The project was "practically not oriented toward the
domestic market" and that China's Sinopec was a potential
partner in the complex, Komyshan said, adding that Russia's far
east is too scarcely populated to spur demand for the complex.
"China is experiencing and will keep having a deficit in
polyethylene," Komyshan said. "Around 2024-2025, we expect
demand for polyethylene to grow by 10 million tonnes."
According to Komyshan, the project construction may be
completed as early as 2024.
Sibur said it could increase estimates for its annual
production capacity of polyethylene at the facility to 2.3
million tonnes from 1.5 million tonnes, as well as produce about
400,000 tonnes of polypropylene.
Meanwhile, Russia, one of the top oil exporters to China, is
set to launch a natural gas export pipeline in December. Its LPG
supplies to China remain small at this stage, but Moscow is
planning to expand its production.
Amid global trade issues, Sibur and Sinopec signed a number
of cooperation agreements this year to join forces, particularly
in processing natural gas into petrochemicals in Russia and
China.
The company said in June that it could carry out a
long-planned initial public offering (IPO) no earlier than next
year. Komyshan said no date had been set for a possible IPO.
"Our main task is to be ready for the IPO," he said. "If and
when this decision is made, I think we will fulfil it
successfully."