SIBUR Introduction and H1 2012 Financial Results Investor - - PowerPoint PPT Presentation
SIBUR Introduction and H1 2012 Financial Results Investor - - PowerPoint PPT Presentation
SIBUR Introduction and H1 2012 Financial Results Investor Presentation October 2012 DISCLAIMER The information contained herein pertaining to SIBUR (the "Company") has been provided by the Company solely for use at this presentation.
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DISCLAIMER
The information contained herein pertaining to SIBUR (the "Company") has been provided by the Company solely for use at this presentation. By attending this presentation, or by reading these presentation slides, you agree to be bound by the limitations set out below. This presentation does not constitute or form part of, and should not be construed as, an
- ffer, solicitation or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company, nor shall any part of it nor the fact of its
distribution form part of, or be relied on in connection with, any contract or investment decision relating thereto. This presentation is not a prospectus or other offering document and does not purport to be all-inclusive. The information contained in this presentation has not been independently verified by the Company or other person connected to the Company or any of their respective direct or indirect shareholders, directors, officers, employees, advisors, representatives or affiliates (all such persons together, the "Affiliates"). No representation or warranty, either express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness, correctness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their
- wn judgment.
This presentation and its contents are confidential and may not be further copied, distributed or passed on to any other person or published or reproduced directly or indirectly, in whole or in part, by any medium or in any form for any purpose. The Company and its advisers accept no responsibility for any losses howsoever arising, directly or indirectly, from this presentation or its contents. The material contained in this presentation is presented solely for information purposes and is not to be construed as providing investment advice. As such, it has no regard to the specific investment objectives, financial situation or particular needs of any recipient. There may be material variances between estimated data set forth in this presentation and actual results, and between the data set forth in this presentation and corresponding data previously published by or on behalf of the Company. This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. This presentation is not for publication, release or distribution in Australia, Canada, Japan or the United States. Neither this presentation nor any copy of it may be taken or transmitted into the United States, its territories or possessions, or distributed, directly or indirectly, in the United States, its territories or possessions or to any US person as defined in Regulation S under the US Securities Act 1933, as amended (the “Securities Act”), except that it may be transmitted to qualified institutional buyers (“QIBs”), as defined in Rule 144A under the Securities Act (“Rule 144A”), in reliance on the exemption from registration provided by Rule 144A and to persons in offshore transactions in accordance with Regulation S under the Securities Act. Any failure to comply with this restriction may constitute a violation of United States securities law. This document is not an offer for sale of any securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. The Company has not registered and does not intend to register any portion of any offering in the United States or to conduct a public offering of any securities in the United States. This presentation and the information presented herein is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). This presentation must not be acted upon by persons who are not relevant persons. Any investment or investment activity to which this presentation relates is available only to relevant persons and will be engaged in only with relevant persons. This presentation contains forward-looking statements, including (without limitation) statements containing the words "anticipates," "expects," "intends," "may," "plans," “forecasts,” "projects," "will," "would", "targets,“ “believes” and similar words. These statements are based on the current expectations and projections of the Company about future events and are subject to change without notice. All statements, other than statements of historical fact, contained herein are forward-looking statements. Forward-looking statements are subject to inherent risks and uncertainties, such that future events and actual results may differ materially from those set forth in, contemplated by or underlying such forward- looking statements. The Company may not actually achieve or realize its plans, intentions or expectations. There can be no assurance that the Company's actual results will not differ materially from the expectations set forth in such forward-looking statements. Factors that could cause actual results to differ from such expectations include, but are not limited to, the state of the global economy, the ability of the petrochemical sector to maintain levels of growth and development, risks related to petrochemical prices and regional political and security concerns. The above is not an exhaustive list of the factors that could cause actual results to differ materially from the expectations set forth in such forward- looking statements. The Company and its Affiliates are under no obligation to update the information, opinions or forward-looking statements in this presentation.
- 1. SIBUR: Business Overview and Strategy
- 2. H1 2012 Operational and Financial Performance
Appendices CONTENTS
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373 kmt of basic polymers 426 kmt of synthetic rubbers 587 kmt of plastics and organic synthesis products 3.2 mmt of intermediates
- The largest integrated gas processing & petrochemical company
in Russia, CIS and CEE in revenue terms − FY 2011 revenues of USD 8.5 bln − H1 2012 revenues of USD 4.5 bln
- Industry-leading profitability:
– FY 2011 EBITDA of USD 2.95 bln with EBITDA margin of 34.9% – H1 2012 EBITDA of USD 1.4 bln with EBITDA margin of 31.1%
- 27 production sites across Russia as of 30 June 2012
- Two main business segments: feedstock & energy (F&E)
and petrochemicals
- In 2011, our F&E business processed over 18 bcm(2) of associated
petroleum gas (APG) and produced:
- In 2011, our petrochemical business produced:
- Around 31,800 employees as of 30 June 2012
- Ultimate controlling shareholder is Leonid Mikhelson,
the CEO and founder of NOVATEK
15.8 bcm of natural gas(2) 4.2 mmt of NGL(2) 3.6 mmt of LPG 1.3 mmt of naphtha 405 kmt of MTBE
SIBUR AT A GLANCE(1)
46 47 7
% Energy products Other
SIBUR Revenue Breakdown
53 6 30 9 2
Petro chemicals
H1 2012
% Other Asia CIS Europe Russia
By Product By Region
% in total processing/ production
SIBUR Market Shares in Russia(3)
27% 34% 38% 55% 65% 7% 34% 51% 58% Polypropylene Synthetic rubbers LDPE Butadiene Mono-ethylene glycol Naphtha LPG MTBE APG processing
2011 Feedstock & Energy Petro- chemicals
(1) All financial figures for SIBUR in this presentation are based on combined financial information, which excludes the results of the mineral fertilizers and tires businesses, which were divested by SIBUR in December 2011, for all reporting periods. SIBUR’s reporting currency is Russian rouble. For this presentation, all P&L and CF figures have been translated from RR to USD at average FX rates for respective periods , balance sheet figures – at end-of-period FX rates (2) Including share of TNK-BP in our JV Yugragazpereragotka (3) Sources: the Central Dispatch Administration of the Fuel and Energy Complex, Syntezkauchuk association, Kortes, MarketReport, SIBUR estimates
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INDUSTRY-LEADING FINANCIAL PERFORMANCE: STRONG GROWTH, HIGH PROFITABILITY, LOW LEVERAGE(1)
11% 15% 20% 32% 35% 37% Braskem Dow Chemical BASF SABIC Petronas Chemical
Sales CAGR vs Peers EBITDA Margin vs Peers, 2011
2% 7% 9% 17% 17% BASF Petronas Chemicals Dow Chemical SABIC SIBUR SIBUR
2006 - 2011 2011
(2) (3) (2) (2) (2)
Based on USD figures
SIBUR Financial Performance
4.03 6.21 8.46 0.82 1.92 2.95 20.3% 30.9% 34.9% 2009 2010 2011 Sales, USD bln EBITDA, USD bln EBITDA Margin, % 1.54x 0.74x 0.78x Net Debt/ EBITDA
(1) All financial figures for SIBUR in this presentation are based on combined financial information, which excludes the results of the mineral fertilizers and tires businesses, which were divested by SIBUR in December 2011, for all reporting periods. SIBUR’s reporting currency is Russian rouble. For this presentation, all P&L & CF figures have been translated from RR to USD at average FX rates for respective periods , balance sheet figures – at year-end FX rates (2) Including only the following segments: BASF – plastics & chemicals, Dow- performance materials, performance plastics, feedstock and energy (3) CAGR for 2008-2011 financial years, starting 1 April and ending 31 March of a respective year
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WHAT MAKES SIBUR DIFFERENT?
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Integration Scale Cost Growth
Synthetic rubbers
- Commodity
- Specialty
- TEP
Plastics & org synthesis
- Glycols
- Alcohols
- PET
- Polystyrene
- BOPP-films
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OUR VERTICALLY-INTEGRATED BUSINESS MODEL
Feedstock & Energy
Gas processing (GPPs)
Feedstock Processing Products
Petrochemicals
Processing Products Intermediates
- Butadiene
- Isoprene
- Propylene
- Ethylene
- Benzene
- Styrene
- PTA, etc.
- Automotive
- Industrial
machinery
- Construction
- Oil & gas
- Chemicals
- Retail
- Construction
- Road building
Energy & chemicals Chemicals
External Sales External Sales
Cracking &
- ther
chemical processing Basic polymers
- PP
- PE
- PVC
- Retail
- Construction
- Automotive
- Road building
- 100% of natural gas and MTBE volumes are sold externally
- In H1 2012, 35% of total available for sale volumes of LPG,
naphtha and NGL were supplied to our petrochemical business as feedstock
- C. 85% of feedstock for our petrochemicals is supplied by
- ur feedstock & energy business
(1) Segment EBITDA Contribution does not take into account corporate overheads and other unallocated expenses
Key Customer Industries Key Customer Industries
Associated Petroleum Gas (APG) NGL & other liquid hydrocarbons Methanol &
- ther
- LPG
- Naphtha
- MTBE /
fuels & fuel additives Gas fractionation (GFUs) and other processing
- Natural gas
- NGL
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NGL Oil Production Gas Production
H1 2012 Segment EBITDA F&E(1) Petrochemicals(1) SIBUR EBITDA EBITDA Contribution, USD billion 1.20 0.35 1.39 EBITDA Margin, % 44.6% 15.5% 31.1%
42 20 18 15 4
NGL (2%) LPG Naphtha Natural gas MTBE Other
%
F&E: HIGH PROFITABILITY THROUGH ACCESS TO ADVANTAGED FEEDSTOCK, NATURAL GAS PRODUCTION AND LONG POSITION IN ENERGY PRODUCTS
- Two main feedstock types:
− Associated petroleum gas (APG), from oil producers − Liquid hydrocarbons (LHC), including NGL, LPG and naphtha, mainly from gas producers Feedstock Types & Sourcing Key Products & Markets
- С.48% of our hydrocarbon
feedstock supply volumes(2) come through our JV with TNK-BP (SIBUR - 51%, TNK-BP – 49%)
- Other suppliers are major oil & gas
companies in Western Siberia
- Natural gas (produced from APG)
- NGL (produced from APG)
- LPG (through NGL fractionation)
- Naphtha (through NGL fractionation)
- MTBE
- C.35% of H1 2012 volumes of NGL,
LPG & naphtha(2) were supplied to petrochemicals segment
19 18 23 40
Fuels (LPG car fuel, utilities Energy Chemicals
%
Refineries
41 59
Export Domestic
%
External Revenue Breakdown By product H1 2012 External Revenue Breakdown By market H1 2012 Customer Industries Key Supply Contracts as of 30 June 2012
(1) In metric tons of liquids extracted (2) Volumes available for sale, including internal production and purchases from third parties (3) Including all supplies within our JV arrangements with TNK-BP (4) Terms under negotiations
External revenue from sales of energy products totaled USD 3,825 million in FY 2011 and USD 2,071 million in H1 2012
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- Gazprom Neft
- Russneft
- TNK-BP
- Rosneft (1yr)
- LUKoil
- 61% of APG supplies for 2012
guaranteed under multi-year contracts(3)
- WA maturity of multi-year
supply contracts – 6.6 years(3) APG
- Surgutneftegaz
- Northgas
- TNK-BP
- Novatek(4)
- Gazprom
- 59% of LHC supplies for 2012
guaranteed under multi-year contracts(3)
- WA maturity of multi-year
supply contracts – 7.0 years(3) LHC TYPES SOURCING
PETROCHEMICALS: DIVERSIFIED PRODUCT PORTFOLIO RANGING FROM COMMODITY TO SPECIALTY PRODUCTS
- Polypropylene (PP)
- Polyethylene (PE)
- Polyvinylchloride (PVC)
Basic Polymers Synthetic Rubbers Plastics & Organic Synthesis External Revenue Breakdown
Pipes Automotive and light vessel components Packaging Stationery
- Commodity rubbers
- Specialty rubbers
- Thermoplastic
elastomers (TEP)
General rubber goods Automotive components Tyres Antifreeze, solvents Bottles Fibers Heat insulation Packaging Labels
- Glycols
- Alcohols
- Polyethylene
terephthalate (PET)
- Plastic
compounds
- Polystyrene
- BOPP-films
35 29 18 18
Basic polymers Synthetic rubbers Plastics & organic synthesis products Intermediates(1)
%
By product H1 2012
External Revenue Breakdown
62 38
Export Domestic
%
By market H1 2012 Revenue from sales of petrochemical products totaled USD 4,146 million in FY 2011 and USD 2,103 million in H1 2012
(1) C.82% of H1 2012 production volumes of intermediates were used internally for further processing into other petrochemical products
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WE OWN AND OPERATE UNIQUE ASSET BASE ACROSS RUSSIA… … with gas processing and transportation infrastructure concentrated in Western Siberia
(1) Source: Russian Ministry of Energy SIBUR’s existing pipelines SIBUR’s pipelines under construction Basic polymers Synthetic rubbers Plastics & organic synthesis products SIBUR’s future petrochemical hub in Western Siberia RusVinyl (PVC, JV with SolVin) NPP Neftekhimia (PP, JV with Gazprom Neft) Yuzhno-Priobskiy GPP (JV with Gazprom Neft) Access points to Gazprom pipeline GPPs GFUs Transportation infrastructure NGL transportation by rail Gazprom natural gas pipeline
46 tln cm 6.9 bln mt Proven oil reserves Proven gas reserves 40% 30%
Western Siberia(1)
SIBUR has quasi-monopoly in Western Siberia:
- 7 GPPs, 3 GFUs, c. 3,000 km of
pipelines
- Strategic projects at advanced stages
- Estimated replacement CapEx of over
USD 15 bln with over 7 years to build
Depletion
TOBOLSK-POLYMER: FIRST STEP IN BUILDING SIBUR’s PETROCHEMICAL HUB IN WESTERN SIBERIA
- Construction of the largest polypropylene (PP) plant
in CIS and Eastern Europe
- Production capacity:
- Propane dehydrogenation: 510 ktpa of
propylene
- PP production: 500 ktpa
- The project will enable SIBUR to capitalize on
Russia’s import substitution potential
- Use of latest global technology for PP production
ensures high production quality & competitiveness
- n global PP markets
Project Description
Propane 612 NGL 3,800 Propylene 510 Dehydro- genation TOBOLSK Gas Fractionation Unit
Production Scheme
PP-500 mmtpa
- Estimated CAPEX: c. USD 2 bln
- Estimated launch: Q1 2013
- Leading global players involved:
- EPC contactors: Tecnimont, Linde
- Licensors: UOP, INEOS
Key Facts
30 June 2012
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86% 100% 100% Construction Equipment & Procurement Design
Completion Stage
EBITDA margin = с. 50%(1)
Propane price in EUROPE
Tobolsk Incremental margin in RUSSIA, ~740
Transport& duties to Europe Propane price in Tobolsk Production costs(2) Transport to W.Russia PP price in W.Russia
730 270 330 300 70 1 440 130 $1580 1,470
PP price in W.Europe
Tobolsk Incremental margin in EUROPE, ~700
NEW PETROCHEMICAL HUB IN WESTERN SIBERIA: MONETIZATION OF STRANDED FEEDSTOCK…
ILLUSTRATIVE
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Polypropylene vs LPG Sales USD
Prices for 2013, CMAI forecasts
(1) Full capacity utilization, depending on regional sales distribution
Transport to W.Europe +Duties
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(2) Using LPG consumption ratio of 1.2; current prices
500 1,000 1,500 2,000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Cumulative Capacity, %
Delivered to NW Europe
Source: IHS, company analysis (1) Illustrative. ZapSib-2 project is at the FEED stage. The final decision has not been made. The complex will not be operational before 2018
…SUPERIOR COMPETITIVE POSITIONS ON GLOBAL PP & PE COST CURVES
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ME Avg. N America’s Ethane SIBUR Tomsk N America Avg. 10% 30% ME Avg. SE Asia Avg. W Europe Avg. PP curve W Europe Avg. SE Asia Avg. NE Asia Avg. ME Ethane
Cash Costs, USD/ton
SIBUR ZapSib-2(1) N America / NE Asia Avg. SIBUR Tobolsk-Polymer PE curve
500 1,000 1,500 2,000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
ME Avg. N America Ethane SIBUR Tomsk N America Avg. ME Avg. SE Asia Avg. W Europe Avg. W Europe Avg. SE Asia Avg. NE Asia Avg. ME Ethane N America Avg. SIBUR Tobolsk-Polymer NE Asia Avg.
Cumulative Capacity, % Cash Costs, USD/ton
Delivered to S. China
PP curve PE curve SIBUR ZapSib-2(1)
SIBUR BENEFITS FROM EXPOSURE TO HIGH-GROWTH MARKETS
Steel & Wood Substitution 10-15 Urban Population Growth 2020E 4.3 2010 3.5 1970 1.4 Global Wealth Growth 2025E 11.2 2011 7.6 Plastics share in vehicles Urban population, bln Real GDP per capita, 000’ 2005$ PE PP Basic Polymers 11.0x Aluminum 3.3x Steel 2.1x Wood 1.1x
27 19
8 11
15
6 9
11
5 7
9
3 6
8
2 6 2015 2012 2009 2006 2003 2018 9 18
5.5% 4.9% 4.5% 4.3% 4.3% 3.1% 2.7% 2.4% 1.0% LPG PS MTBE SR PE PP MEG PVC PET Global Megatrends Global Consumption Growth
5 8 2020E 2010 1970 % % % 1970 – 2010
USA
38 18
Russia
12 6
China
14 11
Poland
20 14
Japan
20 19
Hungary
28 20
Germany
29 20
Consumption of Basic Polymers Former SU Countries Consumption
Kg per capita PE PP Kg per capita
Global Consumption Growth(1)
CAGR, 2009 - 2020
Former SU Countries Consumption Growth(1)
CAGR, 2010 - 2020
(1) World MTBE 2009 – 2014 CAGR, PE incl. LDPE, LLDPE & HDPE, SR incl. SBR, PBR, BR, SBS & IIR, PS incl. PS & EPS Sources: Nexant, CMAI, PlasticsEurope, IMF, Global Insight, IRSG, Purvin&Gertz, McKinsey
PS 3.9% MTBE 1.5% 2.7% LPG SR MEG 4.9% PET 5.0% 9.8% 5.7% PP 6.7% PE 6.9% PVC
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2.8 0.6 1.1 0.2 0.5 1.3 7.0 2.4
Feedstock & Energy Transport Feedstock & Energy Capacity Increase Basic Polymers Synthetic Rubbers Plastics & Organic Synthesis Other Group CAPEX TOTAL ZapSib-2 CAPEX Expansion Potential TOTAL, incl. Expansion Potential
Source: Company data (1) In current prices in Russian rubles, translated from RR to USD at FX rate of 31.5758 (2) Further expansion of petrochemical capacities in Tobolsk
6.5 15.8
USD billion (excl. VAT)(1)
(2)
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Primarily maintenance CapEx Reconstruction of ethylene cracker and other modernization projects Selective expansion in Russia and international JVs in China and India Tobolsk-Polymer polypropylene plant and ZapSib-2 FEED Increase in Tobolsk gas fractionation capacity NGL pipeline network expansion and Ust-Luga export terminal USD 1.1 bln financed in H1 2012
2012F-2016F SIBUR Investment Program
INVESTMENT PROGRAM DESIGNED TO MEET STRATEGIC GOALS
STRONG GROWTH IN PETROCHEMICAL PRODUCTION SHALL RESULT IN REBALANCING BETWEEN FEEDSTOCK MONETIZATION CHANNELS
- Impact of gradual decrease in share of APG-based feedstock on EBITDA margin of F&E segment…
- … is expected to be compensated by growth in volumes and higher margin in petrochemicals…
- …resulting in sustained industry-leading EBITDA performance
Hydrocarbon Feedstock Composition & Monetization Channels 1.6 4.0 4.9 2.5
Feedstock composition Monetization channels
4.9 8.2 6.9 3.6
Feedstock composition Monetization channels
5.5 6.1 7.0 4,4 2.0
Feedstock composition Monetization channels
6.5 11.8 12.5
APG(2) 75% LHC(3) 25% SIBUR petchem 38% External sales 62% APG(2) 58% LHC(3) 42% SIBUR petchem 31% External sales 69% APG(2) 56% LHC(3) 44% SIBUR petchem 51% External sales 49%
2012F 2016F 6.5 11.8 2020F
Million metric tons(1) Million metric tons(1) Million metric tons(1)
(1) In metric tons of liquids extracted (2) APG-based feedstock, which includes 100% of NGL produced by our JV with TNK-BP as a result of APG processing (3) Liquid hydrocarbon feedstock, including NGL (purchased from third-parties apart from TNK-BP), LPG and naphtha
12.5
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ZapSib-2 project Growth of 92% to 2012 Growth of 156% to 2012
Current and former senior SIBUR managers Gennady Timchenko Leonid Mikhelson
Shareholder Structure as of 30 June 2012
Leonid Mikhelson
Chairman of the BOD CEO of NOVATEK
Gennady Timchenko
Co-founder of Gunvor
Alexander Dyukov
Deputy Chairman of the BOD CEO of Gazprom Neft
Pavel Malyi
Representative of Leonid Mikhelson
Oleg Golounin
Representative of Leonid Mikhelson
Dmitry Konov
CEO of SIBUR
Ruben Vardanyan(1)
President of Troika Dialog
Seppo Remes(1)
Portfolio manager, CEO of Kiuru investment fund
Arkadiy Samokhvalov(1)
Assistant to the acting deputy prime minister of Russia
Board Committees
TRANSPARENT OWNERSHIP STRUCTURE AND HIGH CORPORATE GOVERNANCE STANDARDS
Audit
Seppo Remes(1)(2) Oleg Golounin Arkadiy Samokhvalov
Remuneration
Ruben Vardanyan(1)(2) Oleg Golounin Seppo Remes Finance Pavel Malyi(2) Ruben Vardanyan Seppo Remes Strategy and Investments Alexander Dyukov(2) Gennady Timchenko Pavel Malyi Arkadiy Samokhvalov
%
57.5% 37.5% 5%
(1) Independent Directors (2) Chairmen of the Board Committees
Board of Directors
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EXPERIENCED MANAGEMENT TEAM WITH PROVEN TRACK RECORD
Dmitri Konov President/ CEO 8 years at SIBUR Alexey Filippovskiy CFO 8 years at SIBUR
- SIBUR is implementing several strategic programs aimed at
efficiency enhancement and based on world best-practice:
- Working capital optimization (with BCG)
- Supply chain management (with Accenture)
- Shared services (with PWC, Ernst&Young, KPMG)
- Performance management (with McKinsey)
- SIBUR Production System (with DuPont)
- Health Check (with BCG), ERP (SAP)
- The Company has a number of HR development programs,
including SIBUR University, Sales and Marketing Academy
Mikhail Karisalov Executive Director, Co-COO 9 years at SIBUR
- 16 members
- 75% of current Executive Committee members have
been with Sibur for over 7 years
Best Practices Executive Board
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Vladimir Razumov Executive Director, Co-COO 11 years at SIBUR, over 40 years in petchem
- Abundant stranded hydrocarbon
feedstock in Western Siberia + SIBUR’s near-monopoly in feedstock collection and processing in the region =
- Unique cost advantage
- Russia’s legacy of under-
consumption of petrochemicals + import dependence =
- Above-trend demand growth
- Premium pricing off import parity
- Existing assets + new projects
developed ahead of competition
=
- High barriers to entry
- Protection against feedstock
prices growth
- Strong cash flow generation to
support our growth strategy
SIBUR: LEADERSHIP AND GROWTH
Exposure to a highly attractive domestic market Strong growth potential through project pipeline Unique expertise in construction of large- scale industrial facilities High barriers to entry for potential competition Committed shareholders & strong management team Net long position in energy products Access to advantaged feedstock Diversified feedstock & product portfolio
- Cementing cost position and
feedstock access
- Enhancing domestic leadership
- Achieving global competitiveness
in target products
- Generating industry-leading returns
- Cooperation with world EPC
leaders
- Strong in-house capabilities in
developing large projects
- Proven ability to build capacity in
the world’s harshest environment
- Core shareholder: L. Mikhelson
− Excellent equity markets track record
- Management fully on board
− The team behind SIBUR’s success story
- Feedstock and product mix
flexibility leads to: − Margin optimization − Business model resilience
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- 1. SIBUR: Business Overview and Strategy
- 2. H1 2012 Operational and Financial Performance
Appendices CONTENTS
20
8.0% 6.0% H1 2011 H1 2012 3.6% 4.4% H1 2011 H1 2012 111.0 113.6 H1 2011 H1 2012 500 1,000 1,500 2,000
LDPE, FOB NWE PP, FOB NWE
500 1,000 1,500 2,000
PET, FOB Korea MEG, FD NWE
2,000 4,000 6,000
ESBR 1500, FD NEW NR, SMR 20 IIR, CIF East China
1.99 1.89 H1 2011 H1 2012 28.62 30.64 H1 2011 H1 2012 9.5% 3.8% Н1 2011 Н1 2012 USD per bbl +2.3% RR/USD +7.0%
Average Exchange Rate Brent Russian GDP Growth Consumer Price Index Average Electricity Tariffs Railway Tariffs Indexation Energy Products Synthetic Rubbers Plastics & Organic Synthesis Basic Polymers
H1 2012: MARKET ENVIRONMENT
USD USD USD USD
(1)Sources: Rosstat, CB RF, Platts, FTS of Russia, SIBUR (2)Sources: CMAI, Platts
21
RR per kw/hour 250 500 750 1,000
Propane, CIF NWE Butane, CIF NWE Naphtha, average (CIF ARA, FOB Rotterdam)
Macro Data(1) Market Developments(2)
SIBUR: KEY DEVELOPMENTS IN H1 2012
- In September, Moody’s upgraded SIBUR to Ba1 from Ba2
with stable outlook
- In August, Fitch upgraded SIBUR to 'BB+' from 'BB‘ with
stable outlook
- New supply contracts between SIBUR and NOVATEK,
under which SIBUR will deliver to NOVATEK up to 800 mcm of dry gas in Q1 2013 and up to 69,700 mcm between 2013 and 2022
- ZapSibNeftekhim (ZapSib-2) contracts:
− technology license agreements with LINDE AG (cracker), INEOS (PE production) and LyondellBasell (PP production) − FEED contracts with LINDE AG (cracker), TECHNIP (PE production) and ThyssenKrupp Uhde (PP production) − Contract with ОАО VNIPIneft - Russia’s leading engineering institution (pre-design and FEED)
- 10-year supply contract with Gazprom Neft on APG
deliveries
- Cooperation agreements between SIBUR and Sinopec to
set up new JVs for: – nitrile-butadiene rubber (NBR) and polyisoprene rubber (IR) production in Shanghai, based on SIBUR technologies (50 kmtpa); – nitrile rubber in Krasnoyarsk (on the basis of SIBUR’s existing facility, c.50 kmtpa).
Credit Ratings Upgrade Acquisitions and Divestitures New Contracts
- In March, SIBUR acquired control over Biaxplen, a
BOPP-films producer operating three production facilities (78 kmtpa)
- In July, SIBUR announced gradual shutdown of its
- utdated chlorine and caustic soda production in
Dzerzhinsk
- In H1, SIBUR received USD 532 mln in proceeds
(including dividends and receivables) from sale of non- core businesses 22
- Revenue growth of 5.2% y-o-y on:
− higher sales of energy products; and − consolidation of new businesses in petrochemicals… − partially offset by price correction for majority of our products in Q2; and − decline in synthetic rubbers production due to an unscheduled shutdown
- OpEx growth of 15.5% y-o-y due to:
− higher staff, feedstock&materials, repairs and maintenance and transportation costs… − …partially attributable to consolidation
- f new businesses
- H1 2012 profit affected by non-cash FX
loss
H1 2012 RESULTS SUMMARY
23
Six months ended Change, % USD million except as stated 30 June 2012 30 June 2011 Total revenues, including 4,469 4,248 5.2% Energy products 2,071 1,918 7.9% Petrochemical products 2,103 2,087 0.8% Other sales 296 243 21.9% Operating expenses (3,234) (2,799) 15.5% EBITDA 1,389 1,566 (11.3%) EBITDA margin,% 31.1% 36.9% Operating profit 1,235 1,449 (14.7%) Operating margin,% 27.6% 34.1% Profit for the year 968 1,135 (14.7%) Profit margin,% 21.7% 26.7%
Key Developments:
218 213 H1 2011 H1 2012 1,555 1,709 H1 2011 H1 2012 196 196 H1 2011 H1 2012 283 393 H1 2011 H1 2012 5,438 5,324 H1 2011 H1 2012 200 207 H1 2011 H1 2012 616 650 H1 2011 H1 2012 1,807 1,916 H1 2011 H1 2012 (2%) +6% +6% +4% 0% +39% +10% (2%)
(1) Including 51% of natural gas produced by the JV with TNK-BP (Yugragaspererabotka) (2) Decline in production was due to accident at our Tolyatti production site in April 2012 (3) Growth in production was attributable to consolidation of production volumes of Biaxplen group of companies, OAO Acrylate and OAO Polief
24
PRODUCTION VOLUMES BY PRODUCT GROUP
24
Feedstock Business Petrochemical Business
kmt kmt mcm kmt kmt kmt kmt kmt
LPG Basic Polymers Naphtha Natural Gas(1) MTBE Synthetic Rubbers(2) Intermediated and Other Plastics & Organic Synthesis(3)
H1 2012 REVENUE STRUCTURE AND DYNAMICS
19 9 8 8 1 16 14 9 8 7 % Processing services, trading and other sales
Sales Breakdown by Product
LPG Naphtha Natural gas MTBE and other fuels and fuel additives NGL Basic polymers Synthetic rubbers Plastics and organic synthesis products Intermediates and
- ther chemicals
Total revenues USD 4,469 mln H1 2012
25
- Energy products revenues rose 7.9% y-o-y due to
−higher sales of natural gas, MTBE and naphtha −price correction in Q2, which partially offset Q1 growth
- Petchem revenues almost flat y-o-y on
−slowdown in demand and price correction in Q2 −industrial accident in Togliatti in April, resulting in lower production of synthetic rubbers… −…offset by consolidation of new businesses in plastics and organic synthesis product group
935 871 H1 2011 H1 2012 (7%)
LPG
USD million 388 380 H1 2011 H1 2012 (2%)
Basic Polymers
USD million 874 728 H1 2011 H1 2012 (17%)
Synthetic Rubbers
USD million 344 417 H1 2011 H1 2012 +21%
Naphtha
USD million 311 375 H1 2011 H1 2012 +21%
Natural Gas
USD million 401 616 H1 2011 H1 2012 +54%
Plastic and Organic Synthesis
USD million 236 301 H1 2011 H1 2012 +27%
MTBE
USD million 424 379 H1 2011 H1 2012 (11%)
Intermediates and Other
USD million
29 18 14 14 7 4 3 9
270 219 H1 2011 H1 2012 51 108 H1 2011 H1 2012 551 597 H1 2011 H1 2012
H1 2012 OPERATING EXPENSES STRUCTURE AND DYNAMICS
Feedstock and materials
Structure of Operating Expenses
Transportation Energy Staff costs Goods for resale Depreciation and amortization Other % H1 2012 Total OpEx USD 3,234 mln
Feedstock & Materials Transportation Energy Staff Costs Goods for Resale Repairs & Maintenance
840 941 H1 2011 H1 2012 +12% USD million +8% USD million 544 465 H1 2011 H1 2012 (15%) USD million 296 464 H1 2011 H1 2012 +57% USD million USD million USD million (19%) +112%
26
Repairs and maintenance
- Key growth drivers:
− Staff costs growth primarily due to change in bonus provision treatment (one-off non-cash increase) and consolidation of new businesses − Feedstock & materials increased due to consolidation of paraxylene purchases and higher prices for NGL − Transportation expenses rose on higher export transportation tariffs − Repairs & maintenance increased on new programs implementation and change in maintenance schedules
- Offsetting factors:
− Energy & utilities declined due to efficiency gains − Goods for resale decreased as we ceased trading with and for divested businesses, reduced LPG purchases for resale and reclassified PP purchases as feedstock & materials due to consolidation of Biaxplen
- Net cash from operating activities surged
32.2% y-o-y on − lower operating cash flows before changes in working capital due to lower EBITDA − helped by positive impact from changes in working capital due to better receivables collection
- Net cash used in investing activities
declined 36.1% y-o-y with − CapEx growth of 93.0%... − …compensated by proceeds from disposal of non-core businesses
- Net cash used in financing activities
grew 138.9% y-o-y due to − net repayment of debt − dividend payment
CASH FLOW STATEMENT HIGHLIGHTS
27
Six months ended Change % USD million except as stated 30 June 2012 30 June 2011 Net cash from operating activities, including 1,268 959 32.2% Operating cash flows before working capital changes 1,484 1,589 (6.6%) Changes in working capital 37 (388) n/m Income tax paid (253) (242) 4.5% Net cash (used in) investing activities, including (516) (808) (36.1%) Purchase of property, plant and equipment (1,052) (545) 93.0% Proceeds from disposal of the mineral fertilizers businesses and discontinued
- perations(1)
532
- n/m
Net cash (used in) financing activities, including (1,106) (463) 138.9% Effect of exchange rate changes on cash and cash equivalents (5) (6) (10.6%) Net (decrease) in cash and cash equivalents (360) (318) 13.2%
Key Developments:
(1)Including collection of accounts receivable from the buyers of the mineral fertilizers businesses less income tax of RR 900 million as well as including collection of
accounts receivable and proceeds from sale of OAO Kirov Tire Plant and ZAO Voronezh Tire Plant
H1 2011 H1 2012
INVESTMENT PROGRAM IMPLEMENTATION
USD million (excl. VAT)
Capital Expenditures Key Investment Projects
- CAPEX increase of 93.0% y-o-y to USD 1,052 mln came as a result of SIBUR‘s substantial investments in
development of both feedstock & energy and petrochemical businesses in line with our strategic objectives +93% 545 1,052
Spent in H1 2012
USD million (excl. VAT)
Completion Project
28
- New PP complex in Tobolsk
343.6 2013
- New NGL pipeline between Purovskiy gas condensate
plant, Yuzhno-Balykskaya main pumping station and Tobolsk 309.1 2015
- New Ust-Luga LPG and light oils trans-shipment facility
84.8 2013
- Construction of a GPP on the basis of
Vyngapurovskaya compressor station 44.8 Completed
- New GFU in Tobolsk
37.4 end 2014
- New thermoplastic elastomers production in Voronezh
33.0 H1 2013
- New gas processing unit at Yuzhno-Balykskiy GPP
27.0 end 2012
- Ethylene cracker reconstruction in Kstovo
26.7 2013
- Reconstruction of butyl rubber production in Tolyatti
12.4 end 2013
- Third compressor station construction in Nizhnevartovsk
11.9(1) end 2012
- Second expandable polystyrene production line in
Perm 10.9 Completed
(1) Including TNK-BP ‘s share of financing
897 746 458 440 < 1 y 1-2 y 2-5 y > 5 y
USD million 30-Jun-12 31-Dec-11 Change %
Debt 2,541 2,575 (1.3%) Cash & cash equivalents 121 465 (74.1%) Net debt 2,420 2,110 14.7% Average loan tenor(1) 2.6 2.4
- Available credit lines(2)
2,218 2,072 7.0% Debt / EBITDA(3) 0.99x 0.96x
- Net debt / EBITDA(3)
0.94x 0.78x
- EBITDA / Interest
71x 34x
- DEBT STRUCTURE AND MATURITY PROFILE
USD million 32 65 3
RR Euro USD %
Debt Currency Split
30.06.2012
(1) Credit facilities and bonds (2) Undrawn amounts of committed and uncommitted credit facilities (3) Ratios based on Russian rouble-denominated numbers
29
- Total debt largely flat y-o-y as net debt repayment
was compensated by Biaxplen debt consolidation
- Net debt increased by 14.7% due to dividend
payment and CapEx financing
- As of 30 June 2012, majority of the debt was
unsecured with the exception USD 542 mln
- utstanding under the Tobolsk-Polymer project
finance facility
- Share of US-denominated borrowings increased up
to 65% due to the USD 133 mln tranche received as part of Tobolsk-Polymer financing
Debt Maturity Profile
30.06.2012
Key Developments:
- 1. SIBUR: Business Overview and Strategy
- 2. H1 2012 Operational and Financial Performance
Appendices CONTENTS
30
1995-2001 2002-2003 2004-2009 2010 - present
- Incorporated in 1995 under
Government Privatization Decree as a gas processing and fractionation business
- Transformed into a
vertically integrated petrochemical company through an active acquisition strategy
- Gazprom becomes
controlling shareholder of SIBUR in 1998
- Excessive leverage due to
aggressive acquisitions and the consequences of the 1998-1999 financial crisis
- Management change:
appointment of Alexander Dukov as CEO and formation of a new management team
- Focus predominantly on
- rganic development
- Focus on operational
excellence and asset portfolio rationalization
- Gazprom sells SIBUR to
Gazprombank (Gazfund)
- Current CEO Dmitry Konov
takes over in 2006
- Active investment in the
expansion and modernization of existing assets
- Launch of Tobolsk-
Polymer greenfield project
- Launch of strategic
efficiency programs
- Change in ownership:
investor group led by Leonid Mikhelson acquires control through several transactions
- Disposal of mineral
fertilizers and tires businesses
- Continuous investment in
the expansion and modernization of existing assets
- Launch of other greenfield
projects, including RusVinyl and Ust-Luga Terminal
CORPORATE HISTORY: KEY MILESTONES
31
- APG has limited growth potential due to expected slow-down in oil
production.. 46 49 50
SIBUR BENEFITS FROM ACCESS TO ABUNDANT STRANDED RESOURCE BASE
Feedstock Highlights
SIBUR’s Feedstock & Energy business operates predominantly in Western Siberia, Russia’s largest oil and gas province by production and reserves SIBUR uses two main hydrocarbon feedstock types − Associated petroleum gas (APG), a by-product of oil extraction − Liquid hydrocarbons (LHC), largely a by-product of gas extraction APG − APG flaring above 5% limit is penalized by law and may result in material fines or license withdrawal − Apart from gas processing, productive APG utilization is limited − Oil companies typically lack APG processing infrastructure − SIBUR provides oil companies with effective APG processing solution and can source it at attractive terms LHC − LHC include NGL, liquefied petroleum gas (LPG) and naphtha − Due to abundance of LHC resources in Western Siberia, high and rising transportation tariffs and export duties, domestic prices in WS are substantially lower than internationally − LHC is an attractive and growing source of feedstock for our petrochemical business
Feedstock Trends
APG Production in WS(3)
2010 2015 2020 Bcmpa
LHC production in WS(3)
Mmtpa
- Condensate-based LHC volumes produced in Western Siberia are
expected to more than triple by 2020
- …which can be partially offset by lower flaring rates
61% 15% 24%
APG Utilization in Russia(4)
2010 Utilization Oil companies’ use Flaring
(1) Sources: Russian Ministry of Energy, CERA (2) Source: Central Dispatch Administration of the Fuel and Energy Complex (the “CDU-TEK”)
32 19 9 2020 2015 2010
32
FEEDSTOCK TYPES
33
West Siberia
C1 C5 C4 C3 C2 C7+ C6 Petro- chemical business Associated petroleum gas (APG) Light hydrocarbons (LHC) Third party gas stabilization plants Gas-fractionation units
С2 С3-4 С5-6
Other Domestic and export sales Basic polymers Synthetic rubbers Plastics & organic synthesis
Availability of feedstock growth in Western Siberia Oil field Gas field
C1 C5+ C4 C3 C2 APG production growth LHC production growth
Core products for
- il and gas
companies
Domestic and export sales 100% 107% 109% 211% 356% 2010 2015F 2020F C2-6 C3-5 SIBUR’s gas processing plants Domestic sales via Gazprom pipeline system Third party gas processing plants C1
Source: Company information, Russian Ministry of Energy, CERA (1) Excluding flaring and in-field utilization
С1 С2 С3-4 С5-6 С7+
LPG Naphtha Natural Gas Liquids (NGL) Natural Gas Methane (gas) Ethane (gas) Propane (gas/liquid) Butane (gas/liquid) Pentane (liquid) Hexane (liquid) Heavy fractions
Uses Hydrocarbon chain
Associated Petroleum Gas (APG) Oil
External sales, (RURbn), 2011 Key drivers Correlation with oil Competitive position Mid-term
- utlook
trends
74 21 21 22 51 24 25
LPG and naphtha Natural gas MTBE and other fuels and fuel additives Basic polymers Synthetic rubbers Plastics and organic synthesis products Intermediates and
- ther chemicals
- Commodity cycle,
global oil prices
- Transportation
costs and export duties
- 100% domestic
exposure
- Government-
approved price increase schedule for the next 3 years
- Domestic fuel
additives market (gasoline car fleet as main customers)
- Fuel standards
regulations
- Urban population
growth, replacement
- f traditional
materials
- Retail, construction,
automotive
- Import substitution
- Strongly linked to
tyres manufacturing / automotive industry
- Also driven by
natural rubbers and crude oil prices
- Primarily domestic
customers in the chemical, retail, construction, and road building industries
- Used in further
processing in petrochemical industry
- Acts as price-taker
- 34% of LPG market
in Russia
- 3rd largest supplier
in Russia
- #1 producer in Russia
with 40- 50% market share
- Can fully meet
demand of any Russian oil company
- Top-3 producer in
Russia with 30-40% market share in PE and PP
- #2 in Russia
- Top-10 globally
- Leading positions in
Russia and CIS
- Leading positions in
Russia and CIS
Strong correlation
Medium correlation Weak correlation
- Prices are off the
peak but still at historically high levels
- Fixed growth rates
at 15% annually within the next 3 years
- Strong demand for
MTBE on the back
- f strong gasoline
prices and growth
- 8-10% demand
growth expected in Russia
- c. 4% consumption
growth expected to
- utpace supply
- Switch to ethane-
based cracking in US to limit availability of butadiene
- Robust growth in
domestic market on the back of import substitution and derivatives development
- Increasing share of
value-added derivative products
S
Sales split, 2011
Domestic 27% Export 73% Domestic 100% Domestic 77% Export 23% Domestic 71% Export 29% Domestic 44% Export 56% Domestic 74% Export 26% Domestic 74% Export 26%
DIVERSIFIED PRODUCT PORTFOLIO
34
23% 33% 51% Top-3 Top-5 Top-10 10% 14% 23% Top-3 Top-5 Top-10 39% 47% 61% Top-3 Top-5 Top-10
2009 2009 2011 2011
45 49 6
% Energy products Other Petro chemicals
57 5 27 8 3
% Other Asia CIS Europe Russia
47 45 7
% Energy products Other Petro chemicals
50 30 9 6 5
% Other Asia CIS Europe Russia Feedstock and energy Synthetic rubbers Basic polymers Plastics and organic synthesis
22% 31% 49% Top-3 Top-5 Top-10
REGIONAL DIVERSIFICATION AND CUSTOMER CONCENTRATION
Revenues by Products Revenues by Market Customer Concentration
35
BASIC POLYMERS: LARGE-SCALE LOW COST PRODUCTION AND IMPORT SUBSTITUTION ON PREMIUM DOMESTIC MARKET
External Revenue Breakdown
By product 50 50
External Revenue Breakdown
By market 71 29
Export Domestic
Contract Terms
18 82
Contract Spot
Consumer Industries
2011 13 85
% Polyethylene (LDPE) Polypropylene Road building (0.4%) Retail(1)
(1) Packaging, FMCG, non-food retail, etc. (2) Sources: CEIC, Sibur estimates, Oxford Economics
Construction Automotive (2%)
% % % 2011 2011 2011 2011
Auto Retail Construction
Long-Term Growth Drivers Customer Industries Growth(2)
- Large-scale low-cost production of
polypropylene and polyethylene through greenfield projects in Tobolsk
- Import-substitution play in Russia
(30% of domestic demand is satisfied by imports) and expansion into attractive export markets
- JV with SolVin to produce PVC
Russian GDP CAGR forecast of 3.5-4% 9% 9% 7% 2011-2020 CAGR
36
SYNTHETIC RUBBERS: TECHNOLOGY LEADERSHIP WITH SELECTIVE INTERNATIONAL EXPANSION
External Revenue Breakdown
By product 74 21 5
External Revenue Breakdown
By market 44 56
Export Domestic
Contract Terms
69 17 14
Contract Spot
Consumer Industries
2011 15 4 3
% Commodity rubbers TEP Industrial equipment Automotive Roofing materials Oil&gas (4%)
% % % 2011 2011 2011 2011
Auto Construction Industrial equipment
Long-Term Growth Drivers Customer Industries Growth(1)
- Sustainable technology leadership
and export of solutions
- Cost leadership in monomers for
commodity rubbers
- Selective international expansion
through JVs in target markets for specialty rubbers
- New specialty products development
via own R&D and partnerships
- Dominant market position in Russia
and CIS for TEP Russian GDP CAGR forecast of 3.5-4% 9% 7% 5% 2011-2020 CAGR
Specialty rubbers Other (3%)
5
n/a
73
(1) Sources: CEIC, Sibur estimates, Oxford Economics
37
PLASTICS AND ORGANIC SYNTHESIS: LOW-COST PRODUCTION AND IMPORT SUBSTITUTION ON PREMIUM DOMESTIC MARKET
External Revenue Breakdown
By product 33 24 19 12 4
External Revenue Breakdown
By market 74 26
Export Domestic
Contract Terms
53 40 7
Contract Spot
Consumer Industries
2011 55
% Alcohols Polystyrene Retail Chemicals
% % % 2011 2011 2011 2011
Retail Construction Chemicals
Long-Term Growth Drivers Customer Industries Growth(1)
- Leading market positions
- Low-cost production
- Import substitution play in Russia
- Selective scale build-up
- Premium niche play in certain
products
- New specialty products development
for own production and as new client applications Russian GDP CAGR forecast of 3.5-4% 9% 7% 6% 2011-2020 CAGR
PET
7
n/a Plastic compounds Glycols BOPP-films Construction
39 6
(1) Sources: CEIC, Sibur estimates, Oxford Economics
38
JOINT VENTURES: PARTNERSHIPS WITH LEADING WORLD PRODUCERS
39
- Best PVC technology
available including further improvements through technology transfer
- Vast experience in
construction and
- peration of PVC
production
- Access to the fast
growing PVC market in CIS
- Access to cheap
feedstock supply
- Capacity:
- PVC: 330 ktpa
- Caustic soda: 225 ktpa
- Estimated CAPEX: c. USD 1.6 bn
- Sources of funds: project finance attracted at JV level
- Commercial start up: 2014
- 50:50 JV with SolVin (Solvay)
RusVinyl - PVC Plant in Nizhny Novgorod Reliance JV
Rationale Description Project
Sinopec JV (existing and planned JV)
- Access to the fast-
growing Indian market
- Infrastructure and
utilities
- Industrial site &
monomers supply
- Access to SIBUR
proprietary technology
- Capacity:
- Butyl rubber: 100 ktpa
- Estimated CAPEX: c. USD 0.45 bn
- Capex contribution proportionate to ownership
- Commercial start up: 2014
- SIBUR owns 25.1% of JV, Reliance share is 74.9%
- Access to the fast-
growing Chinese market
- Access to Sinopec
distribution capacity
- Access to SIBUR
proprietary technology
- SIBUR’s vast
experience in
- peration of NBR and
IR production
- Access to Russian
market SIBUR SOLVIN Reliance Industries SINOPEC
- JV on Shanghai site base:
- Capacity - Nitrile butadiene rubber 50 ktpa, Isoprene
rubber 50kt/a
- Commercial start up: 2015
- SIBUR will own 25.1% of JV, Sinopec will own 74.9%
- Capex and financing to be determined
- Planning JV on Krasnoyarsk Synthetic Rubber Plant base
- Capacity – Nitrile butadiene rubber 42.5 ktpa
- SIBUR would sell 25.1% share in Krasnoyarsk SR plant
JV
SIBUR
JV
SIBUR
JV
JOINT VENTURES: STRENGTHENING POSITIONS ON THE DOMESTIC MARKET
40
- PP plant with c. 100 ktpa capacity, advantageous
located close to the biggest PP consumer region in Russia and also to European market
- 50:50 JV with Moscow Refinery (Gazprom Neft)
NPP Neftekhimia (operating JV) Yugra- gazpererabotka (operating JV)
- Expansion in an
attractive regional market
- Long-term safe APG
supply
- Processing and
transportation capacities & infrastructure
- Expansion in an
attractive regional market
- Consolidation of
market share
- Access to industrial
site and feedstock supply
- Experience in
production of PP
- Marketing and
distribution capability
- Capacity:
- Three gas processing plants (Nizhnevartovskiy
GPP, Belozerniy GPP and Nyagan GPP) with total APG processing capacity 13 bln.m3
- NGL transportation infrastructure, APG pipelines
and three compressor stations
- SIBUR owns 51% of JV, while TNK-BP share is 49%
SIBUR Gazprom Neft
JV
Rationale Description Site
SIBUR TNK-BP
JV
Petrochemical Industry 2030 Development Plan Framework
- Developed by Ministry of Energy and approved by
the Russian Government special commission
- Part of overriding strategy to increase the share of
higher value-added innovative industries in the economy vs. exports of resources
- Implementation of the Plan to be monitored by the
Government on semi-annual basis Objectives
- Efficient utilization of growing hydrocarbon feedstock
- Development of globally competitive petrochemical capacities in Russia
- Growth in Russian consumption of petrochemical products
SIBUR’s key projects form the backbone of the Plan
- Tobolsk-Polymer, PP complex in Tobolsk
- RusVinyl, PVC complex in Kstovo, Nizhny Novgorod region
- ZapSIb-2, PE&PP complex in Tobolsk (subject to approval post FEED)
- NGL pipeline Purpe-Yuzhny Balyk-Tobolsk (Western Siberia)
- Ethane cracker modernization in Nizhny Novgorod
- Expansion of Tomskneftekhim production capacity (ethylene, PE, PP)
- Expansion of POLIEF production capacity in Blagoveshchensk (PET)
- Togliatti rubber plant expansion (butyl rubbers)
- Voronezh rubber plant expansion (TEP)
Support mechanisms
- Improvements in technical requirements/controls
- Promotion of petrochemical products consumption
- Development of petrochemical clusters
- Lending and financing programs
- Infrastructure development
- Export regime favoring domestic producers
Selected Additional Support Measures RusVinyl
- Included in Minpromenergo’s top-priority list and
Nizhny Novgorod region’s top-priority list
- Favorable tax regime on imports of
technological equipment Tobolsk-Polymer
- Included in Minpromenergo’s top-priority list
SIBUR’s PROJECTS PLAY A KEY ROLE IN RUSSIA’s PETROCHEMICAL INDUSTRY DEVELOPMENT PLAN THROUGH 2030 SET BY THE GOVERNMENT…
… and are included in state and regional top-priority lists
41
Propane price in EUROPE
Tobolsk Incremental margin in RUSSIA, ~980
Transport& duties to Europe Propane price in Tobolsk Transport to W.Russia PP price in W.Russia
830 270 410 320 70 1,780 150 $1580 1,580
PP price in W.Europe
150
Transport to W.Europe +Duties
Tobolsk Incremental margin in EUROPE, ~700
NEW PETROCHEMICAL HUB IN WESTERN SIBERIA: MONETIZATION OF STRANDED FEEDSTOCK…
ILLUSTRATIVE
42
Polypropylene vs LPG Sales USD
Average prices in 2012
EBITDA margin = с. 50%(1)
Production costs(2)
(1) Full capacity utilization, depending on regional sales distribution (2) Using LPG consumption ratio of 1.2; current prices
847 919
200 400 600 800 1,000 ZapSib-2 (1.5 mmt) NA ethane crackers (1.5 mmt)
PE SUPPLIED BY ZAPSIB-2 WILL REMAIN COMPETITIVE IN EUROPE WITH THE NORTH AMERICAN OFFERING ENTERING THE MARKET
HDPE cash cost (1)
43
Source: CMAI, SRI, SIBUR estimates (1) Including transportation cost to Europe; cash costs account for the relevant CapEx (2) CMAI forecast 2018 (3) Conservative forecast 2018 (4) Average Mont-Belvieu ethane price in 2012 (CMAI forecast)
- PE supplied by ZapSib-2 to
Europe would remain competitive vs North American
- ffering from ethane crackers
with forecasted ethane price at and above 400 USD per metric ton
- Natural gas price recovery in the
USA from current USD 80 per thousand cubic meters to USD 150-200 per thousand cubic meters would trigger ethane prices growth and support SIBUR’s competitive position in Europe Implied ethane price for North American producers
969 1,118
304(4) USD/mt (6.2 USD/mbtu) 400(3) USD/mt (8.1 USD/mbtu) 518(2) USD/mt (10.5 USD/mbtu)
SIBUR USD/mt
TOBOLSK IS A LOVELY PLACE…
44