SIBUR Introduction and H1 2012 Financial Results Investor - - PowerPoint PPT Presentation

sibur
SMART_READER_LITE
LIVE PREVIEW

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.


slide-1
SLIDE 1

Investor Presentation October 2012

SIBUR

Introduction and H1 2012 Financial Results

slide-2
SLIDE 2

2

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.

slide-3
SLIDE 3
  • 1. SIBUR: Business Overview and Strategy
  • 2. H1 2012 Operational and Financial Performance

Appendices CONTENTS

3

slide-4
SLIDE 4

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

4

slide-5
SLIDE 5

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

5

slide-6
SLIDE 6

WHAT MAKES SIBUR DIFFERENT?

6

Integration Scale Cost Growth

slide-7
SLIDE 7

Synthetic rubbers

  • Commodity
  • Specialty
  • TEP

Plastics & org synthesis

  • Glycols
  • Alcohols
  • PET
  • Polystyrene
  • BOPP-films

7

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

7

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%

slide-8
SLIDE 8

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

8

  • 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

slide-9
SLIDE 9

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

9

slide-10
SLIDE 10

10

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

slide-11
SLIDE 11

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

11

86% 100% 100% Construction Equipment & Procurement Design

Completion Stage

slide-12
SLIDE 12

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

12

Polypropylene vs LPG Sales USD

Prices for 2013, CMAI forecasts

(1) Full capacity utilization, depending on regional sales distribution

Transport to W.Europe +Duties

140

(2) Using LPG consumption ratio of 1.2; current prices

slide-13
SLIDE 13

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

13

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)

slide-14
SLIDE 14

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

14

slide-15
SLIDE 15

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)

15

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

slide-16
SLIDE 16

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

16

ZapSib-2 project Growth of 92% to 2012 Growth of 156% to 2012

slide-17
SLIDE 17

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

17

slide-18
SLIDE 18

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

18

Vladimir Razumov Executive Director, Co-COO 11 years at SIBUR, over 40 years in petchem

slide-19
SLIDE 19
  • 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

19

slide-20
SLIDE 20
  • 1. SIBUR: Business Overview and Strategy
  • 2. H1 2012 Operational and Financial Performance

Appendices CONTENTS

20

slide-21
SLIDE 21

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)

slide-22
SLIDE 22

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

slide-23
SLIDE 23
  • 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:

slide-24
SLIDE 24

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)

slide-25
SLIDE 25

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

slide-26
SLIDE 26

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

slide-27
SLIDE 27
  • 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

slide-28
SLIDE 28

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

slide-29
SLIDE 29

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:

slide-30
SLIDE 30
  • 1. SIBUR: Business Overview and Strategy
  • 2. H1 2012 Operational and Financial Performance

Appendices CONTENTS

30

slide-31
SLIDE 31

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

slide-32
SLIDE 32
  • 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

slide-33
SLIDE 33

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

slide-34
SLIDE 34

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

slide-35
SLIDE 35

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

slide-36
SLIDE 36

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

slide-37
SLIDE 37

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

slide-38
SLIDE 38

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

slide-39
SLIDE 39

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

slide-40
SLIDE 40

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

slide-41
SLIDE 41

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

slide-42
SLIDE 42

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

slide-43
SLIDE 43

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

slide-44
SLIDE 44

TOBOLSK IS A LOVELY PLACE…

44