Sibur May Ask Russian Wealth Fund to Help Finance Amur Plant

(Bloomberg) -- Russia’s petrochemicals giant Sibur may consider borrowing from the nation’s wealth fund to partially finance construction of a plant near the border with China as it discusses terms for a nearly $10 billion bank loan.

The funding could allow Sibur to borrow less from a consortium of Russian and foreign banks as it develops the Amur gas chemical complex, Peter O’Brien, managing director for finance, told Bloomberg in an interview on the sidelines of the Eastern Economic Forum in Vladivostok.

“The loan from the syndicate is almost $10 billion, so we might reduce it by 10-20% and take those 10-20% from the Wellbeing Fund,” after comparing both offers, O’Brien said. Sibur is now working with the group of banks on documentation and expects to finalize the loan by the end of November.

The Amur plant is 40%-owned by China Petroleum & Chemical Corp., also known as Sinopec, and will process natural gas into base polymers such as polyethylene and polypropylene. Construction is expected to be finished in 2024.

Sibur is now seeking to pay off a previous $1.75 billion loan from the Wellbeing Fund ahead of time. It was taken in 2015 for 15 years to help finance the ZapSibNefteKhim petrochemical project in western Siberia. 

“We have let the relevant parties and the government know that ZapSib is performing very well and we have the capacity to return the loan,” O’Brien said. “It’s up to them to decide.”

Taif Integration 

Sibur’s other major priority now is integrating its petrochemical assets with those of Taif, based in Russia’s Tatarstan region, in a deal announced in April to create a top-five global producer of polyolefins and rubber. That will probably delay a long-discussed initial public offering by “a year or two,” according to O’Brien. 

Sibur shareholders have been contemplating a listing for the company since at least 2005. 

“Before you try to go on an IPO, you want to have a good story on where your earnings growth is going to come from,” O’Brien said. “You also want to have a quarter or two when you are showing the results of the synergies.”

Still, the final decision on timing is up to Sibur shareholders, O’Brien said. 

©2021 Bloomberg L.P.