RDIF & International Funds Invest in ZapSibNeftekhim Project

Gulf Oil and Gas, 12.12.2015

A consortium of investors, comprising the Russian Direct Investment Fund (RDIF) and leading Middle Eastern sovereign wealth funds have invested in SIBUR’s ZapSibNeftekhim project – an integrated petrochemical complex in Tobolsk, Tyumen Region (Russia).

On December 4, ZapSibNeftekhim completed the placement of 15 year bonds worth $1.75 billion on behalf of the Ministry of Finance of the Russian Federation for investing in this project. The bonds were placed to attract financing from Russia’s National Welfare Fund (NWF) as part of RDIF’s quota (10%) from NWF, which is allocated for the implementation of infrastructure projects.

Total investment in the project amounts to $9.5 billion. In addition to funds raised in the form of debt financing from the NWF, up to $3.3 billion are being provided by commercial banks, RDIF and its co-investors. SIBUR is also continuing to fund the facility’s construction at its own expense.

The funds will be used to develop industrial infrastructure for a forthcoming facility, which will process raw hydrocarbon materials into polyolefins. The development of this facility is currently SIBUR’s largest investment project. The project is aimed at deep conversion development of large volumes of Western Siberia’s oil and gas by-products, including associated gas, and the import substitution of highly demanded polymers in the Russian market. ZapSibNeftekhim will be the largest modern petrochemical facility in Russia.

The project includes the construction of a steam cracker with a capacity of 1.5 mtpa of ethylene, about 500 ktpa of propylene and 100 ktpa of butane-butylene fraction (BBF) per year, along with units producing various grades of polyethylene and polypropylene with a total capacity of 2 mtpa per year. The latest advanced technology in the fields of processing raw hydrocarbon materials and logistics will be utilized during the construction and operation of the petrochemical complex in order to ensure the reliability, safety, and efficiency of the project.

Dmitry Konov, CEO of SIBUR, noted: "Investments made by RDIF and its international co-investors into ZapSibNeftekhim prove the value of this project, SIBUR’s largest to date. SIBUR has already invested a substantial amount of its own funds and received credit funds from large commercial banks. The long-term financing from the NWF on favourable terms as well as investments from RDIF and its partners provide additional guarantees of successful project completion and help to optimise the company’s debt portfolio."

Kirill Dmitriev,CEO of the Russian Direct Investment Fund (RDIF), said: "Working with leading sovereign funds from the Middle East as co-investors in the ZapSibNeftekhim project is a milestone in Russian industry and infrastructure development. This project will bring sustainable returns to investors and incentivise further development in a number of related industries of the Russian economy. The investment conforms to RDIF’s mandate, which is to raise funds for infrastructure development and improving industrial efficiency in Russia."