AlwaysFree: SIBUR Overcame The Brick Wall And Found Other Supply Channels

According to the company’s LinkedIn post in March 2023, in 2022, SIBUR accounted for more than half of the total liquefied petroleum gas (LPG) production in Russia – 7.3 million out of 14.5 million tonnes. Previously, much of this volume was exported, but now the situation is different.

Oleg Makarov, Member of the Management Board and Executive Director at SIBUR, sat down with TASS to discuss how SIBUR is looking for new partners, new supply routes and new options for processing LPG. Here are the highlights of the interview.

— Russia’s exports of LPG have dropped substantially, from 3.5 million tonnes in 2021 to 3.1 million tonnes in 2022.

— We were able to overcome the brick wall that was placed before us overnight and find alternative sales channels. SIBUR managed to redirect shipments from Western and Central Europe to other markets, from Asia, the Eastern Mediterranean and South Asia, all the way to the Far East.

— To redirect its shipments, SIBUR is also considering transshipment via the port of Taman. At the moment, however, this is hampered by difficulties with the local rail infrastructure, so Taman remains a test route for product exports.

— The lack of railroad capacity and terminals in the Far East forces SIBUR to use less established channels for shipping products. For example, in 2022, SIBUR arranged deliveries via the Northern Sea Route from Saint Petersburg to China on the Sevmorput, a nuclear-powered container ship.

— Logistics were further impacted by the earthquake in Turkey: Iskenderun, one of the largest terminals handling a large volume of SIBUR products, was badly damaged and shut down for about three months. In the southern part of Turkey, the only available port is currently Mersin, which has a huge backlog.

— As for SIBUR’s petrochemicals, we are already able to switch feedstock between naphtha (a petroleum distillate) and LPG. We opt for the best feed both in terms of cost and the yield of target products.

— SIBUR is cautious about the idea of increasing LPG sales for gas infrastructure expansion in Russia: we believe that LPG should only be used as a raw material where full value can be captured, and the best option is to further process it. This is vital for Russia in terms of creating new enterprises, technologies, products, and jobs.

— Looking ahead, SIBUR is ready for a return to the North-West European LPG market. All infrastructure is still in place, so if and when the market environment is right, SIBUR will come back.

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