Russian petchem firms tie knot

Russia's largest petrochemicals producer Sibur and smaller rival TAIF have struck a deal to merge their polymer businesses, combining more than 70% of Russian petrochemicals supply in a single company.

Shareholders in TAIF will get a 15% interest in the new combined company PJSC Sibur Holding, in return for ceding their 50% plus one share interest in TAIF's petrochemical and energy assets to the entity. PJSC Sibur Holding has an option to buy the remaining shares in TAIF at a later stage. The transaction is subject to necessary corporate procedures and regulatory approvals, the companies said, without disclosing when closure was expected.

"This combination will make the new company's petrochemicals operations more competitive in the global market, improve its resilience to market fluctuations, and also unlock further growth potential of Russia's petrochemical industry through joint realisation of capital intensive projects, and also boost chemical non-commodity exports," the two firms said in a joint statement.

Russia is eager to build up its petrochemicals industry to hedge against volatility in oil and gas markets and add value to its hydrocarbon production. There is also significant consolidation underway in the global petrochemicals market, as players look to cut costs and capture synergies by uniting their operations. Saudi Aramco closed its $69bn purchase of a 70% stake in Saudi Arabia's largest polymer maker SABIC last summer, and there have been several other major tie-ups in the Middle East in the last year.

Once Sibur and TAIF's approved investment projects are realised, the combined entity will produce up to 8mn metric tons/year of polyolefins and 1.2mn mt/yr of rubbers, making it one of the world's five biggest producers of these products. Sibur operates plants across the Volga-Urals area and west Siberia, while TAIF's main asset is the Nizhnekamskneftekhim oil refining and petrochemicals complex in Tatarstan. TAIF noted that the tie-up would help it accelerate key projects in its 2030 development programme worth 1.5 trillion rubles ($20bn).