Sinopec signs agreement to take stake in Amur petchems project in Russia

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Sibur and Sinopec today signed a number of agreements that include Sinopec's possible participation in Sibur's previously announced mega Amur gas chemicals complex (AGCC) in Russia's Far East. Subject to Sibur's final investment decision, Sinopec is expected to hold a 40% share in the joint venture (JV). Dmitry Konov, chairman of Sibur's board and Dai Houliang, chairman of Sinopec, signed the agreement in the presence of Xi Jinping, president of China, and Vladimir Putin, president of the Russian Federation. AGCC is planned to be built at Blagoveshchensk, near the Chinese border, where Gazprom is installing infrastructure to supply natural gas to China. As part of its investment, Gazprom is building six gas-processing lines to produce mostly liquid hydrocarbons and helium and will supply ethane feedstock to AGCC. "… AGCC is another profound … cooperation [between the companies] since Sinopec became a strategic investor in Sibur Holding …. We expect to build the project and make it a model for the extension of the bilateral cooperation from upstream to the petrochemical sector," Dai Houliang said. The two companies also signed a broader agreement of cooperation setting out details of their strategic partnership in China, Russia, and other countries, which also covers joint projects. Under the deal, Sibur and Sinopec have agreed to join forces to process natural gas into petrochemicals in Russia and China, and to engage in R&D and personnel training. Sibur International, the company's export division, and Sinopec Chemical Commercial Holding (Hong Kong) have signed a distribution agreement to supply polyethylene to China from Sibur's $9.5 billion ZapSibNeftekhim project at Tobolsk, Russia construction of which is nearing completion. Sinopec and the Silk Road Fund each control 10% of Sibur while Russian gas tycoon Leonid Mikhelson is the single largest shareholder with a 48.5% stake. Business partner Gennady Timchenko has a 17% stake, and the rest is held by Sibur's management. A separate deal was signed today by Sibur and the Silk Road Fund. Under the agreement, the parties will look at investment opportunities to develop relations between Northeast China and Russia's Far East.