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NOVATEK and SIBUR Announce Major Raw NGL Transportation and Processing Capacity Additions during Teleconference with Russia’s President Vladimir Putin

Astrakhan – Purovsk (Yamal-Nenets Autonomous Area) – Тobolsk, 4 June 2014. NOVATEK and SIBUR reported to Russia’s President Vladimir Putin on completion of a series of projects aimed at creating an integrated technological chain from hydrocarbon production to deep processing in Russia. The announcement was made at a meeting of the Presidential Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security held in Astrakhan.

During the teleconference held in the town of Purovsk (Yamal-Nenets Autonomous Region), NOVATEK announced the expansion of its Purovsky Gas Condensate Processing Plant’s (“Pursovky Plant”) capacity from five (5) to 11 million tons per annum (“mtpa”) providing for the additional volumes of natural gas feedstock for gas processing and petrochemical production. This discussion was followed by a teleconference from Tobolsk, where Mikhail Karisalov, SIBUR’s Executive Director, informed Russia’s President Vladimir Putin that a new raw NGL (“natural gas liquids”) pipeline between the Purovsky Plant and the Tobolsk production site had commenced testing operations and had already transferred first volumes of raw NGL from the Purovsky Plant to the expanded gas fractionation capacities at Tobolsk-Neftekhim.

SIBUR has completed the construction of the raw NGL pipeline from the Purovsky Plant to Tobolsk-Neftekhim with a length of over 1,100 kilometers (“km”) length. As of today, the pipeline sections from the Purovsky Plant - Noyabrsk loading rack and the Noyabrsk rack - Yuzhno-Balyksk Main Pumping Station (“MPS”) with combined length of 686 km have been put into commercial operation and filled with raw NGL. The pipeline section from Yuzhno-Balyksk MPS to Tobolsk-Neftekhim with a length of 414 km is being commissioned; the installation of power lines, automated control systems, communication equipment, as well as the construction of access roads is currently in progress.  The raw NGL separated from the Purovsky Plant is supplied to the gas fractionation capacities of SIBUR in Tobolsk using existing pipelines.

Throughput capacity of the Purovsky Plant - Noyabrsk loading rack pipeline section is up to 4.5 mtpa of raw NGL per annum, of which the Noyabrsk loading rack - Yuzhno-Balyksk MPS section is up to 5.5 mtpa, and the Yuzhno-Balyksk MPS to Tobolsk-Neftekhim section is up to eight (8) mtpa.

The final completion and commercial launch of the entire pipeline network is scheduled for 2015. With the new pipeline, SIBUR will substantially expand its light hydrocarbon feedstock transportation infrastructure, increase throughput capacity as well as enhance the reliability of the transport infrastructure.  SIBUR’s total investments in the pipeline construction project amount to approximately RR63 billion.

As part of expanding the Tobolsk-Neftekhim’s gas fractionation capacities, SIBUR has increased the site’s capacity from 2.5 mtpa in 2007 to 3.8 mtpa in 2011. With the launch of the second gas fractionation unit, SIBUR can now process up to 6.6 mtpa of raw NGL at the Tobolsk production site. The expansion makes the Tobolsk production site one of the largest gas fractionation capacities worldwide. SIBUR’s investment in the second phase of construction of the gas fractionation capacities, including storage facilities, totalled approximately RR14 billion. The project on increasing the processing capacities in Tobolsk is implemented with support of the Government of Tyumen Region.

According to Leonid Mikhelson: “The partnership between NOVATEK and SIBUR has successfully integrated the development of new gas fields and NGLs production from gas condensate with the construction of raw NGL pipeline infrastructure and capacities for deeper processing of hydrocarbon feedstock. For SIBUR, this is a key project ensuring stable and guaranteed access to feedstock in Western Siberia and opening up opportunities for future investment projects in petrochemicals.”

PAO NOVATEK is one of the largest independent natural gas producers in Russia, and in 2017, entered the global LNG market by successfully launching the Yamal LNG project. Founded in 1994, the Company is engaged in the exploration, production, processing and marketing of natural gas and liquid hydrocarbons. Upstream activities of the Company’s subsidiaries and joint ventures are concentrated mainly in the prolific Yamal-Nenets Autonomous Area, which is the world’s largest natural gas producing area and accounts for approximately 80% of Russia’s natural gas production and approximately 15% of the world’s gas production. NOVATEK is a public joint stock company established under the laws of the Russian Federation.

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. SIBUR owns and operates Russia’s largest gas processing business in terms of associated petroleum gas processing volumes, and is a leader in the Russian petrochemicals industry.

As of 31 March 2014, SIBUR operated 27 production sites located all over Russia, had over 1,400 large customers engaged in the energy, chemical, fast moving consumer goods (FMCG), automotive, construction and other industries in approximately 70 countries worldwide and employed over 27,000 personnel.

As part of expanding the Tobolsk-Neftekhim’s gas fractionation capacities, SIBUR applied the latest technology and materials, including but not limited to, trenchless pipe laying, pipelines made of PVC and polyethylene-based materials, polyethylene-based geo-membranes to waterproof foundations and underground structures, expanded polystyrene-based insulators to insulate building and structures, and geo-synthetic materials for road and ground construction and site improvements.

Promstroi (Nyagan), STG-M (Moscow), and SNEMA-SERVIS (Ufa), SIBUR’s contractors in Russia, were engaged in construction, assembly and start-up. Most of the equipment used for the new capacities was sourced from Russia.

During the construction phase: 436 basic equipment units were assembled, over 11,000 piles driven, over 37,000 cubic meters of concrete was used, over 16,000 tons of steelwork was assembled, and over 180 km of suspended industrial pipelines and 1,500 km of cables were routed.

Russian contractors Nova, Stroytransgaz, STG-M, NGSK, Neftmontazh, and VIRA Realtime were engaged in the construction of the NGL pipeline that linked the Purovsky Plant and the Tobolsk production site.

Only Russian-made pipes, supplied mainly by Chelyabinsk Pipe-Rolling Plant and welded using semi-automatic and automatic welding, were utilized during construction.  

To ensure the pipeline’s safety, SIBUR employed the latest solutions in telemetric systems and communications, leak detection to monitor pipeline integrity in real time, air contamination monitoring, and video surveillance and security.

The 1,110 km raw NGL pipeline has:

- 1,116 crossings with transportation lines, including federal highways, water barriers and rail tracks

- 11,830 running meters directionally drilled across rivers, rail tracks and highways

- 528 km of swamped areas (48% of the pipeline’s total length). A 50 km long pipeline section passed across a total of 120 lakes