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Gazprom Neft and SIBUR Formed JV for APG Processing

JSC Gazprom Neft and JSC SIBUR-Holding formed a joint venture – JSC Yuzhno-Priobskiy GPZ - for processing of associated petroleum gas (APG) from Yuzhno-Priobskoye Field which is developed by the oil producing company.

The JV was founded by subsidiaries of the two companies: CJSC Gazprom Neft-Khantos and JSC SiburTyumenGaz. Each partner owns 50% of the JV authorized capital. Denis Solomatin, Deputy General Director of SiburTyumenGaz, has been appointed the JV’s general director.

At the first stage the joint venture will act as the ordering party of design works in a project for construction of a processing plant with a capacity of 1 billion cu. m APG per annum.

The APG utilization activities are in line with the government strategy of enhancing the share of processing industries in overall production as well as mitigating environmental impact of industrial enterprises.

Notes for editors

JSC Gazprom Neft has developed a strategic plan for efficient utilization of APG according to which APG utilization rate at most oil fields is expected to rise to 95 % in 2011. This program is implemented in close cooperation with JSC SIBUR-Holding.

The relevant activities are mainly carried out at oil fields of JSC Sibneft-Noyabrskneftegaz. For example, the APG utilization rate prescribed by license agreements for oil field development is already achieved at the Kholmogorsk field cluster. Recently construction of gas pipeline from Novogodneye field has been completed that will enable to increase APG utilization to 95% upon its commissioning. Moreover, a number of projects for construction of collection gas pipelines are under way at Sugmutskoye, Romanovskoye and Yarainerskoye fields that will enable to direct all APG from these fields to gas processing plants of JSC SIBUR-Holding starting from 2008. Various options for utilization of APG from Meretoyakhinskoye and Ety-Purovskoye fields are presently under consideration.

JSC Gazprom Neft and JSC SIBUR-Holding are also planning joint implementation of a major investment project for the construction of a new gas processing plant with a capacity of 3 billion cu. m of APG per annum on the basis of SIBUR’s Vyngapurovskaya gas compressor station as well as of a associated infrastructure for transportation of broad fraction of light hydrocarbons (BFLH) including rail tank car loading rack in Noyabrsk and oil product pipeline systems that will link it with SIBUR’s gas processing plants. JSC Gazprom Neft will be the principal supplier of APG for processing at the new plant.

SIBUR implements an integrated program for modernization and expansion of APG processing facilities aimed at enhancing of APG processing capacity up to 22 billion cu. m by the year of 2011.

Starting from autumn this year extra APG processing capacities will be commissioned at the Yuzhno-Balykskiy Gas Processing Plant (GPP) thus enabling the plant to receive 1.5 billion cu. m in 2008 with further increase of the plant capacity to 3 billion cu. m of APG per annum by the end of 2009. In June 2007 a memorandum of understanding in the area of APG processing and marketing of processed products was signed by JSC SIBUR-Holding and JSC NK “Rosneft” that provides for eventual setting-up of a joint venture by the two companies on the basis of the Yuzhno-Balykskiy GPP.

In 2006 a joint venture with JSC TNK-BP (CJSC Yugragazpererabotka) was formed on the basis of the SIBUR – owned Belozerniy and Nizhnevartovskiy GPP’s which is aimed at stable utilization and expansion of APG processing capacities in Khanty-Mansiiskiy Autonomous District. In May 2007 CJSC Yugragazpererabotka commenced implementation of a project for reconditioning of MAU-3 processing unit at Nizhnevartovskiy GPP (extra APG processing capacity of 1.5 billion cu. m per annum) and studies a project for construction of a new stage at the Belozerniy GPP.