SIBUR's Amur Gas Chemical Complex Seeks Support from Project Finance Factory

The project to build the Amur Gas Chemical Complex (GCC), a collaboration between SIBUR and China's Sinopec, is poised to secure long-term project financing through the Project Finance Factory. The move comes in response to challenges arising from the departure of the European contractor and the absence of loans from Chinese banks, as outlined in a draft resolution from the Russian Cabinet of Ministers prepared by the Ministry of Economic Development. The resolution aims to address these issues and ensure the continuity of the investment project, thereby making amendments to the Project Finance Factory Program to enable bond placement by a special financial institution. The terms of the bond issue are likely to be synchronized with those of a syndicated loan.

The explanatory note accompanying the draft resolution cites the impact of sanctions by unfriendly countries against Russia, leading to the withdrawal of European contractors and resulting in challenges related to the supply of essential technological equipment. Additionally, the note highlights the inability to secure financing from European banks and the failure to obtain loans from Chinese banks.

The proposed amendments to the Project Finance Factory Program aim to enhance the availability and attractiveness of project financing in Russia, ultimately increasing investment volumes in the country. The Project Finance Factory, initiated in 2018, serves as a mechanism for attracting investment by providing loans for priority-sector investment projects. Loans are available for projects with a minimum worth of 3 billion rubles, and they involve several banks and the state development corporation VEB.RF. These entities collectively offer a syndicated loan to the borrower, with VEB.RF acting as the program operator, overseeing project coordination and selection.

SIBUR had previously reported securing project financing for the Amur Gas Chemical Complex in collaboration with Sinopec at the end of 2021. In this arrangement, the borrower for the loan was the Amur Gas Chemical Complex, with SIBUR and Sinopec acting as sponsors in proportion to their shares in the joint venture.

The Amur Gas Chemical Complex, a joint venture with SIBUR holding a 60% stake and Sinopec holding 40%, is dedicated to the production of polyethylene and polypropylene. The complex's production capacity is expected to reach up to 2.7 million tons of polymers annually. Pavel Lyakhovich, a board member and executive director at SIBUR, announced plans to achieve mechanical readiness for the Amur Gas Chemical Complex by 2026, with the plant's official launch scheduled for 2027.