China's Sinopec Group plans to buy a share of Russian petrochemical major Sibur, the Russian firm announced Sept. 3, without disclosing details.
Moscow-based Sibur said the two companies reached a “framework investment agreement” for Sinopec to acquire a stake in Sibur during Russian President's Vladimir Putin's state visit to China this week.
The Reuters news service, citing a source close to Sibur shareholders, said Sinopec could acquire more than 10 percent of the Russian company.
In the statement, Sinopec Chairman Wang Yupu said Sibur's vertically integrated upstream and petrochemicals business complements Sinopec.
“This transaction is in line with our objective to strategically expand our petrochemical business overseas,” Wang said. “Our continued partnership will help diversify and secure Sinopec's long-term sourcing of petrochemical products.”
Sibur Chairman Leonid Mikhelson said the agreement “is a clear signal of confidence from a global energy and chemical industry leader in Sibur's high-quality asset base and future growth potential.”
The deal will “reinforce Sibur's expertise to maximize the efficiency of new large-scale projects and raise the Company to a new level,” he said.
Reuters said Mikhelson would remain Sibur's largest shareholder. The announcement said the deal is expected to close after approvals from corporate governing bodies and regulators.
The announcement also hinted at the larger political picture, noting that it came during a state visit by Putin to China, to mark celebrations ending World War II 70 years ago.
Wang also noted it fit into China's new “One Belt, One Road” policy to build stronger ties with other countries in Asia, the Middle East and Europe.
Besides some existing joint investments with Sinopec, Sibur manufactures low density polyethylene, polypropylene and synthetic rubber, along with plastics products including biaxially oriented PP film and expanded polystyrene.
It said it has basic polymers production of 995,000 metric tons (2.19 billion pounds) per year and a little over a million tons (2.2 billion pounds) of capacity for products made from plastics and other materials.
Sibur is also Russia's largest processor of petroleum gas. It had 2014 sales of 361 billion rubles ($5.4 billion).