Russia's Sibur hedges against volatility of global oil prices

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Downstream petrochemical businesses are hedging their risks these days given the ongoing volatility of oil prices. And Russia's largest petrochemical company, Sibur, has hedged well against volatility, according to Sergey Komyshan, the executive director of Sibur.

The OPEC+ Ministerial Meetings are around the corner. Given the recent price volatility, the market is concerned whether the current oil reduction agreement would be extended. Komyshan stated that Sibur would keep a close watch on "what's happening," further suggesting "the general mood is that the agreement must be found."

"It's in the interest of the whole industry to keep stability. This is what investment majorities are hoping for," he commented, stressing that "Sibur is a unique company in that way. We are quite well hedged from significant volatility in terms of our business structure."

Sergey Komyshan, the executive director of Sibur. /CGTN Photo

Meanwhile, Sibur and China Petroleum & Chemical Corporation (Sinopec) Wednesday signed a term sheet for a potential joint venture (JV) that could be based at Amur Gas Chemical Complex (AGCC).

Subject to Sibur's final investment decision, "Sinopec will take 40 percent of that new facility," he said, adding that the potential JV is a quite big business, which may produce more than 1.5 million tons of polymer.

Moreover, the company demonstrated growth in key financial indicators in the first quarter of 2019. Its operational and financial results for the first quarter showed that the company's revenue grew by nine percent year on year while net profit rose by 71.5 percent compared to the same period last year.

As to Sibur's potential initial public offering (IPO) in the middle of 2019, Komyshan claimed that the company would be better placed to go through with its planned IPO if its facility is in operation.

"Having facility up running will definitely benefit the potential IPO. For instance, one of the considerations that our shareholders may have is the commissioning of the project, which is a two-million-ton polymer facility in Tomsk (in western Siberia). We have it chemically completed. However, the startup may take some time and the bottom line will be in some more months to come," he explained.