Pavel Lyakhovich, SIBUR's board member and executive director, spoke to Oil and Gas Vertical magazine about the company's most significant projects, as well as about the implementation of closed-cycle economy ideas.

– How has your sales market changed in recent months?

– I will start by saying that SIBUR has always seen Russia as its priority market historically accounting for more than 60% of our sales. Given the current supply restrictions in Europe, we are shifting focus to Asian markets as part of our strategy to strengthen foothold in South East Asia. Importantly, the ongoing rebalancing of export flows is a measure we take to respond to external constraints and has no ideological grounds whatsoever. Once Europe starts to lift restrictions, our sales will recover on the back of strong demand we see from European consumers. The importance of our products is evidenced by our top scores in several polymer producer ratings in 2021. What's more, some of our products are nearly indispensable in the European market.

Today, SIBUR consistently supplies Asian nations with a variety of products (including polypropylene, polyethylene and synthetic rubbers) for a total of over 100,000 tonnes per month. This represents an increase of two to three times year-on-year. China is our key sales market accounting for up to 80% of total exports. We also see significant potential demand in Vietnam, where our business has been growing fast since mid-2021. We are also exploring other markets in South East Asia such as Bangladesh, Malaysia, Cambodia, and Indonesia. We have already set up regular supplies to these countries, albeit in limited volumes. By relying on our extensive experience in other geographies, we can offer a new level of service to our Asian customers.

– Are there any significant changes in the ratio of export and domestic supplies?

– Mathematically, it remained almost flat, but we recorded much higher demand for alternatives to hard-to-find imports from Russian processors. Thanks to the competence of our technical service team and SIBUR PolyLab R&D centre, we were able to find solutions to over a thousand customer queries within just a few months. I am talking about polymer feedstock, customised functional additives and specialty complex formulations. We have selected over 30 grades suitable for consumer goods, with eight developed from scratch.

In 2019, SIBUR adopted the Sustainable Development Strategy. Last year, we revised it to steer the Company towards more ambitious goals

– Have you been able to stabilise payment and delivery infrastructure?

– Yes and no. On the one hand, we were pretty quick in identifying available payment and shipment options. On the other hand, we need to daily monitor the situation and respond to new challenges by adapting our practices and making decisions on the spot.

– Has the Company revised its investment programme? What are the new focus areas?

– SIBUR has enough knowledge and expertise to complete its projects. Since 2010, we have invested around RUB 1.5 tn in capacity expansion, covering equipment and specific production sites. While running the programme, we amassed a wealth of experience that enables us to feel more confident about the future of our business.

One of our key projects is Amur GCC, which we keep adapting to the new reality together with our partners. Adapting does not mean that the construction as such has stopped – on the contrary, the work continues. The site will have another 160 plus units of equipment delivered during this year’s navigation season.

The EP-600 facility has received the core process equipment, and construction is underway. There is also a number of projects associated with EP-600 (ethylene derivatives) that need to be adapted as regards technology availability, specific equipment configurations, and alternative options. But this is manageable.

We are expanding the range of projects by developing our own solutions, among other things. At Nizhnekamskneftekhim, we decided to build Russia's first hexene plant leveraging an in-house technology. This is our new 50,000-tonne project in the Republic of Tatarstan aiming to fully cover our needs in hexene, a сomponent for premium polymers.

We are now piloting our Tobolsk-based MAN facility, also one of a kind in Russia. The product boasts almost unlimited applications across all the key domains, including the food industry. In September, we opened a secondary PET production facility in the Republic of Bashkortostan.

Vivilen is unique to the Russian market as it follows the environmental trend and satisfies the growing demand for the use of recycled materials coming from processing companies and end consumers

– The President has been highlighting the need for transitioning to the circular economy for several years now. What does this mean for SIBUR?

– Petrochemicals offer the biggest potential for the circular economy due to polymers' unique property of multiple recycling and existing technologies enabling the use of polymer waste in the production cycle.

In 2019, SIBUR adopted the Sustainable Development Strategy. Last year, we revised it to steer the Company towards more ambitious goals. Our key strategic priorities are developing the circular economy and building a sustainable product portfolio. For example, SIBUR made a voluntary commitment to recycle polymer waste and make products containing secondary materials. By 2025, we plan to utilise at least 100,000 tonnes of plastic waste and put out at least 250,000 tonnes of green products. We see strong demand for eco-packaging at all levels, from the government (for the Environment national project) to goods manufacturers and end consumers.

As part of circular economy projects, we engage with key stakeholders across the entire production chain, widening the bottlenecks and unlocking the potential of polymer waste recycling in Russia.

– Which SIBUR’s products have already been or are set to be made using circular economy practices?

– SIBUR has created a new product range of recycled polymers under the Vivilen brand. Vivilen is unique to the Russian market as it follows the environmental trend and satisfies the growing demand for the use of recycled materials coming from processing companies and end consumers. With this product range, we are able to supply PET granules with up to 25% recycled content. Manufactured by SIBUR’s POLIEF, this product is used as feedstock for food packaging such as bottles, glasses, boxes, and trays.

We also offer polypropylene and polyethylene compounds with up to 50% recycled content. Their applications include vials, bins, canisters for household chemicals, motor oils and other daily needs, packaging films and bags.

What is most important is that Vivilen-branded products require no additional investment in equipment from packaging manufacturers.

– How much investment does it take to move to this format? What is its cost-effectiveness?

– We have spent over RUB 4 bn on the project to produce PET granules with recycled content (flakes). Part of the financing came from the Industrial Development Fund (IDF).

SIBUR strives to boost the recycled materials market and invests in the development of new business processes across the entire chain, from feedstock procurement to finished products. We see our project becoming a driving force behind the new investment initiatives to process and produce flakes across Russia.

In the context of circular economy, it has provided a bridge between the PET bottle recycling industry and the food packaging market and an important contribution to reverse logistics that helps turn discarded plastic bottles into new ones. With every link of the chain counting, only a concerted effort will make it possible to produce a high-quality product whilst maintaining the economy that relies on a circular supply chain.

The cost effectiveness of these projects can be increased by improving the quality of recycled materials, streamlining logistics, stimulating demand for products from recycled materials and providing government aid to investors in waste recycling.

At SIBUR, we already use recycled materials in production. Yet, we are mindful that if we want to increase the volumes of reused plastic waste we will need to develop not only mechanical recycling but also chemical one

– How long does it take to fully embrace the circular economy?

– Perhaps that is not the right way to put it. What do you mean by saying “fully embrace the circular economy”? That is an impossible task. That said, we do need to expand recycling of used materials. It is, first and foremost, a matter of having the right reverse logistics solutions. The transition period largely depends on how effectively the following four stakeholders will be able to interact. The first is the regulator whose role is to set the right tax priorities. The second is the petrochemical industry that will need to adapt to the new way of handling recyclables. The third is the waste handling industry that will have to improve the quality and regularity of supplies of secondary materials. And, finally, the fourth is the end consumer who will need to embrace responsible consumption and proper waste recycling practices.

– What technological solutions are needed to make it all move? Are such solutions available in the market? Is it acceptable to use replicated or copied technologies?

– At SIBUR, we already use recycled materials in production. Yet, we are mindful that if we want to increase the volumes of reused plastic waste we will need to develop not only mechanical recycling but also chemical one. The key advantage of thermochemical methods is that they can process mixed, multicomponent and dirty plastic waste. That is the type of the mixed plastic waste believed to be unsuitable for recycling. Given that chemical recycling is capable of dealing with this type of waste, it can significantly increase the share of waste recycled. Specifically, the EU’s target for plastic recycling of 50% by 2030 is achievable only if these solutions will be further developed and scaled up. Unlike mechanical recycling, chemical methods can produce plastic that is identical to virgin plastic, which means that it can be recycled for an unlimited number of times.

Today, there is a handful of chemical recycling projects in the world, and their number is expected to grow significantly in the near future. Developed economies that have adopted environmentally responsible practices such as Europe, the US, Asian countries (Japan and Korea) are scaling up investment in this area.

There is an increasing understanding of the importance of chemical recycling in Russia too. That is why more petrochemical companies and R&D centres are getting involved. It is essential that at the next stage we move from lab tests to pilots and commercial-scale solutions. Government support is also vital in helping the technology gain ground.

09 November 2022
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