Sinopec to buy stake in Russian rubber plant

Sinopec International (Hong Kong) Co Ltd, a fully owned subsidiary of China Petroleum and Chemical Corporation, known as Sinopec, will buy a 25 percent stake in a Russian synthetic rubber plant.

Sibur LLC — the largest Russian gas processing and petrochemical company by revenue — which owns the plant, signed the agreement with Sinopec on Wednesday.

The deal amount is below $100 million, said Dmitry Konov, Sibur’s CEO, although he refused to provide the exact figure.

Sinopec will have veto power on the plant’s operations because it bought the 25 percent stake plus 1 share.

Once Sinopec becomes a shareholder, the plant’s annual nitrile rubber capacity will be increased from the current 42,500 tons to 56,000 tons, Konov said.

About 70 percent of the plant’s production is sold in China, and the figure is expected to increase, after the deal, he said.

The deal is subject to approval by Russian and Chinese regulators.

Sibur and Sinopec are also planning to set up a joint venture to produce nitrile and polyisoprene rubber in Shanghai, but the companies don’t have a timetable for the JV yet.

The planned JV’s annual capacity for each type of rubber will be about 50,000 tons, said Oleg Makarov, managing director of Sibur.

The JV in Shanghai will use materials from China, he added.

Sibur had revenue of $8.46 billion in 2011.