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Friday, 23 May 2014

Ust-Luga LPG transshipment terminal changes hands

The LPG terminal in Ust-Luga port The LPG terminal in Ust-Luga port SIBUR

A consortium made up of the Russian Direct Investment Fund (RDIF), Gazprombank and foreign investors is to gain control over SIBUR’s LPG transshipment terminal in Ust-Luga, a Russian port on the Gulf of Finland, as a result of a $700 million investment announced yesterday.

The liquefied petroleum gas (LPG) and light oil products terminal is owned by Russian petrochemical holding SIBUR, which completed its construction last year. It currently operates at a nominal transshipment capacity of 1.5 million tonnes per annum of LPG and 2.5Mtpa of light oil products.

The transaction, subject to regulatory approval, was announced on Thursday by the Russian Direct Investment Fund (RDIF), whose management company is a 100% subsidiary of Vnesheconombank, a state corporation serving as an instrument of government investment policy in Russia. The other consortium members are Gazprombank, which is one of the major Russian banks, and a group of unnamed foreign investors.

As part of the transaction, “the consortium will gain complete control over the terminal,” says the RDIF. The $700 million investment will allow the terminal to optimise its capital structure and expand its capacity for both LPG and the range of light oil products it processes.

SIBUR will have exclusive rights to utilise 100% of the LPG transshipment capacity on pre-agreed terms.

"A modern LPG terminal in the Baltic Sea is a crucial step in the future development of Russian infrastructure,” said Kirill Dmitriev, CEO of RDIF. “This latest development has a significant role to play in reducing domestic dependence on foreign ports as well as responding to the growing European consumer demand for LPG and light oil products.”

"Construction of the terminal in the port of Ust-Luga has created an effective transportation route for Russian LPG and light oil products to Northern and North-Western European markets, said SIBUR’s CEO Dmitry Konov. “Thus, we have not only managed to gain access to new, previously inaccessible markets, but have also decreased Russia’s dependence on foreign port infrastructure.”

“As a result of the deal SIBUR returns its investment in the project while gaining long-term guarantees on capacity utilisation in return."

Alexey Matveev, deputy chairman of the board of Gazprombank, said: "The LPG and light oil products terminal in Ust-Luga is an attractive investment opportunity due to its fundamental competitive advantages and significant potential for value appreciation in future."

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