Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Gazprom, Dow and Sibur Plan Linkup

Gazprom and U.S.-based Dow Chemical Company intend to study opportunities to create joint ventures for processing gas in Germany and Siberia, the companies announced Tuesday.

They stated the intention in a memorandum also signed by Gazprom's petrochemical subsidiary, Sibur, which seeks better technology and outreach to new markets to expand its plastics business, Gazprom said in a statement.

One joint venture would build a petrochemical plant in Germany where Dow has a solid presence, said a source close to the company. Gazprom could supply gas for that plant to process, the source said.

Germany is the biggest importer of Russian gas in Europe.

Dow could bring technology, experience and knowledge of the market, Dow spokesman Paolo Casciato said in comments about the possible joint venture. "From Gazprom, it could be availability of hydrocarbons," he said.

The three companies will set up a working group to estimate economic viability of the project and draw up plans for any further feasibility studies, the statement said. A Dow source said the group was expected to produce its findings next year.

The other joint venture would make Dow a partner in processing the gas from Gazprom's fields in the Yamal-Nenets autonomous district at large-capacity plants in Russia, the statement said.

Since Sibur's existing plants operate at close to capacity, the joint venture would apparently have to build new plants. Sibur declined to comment on the exact plans.

A joint venture would help meet Sibur's goals of building up its resource base and expanding the production of plastics, said company spokesman Rashid Nureyev. "It's the most competitive and profitable type of business," he said.

Sibur is interested in Dow's technology, experience and well-established marketing ties on the world market, Nureyev said. The joint venture would also supply the domestic market, he said.

LUKoil, another big player in the Russian petrochemicals industry, said there was enough place on the local market for many projects. A government program to the develop the industry, which the Cabinet considered last week and plans to adopt next year, calls for major investment, a LUKoil spokesman pointed out.

LUKoil, which has two petrochemical plants in southern Russia, is planning to complete a feasibility study for a third one in the region by the end of this year, the spokesman said.