Alpek signed a JV agreement with UPC in Russia

Monterrey, Mexico. September 26, 2013 – Alpek, S.A.B. de C.V. (“Alpek”) announced today that its subsidiary, Grupo Petrotemex, S.A. de C.V., signed a joint venture (“JV”) agreement with Joint Stock Company United Petrochemical Company (“UPC”), a subsidiary of Sistema JSFC (“Sistema”), for the construction of an integrated purified terephthalic acid (“PTA”) – polyethylene terephthalate (“PET”) plant in Ufa, Bashkortostan, Russia. Under the JV agreement, Alpek and UPC will elaborate a detailed business plan to determine the project’s feasibility. Alpek and UPC will invest US$10 million each in the completion of the plant’s evaluation stage. Construction is subject to the approval of the business plan by the Board of Directors of both companies.

The new facility would be an IntegRex® PTA – PET site dedicated to serve the Russian PET market with a maximum installed capacity of 600 Kton IntegRex® PTA and 600 Kton IntegRex® PET. An IntegRex® license agreement is expected to be signed upon final approval of the JV by all relevant competition authorities. Paraxylene (“Px”) would be sourced domestically. Px supply negotiations are underway with JSOC Bashneft, a subsidiary of Sistema and one of the largest private Russian oil companies.

The European Commission has granted unconditional approval to the proposed transaction and declared it compatible with the internal market and with the EEA (European Economic Area) Agreement. The JV is also subject to approval from other relevant competition authorities, which is expected in due course.

José de Jesús Valdez, Alpek’s CEO stated: “We are very excited by the prospect of Alpek’s first venture outside of the Americas, entering the Russian PET market with a world-class partner such as UPC/Sistema. This agreement reaffirms Alpek’s commitment to the PET value chain and demonstrates the great potential of our IntegRex® technology as an effective vehicle for international expansion. We are convinced that this partnership will create an unparalleled value offer in the Russian PET market by combining Alpek’s IntegRex® technology and polyester value chain expertise with UPC’s unique domestic sourcing capabilities and local market knowledge.”

“We are pleased to have signed the agreement with Alpek on the PET project, our first joint venture. The project will give us access to the unique IntegRex® technology and new opportunities to supply our PET products to the fast growing Russian and international petrochemical markets. UPC is looking forward to a long and successful business partnership with Alpek, one of the largest petrochemical companies in Latin America, as well as to the perspective to increase PTA/PET production in the nearest future and deepen our footprint in Russia,” said Kirill Tyurdenev, President of United Petrochemical Company.