* IPO may happen by year end - financial market sources
* Mikhelson may sell part of his 48.5 pct stake-source
* Sibur says considering "strategic" options to fund growth
* (Adds Shamalov's share in Sibur, U.S. OFAC policy towards sanctioned assets)
By Oksana Kobzeva and Olga Popova
MOSCOW, July 25 (Reuters) - Russian petrochemical company Sibur is preparing for an initial public offering (IPO) potentially worth between $2 billion and $3 billion and which may happen by the end of the year, financial market sources told Reuters.
Sibur, the largest petrochemical producer in Eastern Europe, has long mulled a share placement on the open market but faced delays for various reasons.
One of three financial market sources familiar with Sibur's plans said the company was looking at the possibility of an IPO in Moscow and London and may raise $2 billion to $3 billion.
Another of the sources said the company was looking to raise "a couple of billion dollars" from the deal.
Asked about a potential IPO, Sibur said in a written reply to Reuters that it was considering "strategic options" on how to finance its growth.
Businessman Leonid Mikhelson, the head of and a major shareholder in Russia's largest gas producer Novatek, owns 48.5 percent of Sibur. His business partner Gennady Timchenko owns 17 percent, while China's Sinopec and Silk Fund control 10 percent each.
A source said Mikhelson may sell part of his stake, while Timchenko and another shareholder, Kirill Shamalov, both under U.S. sanctions, were likely to retain their shares.
Shamalov owns 3.9 percent in Sibur. The U.S. Treasury's Office of Foreign Assets Control (OFAC) does not block an entity if the ownership in the asset by the sanctioned persons is below 50 percent, it says on its website.
The United States slapped sanctions on Timchenko in 2014 in response to Russia's annexation of Crimea from Ukraine, describing him as a member of Russian President Vladimir Putin's inner circle.
Shamalov, described by the U.S. Treasury as "Putin's family associate", was put on the sanctions list in April in connection with Ukraine, Syria and suspected cyber activities.
A spokesman for Timchenko declined comment as did Sibur, which is not under Western sanctions as a company.
Two of the three sources said JP Morgan and Russia's Gazprombank are among possible arrangers of the Sibur IPO deal. JP Morgan declined to comment, and Gazprombank did not reply immediately to a request for comment.
There was no final decision whether only existing shares would be involved or Sibur would issue new shares for the IPO as well, the sources said.
Sibur is constructing a petrochemical complex in western Siberia known as ZapSibNefteKhim, which will be one of the world's five biggest petrochemical plants, part of a play by Russia to capture more of the value from the oil it produces.
Another of its projects, a gas chemical complex in Russia's far east, will require preliminary investments of up to $8 billion. Sibur is looking for Asian partners to share the risks for the latter. (Reporting by Oksana Kobzeva and Olga Popova Writing by Katya Golubkova and Vladimir Soldatkin Editing by Ros Russell, Dale Hudson and Emelia Sithole-Matarise)