Nizhnekamskneftekhim: how the petrochemists of Tatarstan conquer the global market

Nizhnekamskneftekhim: how the petrochemists of Tatarstan conquer the global market

The giant of the sector, NKNKH, is one of the largest petrochemical complexes in Eastern Europe. Having got caught up in a stubborn situation in the 90s, Nizhnekamskneftekhim was on the edge of the precipice, which now is producing over 120 different products in 10 factories. Yesterday Realnoe Vremya told in detail how the enterprise managed to overcome the crises of the post-Perestroika period in the first part of the report. Today the next article of the special project TAIF-25 of the newspaper tells its readers about the development of Nizhnekamskneftekhim in market conditions, implementation of new factories, which became crucial, and the role of TAIF, the major shareholder, in the monotonic change in a straight fashion of the largest petrochemical complex of Tatarstan and Russia.

On their own to the world level

As early as 1999 the team of the petrochemical enterprise together with TAIF kept the company afloat in an uneasy post-Perestroika period, defined the strategic area of the modernization of the enterprise – transfer from monomer to polymer production. It allowed the enterprise to increase the added value and make an additional profit.

Generally speaking, every step of the progressive development of the petrochemical company presupposes a firm footing of profound analysis of the global markets and its own possibilities. For instance, from the noughties in Russia, as well as in the whole world, the consumption of butyl rubber, the raw material for tyre inner tubes, did not grow, and the demand for chlorbutyl rubber and halobutyl rubber, which are used in the production of tubeless tyres, was gathering speed. This circumstance compelled NKNKH to create Halobutyl Rubber Plant on the basis of brombutyl rubber. It is one of the most marketable commodities of the petrochemistry, which is used in the tyre industry for the production of the inner layers of tubeless car tyres. Earlier HllR had been produced only by two firms – Exxon Mobil (USA) and Bayer (Germany; today's Lanxess subdivision). They knew the production technology of the popular product.

It goes without saying, no one of them wanted to share their secrets with Nizhnekamskneftekhim. As early as 1999 they talked to the western counterparties who offered to sell them the HllR production technology. In answer to them, the counterparties said: ''In some 7-8 years, perhaps, we'll sell,'' Vladimir Busygin, the ex-director general and now the chairman of the board of directors of Nizhnekamskneftekhim OJSC, remembers.

The strategic area of the modernization of the enterprise – transfer from monomer to polymer production

By this time the born-again Scientific and Technological Centre of NKNKH joined the work: the pilot plant was assembled on their own, which was used to develop the technologies of the synthesis of the new material. The French tyre giant Michelin was the strategic partner of Nizhnekamsk. This company has its own authority among tyre workers. This is why an agreement on the test of new production was signed with it. Having obtained the first kilograms of HllR in the pilot plant, 'Nizhnekamskneftekhim' sent them for investigations to Sena banks. And then basing on the remarks of Michelin's specialists, some alterations were made to the technological process.

In 1,5 years, NKNKH got a real quality product. Next, the enterprise addressed to scientists of Yarsintez Research Institution for the necessary technical documentation for industrial production of HllR. It was erected within a year and in April 2004 was put into operation. The investments in this project made $78m. Once Michelin gave the green light, the international tyre producers like Bridgestone, Pirelli, Goodyear and Continental took a favourable view of the product and signed contracts with the petrochemists of Nizhnekamsk.

NKNKH was the first who created the isoprene production technology from isobutene without separation of any intermediate products

The demand for halobutyl rubber of NKNKH grew so much that the enterprise needed to launch the second and the third 'Welding' separation unit and increase all chain of production from polymerization to halogenation, and to bracketing and packaging further on. And in spring 2015, NKNKH launched the fourth unit of Welding, which allows to produce 50,000 tonnes of products per year, for separation and drying halobutyl and butyl rubbers. The total capacity of halobutyl and butyl rubbers production reached 200,000 tonnes per year, while the best result (during the Soviet Union) was 35,000 tonnes a year. According to forecasts, the world demand for all types of synthetic rubbers is to increase to 16,8m tonnes in 2015 and will increase the growth tendency at 4-5% in the ensuing years.

The similar story of the implementation of halobutyl rubber production happened again to the unit of one-stage isoprene synthesis. NKNKH was the first who created the isoprene production technology from isobutene without separation of any intermediate products. Inventing the energy saving technology, the specialists of Neftekhim had to rely on themselves. The technology enabled to reduce specific heat energy consumption per a tonne of isoprene almost twice. Now the capacity of the one-stage isoprene synthesis production is nearly 200,000 a year, and NKNKH follows the path of further increase equal to over 300,000 per year.

All principal investment projects of NKNKH were realized after the advent of TAIF

Synergy inside the holding

In general, due to anti-crisis measures and beginning of the realization of the modernization strategy, at the beginning of the noughties, the TAIF GC managed to save the petrochemical enterprise from losses. And in 2005 NKNKH reached a new coil of the development – the TAIF Group of Companies became the major shareholder of Nizhnekamskneftekhim, earlier the GC had held a block of shares in trust. Nowadays NKNKH is one of the key companies of the TAIF Group that has about 30% of the revenue. TAIF is also the key participant of the chain of production among the companies of the Group. The simultaneous realization of the large-scale programme on the increase of ethylene production in Nizhnekamskneftekhim and the programme on the modernization in TAIF-NK, another subsidiary of the holding, which in 2005-2006 launched Gasoline Plant, including gas oil catalytic cracking unit and natural-gas condensate unit, erased the problem of raw material in the factory. By the way, the new Gasoline Plant in TAIF-NK provided an additional volume of gas fractions for the production of rubber, polypropylene and nonoxynol. NKNKH also could produce more ethylene, which is the development indicator of the petrochemical industry. Ethylene production entails lines of production of all types of plastic and rubbers. And producing more ethylene, Nizhnekamskneftekhim, if necessary, can deliver this product to its affiliated enterprise Kazanorgsintez. NKNKH owns a unique ethylene pipeline specially for ethylene transportation whose length is 748,5 km, which unites ethylene producers and consumers in Kazan, Nizhnekamsk, Ufa, Sterlitamak and Salavat. Nizhnekamskneftekhim purchases a big part of energy resources in the form of steam from TGC-16, which also belongs to the TAIF Group. The companies of the Group set the prices for straight-run gasoline and ethylene in this chain as a formula of the price based on European quotations. Overall, all deals of the company depend on global prices; it allows to work stably and forecast further development.

NKNKH is one of the key companies of the 'TAIF' Group of Companies who has about 30% of the revenue

Consequently, the annexation of NKNKH to the holding allowed to strengthen the interrepublican cooperation giving a positive effect from synergy among the enterprises of the TAIF Group of Companies that managed to unite all these enterprises and accumulate the possibilities. It enables to solve all problems quickly – the possibilities of the Group are much higher than the possibilities of the enterprises separately, especially concerning financial resources.

Maximal efficiency

All principal investment projects of NKNKH were realized after the advent of TAIF. The largest projects are: construction of Polypropylene Plant with a capacity of 180,000 tonnes per year, the installation of equipment for polyethylene production with a capacity of 230,000 tonnes per year, construction of four Polystyrene Plants (the capacity of every plant is 50,000 tonnes; annual volume is 200,000 tonnes), ABS production with 60,000 tonnes of annual capacity, erection of the units for lithium-catalyzed butadiene rubber (50,000 tonnes per year), increase of capacities for production of isoprene rubber to 280,000 tonnes per year and neodymium-catalyzed butadiene rubber – to 150,000 tonnes per year.

The volume of the revenue from the realization of the products (IFRS) of the NKNKH GC grew from 51,59bn rubles from 2006 to 137,007bn rubles in 2014 mainly owing to the realization of the investment programme and adoption of new productive capacities. The total volume of investments in the main funds from 1999 till 2014 was 126,7bn rubles.

What is more, initially, NKNKH, whose fully-fledged activity started in the 70s from isoprene rubber production, produced practically two types of rubber: synthetic polyisoprene and butyl rubbers. Nowadays the company is the leading rubber producer who accounts for 42% of isoprene rubber in the global market and is in the quartet of the largest world butyl and halobutyl producers. 'Now there are 7 types of synthetic rubbers in the enterprise. Moreover, we increased the volumes of the basic raw material – ethylene – from 225,000 tonnes in 1994, which accounted for 14,3% in the Russian Federation, to today's 610,000 tonnes per year, and the share in the Russian market reached 25,5%. The enterprise did not produce any plastic and today NKNKH is the largest producer of styrene plastic, one of the leading polyolefin manufacturers and leading propylene co-polymer supplier to the Russian market,' said Khamit Gilmanov, the first deputy director general and engineer-in-chief of Nizhnekamskneftekhim OJSC.

The share of plastic production in the structure of the revenue of the company has increased from zero till 34% since 2003

Nizhnekamskneftekhim OJSC entered the Russian polystyrene market for the first time in 2003 when it launched the first production of this product based on the technology of Fina Technology. Due to the high quality of the product, Nizhnekamskneftekhim immediately took the leading position in the market. In 2005 and 2008, the second and the third lines of this production were launched. In 2014, the fourth line of polystyrene production based on a new technology was put into operation. The share of plastic production in the structure of the revenue of the company has increased from zero till 34% since 2003. NKNKH is the leading polystyrene and ABS producer of Russia and one of the largest polyethylene and polypropylene manufacturers.

The fourth line of styrene plastic production, which was launched in 2014 and contributed additional 50,000 tonnes to the annual volume of NKNKH, is worthy of attention. And Catalyst Factory, a common project of workers and scientists of the Kazan Federal University, which was launched within the scope of the programme on import substitution, will allow to provide the independence of NKNKH on catalyst suppliers, which is necessary for Isoprene-Monomer and Synthetic Rubber Plant. The enterprise will annually get over 2,000 tonnes of catalyst.

A great project was on the stage of elaboration, whose beginning of the realization the company stated in 2012. 'Firstly, the date of the launch of Olefin Complex, which, according to the initial design, included ethylene production with a capacity of 1m tonnes per year and two Polymer Plants, was in 2017. But the macroeconomic situation made some adjustments to our plans. Now we plan to realize the project on creation of the complex with a capacity of 1,2m tonnes in two stages. The terms will be postponed for 2019-2024. There will be created facilities with a capacity 600,000 tonnes in the first stage, and the same work will be done in the second one,' says Azat Bikmurzin, the director general of Nizhnekamskneftekhim OJSC. And the new Ethylene Complex is to refine 3,5m tonnes of hydrocarbon and produce the corresponding volume of highly profitable products.

Net profit of the GC in 2014 increased 1,5 in comparison with the previous period and made 9,4bn rubles

Solid positions and optimistic future

Last year the enterprise managed to increase the volumes of commodities and export goods in value terms almost by 4% as well as the volume of domestic sales. Net profit of the GC increased almost 1,5 times in comparison with the previous year and made 9,4bn rubles.

The realization of the next strategic programme till 2026 will allow to increase ethylene production threefold, production of plastics – 3,8 times, rubbers – 1,5 times, and ramp up the production of another commodity twofold and create additional 1,580 working places.

Nizhnekamskneftekhim realizes many social projects simultaneously with increasing its productive capacities. So, 70 large projects were organized within the scope of the active environmental security programme last year. As a result of the implementation of environmental measures, the gross emission of harmful substances into the atmosphere last year reduced over by twofold – to 23,435 tonnes per year (while the emission limit is 24,395 tonnes per year). Compared to 2000, when the factual gross emission made 49,204 tonnes per year.

The realization of the next strategic programme till 2026 will allow to increase ethylene production threefold, production of plastics – 3,8 times and rubbers – 1,5 times

Being one of the large consumers of energy resources among industrial enterprises of Tatarstan, Nizhnekamskneftekhim continued to implement energy saving technologies, so it saved 80,000 G/cal of heat energy and 15m kWt/h equal to 104m rubles.

Moreover, Nizhnekamskneftekhim unchangeably follows the policy of social responsibility towards its workers. For instance, 256 apartments were appropriated last year. And this year the programme on a 100% providing of workers of NKNKH for dwellings in terms of social loan began. Parcels for construction have been allocated in Nizhnekamsk. Over 3,000 apartments on social loan will be realized for workers who need dwellings. To day, 1,109 apartments have been realized since 2005, when the programme on social loan came into force.

In general, the sum of the expenses of the NKNKH GC on social expenses and non-manufacturing expenses, taxes in 2014 made 16,062bn rubles.

The resource base of NKNKH allows it to maintain and finance two professional teams: Neftekhimik who plays in KHL (Kontinental Hockey League) and its namesake Neftekhimik FC who plays in the Football National League of Russia. The Centre of High Sports Masterships was created in Neftekhimik sports club in order to attract prospective sportsmen to specialized training.

What is more, a new park appeared in Nizhnekamsk 4 years ago whose creation was headed by Nizhnekamskneftekhim. The petrochemists managed to convert an abandoned waste ground on Mira Avenue into a favourite place of the citizens.

Last year NKNKH signed new long-term agreements with famous world tyre makers till 2019 on the delivery of synthetic rubbers

NKNKH cemented solid positions among largest companies of the petrochemical complex of Russia and its results permit to look optimistically at the future. Last year NKNKH signed long-term agreements with famous world tyre makers till 2019 on the delivery of synthetic rubbers. In 2014, there were signed agreements with large polymer refiners. These and many other agreements are a kind of guarantee of preservation of positions of the company in the global rubber and plastic market – the key productions of the petrochemical giant where almost 22,000 people of 300 professions work there, exclusive of a huge number of employees of the enterprises who outsource NKNKH. These people year after year enable the petrochemical giant to achieve colossal results. Every step – from the smallest one to a breakthrough – was moulded by a simple person's labour who was loyal to his or her job. This daily work of all workers of the TAIF GC without any exception, when the time at work is not counted, and due to sometimes a hard physical and intellectual work that colossal result is achieved, which makes NKNKH famous as the leader of the petrochemistry of Tatarstan and leading enterprise of Eastern Europe. And people's fates and aspirations, which create the petrochemical industry of Russia, is a special topic that requires a gentle journalistic approach that will be told in our subsequent issues.

Part 1 Nizhnekamskneftekhim: path of trials

Photo: press centre of NKNKH

By Realnoe Vremya