Minnikhanov recommends the industry “not to confine itself to the perimeter but to be transcontinental”

President's order is not to get sick!

Tatarstan President Rustam Minnikhanov opened the regular meeting of the board of directors of Tatneftehiminvest holding for the first time with an urgent request to the heads of large companies not to get sick and stay at the helm! Moreover, the request was made not in a commanding tone, but in a light, friendly manner, but it was clear that no refusals were expected.

“I am glad to welcome you, who are in good health today," Minnikhanov said happily. “Unfortunately, not everyone is on duty," he said, looking around the large meeting room in the Government House. “A lot of our colleagues are more or less under the influence of coronavirus," Rustam Minnikhanov complained and urged to take care of their health. “Talia, this is about you first," he said, turning the conversation into a joke. Although, probably, she was also given a signal to be careful when holding meetings with foreign guests. “You are our treasure. Like Russia has Gazprom, we have Talia," the president continued to joke.

Two key ministers from the economic bloc and some business “generals” couldn't attend the meeting at once. “Unfortunately, Albert [Karimov, Minister of Industry and Trade of Tatarstan] and Midkhat [Shagiakhmetov, Minister of Economy] got sick," Rustam Minnikhanov expressed regret in the middle of the session. At least in the case of Karimov, we are definitely not talking about coronavirus — this was reported in the press service of the ministry of industry and trade of Tatarstan.

Midkhat Shagiakhmetov was replaced by his deputy, Rustem Sibgatullin. The meeting of the board of directors was attended by Albert Shigabutdinov, the chief executive and adviser of TAIF Group, and Ilshat Fardiev, the director general of Grid Company, from their own offices via videoconferencing. Valery Sorokin, the chairperson of the board of directors of Ak Bars Bank and head of SINH (Svyazinvestneftekhim), and Alexander Lavrentyev, the president of the Association of Industrial Enterprises, came directly to the Government House. Let us note that the building has increased security measures — several air recirculators operate on each floor.

The failure of the second quarter recouped by 83%

As usual, the October meeting of the board of directors was devoted to summing up the results of the activities of enterprises of the petrochemical complex of the Republic of Tatarstan for 9 months of 2020. Director General Rafinat Yarullin made a report. He stated that the oil and petrochemical industry began to recover slowly, having recouped the losses of the collapse in global markets in the second quarter in the third quarter.

According to Yarullin, the production volume was adjusted and decreased by 6% as a result. A noticeable reduction remains in oil production, in the production of rubbers and polyethylene. Tatneft accounted for most of the reduction in oil production. It produced more than 19 million tonnes, which is by 13% lower than in 2019. Oil companies reduced exploration expenditures, Tatneft reduced the drilling of new wells by 14%, and since June, drilling has been conducted only in the existing stock. “In the context of low polymer prices, a number of global companies have reduced their profitability or made a loss," Yarullin said.

Leaders and outsiders

Oil refining, the production of mineral fertilizers, detergents and plastic products found themselves on the rise. The production of petroleum products increased by 9,7% to 14,7 million tonnes. “TANECO prices increased by 17%. However, due to the overhaul of the hydrocracking unit, the production of diesel fuel has decreased. The TAIF-NK complex is operating in the commissioning mode," said Rafinat Yarullin. Nefis increased production by 7%, Nizhnekamskneftekhim reduced the pace of decline in production, the rubber production recovered to the previous level. The installation of large-capacity units has been completed at the new pyrolysis complex. At Kazanorgsintez, the pace of output slowed down due to earlier major repairs and problems with the start-up of pyrolysis furnaces.

The Chemical Plant Karpov suffered the most. If the average revenue in the industry decreased by 17%, the chemical plant — by 19%, Yarullin said. The holding's management believes that the company needs to modernise and update its product range.

But the Nizhnekamsk plant of carbon black, which last year was left without raw materials, turned to be a winner. The company managed to compensate for the failure of 2019. Tyre manufacturers revised their strategy and are optimising costs in the face of a downturn in the automotive industry. According to Rafinat Yarullin, Tatneft plans to create new large-scale production facilities in the CIS countries.

The pandemic has hit plastic processors hard. “Over the past three years, the country has missed more than 4,000 enterprises producing plastic and rubber products. At the same time, more than 100 enterprises were closed in Tatarstan. Only food and medicine producers are growing," the speaker said.

“In the third quarter, exporters benefited from the weakening of the ruble. This allowed the petrochemical industry to recoup losses after falling in the second quarter, but they failed to return to the level of last year. The decline in business and consumer activity has affected," Rafinat Yarullin summed up.

Raw materials — to Tatarstan

At the end of the report, Rafinat Yarullin called on large enterprises to maintain cooperative ties and, first of all, support republican consumers. “When choosing supplies, first of all, I ask to meet the needs of Tatarstan companies. Their underutilised capacity will lead to a decrease in regional revenue this year, which next year will result in the loss of jobs and a reduction in the sales market for the major producers themselves," he warned.

The president of Tatarstan agreed with him, who, however, saw the problem of restoring the industry deeper than just loading at 100%. Rustam Minnikhanov believes that, first of all, it is necessary to “carefully look at where we fell, what our markets are and how to 'gain a foothold', it is necessary to choose the right path for expansion. “The company should not be confined to its perimeter, but should be transcontinental," he advised the heads of enterprises to look through a broader lens.

As an example, he cited Kazakhstan, where projects for the assembly of KAMAZ trucks and Tatarstan tyres were presented. “Kazakhstan offers very good conditions," the president said. “No one is waiting for us. We need to work! If it doesn't work out, then we need to develop another project," the president said.

Ammonia-2: another 1 billion cubic metres of gas may be needed

Being in high spirits, the president lifted the veil of secrecy over a new promising project that has a chance to be implemented. We are talking about the resuscitation of Ammonia-2.

“Yesterday I spoke with the owners of Ammonia," Rustam Minnikhanov intrigued the present “generals” of business. “You remember we previously had the second stage of Ammonia. So, if there is a resource, we will try," he was inspired. “I think it is also important for Gazprom to organise gas chemistry within the country.” However, this will require the supply of an additional volume of natural gas of 1 billion cubic metres, explained Minnikhanov. He promised that he would definitely apply for the receipt to the head of Gazprom Transgaz Kazan, if they finally agree.

By the way, Ammonia increased its output by 6%. “The demand for methanol is growing from both the chemical industry and the transport industry. In shipping, a number of international companies already use it as an alternative to fuel oil," explained Rafinat Yarullin.

On the other hand, the petrochemical market is more complex than the rest. “I know the oil industry, but petrochemistry...” Minnikhanov shook his head and asked the “generals“of petrochemistry to be sensitive to changes. “Rubbers is the big topic. The first entry has not been successful yet. There will be a meeting in Tobolsk. Albert Kashafovich, we must definitely raise this topic. Unfortunately, Albert and Midkhat are on sick leave. If we don't protect our businesses, no one needs them. Now we need to analyse each of them. The petrochemical industry is an important one, and I'm familiar with oil industry because I'm running the board of directors," the president said.

According to Minnikhanov, there is a lot of raw materials on the market today, if we do not process it, it will be difficult. “The main thing is to maximise the use of existing capacities," he concluded.

Oil and petrochemical companies keeping the KFU occupied

Following this, the meeting presented the technology for producing composite and carbon structural materials from oil pitches and cokes — precursors developed by the Bashkir State University (BashGU). BashGU proposed to create a low-tonnage import-substituting production with a capacity of 4,000 tonnes of coke and 3,000 tonnes of pitches.

Plans are being developed in the south-east to create an oil-engineering cluster. Igor Malykhin, the director of NPF Modul (Leninogorsk), spoke about this initiative.

The Kazan State Power Engineering University has discussed the idea of creating a situational centre for the development of heat supply in Kazan. It can include representatives of the government and heat supply companies — Tatenergo, Kazenergo, TGC-16.

In conclusion, the rector of the KFU, Ilshat Gafurov, thanked major companies, including TAIF Group, for their support. According to him, thanks to their orders, the university fulfilled economic contracts for 600 million out of the total amount of 1,2 billion rubles, which allowed the university to be in the world rankings and win the right to create a world-class competence centre. The corresponding decree of the Russian government was signed on October 24.