Tatneftekhiminvest-holding counts Tatarstan petrochemistry’s losses

Not big but long fall

A traditional summary of the Tatarstan petrochemical complex’s performance during the pandemic 2020 year became the main topic of the meeting of Tatneftekhiminvest-holding’s Board of Directors on 27 January. Director General of the company Rafinat Yarullin presented them. From the very first minutes, he reported on a worsening of the situation in the sector in all key indicators, but it was more important to know how big the fall was, who was the leader and outsider.

However, the apocalyptic spring forecasts didn’t become a reality. As Rafinat Yarullin said, the output of enterprises of the Tatarstan petrochemical complex in 2020 shrank by 8,4%. It turned out to be better than analysts had predicted in spring 2020 promising an up to 15-20% decline. However, only the absence of accurate numbers of the amount of sold products and the financial result for 2020 in the report confused. Perhaps, the final summary hasn’t yet been made and will be voiced later. Instead, the speaker had to talk about numbers of taxes paid that indirectly “illuminate” financial results of the sector. According to Rafinat Yarullin, enterprises of the sector transferred 384 billion rubles to all budget levels, but the Tatarstan consolidated budget received 54 billion rubles. It is 41% more than in 2019, Yarullin specified.

But it is wrong to attribute all losses of the sector to the pandemic, the director general of Tatneftekhiminvest-holding claimed. An unlucky end of 2019 made a negative impact.

“Not only the pandemic influenced the worsening of results, negative tendencies were noted in 2019,” Rafinat Yarullin indicated. “The output has been reducing for the second year in a row.” Slides showed the dynamics of production decline whose starting point was 2019. If there was reached a growth in 2018, the first decrease to 99% happened in 2019, while the fall in 2020 was 91,6%.

Major repairs during pandemic: fuel prices are going up

The dynamics are negative in all sectors except for rubber goods, Rafinat Yarullin said. In 2020, Tatneft decreased production by 13% — to 25,6 million tonnes. As a result, its revenue went down by 15%, while income did by 61%. Most petrochemical enterprises demonstrated negative numbers: from 13 to 50%. Rafinat Yarullin explained this by the fact of the fall in world prices for oil, oil products, plastics, carbamide. The peak of the reduction was in spring 2020.

However, the prices revived in the fourth quarter, moreover, for all petrochemicals, which favoured the recovery.

“KOS is augmenting polycarbonate production capacities to 100,000 tonnes, but during modernisation, it had to stop the production. The supply of polyethylene to republican consumers continues. NKNK improved its production performance. The production of rubbers, plastics and alpha-olefins is above the level of late 2019,” Yarullin said.

Surprising metamorphoses happened in the fuel market: if petrol demand decreased at the beginning of the year, there was a noticeable rise in prices, which still goes on, after lifting the restrictions. The oil refining complex responded differently by substituting each others’ shutdowns. TANECO increase feedstock processing by 12%. So the production of motor fuel increased by 6,5%, diesel fuel reduced by 6%, to 3,4 million tonnes. The reduction happened during the second quarter when TANECO was carrying out major repairs of several units. TAIF-NK processed 7,3 million tonnes of oil, diesel fuel increased by 19% — to 2,9 million tonnes, car petrols decreased by 11%. The main reason is the major repair at the end of the year. Due to the major repairs and a deficit of feedstock, ethylene and polyethylene production decreased short-term in the third quarter.

Karpov Chemical Plant in search of business ideas

The Karpov Chemical Plant reduced its revenue by 17%. According to Rafinat Yarullin, the closure of dehydration catalyst production led to the worsening of indicators (this happened two years ago but the closure of production still makes itself known). “The last investment projects were implemented in 2013, it is necessary to look for new competitive products. I am asking for proposals for import substituting products,” Rafinat Yarullin who used to be a board member of the Karpov Chemical Plant asked to the “club of petrochemists” for advice. We should remind you that executive agencies of the Mendeleyevsk plant changed with the arrivals of Timur Metshin, the oldest son of the Metshins.

It is already obvious that a new reality that changed landscapes of all markets, including the petrochemical one, came. Yarullin thinks that the hidden threat is that the world market is switching to a cheaper feedstock than Tatarstan companies use.

“The market will be saturated, profitability will reduce,” he warned and added that investors should opt for medium- and small-tonnage chemistry.

In favour of this point, he talked about the possible imposition of bans on sales of cars with internal combustion engines. “Governments of 14 countries of the world have already announced the soon prohibition of this machinery,” Rafinat Yarullin said. “Even conservative scenarios envisage a reduction in oil consuming facilities. This means again that all downstream products should be used to make chemical goods,” Yarullin persuaded.

The speaker finished the report with an urge to follow process safety rules in hazardous plants. “The flames were extinguished in the petrochemical plant in Ufa. We had an emergency in Sarmanovo District,” he reminded the audience.

Polyethylene derivatives: if KFU’s catalyst is necessary

But a traditional pitch session with the presentation of technology and products for the Fuel and Energy Complex took much more time. COVID-19, however, didn’t cancel plans: four new projects at once were added to the agenda. Kazan Federal University scientists didn’t stop working in self-isolation and demonstrated a technological start-up designed to make a new catalyst for selective ethylene oligomerisation. Head of KFU’s scientific group Dmitry Yakhvarov delivered a report named Catalytic Dimerisation and Ethylene Trimerisation. He offered to introduce the technology for catalyst production in chemical enterprises. However, his speech lasted for more than 30 minutes, it sounded like a scientific lecture that only specialists understood.

“I am not a great connoisseur of chemistry, but I know that there are high-margin and low-margin olefins,” the president ironically reacted after the report ended. “But we have two great specialists, let’s ask them... There is a third one, a scientist,” the president saw Rector of Kazan Chemical Technological University Yury Kazakov in the hall but asked the scientist first about the practical application of the know-how: “Will the existing capacities fit or are new units necessary?”

“At the moment, they (catalysts) are located in the laboratory, but the scale easily goes up,” Professor Yakhvarov claimed. Then the president asked to evaluate the advantages of the development of practical industrialists.

“In fact, it is an interesting work, everything that is linked with the selectivity of production,” Director General of Kazanorgsintez Farid Minigulov was first to express his opinion. “Compared to the indicators we have and those claimed in the work, there are serious differences. It is an interesting work. I think it will be necessary to reach industrial tests,” he approved. Head of Nizhnekamskneftekhim Ayrat Safin added that “the linear olefins we make today are clearly designed for our needs, while selectivity should be considered”.

Rector of Kazan Chemical Technological University on problems of expansion

Then the president asked Rector of Kazan Chemical Technological University Yury Kazakov to deliver a speech as an independent expert. He talked about his own experience of catalyst production claiming that a lot of side effects are found when launching the production that cannot be foreseen. “What we didn’t see in laboratory processes is important when expanding the scale. When we were testing our unit, we really suffered.”

“This is world-class technology, it needs to be supported,” Rafinat Yarullin insisted. “But it is necessary to understand that we should produce the feedstock we need to cement our competitive positions,” the president concluded.

The reliability of energy supply and energy efficiency of NORMEL three-phase power stabilisers. Director General of ENEXGROUP Innovative Corporation Vladimir Davydov presented them. The Russian highly reliable stabiliser costs 300,000 rubles, while that of a company from Milan is €1,2m. “Even the price has certainly an economic advantage,” Davydov assured.

Moreover, the stabiliser provides a 15% fall in electrical energy consumption. In reply, the president asked Director General of Grid Company Ilshat Fardeyev to assess the advantages of this proposal. “It is necessary to have a look, examine the service contract. Let’s see the pilot project,” he offered. The president asked to choose several facilities. “We are interested in this novelty. We are the country’s fifth region in energy generation.

“Even descendants won’t know them!”

Director General of EnergyDevelopment GC Rail Gazetdinov talked about prospects of launching eight rapid charging points on the highway from Kazan to Moscow. Particularly 39 Tatneft PJSC petrol stations operate there. Related projects are developed in the Zelenodolsk Electrical and Technical Plant.

In conclusion, the floor was given to head of the Tatarstan State Archive Gulnara Gabdrakhmanova. She complained about five companies refusing to hand over archive documents to the State Archive. Svyazinvestneftekhim, Innopolis, Kazan Fat Plant are among them. “Even descendants won’t know them!” she exclaimed. The president asked the companies to solve the problem. “Leave memory about yourself and your companies, leaders and accomplishments,” he advised.

The president remembered he was presented a 100-year-old book. “If there were no such work, that’s it... everything will be forgotten, lost,” he persuaded and provided a simple argument: “Look how interesting it is for us to find 100-200-year-old documents.”