Ambitious project: Nizhnekamskneftekhim continues the construction of EP-600 ethylene complex

“All design solutions comply with the norms and rules of the Russian Federation”

The Arbitration Court of Tatarstan, chaired by judge Ilgiz Abdrakhmanov, partially satisfied the claim of Rostechnadzor, assigning Nizhnekamskneftekhim PJSC a fine below the lowest limit, in the amount of 150,000 rubles, for deviation from the project documentation during the construction of two ethylene complex facilities.

During the court session, Timur Tarasov, a lawyer of Nizhnekamskneftekhim PJSC, explained that the adjustment of the project was caused by “objective necessity” and assured that the construction is carried out in full compliance with the working documentation, which was developed by German company Linde AG with the involvement of Russian design institutes and “meets all the requirements and norms of the Russian Federation”.

“All design solutions used in the working documentation and reflected on the construction site fully comply with all building norms and regulations of the Russian Federation. They comply with all the requirements for reliability and safety, there is no threat to life or health," said the representative of the defendant. “Besides, during the inspection by the Rostechnadzor department, no deviations of the works performed from the working documentation have been revealed, which confirms that the works were performed in strict accordance with the working project.

By the way, at the direction of the country's leadership, the mechanism of the “regulatory guillotine” (a tool for large-scale revision and cancellation of regulatory documents that negatively affect the overall business climate) has been implemented for several years. That is, the country's leadership believes that reform is long overdue in this issue.

At the same time, the current legislation in the field of construction currently allows, on a legal basis, in the presence of formal deviations from it, even in the absence of real threats to the life and health of citizens, to significantly restrict the rights of business entities, including suspending activities without a court decision. This provision contradicts the purpose of the “regulatory guillotine” mechanism in reducing the excessive administrative burden on businesses.

Russian President Vladimir Putin also drew attention to this in his address to the Federal Assembly. “We have already scrapped many archaic norms and requirements in construction and other areas, we have abandoned a lot of unnecessary control checks, but we need to strengthen the momentum, and the result in improving the business climate should be substantive.”

According to him, when market situation changes, high risks remain for businesses, especially when it comes to investments in long-term projects. “Therefore, we will set up the entire system to support private investment.”

For example, developing one of the main investment projects, Nizhnekamskneftekhim fully follows the recommendations of the address to the Federal Assembly, strengthening the potential of the country and each individual region. Understanding all this and taking into account the adoption of excessive measures related to the ban on construction, the new management of the Volga Department of Rostechnadzor reacted with understanding to the decision of the Arbitration Court. The supervisory authority continues to monitor the construction of the largest complex in the Republic of Tatarstan as planned, and Nizhnekamskneftekhim provides maximum assistance in this.

Important project for Tatarstan and Russia as a whole

The construction works on the olefin complex were suspended on March 19. In the course of the unscheduled inspection, Rostekhnadzor revealed violations of the requirements for urban planning activities during the construction of two objects of the EP-600 ethylene plant.

Even at the preliminary meeting, the defendant's side in justifying its position stated that during the construction of such large-scale and complex objects situations may arise when the working documentation differs from the design documentation.

“In the project documentation, which is examined by Glavexpertiza, may not be fully taken into account the technical solutions, the clarification of which occurs during the development of working documentation and construction. In particular, in the process of developing project documentation, the weight of equipment and pipelines is usually taken according to the weight and size parameters of similar equipment items at similar facilities or with a significant margin. When developing the working documentation, the contractor of the design works performs the correction calculation of the load-bearing structures of the structures, taking into account the data received from each equipment manufacturer," explains Tarasov.

Fedor Zolovkin, the chief engineer at VNIPIneft JSC, also confirmed this, saying that the changes made do not pose a threat to people's lives and health.

“The overall weight of the equipment in comparison with the analogues mentioned in the project documentation has been changed, due to that the weight of the equipment that will be installed has been reduced," Zolovkin explained the technical aspects of the dispute. “Relatively speaking, if the equipment weighed 8 tonnes according to the project, then it becomes 5. Therefore, there is no need to drive 60 piles under it, when 50 is enough. Needless to say that the structures have become less durable.

“The changes made to the design are the result of a complex engineering calculation performed in the same software packages as the original engineering calculations. The conditions for ensuring their strength and load-bearing capabilities, depending on the static and operational loads of the equipment, are confirmed by these calculations," says Dmitry Yarovitsyn, the deputy director general for capital development at Nizhnekamskneftekhim PJSC.

He notes that the legality of making changes to these constructs is quite legitimately proved by Nizhnekamskneftekhim PJSC in the framework of project support by Glavgosexpertiza of Russia.

During the court session, a positive conclusion of the Glavgosexpertiza of the Russian Federation on the reliability and safety of one of the objects of the olefin complex was presented. The representatives of Nizhnekamskneftekhim express confidence that on 21 May a positive conclusion will be received on the updated project of the second object — a rack for pipelines.

Thus, having considered all the arguments in the aggregate, the Arbitration Court of the Republic of Tatarstan recognised that the revealed violation is “formal and the punishment in the form of administrative suspension of activity does not correspond to the severity of deviations from the project documentation”.

The court allowed to resume the construction of the olefin complex, noting the importance of the large-scale project not only for Tatarstan, but also for Russia as a whole.

More than 600 new jobs with decent wages

The implementation of the unique project for the construction of the EP-600 ethylene complex began with the signing of a memorandum of strategic cooperation between TAIF Group and German company Linde AG in June 2017 on the sidelines of the St. Petersburg International Economic Forum in the presence of Russian President Vladimir Putin and Tatarstan President Rustam Minnikhanov.

In the same year, Nizhnekamskneftekhim PJSC and Linde AG signed contracts for the implementation of the first stage of the future ethylene complex with a capacity of 600,000 tonnes a year. The project is implemented using the most modern eco-friendly technologies.

For the implementation of the construction and installation works, VNIPIneft JSC developed project documentation, which received a positive conclusion of the state expertise.

The construction works on the site started in March 2020. It will process almost 1,8 million tonnes of straight-run gasoline a year. In addition to 600,000 tonnes of ethylene, it is planned to produce 273,000 tonnes of propylene, 250,000 tonnes of benzene, and 88,000 tonnes of butadiene.

To date, construction works are actively carried out on the construction site: the assembly of metal structures of pyrolysis ovens, the construction of industrial and non-industrial buildings, the installation of equipment, the construction of cooling tower basins, the installation of trestle support, the construction of treatment plant basin.

As of the beginning of April 2021, about 27,000 piles were driven at the site, 72,000 cubic metres of concrete were accepted and poured, 20,000 tonnes of metal structures were supplied, 197 pieces of equipment were installed on the foundations. Metal structures are supplied by 26 manufacturing plants, of which 18 are enterprises of the Republic of Tatarstan. Two and a half thousand people are involved in the construction and installation works at the site. These are employees of the general contractor, Turkish company Gemont and employees of 18 Tatarstan construction companies.

The supply of equipment is also continuing. Six hundred and ninety-seven units have already been supplied, of which 137 are dynamic and 560 are static equipment. This is 36% of the total volume. Twenty thousand tonnes of pipeline materials have been supplied — 98% of the total volume. Ninety-one per cent of electrical equipment, 70% of power cables, and 46% of instrumentation and control equipment have been supplied.

It is worth noting that an increase in production and the release of new products will contribute to the socio-economic development of the region. More than 600 new jobs with decent wages are going to be created on the territory of the complex, as well as the creation of new infrastructure, including roads (highways, railways, bridges), a new impetus for housing construction and the creation of social infrastructure facilities.

The complex will become a driver for the emergence and development of many production facilities for the production of final goods in Tatarstan and Russia as a whole, which will use polymer products produced at the new complex, which fully corresponds to the federal import substitution programme.

“Nizhnekamskneftekhim is going to become one of the largest petrochemical companies after the implementation of the programme. And one of the few, I think — the only company in the world where such a volume of polymers will be concentrated: about 3,5 million tonnes a year will be produced. A special feature of the complex will be that it processes high-quality raw materials obtained from crude oil — in February 2021, during a working trip to Nizhnekamsk, said Albert Shigabutdinov, the chairman of the board of directors of TAIF JSC, chief adviser to the director general of the parent company of TAIF Group.

The main stage of the construction is planned to be completed in December 2022, which will give the opportunity to start production in the second half of 2023.