Uzbekistan intending to develop the petrochemical industry and interested in the experience of TAIF Group

Large-scale plans, serious intentions

Trade and economic relations between Russia and Uzbekistan have been built and developed virtually since the collapse of the Soviet Union. Already in March 1992, diplomatic relations were established between the states, in May, the agreement on the Foundations of Interstate Relations, Friendship, and Cooperation between the Russian Federation and the Republic of Uzbekistan was signed, and in November, an interstate agreement on trade relations was signed. These relations are getting stronger and developing from year to year. For example, if in 1995 the trade turnover between the states barely exceeded 1,7 billion US dollars, by 2009 it crossed the threshold of 2,5 billion, and by the results of the most difficult pandemic year for the world economy in 2020, it came close to the mark of 6 billion. The parties are making plans to achieve a mutually beneficial economic effect of 10 billion US dollars from the cooperation of the states in the foreseeable future.

“The Uzbek-Russian cooperation is being on the rise today, and the growth dynamics continues. The basis for this is the strategic course set by President of the Republic of Uzbekistan Shavkat Mirziyoyev and President of the Russian Federation Vladimir Putin," Prime Minister of Uzbekistan Abdulla Aripov said on 22 June, 2021, when he came to Moscow to participate in the second meeting of the joint Russian-Uzbek commission at the level of heads of governments.

In turn, Russian Prime Minister Mikhail Mishustin also stressed that the parties need to seriously expand cooperation in industry, the fuel and energy complex, including the peaceful use of nuclear energy, in medicine and education, digital economy, and in high technologies in general.

According to statistics, more than 600 enterprises with the participation of residents from Uzbekistan operated on the territory of Russia at the end of 2019. At the same time, almost 2,000 companies and enterprises with the participation of Russian capital successfully worked in the Republic of Uzbekistan in the second half of 2020. Currently, another 104 projects worth a total of $5,8 billion are being at the stage of practical implementation.

The parties rely on closer contact between the regions in the further strengthening and development of relations between the states. For example, the director of the Centre for Research Initiatives Ma'no, Bakhtiyor Ergashev, emphasises that Tatarstan is the most active in Uzbekistan. In mid-June 2021, Tatarstan President Rustam Minnikhanov paid another two-day working visit to the Central Asian republic. The agenda of the visit was very intensive and eventful: meetings with representatives of the Tatar diaspora (and there are more than 300,000 of them in Uzbekistan), discussion of the development of cooperation within the framework of the intergovernmental agreement signed back in 1993. Rustam Minnikhanov reminded that over the years of cooperation, common projects have been developed with a number of Tatarstan companies, such as KAMAZ, Tatneft, TAIF, KMPO, Shipbuilding Plant, Pozis, Tatkhimfarmpreparaty, Ak Bars Holding, Tatspirtprom, etc.

“We are actively developing cooperation with Uzbekistan. Last year, due to the pandemic, the trade turnover decreased, we are going to increase it by several times," the press service of the president of Tatarstan quotes the words of Rustam Minnikhanov during the meeting with Prime Minister of Uzbekistan Abdulla Aripov.

During the pandemic year, the bilateral trade turnover between Tatarstan and Uzbekistan decreased by almost 20% and amounted to about 156 million US dollars. The export pattern mainly consists of the supplies of land transport vehicles, plastics, and products made from them, wood, rubber, rubber, oil and petroleum products. The main imports at the end of last year were plastics, textiles, and clothing items.

'Every visit of our delegation to Tatarstan brings new things to the development of our republic. I am pleased to send my colleagues to your region so that they adopt the best practices," he stressed during the meeting with the leader of Tatarstan, President of Uzbekistan Shavkat Mirziyoyev.

For the implementation of low-tonnage chemical projects — technopolis, for large projects — TAIF assistance

The Uzbek delegation in Tatarstan was interested in everything: how the housing and communal services system is built, and the work of the Khimgrad technopolis (its twin brother will be built and launched in Tashkent Region with the active assistance of Tatarstan specialists). The guests were also interested in the secrets of the success of the leading special economic zone in Russia — Alabuga. All these projects have been launched and are successfully developing under the auspices of the president of Tatarstan, Rustam Minnikhanov. Divided into several groups, the delegation from Uzbekistan intensively established contacts, got acquainted with production facilities and specialists, agreed on return visits and joint work. One of the most important negotiations — on the development of relations in the oil refining and petrochemical industries — took place within the walls of the headquarters of TAIF JSC, the parent company of TAIF Group.

“Agreements have been reached between the heads and governments of our republics to intensify relations and move from words to deeds," Zhurabek Mirzamakhmudov, the chairman of the management board of Uzkimesanoat JSC and director general of Uzatom agency, said immediately after the exchange of greetings. That is why the Uzbek side turned to Ramil Mavlyutov, the director of the Tatarstan trading house, with a request to help organise a meeting with the leadership of TAIF Group — one of the largest and actively developing in this industry in Russia.

On behalf of TAIF Group, the delegation was received by Albert Shigabutdinov, the chairman of the board of directors of TAIF JSC.

“Both Khimgrad and Alabuga are very interesting projects. The first one is focused on low-tonnage projects, the second one is focused on larger-scale projects. We have a lot to learn — to adopt experience. With TAIF, we believe there is an opportunity to implement larger investment projects. In particular, for the production of polyvinyl chloride (PVC) and for the Methanol to Olefins technology. We would be grateful to TAIF Group for its active participation in these projects. And not only in them. We are ready to work on other projects in the field of chemistry and petrochemistry," Mr. Mirzamakhmudov immediately announced the level and directions of interest in cooperation with TAIF.

“Another direction for cooperation: in the future, given that the demand for polymers in Uzbekistan is growing, we are ready to consider an increase in imports of those grades of polyethylene and polypropylene that are not enough on our market. And not only polymers, but also other types of products: synthetic rubbers, carbon black, soot, various additives used in the production. We would like to build direct contacts — without intermediaries," the chairman of the management board of Uzkimesanoat JSC also said.

After watching a presentation film about the activities of TAIF Group, Mr. Mirzamakhmudov expressed admiration for the Group's plans and the scope of the Development Strategy until 2030, with a total cost of more than 2,2 trillion rubles. Albert Shigabutdinov spoke in a little more detail about the projects that are already being implemented and those that are planned in the foreseeable future.

TAIF is ready to cooperate, but on a parity basis

Speaking about the prospects of cooperation, Albert Shigabutdinov stressed that the interest of the parties is mutual. TAIF Group is ready to consider the possibility of active participation in the programmes implemented in Uzbekistan.

“We are ready to consider any mutually beneficial options for cooperation. TAIF Group has the necessary technologies, financial instruments, and highly qualified personnel to solve problems of any level of complexity," said the chairman of the board of directors of TAIF JSC. But he clarified that TAIF Group intends to consider only joint projects in the implementation of which both sides will be equally interested.

Mr. Mirzamakhmudov assured that partnership relations are preferred in Uzbekistan.

“We understand that only if there is a reliable partnership, the investor will be interested in implementing large-scale projects. As a state-owned company, we are ready to stand shoulder to shoulder and work together with our partners. As for the distribution of participation shares, we are ready to show maximum flexibility here," he stressed.

The enterprises of TAIF Group are ready to supply their products to Uzbekistan in any assortment and volume on economically favourable terms for both sides. The only thing is that Albert Shigabutdinov clarified that in order to ensure relatively small and one-time supplies to TAIF Group's partners, it would be more convenient to use the capacities of one of the largest electronic trading platforms in Tatarstan and Russia — ONLINECONTRACT. Last year alone, the convenient and reliable platform allowed us to conclude transactions totalling about 100 billion rubles. If we are talking about long-term cooperation, Albert Shigabutdinov stressed the readiness of TAIF Group to meet and discuss the terms of supplies.

Following the results of the communication, the parties agreed on the need for new meetings for a substantive discussion of cooperation. Mr. Mirzamakhmudov agreed to give a short interview to the journalist of Realnoe Vremya.

We are ready to cooperate with Tatarstan in many areas

“Zhurabek Tursunpulatovich, during the meeting, Uzbekistan's intention to intensify mutually beneficial trade and economic relations with Russia has been announced. What is the interest of the Republic of Uzbekistan in Tatarstan and TAIF?

“We have visited Khimgrad, where we got acquainted with the experience of implementing clusters of low-tonnage chemicals and organising various industries. Taking into account this experience, the leadership of our country has instructed, together with Khimgrad technopolis and the Republic of Tatarstan, to implement a similar project in the Republic of Uzbekistan, in Tashkent Region. As part of strengthening interregional cooperation, Tashkent Region has been identified as the main partner of the Republic of Tatarstan. We have already started preparing together with our partners for Khimgrad near Tashkent, where, first of all, priority in the implementation of a particular project will be given to companies from Tatarstan and Russia.

As for TAIF, we are primarily interested in his experience in the field of oil and gas chemistry development. Taking into account the plans of Uzbekistan in the development of petrochemical industries, the intention to produce products with higher added value, we see prospects for complementarity, exchange of experience and, of course, the participation of TAIF Group in promising large-scale projects implemented in the Republic of Uzbekistan.

“Let me clarify: is Uzbekistan interested in coming of investors who are ready to place their production facilities on your territory, or they are more interested in joint projects?

“Of course, if a company is interested in implementing a particular project itself, then we will create all the necessary conditions for them and provide all possible assistance and support. But we are more interested, and our investment policy is primarily aimed at the implementation of joint ventures. We don't need investments for the sake of investments. It is much more interesting that an investor in Uzbekistan has a partner with whom marketing will be carried out jointly, modern management and company management will be involved. A gradual transformation of enterprises is being carried out in Uzbekistan. This is our main goal. Therefore, first of all, preference is given to the implementation of projects on the terms of joint ventures or joint implementation.

“If we talk about TAIF, what projects, what areas in petrochemistry, chemistry, oil refining that the Group has already implemented in Tatarstan would you be interested in implementing at home?

“We would be primarily interested in implementing projects to expand the production of ethylene and propylene, as well as its derivatives. Which derivatives — it is necessary to sit down together and determine, based on the market and needs. First of all, it is polyethylene terephthalate, which is used both for synthetic yarns for the textile industry and for the production of bottles. We are also interested in the production of glycols. Besides, it is polypropylene, which is very much demanded. Ethylene-vinyl acetate… and all other derivatives. But we are talking about cooperation not only in the field of oil and gas chemistry. We are interested in a comprehensive approach. So, our delegation includes the heads of Uzbekneftegaz, who are ready to cooperate with Tatneft PJSC in intensifying production at long-term developed fields. Extraction of hard-to-reach oil. This direction is also very interesting for us.

“But hard-to-recover oil reserves are usually heavy. How interesting is TAIF's experience in deep conversion of heavy residues to you?

“This is exactly what I said, that we are interested in a comprehensive approach: using the experience of Tatneft — to establish the extraction of hard-to-reach oil, and based on the experience of TAIF, to establish its deep processing. What we saw in the HRCC project implemented by TAIF, where the possibility of extracting 98,2% of light oil products from a tonne of raw materials is achieved with the use of the modern unit, is impressive. This would be very useful to study.

So you are planning to visit the production facilities of TAIF Group for a more in-depth study of them?

Absolutely! This time the schedule is too busy, and I managed to visit only a part of what I would like. Therefore, next time, and we have agreed to meet more often and have established contacts, I think I will definitely come to study and watch. I am sure that it will be useful.