Chinese СМЕС selected as contractor for Polypropylene-400 project for Nizhnekamskneftekhim
Trilateral agreement and contracts on the construction project of the new production facility have been signed at the central office of TAIF JSC
The official start of the Polypropylene-400 project at Nizhnekamskneftekhim site has been given. On August 6, at the central office of TAIF JSC, the parent company of TAIF Group, a package of contracts and trilateral framework agreement was signed between Nizhnekamskneftekhim PJSC and Chinese companies China Machinery Engineering Corporation (CMEC) and China Нuanqiu Contracting & Engineering Со. Ltd (HQC) for the implementation of the project for the construction of the new polypropylene production facility. Read the details in the material of Realnoe Vremya.
Goal — to triple the capacity
Due to the epidemiological situation in the world — a new surge in the incidence of COVID-19 — the signing ceremony was held in a remote format. The video conference call connected Kazan, Nizhnekamsk and Beijing.
Director General of Nizhnekamskneftekhim PJSC Ayrat Safin signed the documents in the central office of TAIF JSC in the presence of Chairman of the Board of Directors of TAIF JSC Albert Shigabutdinov and Director General of TAIF JSC — Chairman of the Board of Directors of Nizhnekamskneftekhim PJSC Ruslan Shigabutdinov. In Beijing, the package of contracts was signed by the president of China Machinery Engineering Corporation, Fang Yanshui. The president of China Huanqiu Contracting & Engineering Co., Ltd. also participated in the signing of the trilateral framework agreement. It is them who, within the framework of this project, will become the main subcontractor of CMEC for the design.
The construction of the new polypropylene production facility will be implemented on the basis of Spheripoll technology. Nizhnekamskneftekhim PJSC is already one of the Russian leaders in this segment with a real production of 215,000 tonnes a year and a range of products of over 50 brands. Taking into account the existing plant and the one that is planned to be built — with a design capacity of 400,000 tonnes, Nizhnekamskneftekhim PJSC is going to almost triple the production of polypropylene and become one of the largest and most powerful producers of polypropylene in Europe.
A small step for the company, but a big step in the development of cooperation
For TAIF Group as a whole and Nizhnekamskneftekhim PJSC in particular, this contract was the first ever concluded with a company from the People's Republic of China.
“We have been looking for ways and opportunities to build business relations with a serious company from China for a long time. There were a lot of negotiations, trips to China, and representatives of Chinese companies were also with us… But until that day, there had been not a single contract. Finally, as a result of hard, persistent work on both your and our part, we have found a common language," Albert Shigabutdinov, the chairman of the board of directors of TAIF JSC, said in his welcoming speech.
“The history of TAIF Group shows that all the tasks are being solved. Over the long history of the Group, we have found many reliable, serious partners in different countries. Today we are signing a contract with a powerful Chinese company. Maybe this is a small step for the company, but it is a big step forward in the development of joint projects," Ruslan Shigabutdinov, the director general of TAIF JSC, stressed the importance of the moment.
According to the president of СМЕС, Mr. Fang Yanshui, since June 11 of this year — the beginning of substantive negotiations on the contract — the project teams from both TAIF and the Chinese side have worked out all the relevant points and questions on the upcoming project at a high pace. Where it was necessary, the management of companies was involved.
“I thank our — Nizhnekamskneftekhim PJSC and СМЕС — project teams for the fact that their successful joint work has led to the signing of the contract today. Seeing how our teams are working, I hope that the project will be implemented at a high level," Ayrat Safin, the director general of Nizhnekamskneftekhim PJSC, addressed the participants of the meeting.
“There is the saying: a journey of 1,000 miles begins with a single step. Today's signing is the single step in cooperation between us. On behalf of CMEC, I want to assure you that we will work tirelessly and selflessly to complete this project with high quality and on time," Mr. Fang Yanshui assured the audience.
Best offer won the tender
Seven companies applied for the right to implement the project for the construction of the new polypropylene production with a capacity of 400,000 tonnes of finished products a year. All of them have world-famous names and rich experience. Three of them represented European states, three — Korea, including one working in tandem with Japanese partners. CMEC was a seventh contender.
As Ayrat Safin explained, negotiations were held with all participants of the tender to explain the project implementation strategy and the customer's technical specifications for the preparation of a technical and commercial proposal. Based on the results of the negotiations and the received technical and commercial proposals, a list of potential applicants from three companies (European, Chinese and Korean-Japanese companies) was determined. The applicants submitted their proposals in full compliance with the customer's requirements.
The best offer in terms of terms of execution, as well as a combination of price and quality, was the offer from China. An additional advantage when choosing this option was the successful experience of implementing the CMEC in tandem with the HQC of a similar project.
“CMEC has a very serious track record, many successful projects implemented on time. After our analysis of the technical and physical capabilities of this company, we came to the conclusion that this is one of the best options with whom we can organise a fruitful joint cooperation. Experience, professionalism, and, of course, financial matter. Our colleagues made the best proposal for this project from all those who participated in this programme," Ruslan Shigabutdinov stressed during the press conference immediately after the signing ceremony.
Only best equipment from around the world
Even at the stage of participation in the tender, CMEC held negotiations with leading manufacturers of equipment necessary for the implementation of the project, compared the quality, efficiency, prices. By the time the contracts were signed, the contractor for the project implementation had a clear understanding of where and what would be purchased, how the components that were to become a single whole would work in one chain, and what effect this would have for the customer.
“Our offer includes equipment that is manufactured in China, Germany, Japan, America, Russia and other countries. In fact, the delivery will be carried out from all over the world," Mr. Yanshui answered the question of the journalist of Realnoe Vremya.
“At the very beginning, Nizhnekamskneftekhim focused on ensuring that the equipment was of high quality, reliable and met all the most stringent requirements for both operation and safety and ecology. We discussed each piece of equipment with our Chinese partners and confirmed not only its country of origin, but also checked that this equipment was already operating at similar production facilities. Moreover, we once again checked with our licensor — LyondellBasell company, which confirmed each piece of equipment with its reliability," Ayrat Safin emphasised.
He also said that the companies from Tatarstan will actively participate in the construction of the new production facility at Nizhnekamskneftekhim PJSC.
As for the financing of the construction, Nizhnekamskneftekhim PJSC allocates 15% of the funds necessary for the implementation of the project from its own reserves. The rest are planned to be loaned.
“One of the main conditions of the tender was the organisation of financing through the export credit agency in the amount of 85%. Taking into account that the winner of the tender was CMEC, this project is planned to be implemented with the involvement of financing through the Chinese export credit agency SINOSURE (the only export and credit insurance corporation in China — editor's note) in the amount of 85% of the contract price," Ruslan Shigabutdinov explained.
Agreements with credit institutions of the People's Republic of China have already been reached. CMEC company was also engaged in ensuring the solution of the issue.
Reliance on your own personnel
It is planned that about 400 new jobs will be created at the new enterprise. In the selection of specialists, Nizhnekamskneftekhim primarily relies on its own personnel reserve. This was reported by Ayrat Safin.
“Nizhnekamskneftekhim has a fairly good experience in operating the production of polypropylene. In particular, the plastics plant has a powerful and well-coordinated team, it is an excellent base for training personnel, including for the future of the plant. We also traditionally cooperate with educational institutions of the city of Nizhnekamsk.
The issue of training and retraining of specialists also did not remain behind the scenes. Back in early June of this year, during preliminary negotiations with the management of CMEC, Albert Shigabutdinov stressed the need for not only theoretical, but also practical training of future personnel of the new production. Moreover, it is necessary to organise the process not only by the forces of Nizhnekamskneftekhim itself, but also to use the experience of Chinese colleagues.
“I think that this offer from Mr. Shigabutdinov is very good. We will hold a detailed discussion with the customer on this issue. We will make great efforts in training the operating personnel and maintenance personnel. We will choose the most effective options for conducting training in order to get the best result," Mr. Fang Yanshui said in response to the question asked by journalists.
“Nizhnekamskneftekhim is a fusion of technology, history, and most importantly, people: specialists are our main capital," Ruslan Shigabutdinov stressed.
Raw materials will be our own
Another topical issue is raw materials. The petrochemical enterprises of TAIF Group are probably one of the few, if not the only, examples in Russia of how one can build a successful and efficient business without having your own oil and gas production. But increasing capacities also require large flows of raw materials. According to the director general of Nizhnekamskneftekhim, the new polypropylene production will have no problems with utilisation.
“This project is the production of processing products of the new olefin complex EP-600. The basic raw materials such as propylene and ethylene will be supplied with EP-600. Propylene will be supplied in the amount of about 250-280 thousand tons/g. Part of the propylene is planned to be taken from another of our future projects (production of propylene by ethylene metathesis). This is another about 130-150 thousand tons/g of propylene," he explained.
“The EP-600 project, taking into account the current Covid-19 situation, can be said to be on schedule. We plan to work very seriously and closely with our Chinese comrades so that the two new enterprises (EP-600 and Polypropylene-400 — editor's note) converge. Neither we nor our Chinese colleagues have any doubts that everything will be done within the prescribed time frame," Ruslan Shigabutdinov added to Ayrat Safin.
He also said that another large-scale project — the construction of the CCGT-TPP at Nizhnekamskneftekhim PJSC — is also on schedule. Mechanical completion is almost 100%. In the near future, the station will start working in the commissioning mode.
With confidence in a long and fruitful cooperation
Proven partner companies that can offer high quality on the best terms are the wealth of any company. Such business relationships cannot be bought for money. They are developed over years of close cooperation. Both the companies of TAIF Group, CMEC, and HQC are confident that this contract is the beginning of a long and fruitful joint work. There are many similar examples in the history of the Tatarstan company. This includes a number of projects implemented with the active participation of German Siemens, and the long-standing friendship with the Japanese corporation Toyo, and the cooperation with Linde Engineering. Another example is the continuation of long-standing cooperation with the Italian company Maire Tecnimont S.p.A., with which a contract was signed on 5 August this year for the implementation of another project — the construction of the new production of EVA polymers with a capacity of 100,000 tonnes a year.
CMEC and HQC are seriously determined to increase the package of projects implemented in Russia, assigning the special role to TAIF in this matter. Especially if we take into account the fact that the Development Strategy of the companies of the Tatarstan group, designed for the period up to 2030, is estimated at several dozen large-scale projects with a total cost of $20 billion. TAIF itself is also interested in acquiring reliable partners in China. Support for projects implemented through joint efforts is also promised at the state level. This was reported by Albert Shigabutdinov:
“We have received a huge commemorative message from Zhang Hanhui, Ambassador Extraordinary and Plenipotentiary of the People's Republic of China to Russia, wishing successful joint work and health to all participants. And the assurance that our relations and our work will be supported at the intergovernmental and interstate level between China and Russia," said the chairman of the board of directors of TAIF JSC.
“Over the past years, CMEC has completed many projects in more than 120 countries around the world, has experience and has achieved success in the field of international engineering design, construction work supplies and financing. I am confident that with the joint efforts of both sides, this project will be successfully implemented, which will open a new chapter in Chinese-Russian cooperation in the chemical industry and help Chinese-Russian business cooperation achieve even greater success. The Chinese Embassy in the Russian Federation is ready to provide active assistance and support in this matter," Mr. Zhang Hanhui, Ambassador Extraordinary and Plenipotentiary of the People's Republic of China to the Russian Federation, stressed in his written address.
At the end of the meeting, Ayrat Safin made a symbolic gift to Mr. Yanshui — the pen with which contracts and the trilateral agreement were signed.
“We have specially prepared this pen for this project, where we indicated the names of both companies and the current date of signing. I will send this pen to you in honour of respect, gratitude, as a souvenir. Let it be 'lucky', and together with you, we will sign even more contracts with this pen, but for this, we should make every effort so that the first experience is the most successful and gives confidence for signing subsequent ones. I hope for our joint fruitful work, Mr. Yanshui," the director general of Nizhnekamskneftekhim PJSC told the president of CMEC.
“The pen is like a machine: it should be used for a long time. Therefore, I think that in two or three months we will use this pen again," Mr. Yanshui thanked for the present.
There are prospects for this. CMEC did not postpone the development of relations between the companies for a long time and has already submitted tender proposals for another project of TAIF Group — the production of ethylbenzene and styrene.
TAIF JSC is the parent company of TAIF Group. TAIF JSC was founded in August 1995 on the basis of the foreign trade research and production association Kazan (founded in 1990).
TAIF Group unites the Group of TAIF JSC, including 29 subsidiaries, and the Group of TAIF Management Company JSC, including 11 subsidiaries. TAIF Group operates in many areas, the key of which are oil and gas processing, chemistry and petrochemistry, energy, investment activities, production of construction materials, mass media, and other types of services. Total staff number of TAIF Group is 39,7 thousand people.
Nizhnekamskneftekhim PJSC is one of the largest petrochemical companies in Eastern Europe, occupies a leading position among domestic producers of synthetic rubbers, plastics and ethylene. Part of TAIF Group. The company was founded in 1967, the main production facilities are located in Nizhnekamsk (Republic of Tatarstan). The product range includes 320 items. The products of the joint-stock company are exported to 50 countries in Europe, America and Southeast Asia. The share of exports in total sales is 50%. Nizhnekamskneftekhim PJSC is the only producer of alpha-olefins in Russia. The plans for the near future include the construction and launch of the production of methylene diphenyl diisocyanates (MDI) and toluene diisocyanates (TDI) to provide the production of new innovative polyurethane systems with their own raw materials.
China Machinery Engineering Corporation (CMEC) is a Chinese machine-building engineering corporation, part of the China National Machinery Industry Corporation (Sinomach) group of companies. Its history dates back to 1978.
As a well-known international contractor, CMEC was among the top three of the top 50 Chinese enterprises included in the list by the Ministry of Commerce of China. For several years, CMEC has also been included in the list of the world's largest 225 contractors by the well-known Engineering News-Record magazine in the United States. The company's field of activity covers about 120 countries on five continents.
China HuanQiu Contracting and Engineering Corporation (HQC) is a subsidiary of China Petroleum Engineering Corp. Ltd. — China National Petroleum Corporation. The company specialises in the construction of oil refineries, petrochemical plants and plants for the production of chemical fertilisers associated with oil refineries and mining plants.