Union between TAIF JSC and SIBUR Holding PJSC, new plants and other milestones of TAIF GC in 2021

What this year will be remembered for in one of Russia’s largest investment companies. Part one

Union between TAIF JSC and SIBUR Holding PJSC, new plants and other milestones of TAIF GC in 2021
Photo: Roman Khasayev

Together to the world’s petrochemical top 5: the decision on the merger between the businesses made by the management of SIBUR Holding PJSC and TAIF JSC and supported by the Tatarstan president and the Russian government is one of the key events of 2021, moreover, not only in Russia but also globally. The process that began in April 2021 ended in October marking the beginning of a new era of Russian petrochemistry. Read more about this and what other events 2021 has been rich in for TAIF JSC in Realnoe Vremya’s report.

Global event

The decision to unite the petrochemical and energy businesses of TAIF JSC and SIBUR Holding PJSC was defined as “A deal of the century,” “A milestone of Russia and the world’s petrochemical sector” and received many other high-profile characteristics. On 23 April 2021, the country’s two largest companies announced their readiness to work on the further development and improvement of the Russian industry’s efficacy raising chemical non-commodity export together.

On 23 April, TAIF JSC and SIBUR Holding PJSC announced the possible union. Photo: Moscow office of TNV Channel

Board Chairman of SIBUR Holding PJSC Dmitry Konov and Board Chairman of TAIF JSC Albert Shigabutdinov signed a letter of intent in the presence of Russia’s Vice Premier Alexander Novak, Tatarstan President Rustam Minnikhanov, Board Chairman of SIBUR Holding PJSC Leonid Mikhelson, Director General of TAIF JSC Ruslan Shigabutdinov.

Dmitry Konov and Albert Shigabutdinov signed a letter of intent. Photo: Moscow office of TNV Channel

Immediately after the signing ceremony, Albert Shigabutdinov stressed that the union of the companies brought huge potential for the development of Russian petrochemistry. Rustam Minnikhanov noted that SIBUR always was Tatarstan’s partner. Dmitry Konov emphasised that the united company could do much more for the development of the gas and petrochemical sector of the country in general and aimed to be in the world’s top 5 polymer manufacturers. While Leonid Mikhelson reminded them that a deal on the merger between SIBUR and TAIF had been brought up for the first time more than 10 years before.

The meeting of Board Chairman of SIBUR Holding PJSC Leonid Mikhelson and Director General of TAIF JSC Albert Shigabutdinov, 15 March 2011. Photo: press centre of TAIF JSC

“For the first time, the idea that this needed to be done was born 10 years ago. SIBUR made huge investments in the feedstock base. These companies’ spirit is similar: they aim to make cutting-edge investment projects, launch new products. We will see the results of the union in 3-4 years, not 10. The meeting Mr Putin held in Tobolsk about the necessity of developing gas and petrochemistry prompted this somehow, and they decided and agreed,” Leonid Mikhelson remembered the prehistory of events.

Leonid Mikhelson: “The idea of uniting TAIF and SIBUR is more than 10 years old.” Photo: Roman Khasayev

It was necessary to not only unite the two companies’ businesses but also form one strategy for thousands of employees, which would help them to become one organism. During the preparation for the finalisation of the deal, the management and leading specialists of the two Russian petrochemical giants actively exchanged delegations, familiarised themselves with the production of their colleagues and shared experience of the introduction of technologies and cooperation with foreign partners.

In July, the Russian Federal Anti-Monopoly Service supported the motion of SIBUR Holding PJSC on the union between the company and TAIF JSC. One of the key terms of the deal is the guaranteed realisation of TAIF Group’s Strategic Development Programme through 2030 by the united company. The programme with companies included in the deal is assessed at over 1,8 trillion rubles.

A solemn ceremony of signing of an agreement on long-term cooperation between the Republic of Tatarstan and SIBUR Holding PJSC took place in the Kazan Kremlin on 24 September. Tatarstan President Rustam Minnikhanov and Board Chairman of SIBUR Holding PJSC Leonid Mikhelson put signatures to the document, thus approving of the possibility of uniting the petrochemical and energy assets of SIBUR Holding PJSC and TAIF JSC and starting the finalisation of the deal. Priority areas of the company and the republic’s joint work include:

  • cooperation in sustainable development, including the implementation of projects aimed to reduce greenhouse emissions and improvement of the polymer waste collection and recycling system;
  • implementation of approved investment programmes;
  • cooperation in key areas of Formula of Good Deeds programme of social investments at SIBUR Holding PJSC;
  • creation of favourable conditions to improve the population’s quality of life through charity and sponsorship in the social sphere;
  • stimulation of investment, research and development, innovative activity in Tatarstan;
  • elaboration and implementation of joint projects in public and private partnership;
  • implementation of projects aimed to develop links and mutually beneficial cooperation with small and mid-sized enterprises;
  • training of modern professionals in gas and petrochemistry and energy.

The Republic of Tatarstan and SIBUR Holding PJSC signed a cooperation agreement. Photo: Roman Khasayev

“You assume the huge responsibility for continuing investment plans. It is also important for us that you carry on implementing big social projects: sports, public and social projects. All this is displayed in the agreement we have signed. From now on, we should move only forward,” Rustam Minnikhanov emphasised.

To implement all the agreements reached between the republic and SIBUR Holding PJSC and fixed in the contract, an agreement on the final terms of the creation of a joint company was signed in the Kazan Kremlin, in the presence of Tatarstan President Rustam Minnikhanov and Board Chairman of SIBUR Holding PJSC Leonid Mikhelson. Board Chairman of TAIF JSC Albert Shigabutdinov and Board Chairman of SIBUR Holding PJSC Dmitry Konov put their signatures to the document.

On 24 September, TAIF and SIBUR signed an agreement on the final terms of the merger deal. Photo: Roman Khasayev

On 1 October, the deal on the union between Russia’s largest petrochemical companies — TAIF JSC and SIBUR Holding PJSC — was approved by the European Commission. On 4 October, SIBUR and TAIF finished the signing of the final agreement on the merger. Leonid Mikhelson thinks that the creation of one structure is due to end by the beginning of the second quarter of 2022. And the company doesn’t rule out holding an IPO by the middle of the year.

New plants and new products

The financial and economic results of 2021 that has been very rich in big events for TAIF are also expected to be impressive. Despite the epidemic of the novel coronavirus infection that continues rampaging around the globe, partial restrictions on international travel, anti-Russian sanctions and the world crisis, TAIF ends the year not only with growth but also expects record-high results in Group’s history.

The revenue of TAIF JSC and TAIF MC JSC is expected to be 970 billion rubles at the end of the year against 582 billion rubles in 2020. Net profit can total a record 220 billion rubles in Group’s history, while the amount of taxes paid to Tatarstan’s budget alone can reach 28 billion rubles. Moreover, the revenue of companies that were included in the deal between SIBUR and TAIF JSC, Nizhnekamskneftekhim PJSC, Kazanorgsintez PJSC, TGC-16 JSC and their subsidiaries is expected to be 617 billion rubles whereas net profit is considered to be equal to more than 204 billion rubles. Such great results will be achieved, first of all, thanks to billions of investments in the constant development of companies made over the years of Group’s activity. These processes still go on. Moreover, they gain momentum and speed.

One of the illustrative indicators of the active development of TAIF Group’s enterprises is that new large-scale plants are launched every year. 2021 hasn’t been an exception: on 25 January, the new styrene-butadiene rubber plant produced the first SBR briquette, which is the fifth-generation synthetic rubber designed to make the upper layer of the tread of the so-called green tyres. Tyres made of this material not only significantly reduce the environmental impact but also improve the car’s safety, providing a better grip with the road, including the wet road, and decrease fuel consumption.

The first fifth-generation rubber briquette left the conveyor belt of SBR Plant on 25 January 2021. Photo: Nizhnekamskneftekhim PJSC

The capacity of the new plant is 60,000 tonnes a year. The official end of the construction of the plant and its official launch was in May with Tatarstan President Rustam Minnikhanov, Board Chairman of SIBUR Holding PJSC Dmitry Konov and Director General of TAIF JSC Ruslan Shigabutdinov.

“It is a modern enterprise that all car tyre producers need. This plant became a reality only with Nizhnekamskneftekhim’s big research and development potential and capabilities. I would like to thank TAIF for such projects. The investments total 11,3 billion rubles. It is a profitable and good product. I think that the people who will work here will also feel that it is a good product,” stressed Rustam Minnikhanov when congratulating the plant workers on the milestone.

The Tatarstan president, board chairman of SIBUR Holding PJSC and director general of TAIF JSC attended the launching ceremony of SBR Plant. Photo: Roman Khasayev

Besides styrene-butadiene rubber, the new plant set up the production of styrene-butadiene thermoplastic elastomer, which is a special additive to the road coating allowing increasing the durability and elasticity of the road surface. The possibility of multiple recycling without environmental impact can be considered as an undoubted advantage of TPE. Another interesting moment is that the addition of the material to the road concrete mix raises the cost of road construction just by 1%, however, the service of such asphalt doubles. TPE can also be used to make roofing materials.

The SBR production line can also make styrene-butadiene thermoplastic elastomer, which is a special additive increasing the durability and service life of the concrete. Photo: Roman Khasayev

It was announced in August that Kazanorgsintez PJSC successfully implemented a project that could become an example for new Russian ethylene plants. The optimal joint ethane and propane pyrolysis technology was introduced in pyrolysis units. The result of seven years of work allowed adapting the equipment created to run on ethane to work with a mix of ethane and propane.

“Our unit was designed for pyrolysis of pure ethane. Given that the ethane pyrolysis furnaces were not fully loaded, the idea of using mixed feedstock came to our mind. There was done modelling, and propane pyrolysis and joint ethane propane pyrolysis were calculated for ethane pyrolysis furnaces. The calculations proved the feasibility of such a solution. Also, there was proved the possibility of using ethane pyrolysis furnaces for pure propane pyrolysis too to ramp up ethylene production,” Vice Chief Engineer of Kazanorgsintez PJSC in science and development, Doctor of Technical Sciences, Professor Damir Safin told Realnoe Vremya’s journalist.

Damir Safin: “Ethane pyrolysis furnaces can process propane feedstock, thus ramping up ethylene production.” Photo: Kazanorgsintez PJSC

Implementation of Strategic Development Programme

The construction of the first liquid hydrocarbon feedstock pyrolysis, EP-600 ethylene facility, in the history of Russia, CIS countries and Eastern Europe is one of the biggest projects at TAIF Group implemented within the Strategic Development Programme through 2030. The works began in 2018. In 2020, Germany’s Linde AG started to deliver equipment. By August 2021, more than 2,500 were working on the construction site of EP-600.

More than 2,500 people worked on the site of EP-600 in the summer of 2021. Photo: Nizhnekamskneftekhim PJSC

The project is fulfilled with the latest eco-friendly technologies. The launch of the new olefin complex is scheduled for 2023. 600,000 tonnes of ethylene, 272,000 tonnes of propylene, 248,000 tonnes of benzene, 89,000 tonnes of butadiene will annually be made here. There will be created hundreds of jobs. The launch of EP-600 will allow increasing tax payments to the city and republic’s budgets.

The gas turbine was turned on for the first time in late August 2021. Photo: Nizhnekamskneftekhim PJSC

Natural and synthetic gas will become the fuel of the 495 MW Nizhnekamsk CCGT-TPP designed to provide a considerable part of NKNK, including the ethylene complex, which is under construction, with heat and electricity. Synthetic gas will come from Ethylene Plant.

In February, the preparation for start-up and commissioning began at the station, while the gas turbine was turned on for the first time in August. The first synchronisation of the second gas turbine took place in September.

At the 2021 TEF forum, the director general of TGC-16 JSC told the Tatarstan president about the experience of using synthetic gas as fuel for the CHPP. Photo: Rinat Nazmetdinov

The use of synthetic gas coming from the Heavy Residues High Conversion Facility of TAIF-NK JSC is one of the areas that increase the environmental safety and economic efficacy of production at the Nizhnekamsk CHPP of TGC-16. In 2020, the addition of such gas (about 4,05% of the total amount of fuel, or 149,9 million cubic metres), which was earlier simply burnt at the flares, to the fuel mix allowed reducing nitrogen oxide emissions by 623 tonnes and greenhouse gases by more than 275,000 tonnes. In 2021, the use of synthetic gas as fuel has gone up. Director General of TGC-16 JSC Eduard Galeyev told the Tatarstan president about this at the 2021 TEF International Energy Efficiency Forum in April.

The gradual rise in the utilisation rate of the facility allowed increasing the feedstock conversion rate and the production of light oil products at TAIF-NK JSC. Photo: Roman Khasayev

Director General of TAIF-NK JSC Maxim Novikov also talked about the successes of the operation of the Heavy Residues High Conversion Facility at the forum:

“At the same time, we see that the production of light oil products also rose from 63,9% in 2019 to 83,2% in the first quarter of 2021 with a simultaneous reduction in the output of heavy oil products from 35,4% to 16,8% thanks to using them as feedstock at the Heavy Residues High Conversion Facility. Moreover, the production of light oil products in March 2021 rose to 91,4%, while the production of heavy products decreased to 8,61%,” Maxim Novikov said.

In December 2021, the Heavy Residues High Conversion Facility obtained permission to operate to full capacity. Photo: Roman Khasayev

In early October 2021, TAIF-NK JSC obtained a report of conformity of the Heavy Residues High Conversion Facility with technical safety rules. In December, there was received permission from the Executive Committee of Nizhnekamsk Municipal District to put the facility into operation.

Maxim Novikov also noted that at the beginning of the year TAIF-NK JSC announced a new product: the company started to produce Euro 6 diesel fuel with very low sulphur content.

Kazanorgsintez PJSC plans to increase ethylene-vinyl acetate production. Photo: Roman Khasayev

By 2025, a new polyethylene-vinyl acetate plant with a capacity of 100,000 tonnes a year will appear at Kazanorgsintez PJSC. The project will allow replacing obsolete equipment and increase production. Japan’s Sumitomo Chemical, which is part of Sumitomo Group, one of the biggest and oldest financial and industrial groups of Japan, will become the licensor. Nowadays KOS is the only ethylene-vinyl acetate producer in Russia and former Soviet republics making only film brands. The enterprise holds about 20% of the Russian polyethylene-vinyl acetate market, while foreign manufacturers supply the rest of the volume.

The new production will replace the existing unit. This will augment the production of ethylene-vinyl acetate 7,5 times, that’s to say, the capacity of the unit will be 100,000 tonnes a year. The plant will be built by Japanese technology. It is considered universal and allows producing both polyethylene-vinyl acetate and high-density polyethylene in the same equipment. The production volumes will be sufficient to not only substitute imports in the domestic market but also enter foreign markets if needed.

Thanks to the reconstruction of Reactor B of Low-Density Polyethylene Plant at Kazanorgsintez PJSC, the production capacity will triple. Photo: Vladimir Tunik

Also, Kazanorgsintez PJSC plans to reconstruct Reactor B of Low-Density Polyethylene Plant. Today the productivity of the reactor is 70,000 tonnes a year, while after the reconstruction will grow to 280,000 tonnes a year, which will allow significantly expanding the assortment. At the same time, the use of better modern-day technologies and equipment amid a ramp-up in production will considerably reduce the environmental impact.

During the production shutdown for maintenance repairs in 2022, Kazanorgsintez PJSC intends to complete a large-scale modernisation programme of Russia’s only wide range of polycarbonates.

“The installed licensed capacity of polycarbonate production was 65,000 tonnes a year. We expanded it to 77,000 tonnes. And then there was a possibility of modernising this capacity to 100,000 tonnes a year. We have been doing this since 2018. And this year, we are to reach 100,000 tonnes. The costs and the project will pay back in some 3,5 months. The product is profitable enough, I would say, very profitable. Our costs totalled about $50 million,” explained Farid Minigulov at the Tatarstan Gas and Petrochemical Forum in September.

Kazanorgsintez PJSC is the only polycarbonate producer in Russia. Photo: Rinat Nazmetdinov

The production is unique because the factory uses its own bisphenol as well as carbon dioxide (CO2) as feedstock. The company emits over 20,000 tonnes of carbon dioxide as exhaust gases. So in other words, CO2 is not only disposed of but also turns into a very profitable eco-friendly product that is in high demand from the market with the help of state-of-the-art technologies. So the company performs two tasks: it provides itself with the necessary feedstock and significantly reduces the environmental impact clearly following the goals and tasks set by Russian President Vladimir Putin and the government of the country to reduce the carbon footprint.

The production expansion by almost a quarter will increase both the output of existing polycarbonate brands and arrange big supplies of new types of products for consumers.

The complex of works included the development of a series of research and development solutions to seriously modernise the plants operating at Kazanorgsintez and the creation of the second industrial production of composites and products based on basic polycarbonate brands together with the capabilities and experience of the Institute of Plastics.

Kazanorgsintez PJSC won the Grand Prix in New Product nomination. Photo: Roman Khasayev

By the way, PC-008UL1 polycarbonate is one of the new products that won the Grand Prix of the forum’s traditional contest for the best exhibit, project or technical solution. The product of Kazanorgsintez PJSC was recognised as the best in Novelty of the Year.

In early November 2021, the innovative product that is of federal importance and created by the efforts and experience of a group of specialists of TAIF and partners of the company was appreciated by the country’s management: the government’s Chairman Mikhail Mishustin signed a decree on giving the group of engineers a 2021 government award in science and technology.

In December 2021, the government science and technology award ceremony took place in the Russian House of Government in Moscow. Photo: government.ru

The group included:

  • Senior Adviser to TAIF JSC’s Director General Albert Shigabutdinov;
  • Vice Director General of TAIF JSC Vladimir Presnyakov;
  • Director General of Organichesky Syntez Kazan Public Joint Stock Company, Candidate for Chemical Sciences, head of the project Farid Minigulov;
  • Chief Engineer of the plant Aydar Valitov;
  • Vice Director General Rinat Zaripov;
  • Vice Director General Fanis Kalimullin;
  • Director of the plant Andrey Presnyakov;
  • Doctor of Technical Sciences, Professor, Vice Chief Engineer Damir Safin;
  • Director General of SafPlast LLC Andrey Yevseyev;
  • Candidate for Technical Sciences, senior researcher of the Petrov Institute of Plastics Irina Zolkina.

In late December, Tatarstan President Rustam Minnikhanov honoured the group of engineers of the unique product in the Kazan Kremlin.

The group of engineers of the project on the eco-friendly polycarbonate production was honoured in the Kazan Kremlin on 27 December. Photo: Roman Khasayev

The so-called ten is another product whose durability features piqued Gazprom’s genuine interest.

“The characteristics of polycarbonate are known to everyone both in theory and practice, but today its mechanical and thermal features have been shown, that it can be used even as bulletproof elements. This means that it can be used in spheres when such mechanical durability is required. Our colleagues from Gazprom are interested in the product because they need high-impact optical systems for deep-sea equipment that can go more than 2,000 metres down. They will consider this topic. Polycarbonate can be an effective solution to this problem,” Director General of TAIF JSC Ruslan Shigabutdinov told Realnoe Vremya.

Ruslan Shigabutdunov: “Our colleagues from Gazprom are interested in Kazanorgsintez’s polycarbonate to create optical systems for deep-sea equipment.” Photo: Rinat Nazmetdinov

“There is Plexiglas trademark, which is polymethyl methacrylate. It appeared earlier than polycarbonate in world history. It was mainly used for various plane windows, headlight covers in military aircraft, other machines. It — polymethyl methacrylate and polycarbonate — has similar resistance properties. I think polycarbonate suits this more. This is why I think it can be used for such specific purposes. I know that our polycarbonate was approved to be used in space equipment in cooperation with our client, SafPlast, particularly to make helmets,” Director General of Kazanorgsintez PJSC Farid Minigulov said about additional applications of polycarbonate.

This is just a part of memorable events in 2021. Read about what largest companies of the world discussed prospects of cooperation with TAIF and why it is important for the company to participate in social projects and charity. To be continued.

Arseny Favstritsky
Tatarstan