From its origins until now: TAIF for the good of the republic for over 30 years
TAIF Group companies have summed up the financial and economic performance in 2021 and for more than 30 years of activity. Part one
Since October 2021, the signing of an agreement of merger of gas and petrochemical and energy assets of TAIF Group and SIBUR Holding PJSC, TAIF JSC and SIBUR-RT JSC and the their companies have been related to different corporate groups and run their activity independently from each other. However, TAIF Group worked most of 2021 as usual, therefore the annual review Realnoe Vremya’s report is based on is one document uniting total production, economic and financial results of TAIF JSC Group and TAIF MC JSC Group in 2021 and the activity from 1995 as joint results of activity of TAIF Group. Part one.
11 April 1995
Precisely this data is the starting point of the creation of TAIF JSC investment company (Editor’s note: on the basis of Kazan Foreign Trade Research and Production Association that had been operating since 1990).
The preliminary elaboration of proposals for the creation of Russia’s absolutely new company in terms of its functions with joint efforts of a team of specialists of the Foreign Trade Research and Production Association lasted for several years. Finally, a historic meeting of President of the republic Mintimer Shaimiyev and Director General of Kazan Foreign Trade Research and Production Association Albert Shigabutdinov and representatives took place in the Kazan Kremlin.
An adoption of a concept of the creation of TAIF joint-stock company was the result of the meeting. The tasks set for the company that was absolutely new for Russia due to its functions were big and grandiose. A brief news piece published on the pages of The Republic of Tatarstan newspaper on 12 April 1995 talked about what had to be done and what results to achieve talked:
“The sides agreed to create an international investment company to attract capital and invest it in the economy of our republic. This company intends to do a big job to speed up the integration of the Republic of Tatarstan and the Russian Federation into the financial system, develop the stock market of these republics, attract investments to implement promising investment projects in Tatarstan, raise the value of enterprises’ assets, provide their liquidity.”
Ideas were shaped precisely at that time:
- to create legislative favourable conditions in Tatarstan to attract new technologies and investment capital to develop the economy;
- to create conditions for the integration of economies of Tatarstan and Russia to the global financial system;
- to develop Tatarstan’s stock market;
- to set up independent international inspection of assets of Tatarstan companies and enterprises;
- to create quality satellite and telecom network in the republic;
- to create zones with preferential taxation (which was later implemented in Alabuga Special Economic Zone, the research town, Innopolis SEZ and a number of other investment and economic growth points of the republic).
The business’s registration certificate that was doomed to play an important role in the creation of the modern economy of Tatarstan and Russia was signed by the Tatarstan Ministry of Finance on 10 August 1995.
On 13 February 1996, TAIF JSC was registered at federal level, a dedicated certificate was signed by the Russian Ministry of Economy.
Realnoe Vremya already wrote about how Group working in different sectors was created, what difficulties it had to face and how TAIF managed to perform seemingly impossible tasks with flying colours, learn competencies and master new business areas gas and oil processing, chemistry, petrochemistry, the development of the giants of the Russian sector Kazanorgsintez PJSC and Nizhnekamskneftekhim PJSC, in construction and banking, telecommunications and energy. We also told you that in most cases TAIF’s investments played a role of the lifeline for an enterprise in distress or were a start for projects that hadn’t been implemented in the republic earlier, they often were ahead of time.
More than 60 large-scale projects in chemistry and petrochemistry in 30 years
“At the onset of the journey the company tried to invest in those spheres of the economy whose absence or underdevelopment seriously impeded market transformations in the republic. For instance, the absence of quick and quality communication. The company started to create a modern telecommunication market including multimedia services. They launched projects of mobile and conventional networks, created satellite television. Or, let's say, when we were reconstructing and building the crude oil refinery complex, it became obvious that Tatarstan didn't have modern construction capacities. And such companies were created by TAIF. So was it — one by one,” First President of Tatarstan and now State Adviser to the republic, Hero of Labour of Russia Mintimer Shaimiyev reminded Realnoe Vremya in one of his interviews.
Albert Shigabutdinov has repeatedly stressed that TAIF is precisely an investment company that has never planned to completely own some assets: “On market terms, TAIF is part of a company that needs an impulse for development and actively works to boost its economic efficacy, reinforce the production and infrastructure according to a plan, with a clear elaboration of long-term development programmes. But when a business on its feet, it either gains independence and embarks on a journey alone or is given to a new owner who is ready to continue its development on market terms. Precisely the guarantee to rigorously implement a further development plan is a key condition to hand the business over to a new owner.”
The same happened to TVT TRK TV and radio company providing analogue and digital TV and broadband Internet access services whose net asset value increased more than 10,000 times during its activity as part of Group, to TAIF-Telcom (Santel trademark) whose assets grew 9,000 times. In an insurance business, Avers insurance company’s net assets rose 10,6 times in five years. The assets of TGC-16 JSC generating company grew 1,600 times during its development period at TAIF Group. In construction, net assets of NMU-3 JSC increased more than 8 times. The assets of Kazanorgsintez PJSC augmented 13,5 times, that of Nizhnekamskneftekhim PJSC did 7,4 times.
Throughout TAIF Group’s activity, over 60 big units were built in chemistry and petrochemistry, each of them is almost a factor regarding the scale, hundreds smaller but important investments projects that are of huge meaning for both Tatarstan and Russian chemical and gas and petrochemical sectors.
Thanks to a well-considered development strategy, big investments, the use of the latest technologies, ongoing adaptation to constantly changing market conditions and dedicated labour of thousands of workers, from 1995 to 2021, TAIF Group achieved the following results:
- total production and sale incomes, services reached $210 billion (15,6 trillion rubles as of 31.12.2021);
- total EBITDA is $29,6 billion;
- more than $20,6 billion of taxes and duties paid to all; budget levels
- contribution to the development of the country and enterprises of TAIF Group amounted to more than $60 billion: it is investments in the development of companies, process safety, occupational and environmental protection, charity and social expenditures.
Over the years of its activity, the holding made financial investments in different sectors and developed various businesses but at the same time it facilitated the development of Russian industrial enterprises. In 2021 alone, Group spent 81,7 billion rubles on investment projects, first of all, the development of gas and oil refineries, petrochemical, chemical and energy plants. It is 19% of all investments in key funds of the Republic of Tatarstan last year.
Thanks to the investments made and efficient asset management as well as the active work on the promotion of products in Russian and foreign markets, in 2021, the companies of TAIF Group earned incomes on product sales, works and services (including indirect taxes, excises and duties) surpassing a trillion rubles (1 trillion 128 billion rubles) for the first time in its history.
TAIF is the fifth part of Tatarstan’s industrial production
In 2021, the amount of its own products, works and services of the industry of Tatarstan exceeded 4 trillion rubles (to compare, in 2020, this number was 2,7 trillion rubles). The production of oil products, petrochemistry and energy account for about 38% of all products made in the Republic of Tatarstan. The amount of commodities, works and serviced provided by TAIF Group companies in 2021 is over 703 billion rubles, which 18%, or the fifth part, of the whole industrial production and services of Tatarstan enterprises. At the same time, the contribution of TAIF Group to Tatarstan’s financial performance (629,8bn rubles) is one-third, or 209,8bn rubles.
Timely and full payment of taxes and duties by TAIF Group is one of the key components of TAIF Group’s social responsibility and a serious input to the development of the Russian Federation and the Republic of Tatarstan.
Throughout its activity, from 1995 to 2021, TAIF Group companies paid over $20,6 billion to all budget levels. Also, from 1995 to 2021, Group companies made more than $10 billion of social investments (743 billion rubles as of 31.12.2021), primarily as charity and sponsorship.
Production of light oil products at TAIF-NK in 2021 reaches 80,7%
Oil and gas refining is the foundation for further oil and gas processing. At TAIF Group, this sector is represented by TAIF-NK JSC. The gas and petrochemical facility is the leading company in Russian oil and gas processing in the production of light oil products from crude oil and gas as well as in the technological sophistication of a complex of units. The facility consists of three connected plants:
- An oil refinery with an installed capacity of 7 million tonnes of feedstock a year;
- Petrol Plant with a catalytic cracking petrol production unit with an installed capacity of a million tonnes of feedstock a year and gas condensate processing unit with an installed capacity of a million tonnes of feedstock a year;
- the Heavy Residues High Conversion Facility with an installed capacity of 3,6 million tonnes of tar and vacuum gas oil processing.
Last year, the production capacities of TAIF-NK JSC processed 7,325 million tonnes of crude oil and gas, which is comparable to the level of 2020, making 7,3 million tonnes of commodities from it.
The use of capacities in the primary oil and gas feedstock processing at TAIF-NK JSC was 91,6% in 2021, with the average capacity utilisation of 84,6% in Russian oil refineries.
Sales revenue of TAIF-NK JSC in 2021 rose compared to the previous accounting period by 72,5% and reached a record-high of 308,9 billion rubles. The great financial results led to a growth of assets. By the end of the year, they increased by 16,1% and reached 172,4 billion rubles.
From 1995 to 2021, TAIF Group invested $4,81 billion, or 357 billion rubles as of 31.12.2021, in the development of gas and oil refining taking the crude oil conversion rate in 2021 to 85,1% (the average number in Russia is 83,5%) and the production of light oil products to 80,7%.
By late 2021, the results improved: the conversion rate totalled 91,3%, the production of light oil products was 90,4%. Mainly the world’s unique Heavy Residues High Conversion Facility based on Veba Combi Cracking technology played a key role in achieving such great numbers. TAIF-NK JSC is an innovator and pioneer not only Russian but also global heavy residues — tar — processing with hydrogenation processes. In October 2021, there was obtained a statement of the Tatarstan industrial safety watchdog about the compliance of the project of the facility with the norms and rules of industrial safety and project documentation. In November 2021, there was obtained a permit on industrial launch too.
The VCC-based facility is the world’s only plant that can processes heavy residues (tar) remaining after primary processing of oil, with the production of the biggest possible amount of light high-quality oil products.
The investment policy on the modernisation of operating and the creation of new modern plants designed to raise the crude oil conversion rate and recover the biggest possible amount of high-quality, eco-friendly light oil products pursued by Group’s companies fully complies with the state policy in environment and enhancement of the efficacy of Russian oil and gas processing plants.
With the numbers achieved in the conversion rate and the output of light oil products per tonne of feedstock, TAIF-NK JSC is first in the oil processing sector of Russia.
At the same time, heavy oil (a mix of super-heavy bituminous and high-sulphur oils) with a density of up to 878 kg/m3 and more than 1,8% of sulphur content is the main feedstock for TAIF-NK JSC.
At the moment, besides the Veba Combi Cracking technology there aren’t other industrially approved and economically effective heavy oil processing technologies without preliminary improvement in the word, which would allow working successfully with such feedstock following all process safety rules and norms. Solving the problem of the organisation of heavy oil to the enterprise after preliminary improvement or oil with a density of no more than 860 kg/m3 and 1,3-1,4% sulphur content (Urals oil brand) will allow making the processes much more effective. A job on looking for solutions to this problem is done.
The solution of remaining problems of further hydrocracking residues processing into oil products that are in demand from metallurgists allows raising the efficacy of the oil feedstock conversion rate of the facility to 100% and the recovery of light oil products — up to 98,2%.
Over the years of development of the gas and oil processing facility, thanks to the investments made and the diversification of the product line, TAIF-NK JSC dramatically changed its basket. If light oil products account for just 37% of the total amount in volume in 1995, in 2021, precisely high-quality light oil products did 82%.
Nowadays the facility produces a total of 53 product names. Only three in 13 types of products that were made in 1995 are on the list now. But these have improved features, according to the requirements of the era. 10 were withdrawn from production, and the production of new 50 names of oil products was set up instead.
Diesel fuel and Euro 5 motor fuel are among major products. In 2021, Euro 6 diesel fuel joined the list of commodities. Last December, this type of fuel became a laureate, and another product of TAIF-NK JSC — polymer-bitumen binder PBB-60 — received a diploma of the prestigious contest 100 Best Commodities of Russia in Industrial Goods nomination.
Read about what results the companies of the petrochemical and energy arm of TAIF Group ended 2021 with and what Group is going to focus on in the future in the next part of the report.