Rustam Minnikhanov: ''Nizhnekamskneftekhim is the flagship of the petrochemical industry of the country''

The leading enterprise of the petrochemical industry of Tatarstan summed up the results of 2016 at the shareholders' meeting

Rustam Minnikhanov: ''Nizhnekamskneftekhim is the flagship of the petrochemical industry of the country'' Photo: Maksim Platonov

On 5 April, the shareholders of Nizhnekamskneftekhim PJSC at the annual meeting for the first time for all history of existence of the company as joint stock company have been recommended to abandon the decision to pay dividends, which in previous years were a third of net profit. This time a fifth of the gained 25,5 billion rubles has been decided to allocate for financing a strategic program, and the remaining 20.5 billion rubles of the profit the company decided to leave unallocated. As usual, the final event was held with participation of the president of Tatarstan, who, assessing the results of the company's activity, called Nizhnekamskneftekhim ''the pride of the republic''.

''The residents of the settlements will no longer make any claims''

Before the meeting of the shareholders, as it happens from the beginning of the 2000s, Nizhnekamsk petrochemists demonstrated to the head of the republic Rustam Minnikhanov a new object. However, this time it was not a production plant but biological treatment plants, where at the end of last year Nizhnekamskneftekhim completed the first phase of a large-scale modernization project. It was before 8 a.m. when the government motorcade drove into the territory of the treatment facilities.

These treatment facilities, in fact, are ''peers'' of Nizhnekamsk, which turned 50 last year. What is more, they were built not only for the needs of the chemical plant but for the entire city. Later, the enterprises throughout the whole industrial zone began to use them — until they built their own treatment plants. Today, 190,000 cubic meters of industrial and communal effluents go through the purification, filtering systems daily before they go to the Kama river. Throughout all history of the existence of this nature protection object, the treatment plants were reconstructed once — in 1980 — in order in increase capacity.

High load on the treatment systems and the obsolescent designs have long made their presence felt: inhabitants of the city and surrounding villages often complained of odours coming from the treatments. Besides, the composition of the effluents also radically changed: more phosphates and other chemical substances used in the household use started coming from the city, industrialists also began to use new products. So, bacteria in the aeration tanks of treatment plants, which easily ''ate'' organics in runoff before, now, despite all its diversity — more than 40 kinds — did not cope with their main task.

Nizhnekamsk petrochemists demonstrated to the head of the republic Rustam Minnikhanov a new object. However, this time it was not a production plant but biological treatment plants

These reasons, as well as the tightening of environmental legislation in the country, have led to the decision of the management of Nizhnekamskneftekhim to modernise the environmental complex. According to the estimates, the construction of new treatment facilities and reconstruction of existing facilities will cost the company 3,4 billion rubles. In the first stage — construction and upgrade of the facility of mechanical treatment, bar screen building, aerated grit chamber, mixer of domestic and chemically contaminated wastewater and transformer substations, installation of three gas-plasma installations Yatagan and other objects — it has already been invested more than 660 million rubles.

Expected effect of these innovations are quite impressive: according to calculations, the new treatment technology will improve the quality of atmospheric air, as well as of treated effluent discharged into the Kama river. For example, the mass of phosphates will decrease by almost 90%, of ammonium ion — by 36%, and of oil products — more than a half.

Speaking at the opening ceremony of the implemented works at Nizhnekamskneftekhim, Rustam Minnikhanov emphasized their importance: ''It is important that we start the Year of Ecology and Public Spaces with such positive example, when a large company such as Nizhnekamskneftekhim, which is part of TAIF group of companies, has decided and implemented such large, important investment project.''

Mayor of Nizhnekamsk Aidar Metshin also stressed that ''the reconstruction of treatment facilities has become an important event, this facility is of strategic importance not only for the industry but it is also an important part of the engineering infrastructure of the city, it aims to improve the environmental situation in the city.''

Having pressed the symbolic start button of treatment facilities into operation, the large delegation headed by the president, which included Mayor of Nizhnekamsk Aidar Metshin, the head of TAIF Albert Shigabutdinov, Chairman of the Board of Directors of Nizhnekamskneftekhim Vladimir Busygin, and others, quickly inspected a new treatment facility — the mechanical treatment plant. Speaking of further work on the project at the presentation, Director General of Nizhnekamskneftehim Azat Bikmurzin noted that within the framework of the second phase there will be built a manifold coming from the industrial area directly to the treatment facilities, and after the completion of all works in 2019, the quality of water after treatment at the facilities will be brought up to the standards imposed on fishery water bodies.

Having pressed the symbolic start button of treatment facilities into work, the large delegation headed by the president, quickly inspected the treatment facility — the mechanical treatment plant

Growth of commodity output volume and large investment projects

Meanwhile, in the central office of Nizhnekamskneftekhim, there had already gathered the shareholders of the company. In the agenda of the meeting, there were listed eight points, among which one of the important ones was summarising the activities of the company over 2016, about which the head of Azat Bikmurzin reported.

Speaking of the results, he noted that the main production and financial indicators of last year demonstrate the stability and reliability of work of the enterprise: ''In 2016, we increased the volume of production and achieved revenue from sales at more than 153 billion rubles, the net profit amounted to 25.1 billion rubles. The growth rate of industrial production was 102%. We produced more than 670,000 tonnes of caoutchouc, 725,000 tonnes of plastics. More than 88% of produced caoutchouc were shipped to foreign markets.''

The company has also implemented a number of investment projects. The head of Nizhnekamskneftekhim especially highlighted the program to ramp up production of SKI-3, in the course of which there was implemented a large-scale modernization of production of monomers: isobutylene, formaldehyde, and isoprene. Expected result from the implementation of this project should be an annual production of isoprene rubber raised up to 330,000 tonnes.

Besides, the company's specialists have been working on another big task – it is a new kind of diene-styrene synthetic rubber — so-called rubber of new generation. Its experimental batches are already in the process of testing by the Russian and foreign consumers. The company has achieved a significant growth in the production of butyl and halobutyl rubbers. Now this production of the company will be able to send consumers up to 220,000 tonnes per year of one of the most popular elastomers.

The second most important product, bringing Nizhnekamskneftekhim more than a third of revenues, is plastics. In this segment, according to the announced by the head of the company data, there is also undergoing an active development. For 2 years, the company has increased sales of linear low-density polyethylene from 19,000 tonnes to 62,000 tonnes. For the current year, it is planned to increase this figure up to 100,000 tonnes a year. Thus, the company is successfully fulfilling the program of import substitution, as 70-75% of this polyethylene in Russia today are imported from abroad.

Speaking of the tasks for this year, Bikmurzin highlighted the construction of two new pyrolysis ovens and a plant for extraction of benzene by the technology of the company GTC at the ethylene plant

In the report, Azat Bikmurzin highlighted the importance in terms of raw materials supply of the enterprise of the launched in last August plant for production of linear alpha-olefins using the technology alpha-Sablin with the capacity of 37,500 tonnes per year. It enabled Nizhnekamskneftekhim to completely abandon the purchase of imported raw materials since it can fully provide the plastics factory with much-needed in the technology fractions of butene and hexene.

Speaking of the tasks for this year, Bikmurzin highlighted the construction of two new pyrolysis ovens and the plant of extraction of benzene using the technology of the company GTC at the ethylene plant. These technical solutions, he said, will increase production of benzene by 50,000 tonnes per year and eliminate its purchases from other manufacturers. Also, the company is planning to complete construction and a launch of the production of microspherical chromia-alumina catalyst of dehydrogenation of isoparaffins KDI-M.

About the most large-scale project — the olefin complex — they more detailed spoke at the press conference, but here, Director General said that ''as for the project EP-600, we have reached the final stage of selection of companies for design and supply of equipment, and by the end of April, the contracts will be ready for signing.''

Retained profit and new composition of the board of directors

The results of the annual financial statement were voiced by chief accountant of the company Ilfar Yakhin. According to the data, the annual revenue amounted to 153,4 billion rubles, the pretax profit amounted to almost 32 billion rubles, and the profit from sales amounted to 22.7 billion rubles, equity capital by the end of the year rose to 128,3 billion rubles. Nizhnekamskneftekhim allocated to the budgets of all levels 16.3 billion rubles in 2016, about 9 billion rubles out of which were received by the region's treasury.

The next issue of the agenda of the meeting concerned the distribution of profits and payment of dividends. At the meeting of the Board of Directors held on March 3, it was decided to recommend the shareholders not to pay dividends on shares by the results of 2016. Deputy Director General of the company on Economy Rustam Akhmetov announced to the shareholders a proposal to allocate the net profit of 25,5 billion rubles in the following way: to allocate 5 billion rubles for financing the strategic program of development of Nizhnekamskneftekhim, 20,52 billion rubles — leave retained, and share dividends of the company for the financial year not to declare and not to pay.

It was announced to the shareholders a proposal to allocate the net profit of 25,5 billion rubles

The representative of the auditing company PricewaterhouseCoopers and the chairperson of the audit committee expressed their assessments of the accuracy of these figures. According to them, the accounting statement ''reliably reflects in all essential respects the financial position of the Company.''

It came to the election by the shareholders of the Board of Directors of Nizhnekamskneftekhim for the current year. In its composition there have been some changes: Sergey Alekseyev, first Deputy Director General of Svyazinvestneftekhim, and Nurislam Syubaev, Deputy Director for strategic development of Tatneft have retired from the board. Now the strategic decisions in the activities of the board will be made by Ruslan Shigabutdinov, Deputy Director General for corporate governance, property and investments of TAIF, he also heads the Board of Directors of Kazanorgsintez, and Subramanian Visvanatan Anand, Advisor to Director General of TAIF PSC. The right of the ''golden share'' as the representative of the state in the composition of the Board of Directors of the company still has been preserved by Rinat Sabirov, aide to Tatarstan President.

Chairman Vladimir Busygin and Director General of TAIF Albert Shigabutdinov presented gifts and expressed gratitude for the years of service to the retired members of the Board of Directors.

Worthy results of the petrochemists of Nizhnekamsk

While there was the counting of votes of the shareholders on the previously announced issues, the floor was taken by Mayor of Nizhnekamsk. Aidar Metshin expressed gratitude for the contribution of Nizhnekamsk enterprises of TAIF group in the preparation and celebration of the 50th anniversary of the city. He noted that the funds allocated by Nizhnekamskneftekhim allowed ''to implement a number of projects to improve public spaces and to begin to address to an important for all residents issue such as repair of roads in the yards.''

Then President of Tatarstan Rustam Minnikhanov came up to the rostrum. According to him, the first shareholders' meeting, which is held by Nizhnekamskneftekhim, in a series of subsequent similar events, is a significant event for Tatarstan and its industry. First of all, he once again noted the successful contribution of the company in the start of the Year of Ecology. According to him, the reconstructed biological treatment facilities is a gift, platform that uses ''the latest technology and everything is very thought out''. According to the head of the republic, the production results of the petrochemists of Nizhnekamsk are also worthy: the volume of production has increased by 2% compared to the fairly high rate of 2015, record highs in the production of rubbers have been reached — more than 665,000 tonnes, and over 725,000 tonnes of plastics. He also stressed the productivity, which since 2003 has grown more than tenfold on the background of downsizing by 22%.

''Thanks to sustainable companies such as Nizhnekamsneftekhim, the republic has maintained a positive growth rate of the economy, although in the whole country the situation is different.''

The head of Tatarstan called the ''Ethylene-1 200'' and related productions of pyrolysis products processing as the main industry project

Among the strategic tasks facing Nizhnekamskneftekhim in this and in subsequent years, the president called the expansion projects of existing plants for the production of monomers and the increasing the volume of production of synthetic rubbers. Towards the achievement of the goal, ''already in the middle of the second quarter of 2017, as a result of the reconstruction, the volume of rubber output increased by more than 200 tonnes a day,'' said Rustam Minnikhanov.

The head of Tatarstan called the ''Ethylene-1 200'' and associated with it productions for processing of products of pyrolysis as the main industry project. In general, in the framework of the development strategy, Nizhnekamskneftekhim has tasks to increase by 2021 the production of rubbers to up 1 million tonnes, of ethylene – up to 1,2 million tonnes, plastics — up to 1,5 million tonnes.

Having thanked the management and staff of Nizhnekamskneftekhim and TAIF for the contribution to the development of the republic, Rustam Minnikhanov noted: ''Nizhnekamskneftekhim is the flagship of the petrochemical industry of the country and the pride of the whole republic.''

It was a turn of the announcement of the election results. According to the estimates of the commission, the majority votes of the shareholders voted affirmatively in favour of changes in the composition of the Board of Directors, a minor change in the company's Charter, in the issue of non-payment of dividends and the election of PWC as the auditor for 2016.

In the presence of President of Tatarstan and the shareholders, the re-elected composition of the Board of Directors on the proposal of the President of Tatarstan again unanimously elected Vladimir Busygin as its chairperson and confirmed the authority of Azat Bikmurzin as Director General of Nizhnekamskneftekhim PJSC.

President Rustam Minnikhanov, the management of Nizhnekamskneftekhim and TAIF traditionally answered the journalists' questions

Plans for 2017: growth of commodity output by 2% and profit at the level of 28 billion rubles

After the shareholders' meeting, President Rustam Minnikhanov, the management of Nizhnekamskneftekhim and TAIF traditionally answered the journalists' questions.

First, President of the Republic was asked to evaluate the performance of Nizhnekamskneftekhim in import substitution in part of a plan to increase production of polyethylene. As Minnikhanov noted, the company is actively developing new products and new markets. Thanks to the import substitution program of the company by a linear polyethylene the imports fell by 20%.

''The company have a great success in part of the production of rubber — 90% is exported, it will move in this direction this year, there are big plans to expand in the direction of rubber production.''

The president highlighted the fact that the company today is focused not only on expansion of their production capacities.

''You know what a great program the company TAIF is implementing on housing. Last year, they allocated 450 apartments, it is a huge support of the staff, this is a great contribution to the development of the urban environment. The city had the anniversary, Nizhnekamskneftekhim, TAIF group have well invested in the urban environment. I think that this year is also a jubilee — 50 years of the company, we should celebrate. Albert Kashafovich is also ready to fork out, we're also ready to help to make the city more beautiful, more convenient because people who create these products live in this city. If there are no such specialists, if the city is not so convenient, safe, environmentally friendly, of course, it will be difficult to achieve such success. That is why we invite all journalists to the celebration of the 50th anniversary of Nizhnekamskneftekhim in September.''

Referring to the chairperson of the Board of Directors Vladimir Busygin, the journalists asked him to name the volume of investments of the company in 2016 and in what purposes the main investments will be allocated this year.

According to him, this year Nizhnekamskneftekhim completes a large investment program on development of isoprene rubber – it is not only a power increase to 330,000 tonnes per year but also expanding the raw material base for this kind of rubber and others. It is the production of isobutylene with a capacity of 160,000 tonnes and the production of formaldehyde with the capacity of 100,000 tonnes. This project, said Busygin, is estimated at nearly 30 billion rubles.

According to Albert Shigabutdinov, the contracts for implementation of the project EP-1200 will be signed in the first half of the year

''Besides, within the programme of expanding a range of commodity products, we are also planning a number of new capacities on the basis of ethylene oxide – it is the creation of polyethylene glycol and monomethoxy polyethylene glycol. The theme of environmental safety remains, as you've heard at the opening – it is the second stage of reconstruction of treatment plants. First of all, it is design works. We are planning to complete the project approximately by 2019. This will give an opportunity to mix all the biological effluents that come from the city, and, at the same time, hydrocarbon ones that go from the plant. Neither more nor less, the capacity of the plant for processing effluents will be approximately 140 million cubic meters a year. The most important priority project for us was and still is the construction of ethylene complex with a capacity of 1.2 million tonnes, its first stage with the capacity of 600,000 tonnes. The work that has been carried out is enormous. We are planning to sign contracts for designing and supply of equipment in April.''

A question to the head of Nizhnekamskneftekhim concerned the company's plans for 2017 in revenue and net profit. Azat Bikmurzin replied that this year the expected revenue will be at the level of 157 billion, which is higher that the result in 2016 by approximately 3.6 billion rubles. The company aims to achieve it through an increase of output volume, getting the effect from a variety of modernizations of the productions.

''We have planned a growth of commodity output volume by 2% compared to last year. Net income at least at the level of 28 billion rubles.''

The question of Realnoe Vremya to the head of TAIF Albert Shigabutdinov concerned the stages of the project EP-1200 — whether the general contractor and funding sources have been defined, as well as the timing of construction works. As he noted, the contracts will be signed in the first half of the year. As for the contractor, it is selected in the tender process but the tender has not been finished yet.

''In parallel, we are addressing different issues: some insist on increasing the authorized capital, the negotiations are underway, there are already options that at 100% will provide the funding. The question of financing will be solved near November this year.''

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By Angelina Panchenko. Photo: Maksim Platonov