''Nizhnekamskneftekhim's Ethylene Complex is a very important project that is observed by the whole sector''
TAIF Group’s Nizhnekamskneftekhim is going to start the realisation of a grandiose project on olefin complex with Linde AG as licenser
Tatarstan and Bavaria are reaching another cooperation stage. A memorandum on understanding on strategic cooperation between TAIF and Linde AG groups of companies has been signed today on the second day of the Petersburg International Economic Forum. As Realnoe Vremya found out, the memorandum presupposes several contracts on gas separation and industrial gas and, most importantly, four stages of Ethylene Complex. Particularly, an agreement on the first stage at €868m has been signed, which is an event of the year in itself – TAIF and NKNKH administrations started to think about the construction of a powerful ethylene complex as early as 2008. Realnoe Vremya tells the details.
Agreement for 10 years and 1,2m tonnes of ethylene a year
Today Nizhnekamskneftekhim is considered to be the leading ethylene manufacturer across all Russia – the annual volume of the very deficit feedstock made in the company's factories exceeds 600,000 tonnes that is used to provide not only NKNKH factories but also other enterprises of the republic and neighbouring Bashkortostan. This position can be stronger in the next years thanks to a grandiose project carried out by NKNKH and its shareholder TAIF CJSC. The development strategy of Tatarstan's petrochemical leader is linked with the project on the erection of a new ethylene complex (EP-1200) with a total capacity of 1,2m tonnes a year and factories manufacturing popular types of plastics that are integrated into it. In fact, it will become the third industrial zone of Nizhnekamskneftekhim in terms of its scale. The construction of the complex will consist of four stages – one in two with 600,000 tonnes of ethylene a year with high-margin polymer units that are close to them. Ethylene will be the basic raw material. So a huge job was done before today's long-awaited signing.
''It took much time to sign it, and almost all the departments of the enterprise participated in the creation of necessary documentation together with Linde AG. Now we are seeing the results: several contracts with The Linde Group have been signed. Undoubtedly, I feel great pleasure from the job we did and expect the team to work on schedule. The agreement has been signed for 10 years and presupposes realisation of two major stages 600,000 tonnes each,'' Nizhnekamskneftekhim CJSC Director General Azat Bikmurzin commented Realnoe Vremya and noted that world-class companies such as Stone&Webster, Technip, Linde AG, Lummus Technology and others were invited to the tender. Technical solutions and implementation issues of each company were considered. ''Linde was chosen because the company made an offer that was the most acceptable for us,'' the head of Nizhnekamskneftekhim specified.
The new olefin complex won't substitute the old one. It will allow to increase ethylene production three times – to 1,7m tonnes – polymer production three times and ethylene production to 1m tonnes. So the modern factories are going to be put into operation in the next 10 years in Nizhnekamsk, which will become a reliable foundation for further development of not only the very enterprise and the city but also the industrial potential of the republic. EP-1200 will become the biggest investment project in Nizhnekamskneftekhim's 50-year-old history. As Tatarstan President Rustam Minnikhanov told during the signing, the value of the first stage is estimated at €868m.
During one of his visits to Nizhnekamskneftekhim, Tatarstan President Rustam Minnikhanov called the olefin complex ''the main task for the company and republic because precisely NKNKH is the growth point in the Kama Cluster in petrochemistry and oil refining.'' He noted that if the company could increase rubber production within the programme, ethylene was needed to develop plastics. ''The construction of the ethylene complex is the most important programme of the Kama Cluster,'' the president emphasised.
Over 2,000 engineers and designers of Germany and financing through Euler Hermes
The Memorandum of Understanding on Strategic Cooperation between TAIF Group of Companies and Linde AG presupposes cooperation in different spheres: in gas separation, industrial gas, several stages of the ethylene complex. It is a huge amount of job that we undertake together with the Linde team. It will enable TAIF GC to have advanced technologies, implement them in life and develop in Russia and Tatarstan,'' Deputy Director General of TAIF CJSC on Management and Strategic Development of NKNKH Vladimir Busygin commented Realnoe Vremya.
Now Linde will be responsible for delivery of technologies, design and corresponding purchases as a licenser. ''Having signed the agreement, we undertake legal obligations to create corresponding units at NKNKH. Much work was done to configure the project. We are going to work to obtain money through an export credit agency on this basis. And we are very glad that due to the fruitful cooperation between Russia and Germany Euler Hermes credit insurance agency is ready to support this project. As soon as the financing is approved and obtained, the project will start full speed. We will quickly call up over 2,000 engineers and designers of Germany and engineers from our engineering offices located around the world. An active work on the site will begin,'' Vice-President on Petrochemical Plant Sales of Linde Engineering Wolfgang Brand noted the details. Also, as a licenser, Linde is to provide Nizhnekamskneftekhim with a set of necessary licences to make pyrolysis end products, including third party licences. ''We expect to see production of goods that are strategically important for Tatarstan and that will make NKNKH the No. 1 high value added product supplier five years later,'' Wolfgang Brand expressed ambitious plans.
As for the support of Euler Hermes credit insurance agency, 85% of the total sum of the contract will be borrowed. 15% of the price of the contract will be financed by Nizhnekamskneftekhim's own money.
As Chief Executive Officer at Linde AG Christian Bruch told, the Ethylene Complex is a very important project that is observed by the whole sector. ''And we are very proud that Linde's technology is at its heart. It is a continuance of the partnership we already have with NKNKH and TAIF.''
Indeed, Linde concern is a lasting partner of TAIF Group of Companies and is famous for the construction of a number of big industrial facilities for the Tatarstan holding. Particularly, developments of the German concern can be found at Kazanorgsintez where it constructed pyrolysis ovens that refines propane butane fraction and also at Nizhnekamskneftekhim where the α-SABLIN technology was implemented while updating linear alpha olefin production. The technology enables to produce mainly popular light types of linear alpha olefins. Now they continue working with The Linde Group on another ambitious project – putting hydrogen unit into operation at the Heavy Residues Deep Conversion Complex at TAIF-NK.
Industrial infrastructure and logistic development for Ethylene Complex
It should be reminded the TAIF and NKNKH administration started to think about the construction of the powerful ethylene complex as early as 2008. The company's production capacities were already used to the max and further development was possible only on the basis of basic capacities. It was an important factor to make strategic decisions. The search of licensers and technologies meeting all the modern requirements not only by technical characteristics but also minimal impact on the environment started.
According to the initial project, the new olefin complex was going to unite three factories: ethylene, polypropylene and polyethylene with a total capacity of 2m tonnes of products of which ethylene accounted for a half, polypropylene was 400,000 tonnes and polyethylene was equal to 600,000 tonnes. However, several years later, considering economic and geopolitical factors and after examining the sales market with international analytic companies, the construction concept of the olefin complex was reconsidered. It was decided that the complex with a capacity of 1,2m tonnes was going to be launched instead of the ethylene factory making 1m tonnes of goods. And it would be erected in two stages, 600,000 tonnes each. In addition, another two stages besides ethylene presupposed construction of high value added products: polyethylene, polypropylene, polystyrene and other derivatives.
The project of the olefin giant is not only construction of factories but also erection of a storm sewage system, landfill sites and a new chemically contaminated drainage, which is part of the project on the reconstruction of biological treatment plants and new local wastewater treatment facilities. Maximum purified condensate will return to the technology from them. In addition, the use of a new kind of pyrolysis ovens would make emissions into the atmosphere minimum. As a result, the new complex promises to be both complicated and modern in the whole post-Soviet space.
Undoubtedly, such an active development of the company and multiple rise in commodity volumes by 2027 needs corresponding infrastructure from a perspective of logistics. While solving problems on construction of new junctions, railways and hubs, understanding of the especial importance of the new ethylene complex, the administration of TAIF in the person of Director General Albert Shigabutdinov, Chairman of the Board of Directors of Nizhnekamskneftekhim CJSC Vladimir Busygin and top managers of the company looked for support in different state structures, federal ministries and establishments. In 2015, the project on olefin complex, which is part of the Kama Cluster, was included into Strategy 2030.
The offer of NKNKH to include several large-scale infrastructural projects into the federal programme was the first step in this area. The first project is to construct a bridge through the Kama River near Sokolka settlement and a section of the M-7 federal highway. The second one is linked with the expansion of the Kama Railway Hub's capacity, reconstruction of the bridge through the Zay River and expansion of Nizhnekamsk-Chistopol motor road's capacity. The third project is about reconstruction and construction of highways in Nizhnekamsk and Nizhnekamsk Municipal District, including reconstruction of roads leading to the industrial zone and Building Industry Base.
Apart from highways, railways also need to develop. They will also be paid attention: the railways in Krugloye Pole – Agryz and Krugloye Pole – Biklyan that are used by Nizhnekamskneftekhim to get considerable part of feedstock for its factories and send end products to different parts of the world are waiting for large-scale reconstruction.
Linde AG was created in 1878 and consists of three subgroups: Linde Gas, Linde Engineering (two main subgroups) and other areas (Gist logistic company). The biggest subgroup Linde Gas has four operating segments: Europe, Middle East, Asia/Pacific and the Americas. What is more, Linde created five Global Governance Centres (GGCs) that are centrally managed and operate across the regions: GGC Merchant & Packaged Gases (liquefied gases and cylinder gas), GGC Electronics (electronic gases), GGC Healthcare, GGC Operations and GGC Deliver. The Linde Group also set up Opportunity & Project Development in order to take better advantage of its business' potential.
The Linde Group is the leading manufacturer of technologies with EPC. It gives it an advantage over other gas companies. Engineering developments with ownership and Linde's own operating experience are applied to design reliable units. The symbiosis is in both areas: Linde Gas is the biggest client of Linde Engineering.