Rustam Minnikhanov to TAIF: ''You organised the biggest project in the country''

Nizhnekamskneftekhim signed an agreement to finance a new olefin complex at 2018 SPIEF

A consortium of five German banks will grant €807 million for 15 years for an olefin complex project. Deutsche Bank will be the main creditor. Searches for the financial organisation lasted for more than five years, and different banks were considered. But Deutsche Bank offered the most interesting conditions. Realnoe Vremya's report tells when NKNKH's account will receive an advance and what stage the olefin complex project is at.

''The credit agreement will enable the appearance of the biggest production in Nizhnekamsk''

Signing of big agreements at the Petersburg forum becomes a tradition for TAIF Group of Companies – a memorandum on strategic cooperation between TAIF and Linde was signed by Deutsche Bank right one year ago as well as a separate contract on the first stage of the ethylene complex. The issue of its financing has been resolved at this Petersburg forum. Five German banks will expand Nizhnekamskneftekhim €807 million to fulfil the project until 2032. Director General of Nizhnekamskneftekhim Azat Bikmurzin and Chief Executive Officer of Europe, Middle East & Africa Ashok Aram signed the document in presence of Tatarstan President Rustam Minnikhanov, Director General of TAIF PJSC Albert Shigabutdinov, Head of Underwriting and Risk Management at Euler Hermes Thomas Baum and board member of Linde AG Christian Bruch.

Deutsche Bank AG will be the main creditor of the olefin complex. Photo: Timur Rakhmatullin

''The credit agreement will enable the appearance of the biggest production in Nizhnekamsk – a complex with 600,000 tonnes of ethylene. I want to express gratitude to Deutsche Bank that grants a considerable sum, Euler Hermes insurance company, the government of Germany, our partners who represent Linde and, most importantly, the team that worked in our country – Mr Bikmurzin and Mr Shigabutdinov. You organised the biggest project in the country,'' said Rustam Minnikhanov.

Nizhnekamskneftekhim and Deutsche Bank signed the long-term credit agreement in presence of Tatarstan President Rustam Minnikhanov. Photo: president.tatarstan.ru

They came to an agreement on long-term credit for 8 months

Nizhnekamskneftekhim plans to build a new ethylene complex (EP-1200) with a total capacity of 1,2 million tonnes of products a year. The project will have four stages. A complex with a capacity of 600,000 tonnes will be erected during the first stage by 2021. EP contract on design and the supply of equipment is estimated at €868 million. Five German banks will grant €807 million: Deutsche Bank AG will be the main creditor, but UniCredit Bank AG, Bayerische Landesbank, Landesbank Baden-Württemberg, DZ BANK AG will also provide the money. NKNKH will get the total sum during four years given to construct the complex. The first advance is to be given in July already.

''Negotiations for the search for a financial organisation lasted for more than five years. We considered many banks, but Deutsche Bank offered the best credit conditions. This is why we chose it,'' TAIF PJSC Director General Albert Shigabutdionv commented for Realnoe Vremya's correspondent.

Euler Hermes export credit agency has been the guarantee of the deal. According to the agreement's configuration, the borrowed money will account for 85% of the total sum of the contract, Nizhnekamskneftekhim will pay the remaining 15% from its own money.

''The credit agreement with Deutsche Bank gives a start to a more active phase – we will pay the first advance of Nizhnekamskneftekhim to Linde equal to 13% of the contract. Consequently, we're approaching the phase in which a real active work begins,'' NKNKH Director General Azat Bikmurzin said.

In an interview to Realnoe Vremya online newspaper, Chief Executive Officer of Europe, Middle East & Africa at Deutsche Bank Ashok Aram claimed they always looked for the best projects to finance. According to him, the bank always supports Russian projects with German technologies. This time TAIF and Deutsche Bank have had the first joint big project.

Mr Aram says it's the latest project. It's important for them to comply with all ecological requirements and solve all social problems. So they are happy to be a part of the project.

Five German banks will grant €807 million: Deutsche Bank AG will be the main creditor. Photo: Timur Rakhmatullin

They came to an agreement on the long-term credit for record 8 months. Not only a decision to credit was made and all documents were prepared but, most importantly, the deal was approved by the government of Germany during this time.

Head of Underwriting and Risk Management at Euler Hermes Thomas Baum explained they had analysed the company's financial situation. It's what they do in accordance with their procedures determined by the government of Germany. Quite serious credit analysis was done for the agreement on such a big sum, they thoroughly checked all indicators of the company.

Beginning of design and supply of equipment

The olefin complex construction contract was signed on 2 June 2017, after which the work on the project began. A site of the future complex where geodesic and topographic research was done was chosen during this time. In addition, a plan general was elaborated. A selection of subcontractors and contractors to supply equipment was already formed. The work on detailed design also began.

''We're entering an active phase: a team with Linde has been created, there were held preliminary meetings where the whole programme and work schedules were elaborated. Now the design will begin, at the same time, we will deal with equipment supply,'' told Azat Bikmurzin.

Board member of the company and responsible for the Engineering Division at Linde AG Christian Bruch said he's very proud of what they did, they reached an important moment in this project. In addition, he's very excited about the thought what huge work they would need to do. So he is looking forward to starting the work, he said.

The financing agreement has been signed with the support of Euler Hermes. Photo: Timur Rakhmatullin

The long-term credit agreement with Deutsche Bank will strengthen relations between Tatarstan and Germany more. FRG is one of the biggest trade and economic partners of the republic. In 2017, foreign trade turnover between Tatarstan and Germany totalled almost $2 billion, which is 74% more than in 2016. TAIF also has close relations with this country. It's been the second big Tatarstan-German deal in the last 6 months. In December, Nizhnekamskneftekhim signed an agreement with Siemens on constructing a power station for €352 million. It seems it's only the beginning of big projects. According to Realnoe Vremya's information, TAIF and Deutsche Bank are working on new projects.

By Ksenia Zharkova, Timur Rakhmatullin
Reference

Deutsche Bank is Germany's leading bank, with a strong position in Europe and a significant presence in the Americas and Asia Pacific. The bank offers commercial banking and investment and banking services, provides services to private individuals and offers products and services on management of assets and a big private capital. The bank provides banking services to corporations, governments, institutional investors, small and medium-sized businesses and private individuals.

Euler Hermes is a world leader in insurance and debt collection, a recognised expert in credit insurance. With over 100 years of experience, Euler Hermes has gone through several ups and downs together with the world economy and accumulated considerable expertise in financial and economic risks worldwide. The company's offices are located in more than 50 countries.

Linde AG was created in 1878 and consists of three divisions: Linde Gas, Linde Engineering (two main divisions) and other activities (Gist logistic company). The biggest division Linde Gas has three segments: Europe and 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. Linde Group also set up Opportunity & Project Development in order to take better advantage of its business's potential.

The Linde Group is the leading manufacturer of technologies with EPC. It gives it an advantage over other gas companies. Engineering developments with the right of possession 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.

IndustryPetrochemistry Tatarstan