TAIF Group and Linde AG: the time-tested partnership

TAIF Group together with Linde AG has realized a number of large-scale projects since 2003

June 2017. Saint-Petersburg. International Economic Forum. The heads of TAIF Group and Linde AG, the German holding, signed a memorandum of strategic cooperation for the period up to 2025 and a total investment of up to 12 billion euros. The document implies contracts on gas separation, industrial gases, but most importantly — on four stages of the construction of a new ethylene complex in Tatarstan. In May 2018, at the same forum in St. Petersburg, Nizhnekamskneftekhim PJSC and the consortium of five German banks, organized by the largest international financial institution Deutsche Bank AG, signed a loan agreement in the amount of 807 million euros. The funds were raised for the implementation of the first stage of the construction of the new ethylene complex. The project is so large that President of Russia Vladimir Putin and President of Germany Walter Steinmeier spoke about it at a bilateral meeting. Business cooperation between TAIF Group and Linde AG has been lasting for already more than a decade and a half. About what projects have already been implemented and what joint plans the two world-renowed brands are building — read in the material of Realnoe Vremya.

The Linde Group: 16 years out of the 141-year history of the company are connected with Tatarstan

The founder of The Linde Group is Carl von Linde. Photo: pixels.com

Linde AG was founded in 1878 by Carl von Linde, the German engineer, Professor who developed the technology of refrigeration and gas separation. Today, The Linde Group consists of three divisions: Linde Gas — a world's leading manufacturer of industrial and medical gases, Linde Engineering — the leading technology partner in the design and construction of plants around the world, and the logistics company Gist. The assets of The Linde Group include more than 1,000 patents for technological processes and more than 4,000 implemented projects. The number of employees of the holding is almost 60,000 people. The geography of activity — more than 100 countries, including Russia.

16 years out of 141 years of the history of The Linde Group are associated with Tatarstan. Photo: linde-group.ru

Linde AG entered Tatarstan in 2003, and almost from the first days it has cooperated with TAIF Group.

2006 — the completion of the first joint project: the pyrolysis oven of propane-butane with a capacity of 20 tonnes of raw material an hour was put into operation at Kazanorgsintez PJSC.

2006 — RCPSA for hydrogen production with a capacity of 160 kg/h was built and put into operation for Kazanorgsintez PJSC.

2007, and again for Kazanorgsintez PJSC — the commissioning of the air separation unit with a capacity of 14,000 Nm3/h for nitrogen gas. After 2 years, another plant with a capacity of 13,800 Nm3/h was put into operation.

In January 2014, Linde AG and TAIF-NK signed a contract for the design and material and technical support of the construction of a hydrogen production plant with a capacity of 222,400 Nm3/h, as well as the cryogenic air separation unit EKOGAN 7, with a capacity of 5500 m3/h for instrumentation air, 6,000 m3/h for nitrogen gas and 170 m3/h for liquid nitrogen. Both units are located on the territory of the Heavy Residue Conversion Complex and were put into operation in 2017.

2015 — the construction of PSA (Pressure Swing Adsorbrion) with a capacity of 240 kg/h of hydrogen production was completed and ELMESS HG/SE498 electrical heater was supplied to Kazanorgsintez (KOS) with the participation of Linde.

2016 — Linde Group completed the modernization of the production of linear alpha-olefins with a capacity of 37,500 tonnes a year at Nizhnekamskneftekhim PJSC, with the introduction of the new high-performance α-SABLIN technology. The second in the world and the only similar unit in Russia, and TAIF Group — the only producer of alpha-olefins in the country. In the same year, Linde supplied radiant coils for the pyrolysis oven to Kazanorgsintez PJSC.

New horizons of cooperation

Rustam Minnikhanov: ''Tatarstan is interested in expanding mutually beneficial cooperation with Linde.'' Photo: prav.tatarstan.ru

''Tatarstan is interested in expanding mutually beneficial cooperation with Linde as the world leader in the production of industrial gases and engineering,'' Minnikhanov said in early May 2017. These words sounded in Munich during the working trip of the president of Tatarstan to Germany. One of the significant events of the visit of the Tatarstan delegation to Bavaria was the visit of the management of TAIF Group to the headquarters of its long-time partner Linde AG and a meeting with the management of the concern and its CEO Aldo Belloni.

Rustam Minnikhanov stressed that he was well aware of the successful cooperation between TAIF Group and Linde that had lasted for the second decade, knew about the already implemented projects and closely monitored the progress of negotiations on possible cooperation and participation of Linde in the final part of the tender for the selection of the general contractor for the design and supply of equipment for the construction of the new ethylene complex at Nizhnekamskneftekhim. At that time, in addition to the German corporation, Stone&Webster, Technip, Lummus Technology and a number of other world-renowed companies claimed the right to participate in the implementation of the project.

''The subject of the agreement is the creation of a large petrochemical plant for the production of ethylene. Ethylene is the basic chemical substance for the whole petrochemical industry. As Mr. President said (Rustam Minnikhanov – editor's note), we hope that the decision on our cooperation will be made during the St. Petersburg Economic Forum,'' said later Aldo Belloni. He also noted that the upcoming project is much larger than those that TAIF Group and Linde have implemented together before.

Aldo Belloni: ''The construction project of ethylene complex is far bigger than those that TAIF Group and Linde have implemented together before.'' Photo: prav.tatarstan.ru

The very idea of the project for the construction of an ethylene complex for a million tonnes of products per year was initiated by the leadership of TAIF in 2008. Even then it was clear that the processes of further development of Nizhnekamskneftekhim PJSC needed new capacities. Ethylene is necessary for the domestic petrochemical industry as a whole. The currently produced material volume of the Russian chemical industry is clearly not enough. This is confirmed by the Federal strategy for the development of the chemical and petrochemical complex until 2030, in which the investment projects of Nizhnekamskneftekhim on a significant increase in the production of ethylene were included at the development stage.

Not delaying for too long

In Russia, Nizhnekamskneftekhim PJSC is the leader in ethylene production volumes. The existing capacity of the company allows to produce more than 600,000 tonnes of scarce raw materials for its own production. Initially, the programme of expansion, or to be more precise, actually the creation of the new third industrial site of Nizhnekamskneftekhim, was to combine three production facilities: for one million tonnes of ethylene, 400,000 tonnes of polypropylene and 600,000 tonnes of polyethylene. However, a few years later, taking into account economic and geopolitical factors and after a thorough (with the involvement of international analytical companies) study of the sales market, the concept of building the ethylene complex was revised. It was decided to increase the capacity of ethylene production from 1 million tonnes per year to 1,2 million tonnes, as well as to expand the product range of satellite plants, which will also be built.

2017. June. Saint-Petersburg. The second day of the International Economic Forum. In the presence of Russian President Vladimir Putin, Tatarstan President Rustam Minnikhanov and Prime Minister of Bavaria (Germany) Horst Seehofer, TAIF and Linde AG signed a memorandum on strategic partnership for the period up to 2025. Albert Shigabutdinov, the director general of TAIF PSC, and Christian Bruch, the chief executive officer at Linde AG, signed the document providing for the implementation of a number of projects with a total cost of up to 12 billion US dollars.

June 2, 2017 – SPIEF 2017. TAIF Group and Linde AG signed a memorandum of strategic partnership for the period up to 2025. Photo: Lina Sarimova

The first step in the implementation of the memorandum was the signing of another document at SPIEF 2017. Azat Bikmurzin, the CEO of Nizhnekamskneftekhim PJSC, and John van der Velden, the managing director at Linde Engineering, signed a basic agreement for the design, supply of equipment, and services for the commissioning of the first stage of the future ethylene complex — the construction of ethylene production facility with a capacity of 600,000 tonnes per year.

''A huge work has been done to select technologies. The proposals of a dozen well-known and very reputable companies were thoroughly studied, but as a result the choice was made in favour of Linde AG. This is the best offer for us. I am sure that our mutually beneficial cooperation will help successfully implement this ambitious project and bring the development of the petrochemical industry in the Republic of Tatarstan and the Russian Federation to a qualitatively new level,'' Director General of TAIF PSC Albert Shigabutdinov said after the signing.

Albert Shigabutdinov: ''A huge work has been carried out to select technologies.'' Photo: Lina Sarimova

''What does 600,000 tonnes mean? This is as much ethylene as Nizhnekamskneftekhim produces today,'' Tatarstan President Rustam Minnikhanov noted, stressing that this is a huge scale is only the beginning of the large project.

''The ethylene complex is a very important project, which is observed throughout the industry. We are very proud that it is based on Linde technology. This is a continuation of the partnership that we already have with Nizhnekamsneftekhim and TAIF,'' said Christian Bruch.

The whole process of the complex construction was decided to be divided into four stages: the construction of two ethylene plants for 600,000 tonnes per year each, and two more stages — the construction of satellite plants for the production of products with high added value based on ethylene: polyethylene, polypropylene, polystyrene and a number of other derivatives.

''Tatarstan is a very strong region, successful and dynamic. I think that both Tatarstan and Bavaria can live very well at the expense of this cooperation,'' shared his opinion Prime Minister of Bavaria Horst Seehofer. He promised to come to Nizhnekamsk to lay the first stone in the foundation of the EP-600.

Horst Seehofer: ''Tatarstan and Bavaria can live very well through this cooperation.'' Photo: Lina Sarimova

The new olefin complex is not going to be a replacement for the existing 600-thousand unit at Nizhnekamskneftekhim PJSC. Upon completion of all stages of the construction, it will allow to triple — up to 1,8 million tonnes per year — the production of ethylene, to increase the production of polymers threefold and to bring the annual production of rubbers to 1 million tonnes.

Over the next 10 years, the most modern production facilities will be launched in Nizhnekamsk, and this will become a reliable foundation for the further development of not only Nizhnekamskneftekhim PJSC and the city, but also TAIF Group, building the industrial potential of the republic and the country as a whole. EP-1200 will be the largest investment project in the entire 50-year history of Nizhnekamskneftekhim.

The leaders of the states also highlight the importance of active cooperation between large businesses of the two countries and the implementation of such large-scale projects. In June 2017, immediately after the signing of the memorandum between TAIF and Linde AG, President of Russia Vladimir Putin met with President of Tatarstan Rustam Minnikhanov and Head of the government of Bavaria Horst Seehofer. In October of the same year, Vladimir Putin spoke with his colleague, German President Frank-Walter Steinmeier, about the construction of the ethylene complex in Tatarstan.

In October 2017, Russian President Vladimir Putin and German President Frank-Walter Steinmeier spoke about the construction of the ethylene complex in Tatarstan. Photo: iz.ru

The construction of the ethylene complex is a transition to the active phase

The cost of the EPC for the implementation of the first stage of the construction of the ethylene complex — its design and supply of equipment — is estimated at 868 million euros. 15% of the amount — own funds of Nizhnekamskneftekhim PJSC. The rest is borrowed funds.

The issue of financing was resolved exactly one year after the signing by TAIF Group and Linde AG of the memorandum and the conclusion of the agreement between Linde Group and Nizhnekamskneftekhim PJSC. At the same International Economic Forum in St. Petersburg, Chief Executive Officer of Deutsche Bank in the regions of Europe, the Middle East and Africa Ashok Aram on behalf of the consortium of five German banks — Deutsche Bank, UniCredit Bank AG, Bayerische Landesbank, Landesbank Baden-Württemberg and DZ BANK AG — on one side, and Director General of Nizhnekamskneftekhim PJSC Azat Bikmurzin on behalf of TAIF Group on the other, signed a loan agreement for 807 million euros, for a period of 15 years.

On 25 May 2018, SPIEF 2018: the consortium of five German banks and Nizhnekamskneftekhim PJSC signed a loan agreement for 807 million euros. Photo: president.tatarstan.ru

''We are starting the phase in which the real active work begins,'' said Azat Bikmurzin, the director general of Nizhnekamskneftekhim PJSC.

In fact, by this time TAIF Group has already done a lot of work: the site for the construction of the complex has been determined, a complex of geodetic and topographic studies has been carried out, general plan has been developed and the work on detailed design of production facilities has begun.

''The signed loan agreement will allow the largest production facility in Nizhnekamsk to appear — the complex for 600,000 tonnes of ethylene. I would like to express my gratitude to Deutsche Bank, which allocates a significant amount, to Euler Hermes insurance company, the German government, to our partners, who represent Linde, and, most importantly, to the team that worked in our country — Albert Kashafovich and Azat Shaukatovich. You have organized the largest project in the country,'' said President of Tatarstan Rustam Minnikhanov. Director General of TAIF JSC Albert Shigabutdinov and him attended the ceremony of signing the contract.

''We are happy to be part of the project,'' Ashok Aram, the executive director of Deutsche Bank in Europe, the Middle East and Africa, said immediately after the signing.

Ashok Aram: ''We are happy to be part of the project.'' Photo: Timur Rakhmatullin

''I'm very proud of what we have done. We have reached an important milestone in the implementation of this project. At the same time, I am very excited at the thought of what a huge work we have to do and implement. I look forward to getting started,'' said Christian Bruch, a member of the management board responsible for the Linde Engineering Division.

The document was signed in May. At the same time, advance payments were made under the contracts. In July, a representative delegation of Linde AG Corporation was met in Nizhnekamsk. Representatives of the German company had never come to Tatarstan in such a status before: Christian Bruch, the chairman of the board of directors of Linde Engineering, John van der Welden, the managing director of Linde Engineering, Roland Hein, the project director of the new olefin complex at Linde Engineering, and Danil Efremov, the business development director of petrochemical plants at Linde Engineering. The friendly hosts gave the partners a tour around the production facilities of Nizhnekamskneftekhim.

''This is my first visit to Nizhnekamsk, I have visited several sites today and I am very impressed, because I have seen a lot of chemical production facilities, but everything is thought out both in terms of areas and in terms of operational issues. This is just amazing,'' Mr. Bruch shared his impressions.

''We are on the verge of implementing the new project together with Nizhnekamskneftekhim, so Mr. Bikmurzin and I took the opportunity to discuss our further steps on the construction of the olefin complex, we have very big plans. In fact, Linde is honoured to be chosen as the contractor for this project. Moreover, we hope that the olefin complex is only a starting point for our cooperation with Nizhnekamskneftekhim PJSC, in the future we will either build new plants or invest in joint projects,'' added the chairman of the board of directors of Linde Engineering in a conversation with journalists of Realnoe Vremya.

Christian Bruch: 'We hope that the olefin complex is only the starting point for our cooperation.'' Photo: Timur Rakhmatullin

TAIF Group and Linde AG: today and tomorrow

''Currently, the project documentation of the olefin complex EP-600 is coming from Linde AG: process flow diagrams, installation and technological schemes, technological questionnaires, a list of design data for mechanical equipment, technical specifications for engineering surveys, numerous concepts for process maintenance, the concept of environmental protection, the concept of construction works, the basic principles of building an automatic safety system and other documentation,'' Nizhnekamskneftekhim PJSC informed Realnoe Vremya.

Currently, the orders are already being placed for the production of the main technological equipment of the future ethylene complex. Photo: Maksim Platonov

In September-October 2018, the first issue of installation and technological schemes of the designed complex was considered. In November-December of the same year, the working group, which brought together specialists of Nizhnekamskneftekhim PJSC, Linde AG and VNIPIneft OJSC, carefully studied the project in order to exclude possible operational problems, threats and dangers. Currently, orders for the production of basic technological equipment are already being placed and the work is underway to prepare a tender for the selection of a construction contractor.

''After 5 years, we expect to see the production of products that are strategically important for Tatarstan, which will make Nizhnekamskneftekhim the number one supplier for products with high added value,'' Wolfgang Brand, the vice president for business development and sales of petrochemical plants at Linde Engineering, outlined the task for this project.

But this is only one project, but the partners' plans for the development of cooperation are much broader:

''On the one hand, we see TAIF as a buyer of our technologies, on the other hand — as a partner for investments and joint implementation of plans. The second form of cooperation is much more significant because it is designed for decades,'' Chairman of the Board of Directors, CEO of Linde Aldo Belloni stressed in the interview with the journalist of Realnoe Vremya in May 2017.

Aldo Belloni: ''We see TAIF not only as a buyer of our technologies, but also as a partner for investment and joint implementation of plans.'' Photo: global.handelsblatt.com

Thus, Linde AG plans to buy out the hydrogen plant built for TAIF-NK with the subsequent transfer of the TAIF Group's unit to outsourcing.

''This will be the step from the plant supplier to the partner and gas supplier. The partnership is designed for 15-30 years,'' Mr. Belloni then explained the position of the holding headed by him.

Today, Linde already has nine remote centres that support more than a hundred gas separation plants around the world. The tenth such centre may appear in Tatarstan. And also in partnership with TAIF Group. President of Tatarstan Rustam Minnikhanov announced this opportunity his visit to Munich in May 2017. The proposal fell on fertile ground: Aldo Belloni noted that the Group was just ''in search of new budget sites for its operational centres. And the best place could be the area where the Linde plants are already operating'' (the end of the quote). In Tatarstan, gas separation units from the German company successfully operate at Kazanorgsintez, Nizhnekamskneftekhim and TAIF-NK.

Rustam Minnikhanov also suggested the German holding organizing the training of professional staff in Tatarstan and opening several joint laboratories. The Kazan National Research Technological University (KNRTU) could serve as a platform for such cooperation. TAIF Group can become an active participant in the implementation of the dual training system using the capacities of Nizhnekamskneftekhim PJSC and Kazanorgsintez PJSC.

Rustam Minnikhanov offered Linde AG and TAIF Group to create a joint research centre in Tatarstan. Photo: prav.tatarstan.ru

''Our paths are similar. You work in the petrochemical and gas segment, and in the next 20-30 years we see ourselves as the centre of Russian petrochemistry. We have a good production base, raw material base, and educational base, which now needs to be adapted to new tasks. It would be great if you could consider creating a joint research centre based on TAIF Group. We need to move towards a strategic partnership, not towards one-off deals,'' said the president of Tatarstan.

TAIF Group is also interested in helping Linde Group during negotiations with major foreign technology holders and licenses for their use.

The same memorandum, signed in St. Petersburg in June 2017, includes the cooperation between TAIF Group and Linde in the construction of a new gas processing plant and oil refining complexes. In addition, the construction of the EP-600, which has already started, is only the first of four stages of the appearance of the new ethylene complex on the territory of Nizhnekamskneftekhim PJSC. The construction of another ethylene production of 600,000 tonnes per year and a number of satellite plants are ahead. The cooperation of the two world-renowned brands — TAIF Group and Linde AG — already now involves many years of cooperation. It is hard even imagine how many new plans will appear over this time.

By Arseny Favstritsky

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