The union of Russia and Germany: from partnership to a breakthrough
The historic meeting of the heads of TAIF and German multi-industry holding Linde, which determines the development of petrochemical industry in Russia, took place in the capital of Tatarstan
The delegation of the heads of the largest German company Linde headed by the chairperson of the Executive Board Wolfgang Buechele met in Kazan with the top managers of the enterprises of group of companies TAIF. The cooperation of these legendary industrial holdings began more than 10 years ago. Today, the German partner is already involved in the implementation of several ambitious projects of TAIF: it is working on a hydrogen plant for the complex of advanced processing of heavy residue of TAIF-NK, modernizing the production of linear alpha-olefins at Nizhnekamskneftekhim, using unique technologies alpha-Sablin, provided the construction of the pyrolysis furnace for Kazanorgsintez that processes propane-butane fraction. At the landmark meeting of major industrialists of two countries behind closed doors they not only discussed the ongoing projects in the field of petrochemistry but also asserted new promising proposals for the group of companies TAIF. The correspondent of the online newspaper Realnoe Vremya became a witness of the negotiations.
Rich history of the company and more than 4.1 billion euros profit per year
Recently, one of the most influential people in the international industry Wolfgang Buechele for the first time has visited the capital of Tatarstan. In 1987, starting career as a research chemist, he held senior positions in regional offices in Eastern Europe, Africa and West Asia, Germany, Hong Kong and China of the world's largest chemical concern BASF AG. He was a project adviser to the Blackstone Group International Partners LLP in London, he headed the company-manufacturer of polyurethane materials BorsodChem Zrt in Budapest, headed the international chemical concern Kemira Oyj in Helsinki. Now Mr. Buechele heads the German company Linde which has a rich history. Also Dr Buechele heads the Eastern Committee of German economy, which is the collective body of a number of key associations of business unions in Germany: the Federation of German Industry (BDI), the Association of German Banks (BdB), the German Insurance Association (GDV), the Foreign Trade Association of German Retail Trade (AVE), the German Confederation of Skilled Crafts (ZDH).
One of the world's leading engineering companies and manufacturers of industrial gases – the company Linde – started its work in 1879 with the development of artificial ice and cold for the production and storage of raw materials for beer and beer itself.
As the process of development, their own production of refrigeration equipment was a great success. Much later, in the period from 1938 to 1969, Linde produced tractors and diesel engines for them. Today, most of the forklift trucks produced by the Linde company work on diesel engines. Moreover, their production was established in the distant 1955. This year was marked by the fact that the hydrostatic transmission has become the basis of the production process of special purpose machinery.
Alongside the other direction of Linde was developing. In 1895, the founder of the company Carl received a patent on the method of turning gas to a liquid state. In 1902, they developed the technology for the separation of air into its component particles to obtain gases that are needed in industry and medicine. Thus, they established the base for the main activities of the company Linde – the production of gases for industrial and medical industries.
In 1970, only for several weeks, the company suspended the production of tractors and diesel engines for them. This allowed them to focus on the manufacture of lifting and transport equipment. In a year, the world saw the first electric forklift truck Linde.
Today, the manufacture of lifting and transport equipment have been established in nine factories in Germany, England, France, America and China. The German plant is the leader with the production more than 39 thousand units per year. Besides, the company implements large-scale engineering development.
Today, the group Linde consists of three major business divisions: Linde Gases, Linde Engineering and the logistics company Gist. The company supplies equipment for the air separation plants, hydrogen and gas synthesis plants, olefin plants and liquefied natural gas plants around the world. The largest unit of the group Linde Gases has more than 350 major sites for the production of industrial gases in 62 countries around the world. As it became known to the online newspaper Realnoe Vremya, in 2015 the market share of Linde Gases in Russia was about 15% and the number of sales — over 100 million euros per year.
The total operating profit of Linde of last year amounted to 4.1 billion euros, having demonstrated the growth by 5.4% in comparison with the previous year. The sales grew by 5.3% to 17.9 billion euros in 2015.
No failed projects
Top managers of one of the largest transnational industrial companies have arrived in Kazan to present the head of the group of companies TAIF new joint projects. The main purpose of the visit of Wolfgang Buechele is a personal meeting with the head of the group of companies TAIF and the long-time partner Albert Shigabutdinov. It was also attended by the leaders of the Russian branch of the German holding company and top managers of the petrochemical enterprises of TAIF.
Albert Shigabutdinov, the head of TAIF JSC, having listened to the presentation of guests from Munich with great interest, expressed willingness to cooperate, noting that, according to his information, Linde has no record of any failed project.
Director General of TAIF JSC told the partners about the development plans of the group companies. According to him, at the moment, they have the development strategy of TAIF group of companies up to 2025 designed and being implemented. It assumes $12 billion of investments. As a result, the annual amount of output by the companies of TAIF will reach $35 billion, said the head of the company.
Energy-efficient technologies and extreme degree of reliability
After the presentation, the heads of companies started a detailed discussion of already implemented joint projects. In particular, they discussed the progress of the construction of a hydrogen plant, which is part of the large complex of advanced processing of heavy residue for the processing of 2.7 million tonnes per year of vacuum residue and 1 million tonnes per year of vacuum gas oil. As a result, the output of clean oil products will be increased as well as the depth of processing of raw materials. At the meeting, there was announced the cost of the plant: 117 million euros. For the financing of the construction of a hydrogen plant TAIF-NK received a loan from Raiffeisenbank at 60 million euros under the guarantee of the state insurance agency Harmes with the assistance of the company Linde.
'It is a quite large-scale plant – in fact, they are only two in Russia. One of them is in Tolyatti at KuibyshevAzot OJSC with capacity 120 thousand cubic metres per hour of hydrogen. The second one is in Nizhnekamsk at TAIF-NK JSC with production capacity 222.4 thousand cubic metres per hour of hydrogen. The peculiarity – the extremely high reliability of the plant. Because if a refinery runs out of hydrogen, it will entail adverse consequences,' said the chairperson of the Executive Board of Linde Wolfgang Buechele.
Also, the parties have appreciated the results of the introduction of technology alpha-Sablin in modernising of the production of linear alpha-olefins at Nizhnekamskneftekhim PJSC. In November of last year, the construction works completed and started commissioning works at the production unit of the linear alpha-olefins. The necessity of reconstruction of existing since 1989 production has emerged with the commissioning of polyethylene production and increased demand for butene and hexene. The power of the modernized production will be 37.5 tonnes of alpha-olefins per year.
As Wolfgang Buechele commented to Realnoe Vremya later, the technology of alpha-Sablin is very economical, has high selectivity and is effective in terms of reducing costs. By the way, it has already got the prize for energy efficiency at the 17th international specialized exhibition 'Energy. Resource saving' in Kazan.
The technology that will be used at the reconstructed production of linear alpha-olefins will reduce the electrical energy consumption by 4 million kilowatt per hour each year, thermal energy – by 56 thousand Gcal per year, equivalent fuel — by 4 thousand tonnes per year in comparison with the company's technology. The cost of this project at Nizhnekamskneftekhim amounted to 55 million euros.
During the talks, Vladimir Busygin, Deputy Director General of TAIF on management and strategic development of Nizhnekamskneftekhim, appealed to the leadership of the company Linde with a proposal to complete the project not in May as it was planned but a little earlier – in April. Apparently, to coincide with the start of the modernized production to the meeting of shareholders to be held on 15 April. Wolfgang Buechele expressed interest in the accelerating of the process:
'We need to discuss it with our specialists. And if it is feasible, we will make every effort,' assured Wolfgang Buechele.
According to him, they did not have any problems when developing the basic project. 'It is largely due to the intensive cooperation of Nizhnekamskneftekhim PJSC and Linde. After all, the more intense the discussion, the less problems. And due to this the project is well on schedule and perfectly has adhered to the budget,' commented Mr. Buechele to Realnoe Vremya after the meeting.
Future prospects and the spirit of openness
During the meeting, it became known about the plans for large-scale projects throughout Russia. The chairperson of the Board of Linde said that next year the company plans to complete the construction of the plant for the production of hydrogen and ammonia for KuibyshevAzot. The potential power of this plant – up to 340 tonnes per day of ammonia production and hydrogen production — up to 120 thousand cubic meters per hour. This year the work on two air separation systems for Sibur-Neftehim completes. And in 4 years, Linde Engineering plans to complete installation of pyrolysis for ZapSibNeftekhim. Also – the plants of separation and purification of natural gas and helium liquefier for the Amur gas processing plant Gazprom.
As an example of these large-scale developments the head of Linde named projects for possible future cooperation with TAIF. The German partner suggested two new projects. One of which is for Kazanorgsintez in the framework of the organization of own production of ethylene, despite the lack of ethane from Gazprom. The second proposal related to Nizhnekamskneftekhim. German Linde started talking about joint construction of the unit, that would allow NKNK increasing markets for petrochemical products in the future and, consequently, raising the sales.
'We will be honest, many companies use the technologies of projects you've offered for Nizhnekamskneftekhim PJSC, so we have to agree it and announce a tender,' warned Albert Shigabutdinov. 'However, the visit of the chairperson of the Board as the head of the delegation indicates the seriousness of your company.'
After the meeting, Wolfgang Buechele told to the correspondent of the online newspaper Realnoe Vremya that he was satisfied with the results of the discussion. 'The meeting was held in a spirit of openness and was very constructive. We got our homework. We know what we need to discuss with our teams for future work. A meeting of this kind is what I call 'partnership'. We all want to achieve something: TAIF on the one hand, Linde — on the other. And we want to do it together,' summed up Mr. Buechele.
Read more about the Russian-German industrial cooperation in the forthcoming interview of Realnoe Vremya with the chairperson of the Executive Board Linde, the head of the Eastern Committee of German economy Wolfgang Buechele. The details of the planned projects of two largest holdings Linde and TAIF – in our next articles.
Reference
Linde company, established in 1878, consists of three divisions: Linde Gases and Linde Engineering (two core divisions) and other activities (logistics company Gist). The largest division, Gases, has three segments: EMEA (Europe,Middle East and Africa), Asia/Pacific and the Americas. These segments are further subdivided into nine Regional Business Units (RBUs). In addition, Linde has established five Global Governance Centres (GGCs) for the Gases Division which 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 Group has also set up the Group-wide function Opportunity & Project Development in order to take better advantage of business opportunities.
Operating profit of the Linde group in 2015 amounted to 4.1 billion euros. Sales of regional divisions in 2015: Europe and the Middle East — 6.077 billion euros, the Asia-Pacific region – 4.162 billion euros, America – 5.183 billion euros.
The Linde group has a leading position in developing technologies with the possibility of implementing EPC projects. It gives an advantage over the other gas companies. Engineering developments with ownership right and own experience of operation of Linde are used for the design of reliable systems. Symbiosis in both directions: Linde Gases is the biggest customer of Linde Engineering.
Dr Wolfgang Buechele was born in 1959 in Geislingen, Germany. Since last year Dr Buechele heads the Eastern Committee of German economy, which is the collective body of a number of key associations of business unions in Germany: the Federation of German Industry (BDI), the Association of German Banks (BdB), the German Insurance Association (GDV), the Foreign Trade Association of German Retail Trade (AVE), the German Confederation of Skilled Crafts (ZDH). Since 2014 he is the CEO of Linde AG in Munich. From 2012 to 2014 he was the President and CEO of Kemira Oyj, Helsinki, Finland. From 2009 to 2011, he was a member of the Board and the CEO of BorsodChem Zrt., Budapest, Hungary. In 2008, he was a Project Advisor to the Blackstone Group International Partners LLP, London, UK. From 1987 to 2007 he worked at the largest chemical concern BASF AG, Ludwigshafen.