Kazanorgsintez is ready to build two petrochemical facilities

Tatarstan chemists beat about the bush

The idea of building a big gas refinery near Kazan came to Tatarstan chemists’ mind as early as before the 2000s. The project on the construction of a gas refinery is topical because a gas pipe is located literally 10 km far from Kazan, it has been pumping big volumes of natural gas from the Far North to the western border of Russia since the 80s.

“It is a mistake to sell gas with a big amount of ethane. There is a small component that gas is more calorific, but it needs to be refined into other materials,” says Rafinat Yarullin, director general of Tatneftekhiminvest-holding.

And Tatarstan was potentially interested in access to this feedstock. Local chemists considered the idea of the gas refinery as beating about the bush. They talked about it a lot, the issue was repeatedly raised, however, it never grew into a real project.

Serious prerequisites for the projects arose in late 2016 when an agreement was signed among Tatarstan, Gazprom, SIBUR, TAIF. As new pipelines were created in Nord Stream, old pipelines started to be used. At the same time, companies producing fat gas in the Far North (Gazprom, Novatek and others) were still interested in monetising it. An old pipeline could be used to transport fat gas from the Far North. And they could be refined with the emission of ethane and LFLH (large fraction of light hydrocarbons) and then processing into the final product could take place on an industrial site with ready-to-use infrastructure.

Promising Tatarstan

The gas refinery could potentially be built at any point throughout the pipeline in a suitable climatic zone from Novy Urengoy.

However, Tatarstan’s advantages, especially sites near Kazanorgsintez, are plain to see: there are developed infrastructure and powerful professional resources. Apart from the passing by pipeline, there is good transport logistics too here: M7 federal highway, a big railway hub and Sviyazhsk multi-modal logistic centre with access to sea routes. The Volga River is located relatively close, it provides water for production. Tatarstan itself — a traditionally chemical region — has big reserves of professional staff and a serious school to train this staff. Firstly, Kazan Federal University, Kazan National Research Technological University and the Lushnikov Kazan Chemical College annually turn out new qualified graduates. Secondly, some universities and colleges tuned up a long time ago to train specialists of related professions for chemical factories — energy workers, engineers and so on. And Kazan is more promising to attract staff than big Northern Ural or Siberian cities.

New payments to budget with minimum environmental impact

Such a project would, first of all, mean for Tatarstan further consolidation of positions in the chemical market, serious growth of GRP, new jobs and tax payments. This is why President of Tatarstan Rustam Minnikhanov immediately became a staunch advocate of the project.

“We are interested in this project. Imagine that gas is pumped out today. Some fields have fat gas that is sold at a gas price. It is profitable for the country, Gazprom, everyone to deliver all this fat gas to the site where the gas factory will be built through the operating pipe. We have discussed such a decision a lot, our position is proactive, I am sure this will work,” the president explained the project’s logic later.

The redeeming feature was that the environmental impact of the gas refinery and the new gas and oil facility isn’t big because the ethylene production technology from ethane is more eco-friendly. Its contamination of sewage is minimum, it envisages the lowest combustion of residues of production and almost complete emission of toxic substances compared to the processing of the same naphtha.

By the way, Kazanorgsintez has been the only ethylene polymer producer from ethane in Russia for long. And here they are familiar with the specifics of such production as anywhere else.

Feasibility study in 2020

This is why gas producers grabbed the Tatarstan location. However, they didn’t manage to agree on the project during talks in 2017. They went back to the talks in 2019. SIBUR and Gazprom signed an agreement on cooperation in the project on the gas refinery in the Republic of Tatarstan last October at the Petersburg International Gas Forum.

However, SIBUR Board Chairman Dmitry Konov claimed in November that a decision to build the gas refinery in Tatarstan would be made a year later after research. “Research and preparation take about a year for both Kazan and the oil, gas and chemical facility to make a decision, if we participate in it or not, what’s on the perimeter of every project, roles of the sides and so on,” Konov claimed. However, it became known later that a feasibility study could be performed earlier, in the middle of 2020. Rustam Minnikhanov, in turn, confirmed that Tatarstan was interested in this project and would support it by all means.

As Rafinat Yarullin has already told Realnoe Vremya, Tatarstan together with Gazprom already performed a feasibility study of the project on the gas refinery near Kazan. He couldn’t specify the stage of the feasibility study at SIBUR.

Additional feedstock for Kazanorgsintez

Tatarstan, indeed, is already ready to accept the new gas refinery. Apart from obvious advantages as new jobs and new tax payments, the republic needs to use Kazanorgsintez more. Its capacities are designed for big feedstock volumes.

Nowadays Kazanorgsintez remains the only ethane processor in Russia. In case the gas refinery is built, it will become the key consumer of its product. Even with existing capacities, KOS is ready to accept another 200,000 tonnes of ethane a year.

Now the enterprise isn’t fully provided with feedstock. KOS has always considered different options to load its existing capacities with ethane as feedstock, it has also expressed interest in creating the gas refinery. Moreover, as soon as the gas refinery is erected, its production capacities can allow Kazanorgsintez to build a new facility to process ethane and LFLH and manufacture ethylene and propylene with further refining and creation of new capacities to make end products. Only a shortage of feedstock is impeding Kazanorgsintez from augmenting the capacities now.

Orenburg project and propane technology

Today Kazanorgsintez is provided with feedstock via an ethane pipe, it comes from mainly Orenburg. This scheme was established as early as the 70s. The Orenburg gas refinery has room for feedstock capacities, moreover, it potentially considers increasing capacities of this facility. It is planned to create new units to process additional volumes of crude gas and raise ethane production. After that, an expansion of the throughput capability of the ethane pipeline from Orenburg is to be considered. Economic feasibility and effectiveness of this project are evaluated now.

At this moment, with the current shortage of ethane, Kazanorgsintez has to modernise a part of its ethylene complex to shift to propane as feedstock. Moreover, this project will complete soon.

Two new petrochemical facilities at once by 2030?

Both the project on the Kazan gas refinery and the rise in capacities in Orenburg can take place in 2025 if all goes well. However, as Realnoe Vremya was explained in the press service of Kazanorgsintez PJSC, the enterprise is potentially considering various options to solve the feedstock problem. KOS will also be ready to accept ethane from both suppliers.

“One of the options of the development plans of Kazanorgsintez PJSC includes the construction of two petrochemical facilities in 2025 and 2030. However, the implementation of these projects will be possible if the gas refinery’s construction near Kazan begins and the capacities of the Orenburg gas refinery increase,” reads the enterprise’s press service’s reply to Realnoe Vremya. These projects can help triple ethylene production volumes at Kazanorgsintez.