Kazan is the cradle of Russian and world organic chemistry (Part 2)

The new era of Kazanorgsintez

By the end of the 1990s, the economic situation at Kazanorgsintez was not good at all. In the workshops — outdated equipment, a constant shortage of raw materials and working capital. There was no question of developing or even increasing production volumes, and it was extremely difficult to keep them at the same level. And so it was in many workshops of the plant. Technical premises had not been repaired for many years, but they tried to modernise the outdated equipment. In 1998, attempts were made to modernise the production of high- and low-density polyethylene, but they were not successful. By the beginning of the 21st century, it became clear that we need fundamentally new approaches and almost complete renewal of production capacities.

TAIF's team came to Kazanorgsintez in the early 2000s. And from that moment, the situation changed dramatically for the better — a new stage in the company's history began. The management of TAIF JSC by that time had already had experience in building new production facilities, modernising and developing existing ones. Since the late 1990s, the TAIF team, with the support of the republic's leadership, has implemented a large-scale anti-crisis programme at another petrochemical giant, Nizhnekamskneftekhim. The competent, balanced, thought-out approach brought tangible results, and the government of Tatarstan instructed TAIF to take up the rescue of Kazanorgsintez and consolidate a controlling stake in the company. By 2003, TAIF's share had increased from the original 4,9% to 15,5%. By April 2004, the company managed to increase its share to a controlling stake of 50,01% of voting shares. Moreover, the Group did not have any preferential or special conditions: securities were repurchased on the stock markets on market terms.

“We held negotiations with all shareholders holding at least 0,1% of the shares. We spent about a year on this," said Albert Shigabutdinov, the chief development adviser to the director general of TAIF JSC (who previously held the position of director general of the parent company of TAIF Group). “The negotiations were conducted in strict confidence, contracts were concluded with the holders of securities, and the share buyback was almost simultaneous. At above-market and privatisation prices," Albert Kashafovich shared the memories. The controlling stake allowed TAIF to take over the management of Kazanorgsintez and start a large-scale modernisation.

In 2003, the new composition of the supervisory board of Kazanorgsintez was approved at the annual general meeting of shareholders with the participation of the then prime minister of Tatarstan, Rustam Minnikhanov. Albert Shigabutdinov was elected as its chairman (at that time — Director General of TAIF JSC, today — chief adviser to the director general of TAIF JSC for development — editor's note). Vladimir Presnyakov, who previously worked as deputy director general of Nizhnekamskneftekhim, was invited to lead the development project of Kazanorgsintez and the petrochemical industry as a whole to the group's parent company as deputy director general. At the end of April 2004, at the first meeting of the board of directors (previously the supervisory board — editor's note) after the annual general meeting of Kazanorgsintez shareholders, Vladimir Presnyakov was elected chairman of the board of directors of Kazanorgsintez at the suggestion of Rustam Minnikhanov (he actively worked in this post until 2006). It was under the leadership of Vladimir Presnyakov that the company's Strategic Development Programme was developed.

At the final meeting of the supervisory board before the shareholders' meeting in April 2004, the company's strategic development program for the next 8 years, developed under the leadership of Vladimir Presnyakov, was approved. Until 2012, it was planned to invest $900 million in the construction of new facilities, as well as in the modernisation and expansion of production facilities, the development of new technologies and products, which TAIF Group intended to attract through credit funds from Russian and foreign banks. Not everyone believed that the ambitious and audacious plan proposed by TAIF Group's leadership would be implemented. Even experienced managers-chemists expressed doubts. But the TAIF leadership had a detailed plan, which they clarified several times, consulting with experienced technologists, engineers, and economists, rechecking each parameter of this plan repeatedly.

As part of the implementation of the strategic development programme, it was planned to load the existing capacity by 100%. With the help of information technologies, the cost of production was analysed. At Kazanorgsintez, the system and management structures were restructured, and production development projects were worked out in detail.

“We have set our sights on a large-scale programme that no one in Russia had ever implemented on their own before. But it took borrowed funds to make it work. We agreed with the banks and signed agreements," Albert Shigabutdinov told the journalist of Realnoe Vremya. “We were talking about astronomical sums for that time — up to a billion US dollars. We agreed with banks that, to accelerate the implementation processes of large-scale development programme of Kazanorgsintez at the initial stage, funds will be issued in the form of short-term loans under execution of certain types of works on construction of new production facilities and purchase of equipment. This allowed us to work ,as they say, “from the project sheet”. We agreed to the banks' terms and conditions, while agreeing and signing agreements with the banks' management that later, when a significant amount of the tasks is completed, the banks will open a long-term credit line, part of which will be used to repay “short” loans, and the remaining funds will be used to continue implementing the strategic development programme.

Normalising the supply of raw materials, stopping the decline in production and starting increasing production — the tasks of the first stage. Next — building a number of production facilities from scratch. On December 16, 2004, four projects were launched within the framework of the comprehensive Strategic Development Programme: the construction of large-capacity production of bisphenol A and polycarbonates, the modernisation of existing production of high-density polyethylene, the construction of plants for the production of new, previously unreleased brands, while increasing it by 250% of the existing capacity. Besides, the reconstruction of the production of phenol and acetone, as well as of ethylene, was launched. TAIF's team had no doubt that these ambitious goals would be realised.

Solving the raw material issue is one of the key conditions for success for companies planning to actively grow their production. The main supplier of raw materials and ethane to Kazanorgsintez was Gazprom (the helium plant of Orenburggazprom PLC), with which at that time the company worked on a on a give-and-take, extremely unprofitable scheme for itself — through intermediaries. TAIF started negotiations with Gazprom, expressing its readiness to co-finance the reconstruction of the helium plant in the amount of $120 million to increase production to the required volumes for Kazanorgsintez. The negotiations that ended in 2004 with the signing of the protocol of intent were conducted by Vladimir Presnyakov and Kazanorgsintez leadership on the part of TAIF.

At the same time, there were negotiations with foreign companies, search for new technologies and licensors. Before making the final decision, TAIF Group experts had studied global developments, demand and sales conditions. In a short time, the company managed to reach an agreement with foreign partners. In the spring of 2004, a contract was signed between Kazanorgsintez and American company Univation Technologies. With partners from the United States, we agreed to grant licenses for the design, construction, production and sale of the latest linear and bimodal polyethylenes on global markets. The design production capacity is up to 440,000 tonnes a year. Exactly a year later, the first industrial batch of linear polyethylene in Russia was received at the new production facility.

The modernisation of the plant for the production and processing of high-density polyethylene allowed to increase the total production capacity to 510,000 tonnes a year and expand the line of produced polyethylene to more than 20 brands. With new, higher performance characteristics and a wide range of fields of application. Today, almost no industry can do without polyethylene, packaging materials and films are made from it, including for food, medicines and medical products. Polyethylene is used for storage and transportation of liquid and bulk food and non-food products, bags and tetrapacks, juice boxes, bottles, canisters and flasks, parts for various equipment, transport, as well as special and medical equipment, insulation for cables, and much more.

Thanks to its high strength and durability, polyethylene pipes have become an effective replacement for metal pipes in the construction of pipelines for the transportation of gas, drinking and industrial water, food, and the construction of storm and sewer systems. For this purpose, there are special — pipe classes of polyethylene: PE63, PE80 and PE100, which have different characteristics of MRS (long-term strength). The higher MRS, the higher the maximum operating pressure of pipelines. PE63 corresponds to MRS of 6,3 MPa, PE80, respectively — 8,0 MPa, and EP100 — 10,0 MPa.

Kazanorgsintez PJSC produced all three generations of pipe polyethylene at different stages of its development. PE63, which was used for the manufacture of pressure pipes in the Soviet period, eventually became obsolete, was excluded from the GOST for the production of gas pipes and replaced in production with new classes with higher performance characteristics.

The advantages of polyethylene over metal are obvious: low weight (which facilitates transportation and installation), high strength, resistance to breaks and deformation (which allows operation in a wide temperature range), low thermal conductivity (which reduces heat loss and prevents the formation of external condensate), durability (under the same conditions, polyethylene pipes can last twice as long as metal pipes), non-toxicity, resistance to chemical and aggressive environments, as well as complete absence of corrosion (they do not need cathodic protection, and therefore expensive maintenance), easy to repair.

Closely interacting with science, production does not stand still. PE63 was replaced by the new one with much higher performance characteristics, PE80. In 2012, it also gave way in production to the more advanced PE100 class — the only polyethylene from which it is possible to make pipes for gas pipelines under an operating pressure of 12 bar. The numerical designation indicates the density of the material. The higher it is, the more grouped crystalline structure the material has. What does it mean? Stronger intermolecular bonds that provide the material with the most optimal combination of strength, stiffness and at the same time — plasticity. Pipes made of PE100 with the same external diameter in comparison with those made of the previous classes of polyethylene have a smaller wall thickness, weigh less and have a higher throughput. Besides, they are able to work in a larger temperature range — from -60C to +130C and resist cracking and deformation much more successfully.

The fact that in March of this year Kazanorgsintez PJSC became the 14th participant of the international association PE100+ shows how high the quality of polyethylene and pipes produced by Kazanorgsintez is. Only 14 of the world's best manufacturers have been awarded this honour, and only Kazanorgsintez represents Russia.

The task that TAIF set for itself was to make Kazanorgsintez the most advanced and modern production in Russia and one of the world leaders. Not only to increase the efficiency of existing production facilities but also to build new ones that can provide products that are in demand by the domestic and global market. Such as polycarbonates. And not just a quality product, but also the best — reliable, durable and safe. This technology — phosgene-free — had already existed. Two companies in the world produced polycarbonate that meets the most stringent environmental and sanitary requirements. But the license holders were in no hurry to sell them. The business seemed to stand still, but the personal ties of the first president of Tatarstan, Mintimer Shaimiev, who has good relations with the Japanese Ambassador to Russia, Takehiro Togo, played a role here. With the assistance of Mitsui, we managed to build a relationship with Japanese company Asahi Kasei and agree on the sale of technology and a license for the phosgene-free production of polycarbonates. The construction of the new production facility — the first in Russia and the third in the world — and the training of specialists took place almost simultaneously. Thirty people went to Taiwan to learn the science of producing products that the country needed so much.

One of the key components in the production technology of polycarbonates is bisphenol. TAIF management held successful negotiations with another major company from the Land of the Rising Sun, which resulted in the signing of a license agreement and contract and the start in 2004 of construction of the new plant for the production of bisphenol A in Kazan.

In 2008, by the way, the anniversary year for Kazanorgsintez, which marked the 50th anniversary of the construction of the complex and the 45th anniversary of the shipment of the first products, during the launch ceremony of the polycarbonates plant — the first and only one in Russia (as well as the production of bisphenol A) — Mintimer Shaimiev praised the results of the first stage of the implementation of the strategic development programme of Kazanorgsintez.

“By its anniversary, one of the largest petrochemical companies in Russia had come with the best performance in its history. Output increased from 7,13 to 21,5 billion rubles, net profit increased from 688,3 million to 2,6 billion rubles," Albert Shigabutdinov cited the figures.

“Mintimer Sharipovich told us in the most difficult moments for the company: 'If not us, then who?'," recalls Albert Shigabutdinov. “And this 'we' gave us an understanding that the leadership of the republic shares our bold plans.

By the end of 2008, five years after Kazanorgsintez joined TAIF Group, the company was producing more than 320,000 tonnes of high-density polyethylene compared to 154,000 tonnes in 1991. The production of low-density polyethylene from 168,000 tonnes in 1991 was increased to 203,000 tonnes. All this is the result of competent, carefully-thought-out programme of the enterprise development elaborated by the experts of Group TAIF, managed not only to preserve the unique complex but also to attract multimillion investments in modernisation of existing and construction of new production facilities. Instead of the planned $900 million, the total investment in the programme exceeded $2 billion.https://realnoevremya.ru/articles/4363

Mintimer Shaimiev: “I felt that Orgsintez was leaving, and I said that only over my dead body!”

At the end of the first decade of the 21st century, Kazanorgsintez was destined to go through another difficult stage. The global crisis that began in 2008 hit the company at a time when huge investments were made in development and the return on investment was just beginning.

“To finance the initial work, Kazanorgsintez, at the suggestion of creditor banks, attracted a lot of short-term loans to accelerate the work on projects, which were then planned to be replaced by a long-term credit line, according to an agreement with the banks. But banks in connection with the crisis, invoking force majeure, refused to work on existing long-term credit lines. At the same time, demand decreased and prices for manufactured products fell. Kazanorgsintez finished the year 2008 with a loss. The economic situation did not level off in the first quarter of 2009," Farid Minigulov, the director general of Kazanorgsintez, told Realnoe Vremya.

The deadlines for payments on short-term loans taken for the development of production were approaching. By the end of 2009, Kazanorgsintez had to repay 11 billion rubles to banks. By the third quarter, 20% of payments had been overdue.

Sberbank expressed its readiness to undertake the restructuring of the loan. It planned to mediate the contract for the supply of ethane from the helium plant in Orenburg (the main supplier of raw materials), where ethane was a by-product in the production of helium. The raw materials were delivered to Kazanorgsintez via the Orenburg-Kazan ethane pipe line, which was specially built in 1982. Before the collapse of the Soviet Union, there had been no problems with the supply of raw materials, but in the 1990s, the supply of ethane decreased. This pipeline became an important link in the production structure of Gazprom, and the holding increased the cost of services for the supply of raw materials. Kazanorgsintez was not satisfied with this scheme, but the lack of a raw material alternative made the company vulnerable.

In 2018, at the celebrations on the occasion of the 60th anniversary of the construction of Kazanorgsintez and the 55th anniversary of its commissioning, Mintimer Shaimiev from the stage reminded the audience about the relatively recent trials. The situation was so complicated that it had to be discussed at the state level:

“We were invited to the Federation Council to discuss the situation of Orgsintez. The company's debt was 30 billion rubles. No one wanted to figure out where the loans came from. Many have offered to give Orgsintez to Sberbank. They thought the bank would figure out what to do. I took the floor: “Has anyone wondered why Orgsintez is credited today? It took out loans to expand production. Loans are taken, but they are for development, this is a look ahead. Orgsintez will launch production and pay off its creditors.” No one wanted to believe it. I felt that Orgsintez was leaving, and I said that only over my dead body! I had a right to say that.

At that time, Vladimir Putin (then Prime Minister of Russia) suggested a solution to the problem. At a meeting in Nizhnekamsk on gas and petrochemicals, he listened to the arguments of the parties and recommended working on market conditions. Kazanorgsintez concluded a contract with Gazprom and a long-term contract with a formula price for the supply of ethane, the main raw material for the production of ethylene and then polyethylene. The deals were completed thanks to participation in negotiations and personal guarantee of TAIF's management. The situation was resolved, Kazanorgsintez, despite the objections of banks, repaid all debt obligations ahead of schedule.

The company used the borrowed funds to restructure the debt on previously borrowed loans that Kazanorgsintez needed for the construction of plants for the production of bisphenol A and polycarbonate, as well as large-scale reconstruction of ethylene, HDPE, phenol and acetone production.

Production growth and a new brand of polyethylene

The petrochemical industry of Tatarstan has approached the 100th anniversary of the TASSR with serious achievements. For example, in 2019, Kazanorgsintez produced more than 1,8 million tonnes of products. Last year, the company produced more than 608,5 thousand tons of ethylene, LDPE production reached 210,6 thousand tonnes, and HDPE — 526 thousand tonnes. In 2018, the share of ethylene polymers and copolymers from Kazanorgsintez in Russian production was 40% and reached 716 thousand tonnes.

Chief engineer of Kazanorgsintez PJSC Rafael Safarov noted that since 2003 the processes of modernisation and production improvement at the enterprise have not stopped.

“In accordance with the adopted strategic development programme of Kazanorgsintez PJSC, the ethylene plant's production facilities are being modernised until 2025 to allow processing of propane raw materials. The company intends to compensate for the shortage of ethane raw materials by implementing the technical possibility of processing alternative raw materials — propane, and increase the production of its own ethylene," added Rafael Safarov.

The bisphenol A plant is modernising the production of isopropylbenzene with the introduction of cumene production technology. The implementation of the project will reduce the consumption of raw materials and energy resources and reduce the impact on the environment. It is planned to reconstruct the Polycarbonate Plant with increasing capacity at the expense of the existing potential of the existing production of polycarbonates.

It is planned to reconstruct the Reactor B of the HDPE Production and Processing Plant with equipment of a recovery system of waste gas. The power of the reactor will increase several times. Instead of the existing production of savilenes, it is planned to organise a new one-using autoclave technology, significantly increasing the volume of production.

In 2018, on the eve of the 60th anniversary of the company, the Ethylene Plant launched four pyrolysis furnaces Teknip with a capacity of 72 t/hour, replacing ten old ones. Tatarstan President Rustam Minnikhanov noted their effectiveness at a meeting with journalists immediately after the ceremony:

“With the same volumes of raw materials, we get a much larger number of products. In 2019, Kazanorgsintez produced more than 1,8 million tonnes. Now 77,000 tonnes of products are produced instead of the project production of 60,000 tonnes of polycarbonate. The goal is to reach 100,000 tonnes of polycarbonate. This requires serious technological solutions. Last year, we carried out the first stage of upgrading the Polycarbonate Production Plant to increase capacity. This August, we plan to increase production to 100,000 tonnes a year.

Over the past two years, the company has launched a black masterbatch production unit, reconstructed the LPG discharge and filling overpass, modernized the reactor unit at the plant for the production and processing of low-pressure polyethylene (LDPE), and replaced the autoclave reactors at the HDPE Production and Processing Plant. Kazanorgsintez allocated 12 billion rubles to finance capital construction projects, replace and update equipment in 2018, which is 1,5 times more than in 2017.

In March 2018, the company launched production of three-layer FFS film for packaging products. In August, the ethylene plant's workshops were upgraded for processing propane raw materials. In December 2018, a new unit for the production of natural dye from technocarbon was launched. In 2020, the nitrogen and air shop built a compressor unit with a capacity of up to 50,000-55,000 Nm3/hour. Workshops for storing raw materials and finished products were reconstructed. Also, the worn-out equipment of the main production facilities of other divisions of Kazanorgsintez was replaced.

A significant part of the funds is spent on measures to improve the reliability and efficiency of the Kazanorgsintez energy sector. TAIF Group acquired two thermal power plants in 2010: Nizhnekamsk CHP (PTK-1) and Kazan CHP-3, and the creation of its own generating company TGC-16 JSC was a major milestone in the history of the group of companies. Hundreds of billions of rubles invested in the purchase and modernisation of energy production facilities gave the opportunity to eliminate the dependence of oil refining and petrochemistry from only one source of independent power and multiple to increase the reliability of heat and electricity production capacity in the petrochemical capital of Tatarstan, Nizhnekamsk and Kazan, and also to modernise the production facilities of Tatenergo JSC and Electric Networks JSC of Tatarstan.

“This is a huge but extremely important job. It is difficult to calculate how much Kazanorgsintez lost at toppages due to the termination of heat and electricity supply. Only through the implementation of the programme to normalise energy supply, increase its reliability and continuity, we could almost double the capacity of production," shared Albert Shigabutdinov.

The company is constantly working to improve the quality of products, updates and expands the brand range. In 2019, the new product of Kazanorgsintez — metallocene linear low-density polyethylene (LLDPE) of F2010M brand — was awarded the Grand Prix in the category “Products with New or Improved Characteristics” at the Tatarstan petrochemical forum.

“The new brand is designed for processing by extrusion with blowing into films of various thicknesses for packaging, storage, transportation of goods, production of bags used in harsh conditions. The films have high tensile strength and high puncture resistance. We received about 2,000 tonnes of industrial batch of metallocene catalyst. We plan to increase production to 20,000 tonnes," Farid Minigulov told the president of Tatarstan, presenting the new product. He also noted that the company is the only Russian manufacturer of metallocene polyethylene.

Own power capacities

One example of international cooperation is the signing last year at the International forum on energy efficiency and energy development Russian Energy Week 2019 between the management of German company Siemens and Kazanorgsintez of a contract for the construction of a 250 MW combined-cycle power plant for the needs of the petrochemical enterprise. The signing took place with the personal participation of Director General of TAIF JSC, Chairman of the Board of Directors of Nizhnekamskneftekhim PJSC, and Chairman of the Board of Directors of Kazanorgsintez, Ruslan Shigabutdinov.

The German concern will produce and supply the SGT5-2000E gas turbine with a generator and the SST-600 steam turbine with a generator, an automated process control system for the power plant and power distribution circuit equipment. The commissioning of the CCPP is scheduled for March 2023. Thus, the production of electricity at TAIF Group's enterprises is going to increase.

Ruslan Shigabutdinov noted that the energy project will allow the company to use its own capacity in the future and optimise the cost of production of final products, thereby reducing the impact on the environment.

Farid Minigulov added that the company will continue to monitor trends in the development of the chemical industry and introduce modern production technologies.

Today, once again recalling all this way, full of seemingly insurmountable obstacles, difficulties that still failed to bring down the mood, or even slightly slow down the transformation process launched by TAIF JSC at Kazanorgsintez, Albert Shigabutdinov confidently declares:

“In new Russia, this is one of the best implemented projects in the petrochemical industry.

Now Kazanorgsintez is a company with a constantly growing capitalisation, implemented global projects and no less ambitious plans.

“Our difficult industrial path shows that there are no problems and tasks that our valiant order-bearing team could not solve. The company was not created by magic. Behind it is the daily work of a team of thousands of people. The veterans of production laid the foundation of our company, raised the factory buildings in the distant '50-60s, provided trouble-free operation, preserving the company in the difficult years of perestroika. Especially huge is the contribution of those who today, based on the experience of previous generations, armed with the latest technologies, build modern factories and work for the benefit of the enterprise," Director General of TAIF JSC, Chairman of the Board of Directors of Kazanorgsintez PJSC Ruslan Shigabutdinov told about the achievements of Kazanorgsintez.

The history of Kazanorgsintez is seen as successful and promising thanks to a competent and competent strategy, well-coordinated and qualified work. The main thing is to maintain an effective approach, when at any time the emphasis is on the development of production, honest work and maximum opportunities, Ruslan Shigabutdinov is sure. He highlights: “We set high goals and are confident in the people who create Kazanorgsintez today.”

Kazan is the cradle of Russian and world organic chemistry. Part 1.