COVID-19 “eats off” 40 billion of Tatarstan oil and gas chemistry

The main victims of the coronavirus are almost all: oil industry, tyre industry and petrochemistry. But oil refiners and manufacturers of detergents have gone up

COVID-19 “eats off” 40 billion of Tatarstan oil and gas chemistry
Photo: tatarstan.ru

The lowest revenue in recent years has been received by enterprises of the petrochemical complex of Tatarstan as a result of the COVID-19 pandemic that took place in the first half of the year in the world. Tax payments of the base enterprises of the complex in the consolidated budget decreased by almost twofold — to 39,6 billion rubles," Director General of Tatneftekhiminvest-holding JSC Rafinat Yarullin outlined the scale of world export markets' shrinkage. However, the overall downward wave has bypassed refiners and the manufacturers of detergents, which are in the black to the level of last year.

Overall decrease in production by 6%

At the meeting of the board of directors of Tatneftekhiminvest-holding JSC on 20 July, the results of the work of the petrochemical complex of Tatarstan for the first half of 2020, which had a negative impact on the economy of enterprises because of the COVID-19 pandemic in the world, were summed up. It was chaired by President of Tatarstan Rustam Minnikhanov.

As reported by the director general of Tatneftekhiminvest-holding JSC Rafinat Yarullin, the base enterprises of the petrochemical complex reduced output in the first half of the year by 6%. “The most noticeable cuts were in the second quarter, when production fell by 14-16%. At some enterprises, the drop reached 60%," he highlighted the uneven depth of the fall. Among the most affected victims of the pandemic are world's petrochemical exporters.

“Under the influence of COVID-19, air flights were suspended in the second quarter, global car production has fallen, and there are problems with cross-border cargo transportation. This has led to a decrease in exports of products — rubbers, truck and passenger tyres, technical carbon, urea," the reporter explained. According to Rafinat Yarullin, the production of rubbers, paint materials, and polymer pipes has decreased at the enterprises. The total cost of commodity products has decreased by about a third, he believes.

According to Rafinat Yarullin, the production of rubbers, paint materials, and polymer pipes has decreased at the enterprises

It is difficult to estimate the direct financial losses of the complex more accurately. As explained by Rafinat Yarullin, in conditions of reduced demand, it is impossible to make a qualitative analysis, since many companies do not present financial results to the holding. “We rely on indirect signs," he said. Indirectly, as a result of the pandemic, tax payments to the consolidated budget have been reduced by almost twofold. According to Rafinat Yarullin, 39,6 billion rubles were paid for the half-year. In other words, COVID-19 has “eaten off” almost 40 billion rubles in the Tatarstan petrochemical complex.

Tatneft has reduced production by 11% under the agreement with OPEC+

In the first half of the year, oil production and chemical production went into the red considerably. According to the head of Tatneftekhiminvest-holding, Tatneft immediately reduced production by about 11% — to 13 million tonnes. This is due to the fulfillment of Russia's obligations under the agreement with OPEC+. MNK reduced production at a slower pace. As a result, the total production rate has decreased in the republic by 7,1%, while in the country — by 2,9%. Another source of falling revenues to the budget is “chemistry”. There has been a decrease of 7,5%. World prices for rubbers and plastics remain at a low level. “According to the forecast, the global demand for natural rubber is going to decrease by 6%, for synthetic rubber — by 2-3%, and for mineral fertilizers by 3%," explained Rafinat Yarullin.

Despite the shrinkage of world markets, in May, the first batch of large-sized heavy-weight equipment was delivered to the construction site of the ethylene complex near the territory of Nizhnekamskneftekhim. . In the first half of the year, Nizhnekamskneftekhim produced 262,700 tonnes of rubber and 370,000 tonnes of plastic, which is by 2,5% more than in the first half of 2019.

Among the victims of the coronavirus — tyre manufacturers. The enterprises of the Tatneft tyre complex are not able to restore output volumes after last year's fall. The production index was 82%, and 5,287 million tyres were produced. Compared to last year, the supply of passenger tyres has reached the minimum value. Their supplier, the producer of technical carbon, maintained production volumes at the level of 2019, but 16% below the level of 2018.

Oil quotes began to grow on the eve of the OPEC+ agreement, Rafinat Yarullin said

On the other hand, the producer of fertilizers, Ammonia JSC, “did not fail” in the world markets but experienced a noticeable slowdown. According to Rafinat Yarullin, the production growth slowed from 6% in the first quarter to 2% in the first half of the year. The cost of urea has reached 200 dollars a tonne. “The output of all types of products, with the exception of methanol, turned out to be higher than last year's level," the speaker stated. “A decrease in capacity utilization for methanol is associated with a drop in demand in the world. European prices reached an 11-year low in May.”

Gasoline prices have peaked

World prices for oil and petroleum products began to recover from the second quarter. Oil quotes began to grow on the eve of the OPEC+ agreement, Rafinat Yarullin said. Worldwide, motor fuel prices are increasing, but further growth is being held back by accumulated reserves in tankers. But Russian wholesale gasoline prices rose to a record high in June.

“There was a shortage caused by early preventive repairs at the refinery and a temporary ban on the import of petroleum products. Retail prices were kept in the first half of the year above the values of 2019 by 70-90 kopecks," said the head of Tatneftekhiminvest-holding. Over this time, TANECO increased the processing of raw materials by 30%. The output of automobile fuel has decreased in favour of motor gasoline.

In June, business activity began to recover. Experts expect the economy to grow in the third quarter compared to the second quarter. At the same time, the negative assessment of the impact of coronavirus in 2020 has intensified. The decline in investment may be worse than the crisis of 2008-2009. Energy, consumer goods and real estate are among the leaders.

The president of Tatarstan, noting the great potential of the university, spoke for its involvement in industry programmes and projects of enterprises and for cooperation with the KFU

Europe will be protected by carbon tax

“In Europe, the introduction of a carbon tax on imported goods is being discussed," Rafinat Yarullin warned of new threats to exports. “In the worst case, this may happen in 2022 and restrict access to Russian products in the largest markets.”

“Tatneft is working on projects to reduce the carbon footprint in Tatarstan. It is necessary to involve other companies in the low-carbon supply chain.”

Besides, the information about how the A.V. Topichev Institute of Petrochemical Synthesis of the RAS is preparing to create a pilot plant for oxidative desulphurization (removal of sulphur) to reduce the class of sulphur content of oil and ultra-fine desulphurization of petroleum products was listened to at the meeting, reported Devon IA. Rustam Minnikhanov suggested discussing this project in more detail in relation to Tatarstan and recommended studying Tatneft, which already works closely with the institute.

The acting rector of the Kazan National Research Technological University Yury Kazakov reported on what petrochemical and composite projects are in the universities. He told how the university intends to develop state-industrial partnership through participation in the scientific and educational center “Production and Deep Processing of Hydrocarbons”.

The president of Tatarstan, noting the great potential of the university, spoke for its involvement in industry programmes and projects of enterprises and for cooperation with the KFU.

At the end of the meeting, it became known that the Tatarstan petrochemical forum will be held “live” on September 2-4 and will be dedicated to the 100th anniversary of the Tatar ASSR. It will be held at Kazan Expo for the first time. Rustam Minnikhanov called the forum the main one for the republic and instructed to take the necessary measures for anti-coronavirus safety.

By Luiza Ignatyeva
Tatarstan