Nizhnekamskneftekhim's results 2020: fifth generation rubber, construction of CCGT and EP-600

World lockdown's consequences

There year 2020 became a difficult year for the global economy, including for the chemical industry. The decline in demand for polymers due to the new coronavirus pandemic has also affected the output of large-capacity petrochemistry. In 2020, global demand for rubbers decreased by 8 per cent compared to 2019, to 26,5 million tonnes.

According to the market analysis conducted by the International Rubber Research Group (IRSG), the global demand for synthetic rubber by the end of 2020 decreased by 7,9 per cent, to 13,97 million tonnes. It is expected that the year 2021 will somewhat correct the situation and show an increase in demand for synthetic rubber by 7,2 per cent.

The main factors that affected the global economy were the following: the policy of harsh lockdowns, the widespread introduction of restrictive measures aimed at curbing the spread of coronavirus, excessive, against the background of the fall of the world economy, world reserve currencies issue.

The decline in Russia's GDP in 2020 was 3,1%. Rosstat believes that the decline is due to the introduced restrictive measures aimed at combating the COVID-19 pandemic and falling global demand for energy resources. “The dynamics of GDP in 2020 relative to 2019 was affected by a decrease in domestic final demand (minus 5,0%) and an increase in net exports of goods and services due to a faster reduction in imports (minus 13,7%) compared to exports (minus 5,1%)," the Rosstat report says.

Rubber consumption in the global tyre sector declined by 10,2% in 2020. In the period from March to May 2020, more than 130 tyre factories around the world were forced to stand idle due to the COVID-19 pandemic. A sharp drop in demand also affected Nizhnekamskneftekhim PJSC. Commodity stocks of rubbers reached critical levels by the beginning of May. The warehouses of one of the largest petrochemical complexes in Europe were overstocked with products, which did not happen even in the 1990s.

In order to minimise losses, the flagship of the Tatarstan petrochemical industry made enormous efforts to withdraw the company from the current situation. In order to avoid the shutdown of its production facilities, Nizhnekamskneftekhim carried out major repairs earlier than the deadline at the Butyl Rubber Plant and the Divinyl & Hydrocarbon Feed Plant, at the MTBE site of the Isoprene Monomer Plant, which partially relieved the tension with overproduction of products during the downturn in demand. The anti-crisis measures taken helped to stabilise the situation.

As a result, it was possible not only to avoid the spread of the new coronavirus infection among the staff, downtime of main production facilities and downsizing, but also to restore rubber sales in the third quarter to the level of the first quarter of 2019, and in the fourth quarter of 2020 to return rubber sales to the level of the average quarterly value of 2019 as a whole.

However, the coronavirus pandemic and the implementation of the large-scale investment programme affected the company's financial performance. According to the published data, the revenue of Nizhnekamskneftekhim in 2020 amounted to 147,9 billion rubles against 174,1 billion rubles in 2019 (a decrease of 26,2 billion rubles, or 15%). This decline in revenue is not so much caused by a reduction in production volumes following a decline in demand but is the result of a sharp drop in prices that accompanied the economy of all global industrial enterprises in 2020. As a result, the profit from sales decreased from 27,7 billion rubles in 2019 to 20,5 billion rubles in 2020.

The growing financial burden associated with the implementation of large-scale investment programmes also affected the company's economic performance. The company did not suspend his work for a single day. As a result of the revaluation of the loan portfolio, the negative exchange rate difference amounted to more than 16 billion rubles. As a result, the company's net profit in 2020 amounted to 4,4 billion rubles.

Nizhnekamskneftekhim PJSC in 2020, despite the constantly complicated economic situation in the world, continued to expand the range of products, the modernisation of operating and the construction of new ones. In the reporting period, the following products were obtained: 9-millionth tonne of propylene, 11-millionth tonne of SKI-3 rubber, 19-millionth tonne of ethylene. It was possible to achieve record output for ethylene: more than 619,000 tonnes were produced, 285,000 tonnes of benzene, 217,000 tonnes of polyethylene, and 219,000 tonnes of polypropylene.

In 2020, the Oligomer and Glycol Plant conducted pilot tests for the production of metallooxypolyethylene glycols and started the production of N-PEG-2400. Shipment to consumers is carried out on a regular basis.

Besides, since November, the production of liquid technical oxygen, which is in demand in hospitals, has been resumed at the Oligomer and Glycol Plant. Thanks to this, the republic is fully provided with much-needed volumes of oxygen during the pandemic.

In 2020, the quality of the products produced by Nizhnekamskneftekhim PJSC was again highly appreciated by consumers. The PP 7540U polypropylene became the winner of the All-Russian competition '100 Best Goods of Russia' in the category 'Industrial and Technical Products'. Two more products of Nizhnekamskneftekhim PJSC — Methoxypolyethylene Glycol (MPEG) 1000M and SKD Neodymium Rubber (SKDN) of 44M1 Brand — were recognised as diploma holders of the first degree according to the results of the contest 'Best Goods and Services of the Republic of Tatarstan'.

Fifth generation rubber is being prepared for production

At the end of 2020, Nizhnekamskneftekhim PJSC started commissioning operations for the production of divinyl-styrene synthetic rubber (DSSK) of the fifth generation (butadiene-styrene rubber of solution polymerisation) with a capacity of 60,000 tonnes a year. The tyres made using DSSK have frost and wear resistance, save fuel, because they have low rolling resistance, which reduces gasoline consumption, increases the environmental friendliness of the car.

The special properties of these tyres of Nizhnekamskneftekhim PJSC provide better grip on the road surface, thereby increasing the safety of the car.

“With the launch of DSSK, we will supply the entire line of synthetic rubbers for the tyre industry. On January 25, we received the first rubber briquette in the test mode. This is an important product both for Nizhnekamskneftekhim and for our future customers. Using this rubber, manufacturers will have the opportunity to produce tyres with the best consumer characteristics. This is the most modern functionalised rubber of the fifth generation," said Ayrat Safin, the director general of Nizhnekamskneftekhim PJSC.

By the end of 2021, the production of DSSK intends to form a package of orders and work at full load.

Construction of CCGT-TPP

CCGT-TPP with a capacity of 495 MW is another large-scale project of the company. The TPP is intended for the disposal of associated petroleum gas processing products and the simultaneous generation of electric energy. The combined-cycle plant will reduce the energy consumption from the outside, which will have a positive impact on the cost of the finished products of the enterprise.

One of the main factors in the need to build its own CCGT-TPP is also the use of stripping from the production facilities of Nizhnekamskneftekhim as fuel. Thus, the new power plant will reduce the load on the atmospheric air.

“The crisis and the pandemic is death for someone, a fall, but another, it is a time of capacity building and growth. I propose to speed up the work and not deviate from the schedules in which there was no place for the coronavirus," Albert Shigabutdinov, the chief development adviser to the director general of TAIF JSC, said during one of the meetings.

“Every effort will be made by Siemens Energy and everything possible will be done to meet the deadlines," said Christian Bruch, the president of Siemens Energy.

Construction of ethylene plant — main investment project

Despite the negative consequences of the pandemic, the project for the construction of the EP-600 complex is in full swing. It will process almost 1,8 million tonnes of straight-run gasoline a year. In addition to 600,000 tonnes of ethylene, it is planned to produce 273,000 tonnes of propylene, 250,000 tonnes of benzene, and 88,000 tonnes of butadiene.

A significant increase in production and the planned development of new products will contribute not only to the development of Nizhnekamskneftekhim PJSC and TAIF Group as a whole, but also serve for the benefit of the city, the district, the republic and the country as a whole.

The olefin complex is a significant increase in tax deductions and payments to budgets of all levels (municipal, republican, federal), it is the creation of more than 600 new jobs with decent wages, the creation of new infrastructure, including roads (highways, railways, bridges), a new impetus for housing construction and the creation of social infrastructure.

The complex will become a driver for the emergence and development of many production facilities for the production of final goods in Tatarstan and Russia as a whole, which will use polymer products produced at the new complex, which fully corresponds to the federal import substitution programme

“Nizhnekamskneftekhim will become one of the largest petrochemical companies after the implementation of the programme. And one of the few, I think — the only company in the world where such a volume of polymers will be concentrated: about 3,5 million tonnes a year will be produced. A special feature of the complex will be that it processes high-quality raw materials obtained from crude oil — in February 2021, during a working trip to Nizhnekamsk, said Albert Shigabutdinov, the chairman of the board of directors of TAIF JSC, chief adviser to the director general of the parent company of TAIF Group.

Despite the decline in the economy, in 2020, petrochemists coped with the task, emerging from the crisis with minimal losses.

“The staff of the enterprise is preserved, the status and positions of the leading enterprise of the petrochemical industry are preserved. We have not lost the pace of construction of our new investment development projects and have not committed any violations of our credit obligations. Timely implementation of long-term development plans will strengthen the position of Nizhnekamskneftekhim, creating a solid foundation for ensuring the further development and prosperity of the city, improving the quality of life of Nizhnekamsk residents and all residents of the republic," Ayrat Safin said at the final session of the NMR.

Implementation of fourth environmental programme has been completed

Priority is given to the issues of environmental and industrial safety. In 2020, Nizhnekamskneftekhim PJSC completed the implementation of the fourth environmental programme, designed for seven years. This made it possible to increase production efficiency, significantly reduce the burden on the environment and create comfortable conditions for residents of the Nizhnekamsk and Tukayevsky municipal districts.

It was possible to achieve a reduction in the consumption of river water by 12,7 million cubic metres (18,6 per cent), and emissions of pollutants into the atmosphere by 6,089 tonnes (26 per cent). The most significant projects in recent years, worth more than 3 billion rubles, were the reconstruction of biological treatment facilities (BPFs) and the construction of a new 15-kilometre collector of industrial wastewater.

With the launch of the new collector, the threat of effluent ingressing into the soil and reservoirs is eliminated, and the reliability of effluent transportation from the industrial site to the treatment facilities is ensured. The reconstruction made it possible to improve the quality of the chemically polluted runoff, which is then supplied for biological treatment, as well as to cleanup the polluted air to the level of regulatory requirements.

Over the past year alone, more than 60 events worth more than 828 million rubles have been implemented. This includes the repair of cooling towers, the replacement of pumping and technological equipment with hermetic equipment, the replacement of more than 12,000 metres of water pipelines and sewer networks, the development of a water consumption accounting system.

By the results of the year, Nizhnekamskneftekhim became the winner of the XVI All-Russian competition 'Leader of Environmental Activities in Russia 2020' in two categories at once — 'For Environmental Responsibility' and 'Best Environmentally Responsible City-Forming Enterprise'.

Within the framework of the IV Energy Saving Programme for 2016-2020, 48 energy-saving measures were implemented in 2020. This allowed to save 7,2 million kWh of electric energy, 53,2 thousand kilowatts of electricity. Gcal of thermal energy and 1,903 tonnes of conventional fuel for a total amount of 93,16 million rubles, including VAT.

In 2020, Nizhnekamskneftekhim entered the top 10 of the investment performance rating, which was compiled by the NKR Credit Rating Agency together with the Agency for Social Analysis and Forecasting.

Despite that the situation in the global petrochemical industry is still difficult, the company has all the necessary resources to achieve its strategic goals. The company is confident that the experience gained by the end of 2020 will give the opportunity to effectively solve current problems and successfully implement large-scale development plans of Nizhnekamskneftekhim PJSC.

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