Experience that gives results: Nizhnekamskneftekhim retains its position in the market and continues its strategic development in 2020

Russia's GDP in 2020 fell to 3,1%

The main factors that affected the production and financial performance of Nizhnekamskneftekhim were the following: the policy of rigorous lockdowns, the widespread introduction of restrictive measures, as well as the excessive issue of the money supply of world reserve currencies against the background of falling world economy.

In Russia, a decline in GDP in 2020 was 3,1%. “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 an outstripped reduction in imports (minus 13,7%) compared to exports (minus 5,1%)," the Rosstat report says.

The difficult economic situation affected the work of Nizhnekamskneftekhim PJSC. The main segment experiencing the most severe impact of the consequences of the pandemic was the production of rubber. Commodity stocks of this type of product reached critical levels at the beginning of May in Nizhnekamskneftekhim.

Thanks to the competent actions of the management of Nizhnekamskneftekhim and TAIF Group, it was possible to avoid the spread of coronavirus infection among the staff, the downtime of the main production facilities, and job cuts.

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 company focused its efforts to maintain production volumes in the second quarter and increase them in the third and fourth quarters of 2020.

In the fourth quarter, rubber sales reached the 2019 quarterly average.

Position in industry

In total, Nizhnekamskneftekhim PJSC produced more than 2,4 million tonnes of products in 2020. The main product segment of the company is traditionally synthetic rubbers, which accounted for about 41% of revenue from the sale of products of their own production in 2020. More than one-third of the revenue was from plastics — 34%. Another 25% was provided by the sale of other types of products.

The company's sales in Russia and export markets had an approximate parity. For example, in 2020, the sales of products in the Russian Federation accounted for 52%, and abroad — 48%.

The company occupies 37,8% of the global market for the production of isoprene rubber, 16,3% — butyl rubber, 4,7% — butadiene rubber.

NKNH plastics were in demand in Russia

In 2020, Nizhnekamskneftekhim retained its strategic direction in the sales of plastics in the territory of the countries of the Common Customs Tariff of the Eurasian Economic Union (ETT EEU).

In the second half of 2020, Nizhnekamskneftekhim PJSC increased the share of plastic supplies to the markets of the ETT EEU countries — Russia,Belarus and Kazakhstan — to 98,2% of the total production.

In addition to rubbers and plastics, NKNH also produces and sells other petrochemical products based on olefins and their derivatives — polyesters, glycols and glycol esters, propylene trimers and tetramers, surfactants, and other types of products.

In 2020, about 76% of the products in this segment were sold in the Russian Federation.

Despite all the realities and difficulties, in 2020, the revenue of NKNH amounted to about 148 billion rubles, sales profit — 20,5 billion rubles, net profit — 4,4 billion rubles. The company's net profit was affected by the increasing financial burden associated with the implementation of the large-scale investment programme. As a result of the revaluation of the loan portfolio, the negative exchange rate difference amounted to more than 16 billion rubles.

Expansion of product range and modernisation of production facilities

Throughout 2020, the team of Nizhnekamskneftekhim PJSC successfully worked on the production of new product brands, modernisation of existing production facilities and increasing their efficiency.

The implementation of the programmes on import substitution and energy saving, environmental protection, and digitalisation continued. The company expanded its product range, modernised existing production facilities and built new ones.

In 2020, Nizhnekamskneftekhim produced: 9-millionth tonne of propylene, 11-millionth tonne of SKI-3 rubber, 19-millionth tonne of ethylene. New brands of butadiene and styrene-butadiene rubbers have been developed for the manufacture of all-season, summer and winter, as well as high-speed tyres.

The quality of the products 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 by the results of the contest 'Best Goods and Services of the Republic of Tatarstan'.

New brands of propylene-ethylene copolymer, linear low-density polyethylene, with high molecular weight, high mechanical properties, high strength, elasticity, rigidity, and low gel content were developed. The new brands are homologated by processors.

besides, the high-molecular-weight oxyethylated product H-PEG-2400 was produced, which was successfully tested by consumers in the production of fifth-generation superplasticizers of concrete mixes. In the plans — the design and construction of a new plant with a capacity of 50,000 tonnes a year.

Fifth generation rubber

In 2020, more than 60 billion rubles, including VAT, were allocated for financing projects, modernisation, technical re-equipment, reconstruction, and the creation of new production facilities for the production of completely new products.

One of the results of the company's investments in development was the commissioning of 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 new rubber is of interest to tyre manufacturers. DSSK provides better grip on wet roads and thus increases driving safety. These tyres have a low level of noise when driving and save fuel due to low rolling resistance. DSSK is also the basis for the production of environmentally friendly, “green” tyres.

Also, the technical re-equipment of the catalytic complex preparation unit with the installation of a low-temperature cold production unit was completed at the Synthetic Rubber Plant of Nizhnekamskneftekhim PJSC. The installation of low-temperature cold at the Synthetic Rubber Plant is necessary for the production of ethylene cold.

Large-scale construction of Ethylene Plant

In 2020, Nizhnekamskneftekhim started the active phase of construction of the new olefin complex with a capacity of 600,000 tonnes of ethylene a year. The project is implemented using cutting-edge eco-friendly technologies.

The olefin complex is going to 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. This fully corresponds to the import substitution programme implemented at the federal level.

Last year, 17 units of large-sized column equipment were installed on the construction site. The equipment for the flare unit was delivered — a cold purge tank and a flare separator.

Fifty thousand cubic metres of reinforced concrete structures were manufactured, more than 2,000 tonnes of metal structures were installed, 62 units of static equipment were installed on the foundation. The works were carried out on the construction of panels of radiant sections of pyrolysis ovens. Two steam boilers were installed, and preparatory work is underway to install the third one.

Leader of environmental protection activities in Russia 2020

One of the priority areas of Nizhnekamskneftekhim PJSC is to ensure environmental safety. In 2020, the company completed the implementation of the fourth environmental programme, designed for 2014-2020. Over 7 years, 490 environmental protection measures have been implemented, and 7,96 billion rubles have been financed.

Due to the implementation of measures from 2014 to 2020, they prevented:

• 3,600 tonnes of emissions of harmful substances into the atmosphere;
• 8,7 million cubic metres of wastewater discharge into the reservoir;
• 6,200 tonnes of pollutants discharged into the reservoir;
• generation of 15,200 tonnes of non-recyclable waste, 46,500 tonnes of recyclable waste;
• consumption of 36,600 tonnes of hydrocarbon raw materials, 11,1 million cubic metres of river water.

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 in 2020, the threat of effluent ingressing into the soil and reservoirs was eliminated, and the reliability of effluent transportation from the industrial site to the treatment facilities was 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.

In total, 61 environmental protection measures were implemented in 2020, the amount of funding for which amounted to 828,1 million rubles. It is 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.

The result of 2020 was a decrease in the consumption of river water by 9,57 million cubic metres (14,8%), the volume of wastewater by 3,17 million cubic metres (7%), and emissions into the atmospheric air by 2,77 thousand tonnes (13,8%).

Petrochemists took part in environmental events. Last October, as part of the Green Wave 2020, 300 seedlings of spruce and mountain ash were planted along the city highway.

By the results of the year, Nizhnekamskneftekhim became the winner of the 16th 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'.

Completion of fourth energy saving programme

A huge amount of work has been done to provide energy and improve the energy efficiency of existing and future production facilities. Despite the pandemic, in 2020, the implementation of the project for the construction of its own power plant, the 495 MW CCGT-TPP, continued.

This 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 CCGT unit will reduce the energy consumption from the outside, which will have a positive impact on the cost of the finished products of the enterprise.

To increase reliable and uninterrupted gas supply to the existing production facilities of Nizhnekamskneftekhim PJSC, as well as to new production facilities within the framework of ongoing investment projects, the construction and connection of a gas pipeline bridge to the new high-pressure gas pipeline from GRS-2 (Central) in Yelabuga was completed in 2020

In total, 48 energy-saving measures were implemented within the framework of the 4th Energy Saving Programme in 2020. This resulted in saving of 7,2 million kWh of electric energy, 53,2 thousand kilowatts of thermal energy, and 1,903 tonnes of conventional fuel for a total amount of 93,16 million rubles, including VAT.

Fighting coronavirus infection

Nizhnekamskneftekhim made a significant contribution to the fight against coronavirus. On the basis of the subsidiary, Polymatiz JSC, the company has established the production of protective medical masks.

Due to the high demand for disinfectants, petrochemicals started to produce their own antiseptic DS-1. In the coronavirus pandemic, all employees of the company were provided with protective masks, gloves, and disinfectants.

The company provided special support to the hospitals of Tatarstan. The company provided them with the necessary medical equipment, materials, masks, and other protective equipment, as well as increased the release of oxygen necessary to save the lives of patients.

Last year, doctors were given medical equipment, protective suits and funds worth more than 33 million rubles.

In total, from 2019 to 2020, charitable assistance in the amount of more than 160 million rubles was provided to city and republican medical institutions. Of these, more than 140 million rubles — for the needs of the Nizhnekamsk Central District Hospital.

The company also cared of the most vulnerable category of citizens — it organized the delivery of food packages for the disabled of the first and second groups, belonging to the Council of War and Labour Veterans of Nizhnekamskneftekhim PJSC.

During the period of the spread of the coronavirus, the payment of wages, as well as all types of additional payments and allowances to it, was made in a timely manner. By the results of 2020, the average salary at the enterprise amounted to 61,748 rubles. Over the past 3 years, it has increased by 19%. Also, the company's employees are provided with a significant social package, which is 17,5% of the amount of annual payroll.

The company continued its participation in charitable activities and in the development of the social infrastructure of the Nizhnekamsk Municipal District. Bright, memorable events in the year of the 75th anniversary of the Victory in the Great Patriotic War and the 100th anniversary of the Republic of Tatarstan were the following: the opening of the museum of Combat Glory of the search party Neftekhimik and the new office of the Council of War and Labour Veterans of the enterprise.

Neftekhimik football stadium got its second birth. Its opening after a large-scale reconstruction by the standards of the Russian Football Union was a real gift for fans of this sport. The sports shooting complex of Nizhnekamskneftekhim PJSC also opened its doors.

Development prospects

Thanks to high production efficiency, vertical integration and customer focus, Nizhnekamskneftekhim continues its stable development.

Petrochemists are confident that the experience gained in 2020 will allow them to continue to solve current problems and successfully implement large-scale plans. The main projects of the strategic development programme until 2025 are the construction of the new complex for the production of olefins and derivatives, the commissioning of the new power plant of the CCGT-TPP with a capacity of 495 MW.

The total cost of the projects is about 400 billion rubles without VAT. The result of the strategic programme will be an increase in the annual production of ethylene to 1,2 million tonnes by 2025, synthetic rubbers — to 0,8 million tons, plastics — to 1,4 million tonnes.

Despite the decline in the global economy due to the coronavirus pandemic in 2020, the company did not lose the pace of implementation of investment development projects and did not commit violations of its loan obligations. Timely implementation of the long-term development plans will further strengthen the position of creating a solid foundation for the further development and prosperity of the city and enhance the quality of life of residents and all citizens of the republic, concluded Ayrat Safin to the applause of the members.

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