China's leading engineering company offers its work and investment to TAIF

Prospects for cooperation

It is not the first visit to the main office of the parent company of TAIF Group for Mr long Haiyang. He was here at the time when China National Chemical Engineering Group Corporation Ltd. (CNCEC) — one of the largest EPC contractors in the petrochemical industry and the parent company of the holding, which includes CC7, worked in Tatarstan (Mendeleyevsk) on the implementation of the project for the construction of Ammonia complex. The project was implemented under the personal supervision of the president of Tatarstan, Rustam Minnikhanov, and is now successfully operated.

Already then, the two groups were studying each other's capacities and prospects for cooperation. Now they have returned to the dialogue that was interrupted for a while. The meeting was also attended by Ramil Mavlyutov, the director general of Tatarstan Trade House (Turkey) and Tatarstan Trading House PLC (Iran).

On behalf of TAIF JSC and the Group as a whole, the meeting was chaired by Albert Shigabutdinov, the chairman of the board of directors, chief development adviser to TAIF director general. The negotiations were also participated by Director General of TAIF JSC Ruslan Shigabutdinov and others.

During the presentation of the parties, the guest felt it necessary to inform that in Chinese, his name — “long”, means “Dragon”. Then an interesting point was found: it turned out that there were three dragons at the negotiating table at once: the symbol of the years in which Albert Shigabutdinov and Ruslan Shigabutdinov were born is also dragon.

СС7: 12 years in Russia

The staff is about 8,000 specialists, 4 implemented projects, and 4 more — underway. Among the Russian customers of the Chinese CC7 services, in addition to Ammonia chemical complex in Mendeleyevsk — Sibur’s ZapSibNeftekhim, Afipka Refinery, Omsk Oil Refinery, Omsk Lubricants Plant, Lukoil’s Kstovo Delayed Coker unit, Baltic Gas Chemical Complex of RusGasDobycha and a number of other enterprises. The experience of working in Russia deserves attention and respect. Therefore, TAIF responded to the offer to meet and showed its willingness to discuss possible cooperation. Moreover, there are specific projects that the Tatarstan’s Group is interested in implementing and is waiting for profitable offers from potential contractors.

“There are two projects that may be of interest to you. The first project is for the production of carbon black. The planned capacity of the plant is 216,000 tonnes a year for raw materials. And we have the raw material for this production. The best that is available in the world: pyrolysis resin produced in the pyrolysis of naphtha coming from ethylene production or pyrolysis units. But we can consider the possibility of using other raw materials. We have information that you — in the People's Republic of China — have a powerful centre for the development and production of carbon black.

The second project is the production of methanol with a production capacity of 500,000 tonnes a year. In the future, we will use the products of this production as raw materials for the production of synthetic rubbers. You have experience in implementing such projects. The successful implementation of these projects will be a good basis for our further cooperation. The strategic development program of TAIF Group has been elaborated in detail and adopted until 2030. The total cost of already implemented and planned projects is more than $20 billion. There is a lot of work to be done, and the partners-contractors who have proven their reliability and demonstrated their willingness to work quickly and efficiently, are valuable and important to TAIF,” Albert Shigabutdinov very frankly outlined the wishes of TAIF.

We are ready not only to build but also invest

Mr long Haiyang arrived thoroughly prepared for the meeting with the leadership of TAIF. In particular, he expressed the readiness of the Chinese side to take on all aspects of the project: the acquisition of a license for the technology, to develop a basic and working project, to obtain all the necessary approvals and permits, to organise the purchase of equipment, and to complete the turnkey construction, involving, if necessary, the expertise and services of other companies belonging to CNCEC holding.

CC7 also expressed another proposal:

“We can offer the following option: if TAIF Group is considering such an opportunity, we can jointly invest in some projects. We have a fairly flexible system of cooperation,” said Mr long Haiyang.

“For the project of construction of the carbon black plant, we are ready to consider the possibility of attracting co-investor funds in the range from 15% to 49%. We intend to use the products of this production for our capacities — the manufacture of rubber products (in particular, for a complex offer to world's leading tyre manufacturers — editor’s note). This is when implementing the first stage. Then the second stage — the production of the most marginal types of carbon black for paints, computers, etc.,” said Albert Shigabutdinov. These types of product, among other things, can be supplied to the Chinese market.

As for the production of methanol, its products will be fully involved in the production of synthetic rubbers of the Group itself, and the possibility of an equity participation in the implementation of this project by TAIF is not considered.

Before the meeting with the management of TAIF JSC, Mr long Haiyang had worked out this issue in detail with the leading financial institutions of China.

Two leading banks in China, according to Mr long Haiyang: Bank of China Limited and the Industrial and Commercial Bank of China (ICBC) expressed their readiness to extend lines of credit for up to 15 years and on the terms of 15% of the funds are from construction customer, 85% — credit funds. CC7 is also ready to take an active part in the discussion of the line of credit volume and the interest rate, if necessary. One of the key conditions of TAIF Group in the matter of attracting borrowed funds is the involvement of international export credit agencies.

Deadline — until September

During the negotiations, the parties agreed to exchange the necessary information: CC7 will receive specific technical specification for both projects, and TAIF Group will have the opportunity to get acquainted with the main points of the projects already implemented by the Chinese company. By mid-summer, Tatarstan expects a detailed technical and commercial offer and, if the parties agree, they will probably start preparing the contract for signing by the beginning of September.

If necessary, the company is ready to involve up to 50,000 professionals from partner companies with which it has built long-standing strong professional relationships. In 2019, at the facilities in Kstovo and Omsk alone, almost 8,000 people worked at the same time from the Chinese company. Plus other objects.

Everyone who leaves China is already vaccinated against COVID-19

“Will there be any problems with the involvement of workers, given COVID-19?” Ruslan Shigabutdinov, the director general of TAIF JSC, asked one of the most relevant questions for today.

“We have not been affected by the pandemic," Mr long Haiyang said immediately. He continued: “All employees of the company who have come to Russia since August of last year are vaccinated. Including myself. In a few days, 6 charters will arrive in Russia and at the facility that is being built by CC7 for GazpromNeft as well as in Kstovo for Lukoil. All arrivals are also vaccinated with one of the 5 state-approved vaccines in China. Now in China, there are such requirements: everyone who travels outside the country must be vaccinated. The government of the country has high requirements for the safety and health of citizens.

About 300 people, who worked on the territory of Russia before the pandemic and did not have time to leave before the epidemic cut off air traffic between the states, have been vaccinated here, in Russia, also said the chairman of CC7.

After discussing the main issues, the parties exchanged gifts and agreed on new meetings as soon as they were ready. The next one may take place as early as mid-summer, when the Chinese company completes the development of commercial offers for both projects.