Rustam Minnikhanov called Tatarstan’s oilmen for targeting, first of all, Russian market on the back of an unstable political situation and also searching for new customers in Arabian countries and South-East Asia. He said it on April 14 during the General Meeting of Nizhnekamskneftekhim OJSC’s Shareholders (NKNK), which is the leading Russian plastics, synthetic rubber, and polyethylene producer.
“We (Tatarstan petrochemicals producers) depend very much on export; half of our products are exported. We must process the maximum quantity of products in the Republic. For example, polystyrene, an extremely valuable product, for which NKNK’s production volume is 50 KTA, provides a small and medium business market", President said having mentioned as an instance of consumer the polymer package plant Ay-Plast.
In 2013, the production volume of Nizhnekamskneftekhim amounted to almost USD 4 billion, of which 50% was exported. The company supplies feedstock to 50 countries globally. According to the company’s report for 2013 the major share of its export falls on Europe, CIS countries, Asia, and North America. 80% of the export falls on the rubbers used for tire and rubber goods production. The following consumers purchase NKNK’s feedstock for tire production: Michelin, Goodyear, Pirelli, Continental, Bridgestone and Belshina. Nizhnekamskshina supplies to these companies 73% of the overall export.
The President noted that petrochemical business in the Republic is necessarily affected by the political situation, namely, deterioration of the relationships between Russian and the West on the back of the events in Ukraine and the Crimea joining Russia. “I believe all these things will pass, however, taking into account new developments, we must be prepared to new challenges. We must seek new markets: African, Arab, and South-East Asia countries”, Rustam Minnikhanov advised.
He called the position of Europe and the USA in the relationships with Russia “economically unjustified” referring to banning Russia from the G8 and threatening with closing of commodity market outlets. “While politicians say there is a need for sanctions, all the entrepreneurs who want to work in Russia have a different position. We are ready for any challenge and so far we foresee no difficulties”, the head of the republic stated.
Also the President shared the opinion that European commodity markets are oriented towards Russian market and, therefore, political statements on imposing sanctions will cause more harm to Europe than to Russia. “Well, Americans live quite far away and all these processes are not so important for them. As far as European markets are concerned, however, I believe maintenance of a normal business climate with the Russian Federation is very important for them. I’m convinced the situation will change because now a biased escalation of the situation takes place”, the President summarized and noted that major Republican export companies have already commenced the work on mitigation of possible risks.
Petrochemical sector, in particular, Nizhnekamskneftekhim, were adversely impacted by the global economic decline, too. Thus, in view of the doubling of global rubber production over the past two years the prices for this product reduced by half, according to the General Director of Nizhnekamskneftekhim Oleg Nesterov. As a result, the company’s net profit in 2013 dropped 2,5 times versus 2012 having amounted to RUB 6.1 billion. Revenue amounted to almost RUB 120 billion that is by 4.3% below the level of 2012. “In order to overcome this situation we decided to compensate the overall price decrease with expansion of rubber and plastics production and sales volume. If compared to 2012, the production volume made up 103.9% in comparable prices”, Oleg Nesterov informed. Besides, Nizhnekamskneftekhim produced extra 60 KTA of output.
Based on his forecast, in 2014 the decline in the company’s performance must cease. According to Nesterov, in 2014 the company expects the revenue to be at the level of 2013 – not less than RUB 120 billion.