German EPC has sold thousands of industrial plants to more than 40 countries for 140 years. The company’s management came to the multi-sectoral TAIF holding in Kazan to present isocyanate, which is a component for polyurethane production, and a novelty for Russia. Jens Henkel, General Director, EPC Group told Realnoe Vremya about the largest projects in Russia, why developments in renewable power engineering are in low demand now, what products can be produced from wheat high conversion, and many others.
A $400 mln factory
Mr. Henkel, your company has sold a huge amount of equipment during its long history. However, you have arrived in Tatarstan to offer a launch of isocyanate production, which is also new for you. Why?
We started to cooperate with Chematur on isocyanate production technology. This project interested us three years ago because Russia doesn't have such a production, while the Russian President gave instructions on import substitution.
In other words, did you start to deal with this production because the Russian market was absolutely free?
Yes, Russia is very interesting for us. But we are active in the Arab market, too.
How much will enterprises have to pay for this unit?
Depending on additional options, this unit will cost some $400 million.
What capacity are we speaking about?
About 150-200 thousand tons.
What feedstock is needed for production?
It is the most important point. It is why we are actively trying to promote this project in Tatarstan. The republic has all the necessary feedstock for the production. Benzene is the most important component, whose volume will increase after the launch of big 600 KTA ethylene production lines at Nizhnekamskneftekhim.
Modern isocyanate production is impossible without phosgene
What challenges did you face while developing the unit?
A great number of experts is needed to implement this project. And, it goes without saying, it is quite a long project. We spent 3 years.
It turned out phosgene, which is quite a dangerous substance, is needed for this production. Is it a safe project?
Firstly, modern isocyanate production is impossible without phosgene. Secondly, the factory assumes its own small plant for phosgene production. Consequently, a transportation route is minimum. And, undoubtedly, an additional isolation is expected. Moreover, only a necessary volume of phosgene, which is needed for the next process, is produced according to the project. Storage tanks are not considered at all – everything is processed. Chematur's technology concept means an instantaneous neutralization of excessive phosgene in case of its overproduction. So, there is no danger for the environment. The general safety standard complies with the strictest world requirements.
Who has already been interested in this project?
We have requests from many regions of Russia. As we started to work with Tatarstan and TAIF, we don't talk to other clients because we see that Tatarstan is the republic that has a feedstock and correct management. And we believe this project will be fulfilled here.
Tendencies in industrial equipment market
You consider your equipment as a resource saving. Could you tell us about its peculiarity?
For example, there is an exothermic reaction that releases heat, which used to get steam for further energy generation. Thus all released heat is used in the same equipment – no drop escapes. Modern standards adopted in the European community apply to all water, gas purification and waste treatment plants.
According to the company’s web site, you adopted a faster construction due to a thoughtful design. How is it possible to build faster just because of design?
Indeed, we have such plants, for example, for liquefied natural gas production, which are built very quick. Everything is done in containers at our production site. Thus, everything is assembled much quicker at a client's site than it used to be. Isocyanate production however will be different because the design and construction volumes are very big. The process will take at least 3 years, including installation and start-up.
You focus on industrial units intended for different fields of application. What are the current trends in the industrial equipment market?
The number of demands for oil and gas has reduced. Equipment that allows to produce polymers from monomers and make an end product has been popular in recent time. And plants that enable to get rid of import dependence and purchase of components of foreign origin are especially popular in the Russian market.
What import substitution projects have you already implemented?
Well, Sodium Cyanide Plant in Dzerzhinsk is an illustrative example. Import of cyanide to Russia stopped after the end of the construction. Our client occupied the whole market in Russia, and was going to build the second stage.
We have worked, for example, on wheat high conversion in recent years. It is possible to get not only flour from it but also amino acids and chemicals in the end. And here we are also fighting against import. Import of these products accounts for about 100 thousand tons.
And now we are negotiating with a potential client from the European part of Russia regarding a very big project aimed at terephthalic acid production, which is a feedstock for manufacturing polyester, and polyethylene terephthalate needed to produce plastic bottles.
In your opinion, what key project have you had in the last 3 years?
There was a big project aimed at construction of a polycarbonate plant in China. And, Sodium Cyanide Plant in Dzerzhinsk that I have mentioned was built from scratch.
How much money was invested in these projects?
Over ˆ200m were spent for Sodium Cyanide Plant. And, the 100 KTA Polycarbonate Plant in China cost ˆ180m. The license is completely ours. By the way, we have negotiations with Kazanorgsintez regarding the construction of such unit there. We hope these negotiations will result in a joint project.
But, they already have it. Do you plan to expand their capacities? What capacity are you planning to reach?
Yes, we do. Probably we will add 100,000 tons more.
Equipment in Russia is more expensive
This summer, a subsidiary of EPC signed a master agreement for process solutions on liquefied natural gas in our republic. How will the LNG production plant in Tatarstan be forming?
Yes, an agreement was signed. Unfortunately, the project has not been developed in recent time. It seems a decision was made we are unfamiliar with.
An analysis of the Russian Ministry of Industry and Energy demonstrated a construction in the Russian petrochemistry from scratch is 20-60% more expensive than construction of analogous capacities in Europe. Do you see this trend in Russia?
Yes, we see the units in Russia are more expensive. First of all, construction of any building in Russia is more expensive than in Europe. Moreover, there are norms. We need to work together with Russian design centres in order to comply with them. Everything needs money.
How do your company reduce costs while constructing factories here?
If during a detailed design we find Russian producers who manufacture quality equipment, we try to use products of local companies while purchasing tankers, installing pumps and during assembly works in order to reduce the prime cost… We don't dispatch expensive engineers from Germany but attract local companies.
Your company also deals with renewable power engineering. What achievements do you have? Where are your plants used?
These projects have been less popular because of oil price reduction in recent time. These projects stopped being profitable. When oil was $150 per barrel, everybody wanted bioethanol, biodiesel because they were cheaper. The situation has changed now.
What strategic plans in Russia and in the world do you have for the next five years?
Despite recent political difficulties between Germany and Russia, we always have been in touch with our clients: we came, met and advised. Now we are yielding the fruits of our work because the demand has increased right now.
There are many projects we would like to implement in Tatarstan. I presented them all when I met with the President last time. We would like the republic to react to these projects quicker and make decisions quicker because there are many Russian regions. They all want to do something and launch new factories. The first company will be the only one because, for instance, Russia doesn't need the second isocyanate production. The market is not so developed. As for not only isocyanate but also lyocell fibers, viscose, polyacrylonitrile and carbon fibers, there are many projects on which one should make decisions quicker and move further on.
The executive staff of the company comprises of four engineers, and it is one family. Who are they to each other?
The company is located in West Germany. My father reopened the firm after the German reunification. He delegated the management to his children six years ago.
EPC Group, Germany, manufactures industrial equipment, runs planning and implementation of infrastructure projects and industrial units. EPC renders services for the entire process and life cycle of a unit. It implemented over 1,000 projects in total in more than 40 countries globally.