Tatarstan and Bavaria are heading to a new round of cooperation. Today, during the second day of the St. Petersburg International Economic Forum, a memorandum of strategic cooperation between TAIF Group and Linde was signed. As it has been known to Realnoye Vremya, the memorandum envisages a number of contracts covering both gas separation and process gases, and most importantly, the contracts related to the four stages of the Ethylene Complex. In particular, a EUR 868 million contract has been signed for implementation of the first stage that is by itself a highlight of the year - the idea of building a high-capacity ethylene complex came to the leadership of TAIF and NKNK as early as in 2008. Find out more details in the report of Realnoye Vremya.
Contract for 10 years and 1.2 million tons of ethylene per year
Today, Nizhnekamskneftekhim is considered to be a nation-wide leader in the production of ethylene - annual volume of this ultra-deficit raw material produced at the facilities of the company exceeds 600 thousand tons per year, which covers not only the needs of NKNK's plants, but is supplied also to other enterprises of the republic and the neighbor region Bashkortostan. And this position may strengthen further in the coming years due to a grandiose project that will be implemented by NKNK and its shareholder TAIF PSC. The development strategy of the petrochemical flagship of Tatarstan is connected with implementation of the project envisaging construction of a new ethylene complex (EP-1,200) with a total capacity of 1.2 million tons per year and integrated plants for production of highly sought-after types of plastics. In terms of its size, it will be essentially the third industrial area of Nizhnekamskneftekhim. The complex will be built in four stages - the second and the forth ones with the capacity of 600 thousand tpa of ethylene - plus connected plants producing high value-added polymers, and this is ethylene that will be used as a basic raw material for the latter. So, a great deal of work has been done before the long-awaited signing.
'We've gone a long way until the signing, and virtually all the company's departments participated in the development of necessary documentation together with Linde AG. Now, we see the final results: the entire number of contracts with Linde has been signed. Of course, I have a great sense of accomplishment because of the work done and I expect that the team will perform the work according to the schedule adopted. The agreement has been signed for 10 years; it envisages the implementation of two major stages, each having the capacity of 600 thousand tons per year,' Azat Bikmurzin, General Director of Nizhnekamskneftekhim PJSC, told to Realnoye Vremya and noted that the tender was conducted among world-class companies such as Stone & Webster, Technip, Linde, Lummus Technology and others. Each company's proposal was evaluated technical-wise and implementation-wise. 'Linde was selected since its proposal was the most acceptable for us,' the head of Nizhnekamskneftekhim explained.
New olefin complex will not substitute the existing one. It will allow tripling of ethylene output — up to 1.8 million tons, tripling of polymer production and expansion of rubber production up to 1 million tons. Thus, state-of-the-art production facilities will be put into operation in Nizhnekamsk in the next 10 years, that will become a reliable basis for the further development of not only the enterprise and the city, but also of the industrial potential of the republic. EP-1,200 will be the largest investment project for the entire 50-year history of Nizhnekamskneftekhim. The first stage alone is estimated at EUR 868 million, according to the information from Rustam Minnikhanov, the President of Tatarstan.
During one of the visits to Nizhnekamskneftekhim, Rustam Minnikhanov called the olefin complex ‘the main challenge for the company and the republic, since it is NKNK that constitutes the growth point in Kama Petrochemical and Oil Refining Cluster’. He noted that, while the company has managed to find solutions within the programme of rubber production expansion, the development of plastics requires ethylene. 'The construction of the ethylene complex is the number of priority of the cluster,' the President highlighted.
Over 2 Thousand German Engineers And Designers, And Financing Through Euler Hermes
'The Memorandum of Strategic Cooperation entered into by TAIF Group and The Linde Group envisages cooperation in variouis fields: gas separation processes, process gases, and several stages of the ethylene complex. This is a great deal of work, which we will carry out together with Linde. This will allow TAIF Group to possess advanced technologies, bring them to life and develop in the territory of Russia and Tatarstan,' commented Vladimir Busygin, Chairman of the Board of Directors, Nizhnekamskneftekhim PJSC, and Deputy General Director, Management and Strategic Development of NKNK, TAIF PSC.
Now, Linde as the licensor of the project will be responsible for supplying the technology, engineering work and relevant procurement. 'By signing this agreement we undertake legal obligations to establish a respective plant at NIZHNEKAMSKNEFTEKHIM. A lot of work has been done already to define the project configuration. Based on that, we will put efforts to obtain financing through an export credit agency. And we are very glad that, thanks to the fruitful cooperation between Russia and Germany, Euler Hermes export credit agency is ready to support this project. As soon as the financing is approved and received, the implementation of the project will commence at full pace. And we will quickly mobilize more than 2 thousand German engineers and designers as well as the engineers from our engineering offices worldwide. Intensive work will commence at the site,' Wolfgang Brand, Vice President, Sales of Petrochemical Plants, Linde, revealed the details. Also, as licensor, Linde shall provide Nizhnekamskneftekhim with all necessary licenses for manufacturing of the end products of pyrolysis, including third party licenses. ‘After five years, we expect to have the products of strategic importance for Tatarstan that will make NKNK a number one supplier of high value-added products,' Wolfgang Brand outlined ambitious plans.
As far as the support of Euler Hermes export credit agency is concerned, debt financing of the production complex will amount to some 85% of the total contract price. 15% of the contract price will be financed by the own funds of Nizhnekamskneftekhim.
According to Christian Bruch, Chief Operating Officer of Linde AG, the ethylene complex is a very important project, for which there is an eye kept out throughout the entire industry. 'And we are very proud that it is based on the technology of Linde. This is a continuation of the partnership, which we already have with NKNK and TAIF.
Linde, indeed, is a long-term partner of TAIF Group and is known in the republic for the construction of a number of large production facilities carried out for the Tatarstan holding. In particular, the solutions supplied by the German group can be found at Kazanorgsintez, where Linde supplied cracking furnaces processing propane-butane fraction, as well as at Nizhnekamskneftehim, where the ?-SABLIN process was implemented during modernization of a linear alpha olefins production plant (LAO Plant). The technology allows production of highly sought-after light grades of linear alpha-olefins. Today, the work on another ambitious facility continues in cooperation with Linde, too, which is the commissioning of a hydrogen plant for the Heavy Residue Conversion Complex at the site of TAIF-NK.
Industrial Infrastructure And Logistics Development For Ethylene Complex
It is to be recalled that the idea of building a high-capacity ethylene complex came to the leadership of TAIF and NKNK as early as in 2008. The fact is that the company's existing production capacities are fully loaded already and further development is possible only on the basis of new base facilities. This factor has become a fundamental assumption for strategic decision-making. The company started searching licensors and technologies meeting all modern standards not only in terms of technical characteristics, but also providing minimal impact on the environment.
In the original scenario, a new olefin complex was supposed to embrace three production facilities: ethylene, polypropylene and polyethylene with the total capacity of 2 million tons per year, half of which falls on ethylene, and the rest is propylene (400 thousand tons) and polyethylene (600 thousand tons). A few years later, however, in the light of economic and geopolitical factors and upon studying the market with the involvement of international analytical companies the concept of the olefin complex was revised. Thus, it was decided that instead of ethylene production capacity of 1 million tons per year, a 1.2 million ton complex will be launched, and the construction will be carried out in two phases, 600 thousand tons each. Besides, two more stages, in addition to ethylene, include the construction of plants producing high value added products: polyethylene, polypropylene, polystyrene and some other derivatives.
The olefin giant project includes not only the construction of the plant itself, but also the construction of a storm water system, waste storage facilities, as well as a new chemically contaminated manifold, which is an integral part of both the project of the biological treatment facilities reconstruction and new local waste treatment system. The condensate treated to a maximum extent at these facilities will be routed back to the process. Moreover, by using a new type of pyrolysis furnaces, the emissions will be brought to the lowest level. As a result, the new complex is expected to be both more complicated and state-of-the-art across the entire former Soviet Union.
Obviously, such a rapid development of the company and a multiple increase in output of marketable products by 2027 requires also the availability of appropriate infrastructure logistics-wise. When addressing such issues as the construction of new road junctions, railways and hubs, with a glance to outstanding significance of the new ethylene complex, the leadership of TAIF represented by Albert Shigabutdinov, General Director, Vladimir Busygin, Chairman of the Board of Directors, Nizhnekamskneftekhim PJSC, and the top managers of the company sought the support in various state authorities, federal ministries and agencies. In 2015, the project of the olefin complex, which is an integral part of Kama Cluster, was included in the republic's 2030 Strategy.
The first step in this direction was NKNK's proposal to include several large-scale infrastructure projects in the federal programme. The first project refers to the construction of a bridge crossing over the Kama River near the village of Sokolki and a section of the M-7 Federal Highway bypassing Naberezhnye Chelny and Nizhnekamsk with a total length of 84 km. The second one relates to the improvement of the Kama Railway Junction's train-handling capacity, the reconstruction of the bridge over the Zai River and the increase of the traffic capacity of the motor road Nizhnekamsk - Chistopol. The third project envisages the reconstruction and construction of roads in the city of Nizhnekamsk and Nizhnekamsk municipal district, including reconstruction of the roads leading to the Industrial Zone and the Construction Industry Base (CIB).
In addition to motor road, railways must be developed, too. They won't be left unattended: a large-scale reconstruction is planned for the railway sections between the stations Krugloye Pole (Round Field) - Agryz and Krugloye Pole - Biklyan that are used to deliver a significant portion of raw materials for the plants of Nizhnekamskneftekhim and ship finished products to different destinations of the country.
Established in 1878, The Linde Group consists of three divisions: Linde Gas, Linde Engineering (two main divisions) and Other Activities (GIST, a logistics company). The largest unit of Linde Gas consists of three segments — Europe and the Middle East, Asia and Pacific, and Americas. In addition, Linde has established five global Remote Operation Centres (ROCs) that perform centralized control and operation of the activities in all the regions: Liquefied and cylinder gases ROC, Electronics ROC, Healthcare ROC, Plant Operation ROC, and Transportation ROC. The Linde Group also has established a project development function across the entire Group to ensure the best implementation of the business potential.
The Linde Group is in the forefront of technology development with the possibility of implementing EPC projects. This gives it an advantage over other gas companies. Linde's proprietary engineering solutions and own operating expertise are applied to design reliable plants. Symbiosis in both directions: Linde Gas is the largest customer of Linde Engineering.