SIBUR secures its PP position

26 July 2013 08:50  [Source: ICB]

A small northern Russian city with a population of only 100,000, 300km from the nearest airport, has been a flurry of activity for the past three years - thanks to the 6,000 workers building a vast petrochemicals facility there.

SIBUR's flagship Tobolsk-Polymer project is set to revolutionize the company's polypropylene (PP) production, doubling its output and positioning the Russian major as one of the world's leading players, says Mikhail ­Karisalov, deputy chairman of the management board - executive director. Its completion means the country can substitute imports of basic PP grades and become an exporter.


There has never been a petrochemical project of this size and scale before in Russia

Western Europe is set to move from a state of oversupply for PP in 2012 (384,000 tonnes/year) to a deficit of 1.7m tonnes/year by the end of the decade, according to IHS Chemical.

To complement the existing gas fractionation and butadiene (BD), isobutylene and ­methyl tertiary butyl ether (MTBE) facilities this site is now home to another two plants - a propane dehydrogenation (PDH) plant based on UOP technology and capable of producing 510,000 tonnes/year of propylene, and another that converts the output into 500,000 tonnes/year of homopolymer PP. This uses technology from UK-based INEOS.

The greenfield project required new infrastructure including utilities, electricity, cabling, water and steam pipelines in addition to the existing facilities of Tobolsk-Neftekhim. Construction and pre-commissioning is now complete.

"The plant is fully integrated into the feedstock chain and will help Russia to become a totally new petrochemical player globally," says Karisalov. "This project has been a major challenge - with the construction industry specifically - because a lot of competences have been lost since the end of the Soviet Era. Everything had to be learnt anew.

"Everything will change dramatically when our project fully comes onstream. There will be totally new markets and new capacity available to us. This market is very dynamic and really promising - we do believe it has bright prospects because it's growing very fast on the back of the utility, automotive and consumer industries," he says.

Tobolsk is home to the largest natural gas liquid (NGL) fractionator in the former Soviet Union, the 3.8m tonne/year unit connected via a pipeline grid to gas processing plants in Western Siberia, adds Sergey Komyshan, managing director of the basic polymers division.

"Historically, it's a well developed petrochemical site and that was the basis of our decision to install our project there. The market situation is significantly more favourable for polypropylene than for ethylene derivatives such as polyethylene (PE)," he says.

"We see very good demand in Russia and CIS and notice trends in Europe where oversupply is gradually changing to a deficit - we believe this will continue for years to come. We also see a deficit in China for PP, so someone has to fill in the gap. Building a facility in Tobolsk made sense because the cost of transporting resin is significantly less on a per tonne basis than that of light hydrocarbons, which requires special railcars and safety provisions," adds Komyshan.

Transportation costs are expected to be comparable to those from Middle East, US and Asian producers, with a replenishment lead time of around 4-5 weeks. About 70 grades are expected to be available after the plant's start-up.

"Our cost position will be that of an integrated player - based on competitive cost of hydrocarbons in western Siberia. Tobolsk-Polymer should be able to find itself in the first quartile in terms of competitiveness," he points out.

Companies from seven countries were involved in the mammoth task, including licensors from the US and the UK, designers from Italy and Germany, as well as manufacturers from Russia, South Korea and Japan.

Managing the different languages, mentalities, cultures and working practices, as well as dealing with various time zones and moving equipment over huge distances certainly posed a few challenges, notes Karisalov.

"In Russia, there has never been a similar petrochemical project that included two huge production integrated facilities. We've seen some major greenfield facilities but we've never had any of a global scale with this level of capacity," he says.

"Such large scale construction only started to emerge in Russia a few years ago. There were no competencies, policies or standards so we had to act almost as a cocktail shaker and mix all the required elements in strict proportions. It was a delicate mix of dozens of ingredients. We've been ready and willing to learn and get the necessary experience for this project."

SIBUR appointed several leading licensors and contractors to assist with the ambitious plans. UOP - a specialist in processes and technologies for the dehydrogenation of light alkanes - was joined by INEOS with its Innovene polymerisation technology. Tecnimont was also approached based on its skills and track record with similar large-scale projects globally.

"Our licensors UOP and Tecnimont shared knowledge with us in terms of similar projects and their experience really helped a lot to properly structure and plan all the operations and works," he says. "More than 100 of our staff from Tobolsk were trained at production sites for two weeks in the US, Thailand and Saudi Arabia. The conclusions we have drawn from this experience is that there will be no hurry, no compromises, and no actions aimed at saving time for the sake of quality."

This was Linde Engineering's biggest engineering procurement and construction (EPC) project as a general contractor, and the sheer scale of the task posed a few difficulties.

With several thousand staff onsite, as well as more than 100 people in Dresden, Germany, and its Indian office, careful management was essential, says Jörg Linsenmaier, managing director, Linde Engineering Dresden. An integrated team was established with SIBUR to control the overall construction site, and proved extremely effective.

"This is a very big site which has to be managed very precisely and very well. There is a lot of planning involved. I think that we have found a very good way of working with SIBUR and overcoming problems because we are openly discussing those; I think we have managed to resolve problems together quite well," he says.

With low temperatures from -35-40°C, the windows for ships to sail to the small port through the Northern Rivers were extremely tight, sometimes lasting just a few weeks.

Ferrucio Tatanardini, project manager at Tecnimont, was involved in the engineering, procurement and construction of the high capacity PDH unit.

"This kind of project takes two or three years to complete. We had more or less 3,000 people working day and night. The big challenge was to bring the materials to Tobolsk due to the fact that most of the equipment was oversized. The only chance to move the equipment was through the river in the north of Russia and this is not frozen for only 20 days of the year. You have to take into consideration that starting from November, up to March, the temperature in Tobolsk is -25°C, so the difficulties working in these conditions are evident," he says.

Despite the difficulties getting the cargo vessels through the waterway and unloading them, 11 shipments and 23 pieces of large-sized heavy equipment were successfully delivered for the plant's construction. In 2010 alone, more than 650 containers, 100 rail cars and 470 trailers arrived safely onsite.

To accommodate some of the oversized deliveries, dredging work was needed at the river port to cope with the demands. One column for the propane dehydrogenation (PDH) facility weighed 1,096 tonnes and measured 10 metres in diameter and 100 metres in length. It was shipped from South Korea through the Panama Canal to Arkhangelsk, before being loaded onto a barge to the Irtysh river.

Support from the local administration far exceeded SIBUR's expectations, helped by early discussions with the regional governor to outline the specific plans for the project.

Meetings were arranged at both a local level with the regional governor and with direct support from the Russian government.

The project is transforming the area. It is the first that involves the advance processing of crude hydrocarbon in a region typically associated with extracting crude hydrocarbon. It will also have a significant effect economically as a major taxpayer and will create jobs.

"Regarding the ordinary local people, there are always some unhappy with projects like these, but I personally worked on this project for three years and the overwhelming majority were really positive. The key to success was openness, transparency and our heavy investment in communication," says Karisalov.

"We've run several initiatives to help create a very positive picture - even planting one million young trees in several districts in Tobolsk to create a huge forest. Then there were public hearings, meetings and sessions with local parliament members and public representatives. There were independent environmental experts involved and the publication of the environmental audit reports in the local press. We've also sent public representatives to similar projects globally for them to get familiar with what we're implementing in Tobolsk."

By: Andy Brice
+44 20 8652 3214

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