6 Jun 2022 16:21

SIBUR dissolves contract with Turkish contractor on construction of NKNC ethylene complex

MOSCOW. June 6 (Interfax) - SIBUR has decided to terminate a contract with Gemont LLC (a subsidiary of Turkey's Gemont) for construction of the EP-600 ethylene plant at PJSC Nizhnekamskneftekhim due to the loss of the contractor's ability to keep to the schedule, an NKNC representative told Interfax.

"A decision was made to terminate the contract with Gemont, demobilization will be completed within a month," a spokesperson for the chemical plant said.

Gemont is currently unable to maintain the necessary pace of work on the project, the spokesperson said.

"In order to keep to the construction schedule, decisions were made earlier on the transfer of an additional volume of work due to be done by Gemont to contractors from Tatarstan and other regions of Russia. In the past few weeks the management of NKNC, Gemont and all companies whose participation in construction of EP-600 is envisaged carried out preliminary joint measures to redistribute resources and tasks within the project," the spokesperson said.

More than 20 subcontractors from Russia are now involved in the construction of EP-600, a source familiar with the construction process told Interfax.

EP-600 is the largest investment project currently underway at NKNC.

Interfax has asked Gemont's Russian subsidiary to comment on the situation.

According to the SPARK-Interfax system, Aktash Mukhittin, who had headed Gemont since its foundation in March 2013, left his post as CEO at the end of May 2022 and was replaced by Chetin Haydar Kerim.

Gemont is now a defendant in 61 arbitration cases in Russia, with all cases open in 2021-2022, the system said. The largest of the claims against Gemont, for 1 billion rubles, was filed by Gazprom Avtomatizatsiya , (part of Gazstroyprom) in the Arbitration Court of Moscow in March 2022.

NKNC was planning to build a new ethylene (olefin) complex with a capacity of 1.2 million tonnes per year (two lines of 600,000 tonnes per year with derivatives) in addition to existing production of ethylene. Production of polymers was due to start, 3-4 months before the launch of the first unit of EP-600. The company was then going to start construction of the second line and to complete the whole ethylene complex in 2027. The cost of construction of the first stage - the EP-600 unit with production of polymers - was estimated at 234.2 billion rubles.

In February 2020, NKNC and Gemont signed a contract for construction and installation works on the EP-600 unit, with works due to be completed in July 2023.

The new EP-600 unit will refine 1.8 million tonnes of straight-run gasoline per year to produce 600,000 tonnes of ethylene and target products: propylene (273,000 tonnes), benzene (249,000 tonnes) and butadiene (88,000 tonnes).

NKNC is maintaining plans to build the second stage of the ethylene complex, but has not decided on its final configuration, Sergey Sergeev, deputy head of the company's investment department, said in December 2021.

Nizhnekamskneftekhim is one of the largest producers of synthetic rubbers in the world and plastics in Russia; since October 2021, it has been a part of SIBUR.

Gemont's website says that in addition to the EP-600 project in Russia, the company is also involved in projects to build the Irkutsk Oil Company's polymer plant in Ust-Kut and crude oil and vacuum distillation units at Gazprom Neft's Omsk refinery. Gemont's portfolio of completed projects includes the construction of units for TAIF-NK refinery (owned by the founders of TAIF Group), TANEKO refinery (part of Tatneft ), Gazprom Neft's Omsk refinery and the stable gas condensate reception, storage and shipment complex for Irkutsk Oil Company in Ust-Kut, according to the contractor's website.