OIL-GAS-CHEMCIAL COMPLEX OF THE REPUBLIC OF TATARSTAN MINISTRY OF TRADE AND FOREIGN ECONOMIC COOPERATION OF THE REPUBLIC OF TATARSTAN OAO “TATNEFTEKHIMINVEST-HOLDING”

OIL-GAS-CHEMCIAL COMPLEX OF THE REPUBLIC OF TATARSTAN MINISTRY OF TRADE AND FOREIGN ECONOMIC COOPERATION OF THE REPUBLIC OF TATARSTAN OAO TATNEFTEKHIMINVEST-HOLDING

The Oil-Gas-Chemical Complex of the Republic of Tatarstan is the backbone budget-forming sector of industry that determines a stable and progressive development of the economy in general

Percentage of Products Manufactured by Enterprises of Oil-Gas-Chemical Complex of the Republic of Tatarstan in the Total Russias Production

Percentage of Products from the Republic of Tatarstan in the Total Russias Output ethylene 40% propylene 23% benzene 17% styrene 64% phenol 22% acetone 20% synthetic rubber 25% polyethylene 40% tyres 29%

Contribution of Enterprises Representing Oil-Gas-Chemical Complex to the Economy of the Republic of Tatarstan

In the structure of Tatarstans industrial output, the contribution from enterprises of this sector is 49%. The complex accounts for over 50% of the Republics budget and employs one third of industrial workers. The oil-gas-chemical complex of the Republic of Tatarstan is represented by 24 enterprises of different organisational and legal forms, with 4 of them ( Tatneft, Nizhnekamskneftekhim, Nizhnekamskshina, and Kazanorgsintez) being the largest budget-forming enterprises. Tatneftekhiminvest-Holding is a structure that coordinates the operation of enterprises of the sector.

Integration of Oil-Gas-Chemical Enterprises Within the Republic

Enterprises of the sector are organised into common process chain: extracting enterprises; processing enterprises; enterprises manufacturing semi- products of basic organic synthesis; enterprises manufacturing finished products

Supply of Raw Materials to Oil-Gas-Chemical Enterprises of the Republic of Tatarstan Kirov Synthetic Rubber Plant NNPZ (ELOU-AVT-7) NKSh MGPZ Middle distillates Oil-well gas Liquefied gas for domestic uses Butyl rubber, commodity Carbon black Isobutane Isopentane Liquefied gas oil Straight-run gasoline Styrene Propylene Ethane N. butane Divinyl Carbon black Pyrolysis resin SKI-3 Ethylene Ethane N. butane Stable natural gasoline + hexane Middle distillates Butyl rubber External suppliers Raw materials: 40% - own 60% - external SKD Yefremov Plant

Basic Products, 000 MT EnterpriseProductsProduction Output Tatneft Oil 24.6 Small oil companies 4.1 Nizhnekamskneftekhim SKI - 3142.2 SKEPT7.3 Butyl rubber68.0 Butadiene65.6 Polyols55.6 Propylene198.1 Propylene oxide52.4 Ethylene448.2 Styrene245.1 Ethylene oxide236.4 MEB122.4 Alpha-olefins65.1 Kazanorgsintez Phenol32.0 Acetone20.4 LDPE173.6 HDPE197.8 Monoethylene glycol47.8 Diethanol amine1.9

Plans for Development of the Republics Petrochemical Industry

The strategic long-term goal of the sectors development is to saturate the demand for competitive products through development and introduction of resource-saving and environmentally sound technologies within the open economy. To attain the goal, we need to ensure the support in raw materials, innovations, and investments. One of the topical issues in the republic is for today the insufficient degree of hydrocarbon raw processing, which significantly reduces the value of the oil products basket obtained from 1 MT of crude oil. For this reason, it is very important to further improve the petrochemical complex of the Republic of Tatarstan with complete cycle of oil refining on the basis of advanced technologies that would help increase the degree of refining. This goal can be achieved with attraction of large-scale foreign investments that would be used both for the financing of investment projects, and, what is even more important, for the attraction of advanced foreign technologies. Most preferable forms of cooperation with foreign partners are setting up joint productions with full or partial participation of foreign investor.

Commercial ethylene-90.0 To Kazanorgsintez EP-450 (600) Ethylene Plant OAO NKNH Ethyl benzene 290.0 Styrene 250.0 Foaming polystyrene - 40.0 ABS Plastic 20.0 High-impact and crystalline polystyrene - 120.0 Extrusion Polystyrene 100,000 cubic metres Ethyl cellosolve Ethylene oxide 260.0 Monoethylene glycol 220.0 Nonylphenol ethoxylate - 58.0 Brake fluid 10.0 Antifreezes 40.0 Alpha-olefins 100.0 Alpha-olefin sulphonates -1.0 Linear alkyl benzenes-30.0 Alkyl benzene sulphonates Synthetic oils- 10.0 Benzene 6.0 Methanol-2.5 Detergents Planned Ethylene Processing Production Development at Nizhnekamskneftekhim, 000 MTY Already operated facilitiesFacilities under constructionProjected facilities Semi-synthetic oils - 30.0

Basic complex for ethylene production and processing are pyrolysis furnaces EP-450 (600) of Ethylene Plant under Nizhnekamskneftekhim and process-related facilities of 2nd industrial area. Reconstruction and modernisation of the pyrolysis furnaces in the period 2000 to 2005 would enable the company to increase the output of: ethylene, up to 600,000 MT propylene, up to 300,000 MT benzene, up to 220,000 MT divinyl, up to 100,000 MT As a raw material for pyrolysis, the following products of Nizhnekamsk Refinery would be used: straight-run gasoline, up to 1,060,000 MT aviation kerosene up to 400,000 MT hydrotreated diesel fuels, up to 380,000 MT per year. Solving the ethylene supply problem would enable the company to proceed to the full- scale implementation of projects in Nizhnekamsk to produce styrene polymers and copolymers and products thereof, linear alkyl benzene and synthetic detergents, oil bases and synthetic oils. In 2003, facilities for high-impact polystyrene production rated at 50,000 MTY will be put into operation; it is planned to create facilities to produce linear alkyl benzene and synthetic detergents on its basis, as well as polystyrene foam, ABS plastic, extrusion polystyrene foam, and polypropylene rated at 120,000 MTY. OAO Nizhnekamskneftekhim

Planned Propylene Processing Developments at OAO Nizhnekamskneftekhim, 000 MTY Propylene OAO NKNK 240.0 Propylene oxide 65.0 Propylene tetramers 10.0 Polypropylene 120.0 Polyethers 48.0 Component A 10.0 Alkyl phenols 21.0 Phenol Surface-active substances 64.7 Ethylene oxide Propylene trimers 140.0 Pipes and fittings Thermoplastic elastomers Packaging materials Consumer goods Dye concentrates Polypropylene foam Carbon black concentrates Polyurethane foam Already operated facilitiesFacilities under constructionProjected facilities

Development of rubber facilities at Nizhnekamskneftekhim CGFU Low-temperature isomerisation at I-7 of butane into isobutane Modernised plant IF for isoprene synthesis from methanol and isobutylene, rated at 210,000 MTY Dehydration of isobutane into isobutylene at DB-2 Isoprene polymerisation into SKI rubber or polyisoprene, KI plants Oligomerisation and further separation Synthesis of divinyl-styrene and (I gr.) ethylene-propylene monomers Production of BK butyl rubber BK plants and new C4+C5 125,000 Mixture of pentanes and isopentanes to ETHYLENE 500 Imported butane Methanol SKI-3 rubber 200,000 MTY Isoprene Butane-butylene mixture to ETHYLENE 600 Auto-gasoline AI-93 80,000 MTY Isobutylene Normal butane Isobutane SIBUR BBF from Russian refineries ( + from Nizhnekamsk Refinery, some 128,000 MTY) Ethylene+Divinyl+Propylene from ETHYLENE 600 Styrene from SPS plant of 2nd area Isobulylene-butylene fraction from ETHYLENE 600 Ethylene-propylene rubbers SKEPT 15,000 MTY Butadiene-styrene rubbers (solutions) 60,000 MTY Tatneft BR - 58,000 MT BR 30,000 MT HBR 30,000 MT CBR 25,000 MT BBR 5,000 MT Already operated facilitiesFacilities under constructionProjected facilities

The implementation of a package of investment projects to ensure the growth in output and widening of the range of synthetic rubbers would enable OAO Nizhnekamskneftekhim to produce a full spectrum of rubbers for tyre sector and other manufacturing industries in the quantity of over 300,000 MT. By now, ethylene-propylene rubber production facilities have been put into operation, the work to create halo butyl rubber production facilities rated at 30,000 MT is nearly completed, and construction of butadiene- styrene production rated at 60,000 MT is planned. OAO Nizhnekamskneftekhim

Planned Ethylene Processing Developments at OAO Kazanorgsintez, 000 MTY Ethylene plant 525.0 Organic products plant HDPE plant - 260.9 LDPE plant - 184.0 Ethylene oxide - 1st line 18.7 Ethylene oxide - 2nd line 60.0 Organic peroxides 1.2 De-emulsifiers - 25.5 Monoethylene glycol - 35.0 Diethylene glycol - 23.5 Butyl cellosolve - 3.0 Auxiliaries for textile sector - 18.8 Ethanol amines - 14.5 LDPE - 2nd line 72.0 LDPE - 3rd line 114.0 Composite materials production HDPE powder 10.0 HDPE granulate 250.9 Plastics processing plant Pipes and parts- 52.4, incl. gas pipes 24.5 79.9 184.0 197.0 Ethylene 40.1 OAO NKNK, OAO SNOS Already operated facilitiesFacilities under construction

The second largest company in Tatarstans petrochemical complex is OAO Kazanorgsintez. It is the only manufacturer in Russia with both HDPE and LDPE production facilities with total output of 380,900 MT. This enables the company to be more flexible in responding to the changing demand for various PE brands both in international and domestic market. A considerable portion of high density polyethylene manufactured by the company is used in the in-house production of cold water pipes and gas distributing pipes. Investment package of OAO Kazanorgsintez includes projects of increasing the ethylene production output from 375,000 MTY to 525,000 MTY, polyethylene production output by 150,000 MTY (including the organisation of linear bimodal polyethylene production), projects of peroxide facilities reconstruction and organisation of metal-polymeric pipes production. OAO Kazanorgsintez

Planned Tyre Production Developments at OAO Nizhnekamskshina In the structure of Tatarstans oil-gas-chemical complex, a special role is given to OAO Nizhnekamskshina as a manufacturer of petrochemical synthesis end products. The development strategy of this Tatarstans tyre manufacturer is the implementation of the following investment projects: - Organisation of all-steel car tyres production with capacity of 2 million tyres per year. - Organisation of R15, R16, and R17.5 light-truck tyres production with capacity of 2 million tyres per year. - Organisation of green tyres production.

Construction of Nizhnekamsk Oil Refinery

A current priority to the development of petrochemical industry in the Republic of Tatarstan is to establish a high-technology complex in Nizhnekamsk to be aimed at production of environmentally sound oil products out of high-sulphur oil. General investor and implementation co-ordinator for the project is OAO Tatneft. Products to be made at the complex would be liquefied hydrocarbon gases, straight-run gasoline, gasolines A-76, AI-92, AI-95, and AI-98, hydrotreated jet fuel, hydrotreated diesel fuel, fuel oil, road bitumen, and granulated sulphur. The construction of Nizhnekamsk Refinery is being carried out in two stages. Deep Oil Processing Complex is scheduled to be completed in 2008. Stage 1 - Construction of a Basic Complex based on the currently functioning preliminary distillation unit ELOU-AVT-7 owned by OAO Nizhnekamskneftekhim. Stage 2 - Construction of a Deep Oil Processing Complex. In December 2002, the Basic Complex of Nizhnekamsk Refinery was put into operation with oil refining capacity of 7 million MTY and degree of oil refining reaching 46 per cent. The construction of Deep Oil Processing Complex will be performed in two lines. The first line of DOPC which includes 7 facilities suggests the processing of up to 50 per cent of high- sulphur oil and reaching the degree of processing up to 74 per cent. The second line is intended for the processing of 100 per cent high-sulphur oil with degree of processing of 82 per cent (which would result in the decrease of sulphur content down to 1 per cent). OAO Nizhnekamsk Refinery

Flow Chart of OAO Nizhnekamsk Refinery Already operated facilitiesProjected facilities ELOU AT-7 Vacuum unit Middle distillates hydrotreatment complex Bitumen unit Vacuum gas oil facilities Viscosity breaking unit Liquefied gases = 130,000 MT Jet fuel 500,000 MT Diesel fuel 1,941,000 MT Bitumen Fuel oil as remained Cracked residueOil tar Mazut Gas oil Kerosene fraction Natural gas Vacuum gas oil Straight-run gasoline to NKNK = 1,066,000 MT Crude oil Hydrogen production Sulphur production Hydrogen Hydrogen sulphide Naphtha hydrotreatment High-octane additives unit Marox Catalytic cracking Light and heavy gas oils Hydro- cracking Sulphur production Gasoline 953,000 MT Naphtha 98,000 MT PPF 120,000 MT Sulphur 90,000 MT Bitumen 300,000 MT Naphtha+liq. gases Hydrogen sulphide Diesel fraction Sulphur Diesel fuel Jet fuel Naphtha Asphalt 951,000 MT Electric energy De- asphalting Gasification Hydrogen Asphalt-free oil 1126,000 MT

Propylene 340,000 MT Asphalt-free oil 970,000 MT Straight-run gasoline 785,000 MT Oil tar 2,425,000 MT ELOU AVT-7 New unit Middle distillates hydrotreatment complex Fraction NK 140-350 C 1,800,000 MT Carbonaceous oil (100%) 7,000,000 MT Gasolines AI-98 AI-95 AI-80 Gas 90,000 MT Gasoline fraction hydrotreatment complex De- asphaltisation Asphalt 1,455,000 MT Light vacuum gas oil 950,000 MT Gasification ETHYLENE-700 plant Pyrolysis fractions separation unit MTBE, acrylate 2,750,000 MT Catalytic reforming Isomerisation Fr. NK 85-140 490,000 MT Fr. NK 62 C 355,000 MT 190,000 MT Gasoline blending unit 355,000 MT 390,000 MT 60,000 MT Fraction 62C 165,000 MT from OAO Nizhnekamsk Refinery Fraction 62-85C 105,000 MT to pyrolysis at OAO NKNK 800,000 MT Pyrolysis tar 700,000 MT to TU Ethylene 700,000 MT Fractions 5 and 4 168,000 MT to SK Motor oils production complex Heavy vacuum gas oil 648,000 MT 100,000 MT to OAO KOS 22 Electric energy Sulphuric acidMineral fertilisers Flow Chart of New Benzene production unit Divinyl production unit Butylene-isobutylene fraction 142,000 MT Butadiene 190,000 MT Benzene 378,000 MT

Ethylene Propylene Fraction C4 Vinyl acetate Copolymers thereof Alpha olefins Ethylene oxide PE LLDPE HDPE LDPE Cross-linked PE EVAC Polymer processing facilities Surface active substances Synthetic oils Higher fatty alcohols Polyethylene terephtalate Polyethylene glycol Acetaldehyde Ethyl acetate SKEPT Propylene oxide Propylene glycol Polyethers Polyurethane foam Isopropyl alcohol Polypropylene Thermoplastic elastomers Acrylonitrile Isobulylene MMAPMMA PAK ABS Acrylamide Polyacrylamide Halo-butyl rubbers Butyl rubber Benzene Maleic anhydride Ethyl benzene Caprolactam, PA-6 Styrene PS, ABS, SAN Petrochemical Complex Polymer processing facilities Acetic acid Pentaerythrite Paints & varnishes Ethylene glycol Monoethanol amine Polyacetal resin SAS Polypropylene glycol Butadiene rubbers Polyester resins Butadiene-styrene rubbers, thermoplastic elastomers

OIL-GAS-CHEMCIAL COMPLEX OF THE REPUBLIC OF TATARSTAN MINISTRY OF TRADE AND FOREIGN ECONOMIC COOPERATION OF THE REPUBLIC OF TATARSTAN OAO “TATNEFTEKHIMINVEST-HOLDING”

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