Interview

Interview

The Chemical Industry is Gaining Momentum

5/2019

     In April of this year, the President of the Republic of Uzbekistan Sh. Mirziyoyev approved the Program of the Chemical Industry Development for 2019-2030. The document provides for implementation of several investment projects worth about 12 billion USD. Another direction is to increase the efficiency of using existing production facilities while creating manufacturing clusters on their basis for production of new types of chemical products which are in demand in the economy sectors.
     The Chairman of the Board of the JSC “Uzkimyosanoat” Odil TEMIROV gave a detailed interview to the Editor-in-Chief of the magazine “EBU” and spoke about topical issues of the industry development. We bring to your attention the text of this conversation.
 
     – Odil Shukurovich, currently reforms aimed at modernization and improvement of investment attractiveness are actively carried out practically in all branches of the economy of our country. Tell us about the changes in your organization, what awaits the domestic chemical industry?
     – Practical implementation of projects in the chemical industry is aimed at accelerated development and diversification of production. This requires the adoption of effective measures to increase the investment attractiveness of the industry by, first, reducing the state share in enterprises, introduction of modern methods of corporate governance, as well as international financial reporting standards.
     The Program of the Chemical Industry Development for 2019-2030 provides for implementation of a number of investment projects aimed at expansion, modernization of existing and creation of new industries and new types of chemical products for sectors of the economy of the Republic.
     To reduce participation of the state as a regulator and to enhance the role of shareholders in managing companies in the sector, promote direct investments in modernization and expansion of existing production facilities it is planned to sell the state’s share of the JSC “Uzkimyosanoat” in the charter capital of enterprises. In the first half of this year, shares of the JSC “Kokand Superphosphate Plant” were sold to a foreign investor “Indorama” (Singapore) with acceptance of social and investment obligations.
     It is also envisaged to attract direct investment in the investment project of the LLC “Birinchi Rezinotekhnika Zavodi” by making an additional contribution by the investor in the amount of up to 51% of the company’s charter capital at market value. Now the project is at the stage of agreeing terms with the PJSC Tatneft (Russia).
     51% or more shares in the charter capital of the JSC “Farg‘onaazot”, the LLC “Kungrad Sodium Plant” are sold at competitive auction at market value with the condition of acceptance by the investor of social and investment obligations.
     Besides, the Resolution provides for sale of 100% of shares of the JSC “Samarkandkimyo”, 26.14% of shares in the charter capital of the JV JSC “Electrokhimzavod”.
     The JSC “Jizzakh Plastmassa” is planning to attract investment through the IPO – initial public offering of stocks to a wide range of investors for investment in the issue of additional shares amounting to 25% of the charter capital and their subsequent placement on the stock exchange. Currently, work has begun on the issue of shares and preparation of the company for IPO with the involvement of an investment consultant — the largest international company Ernst & Young, which is working on the sale of shares of the JSC “Farg‘onaazot”, the LLC “Kungrad Sodium Plant” and the JSC “Dehkanabad Potash Plant”. These measures will activate the process of market mechanisms in the chemical industry of the country, which will allow it to work more flexibly and dynamically, in accordance with the new market conditions.
     – With whom currently cooperation is being negotiated? Are there plans to build and launch new joint ventures with foreign partners in near future?
     – We cooperate with foreign companies in implementation of investment projects. In particular, the project “Construction of a complex of manufacturing facilities for production of 100 thousand tons of polyvinyl chloride (PVC), 75 thousand tons of caustic soda and 300 thousand tons of methanol per year on the basis of the JSC “Navoiyazot” is at the completion stage. The project is implemented jointly with a consortium of Chinese companies China CAMCE Engineering and HQC Shanghai Company.
     At the same time, implementation of the project “Organization of production of 20 thousand tons of BOPP film in the FEZ ‘Jizzakh’” is being worked out. A joint venture “Nova Polymer Jizzakh” LLC has been established, a business plan is being prepared and negotiations are underway with suppliers of equipment for contracting.
     In the coming years it is planned to implement projects together with:
     ● foreign companies – “Organization of production of polyester fiber” on the basis of the JSC “Farg‘onaazot”;
     ● the Slovak company Resysle — production of synthetic yarns from polypropylene on the basis of the JSC “Jizzakh Plastic Plant”;
     ● “TEXOCOR” (Russia) and “Textima Export Import GmbH” (Germany) – “Organization of production of textile and technical cord” and “Organization of production of hydrogen peroxide”;
     ● European companies – “Organization of production of urea-formaldehyde resin” in the form of a joint venture.
     This is only a part of all projects, because the list is quite solid.
     – In our country, as in the world, the trend of production of “smart” materials, polymers, plastics, rubbers, resin, synthetic fibers is rapidly gaining momentum. What other new types of chemical products are planned to be manufactured in Uzbekistan?
     – Based on the Program for the Industry Development for 2023-2025 it is planned to expand the product line by producing more than 30 modern types of products, such as: new types of catalysts for the oil and gas and chemical industries, polyvinyl chloride and polystyrene for the construction industry, BOPP film for the packaging industry, synthetic rubbers for the rubber industry, PET fibers, chemicals and hydrogen peroxide for the textile industry, new reagents for the metallurgical, oil and gas and energy industries, new types of complex fertilizers and pesticides for agriculture and greenhouses, intensive gardening, as well as the bases of detergents — LABS and SLES, the production of which in our country will solve the issues of import substitution.
     – There is an intensive development of petrochemistry all over the world, there is a formation and growth of petrochemical clusters and hubs, and know-how is being generated in this area. The chemical and oil and gas industries of our country are close to each other. Can you tell us about the interaction of the JSC “Uzkimyosanoat” and the JSC “Uzbekneftegaz”.
     – The petrochemical industry of the Republic is developing steadily from year to year. Large-scale plans are being implemented, which can significantly increase the industry’s importance for the country’s economy.
     Currently, together with the JSC “Uzbekneftegaz” we are working on the project “Production of olefins by MTO technology from natural gas for further production of PET, synthetic rubbers, chemical fibers, polyvinyl chloride, polymers and other petrochemical products”, which provides for creation of a technological cluster processing 1.6 billion cubic meters of gas with the production of up to 1 million tons of gas chemical products.
     On May 8-9 of this year in London, an extended meeting was held with participation of foreign consultants, IFIs and a joint working group of specialists of the JSC “Uzbekneftegaz” and the JSC “Uzkimyosanoat”, at which the presentation of the project of MTO with a line of final products for further detailed marketing analysis was held.
     Within the framework of the 23rd international conference “Oil and Gas of Uzbekistan-OGU – 2019” (May 15-16, 2019), this project was discussed with participation of leading technology licensors and potential investors, negotiations on its implementation were held. As a result, a four-party agreement was signed on implementation of the project with participation of the JSC “Uzkimyosanoat”, the JSC “Uzbekneftegaz” and foreign investors. Currently, the development of the project configuration with marketing study by Wood (Italy) and Nexant (UK) is being completed. When these projects are implemented, the petrochemical industry will reach a new level, and the regional economy will receive another powerful impetus for development.
     To date, the enterprises of the JSC “Uzkimyosanoat” provide the oil and gas industry with drilling and other chemical reagents. In the future the scope of our cooperation with implementation of joint projects will expand significantly.
     – Are the existing capacities sufficient to meet the needs of the domestic market of Uzbekistan with domestic chemical products taking into account the prospects for growth of the entire economy of the country?
     – The JSC “Uzkimyosanoat” does not yet meet the needs of the domestic market for 100%, so every year a variety of chemical products worth about 700 million USD are imported to the Republic. In this regard, the Program of the Industry Development provides for implementation of new investment projects aimed at production of domestic chemical products with added value, reducing imports and increasing industrial cooperation of sectors of the economy.
Today, 16 large and medium-size chemical enterprises operate in the chemical industry, which together produce more than 200,180 types of chemical products, of which about 90 are new and in demand by both local and foreign consumers.
     – What products produced by the enterprises of the JSC “Uzkimyosanoat” are in great demand abroad, do they meet international standards?
     – Traditionally, mineral fertilizers such as urea, saltpeter and potassium chloride are in great demand. Due to the fact that the Republic of Uzbekistan is the only country in Central Asia producing soda ash, the demand for it is very high.
     As for the requirements, of course, all products of the chemical industry meet international standards and have appropriate certificates, such as ISO and others, without this it is now unthinkable to produce any products, especially for export.
     – Uzbekistan became one of the countries producing all three components of mineral fertilizers – nitrogen, phosphorus and potassium, and became the only producer of soda ash in Central Asia. What are the benefits of these factors?
     – First of all, it is the import substitution. The launch of the Dehkanabad Potash Fertilizer Plant allowed Uzbekistan to become one of the countries with its own production of potash fertilizers. This factor allowed to exclude the import of this product and made Uzbekistan one of the few countries in the world producing all three components of fertilizers and to create the foundation for setting up new facilities for production of complex mineral fertilizers (NPK) based on local resources.
     The LLC Kungrad Sodium Plant is the only enterprise in Central Asia for production of calcined soda. The company’s products are in demand both in the domestic market and abroad, and the demand for it increases every year.
     Currently, in terms of volume and types of produced mineral nitrogen and phosphorus fertilizers, the JSC “Uzkimyosanoat” occupies a leading place in Central Asia, being the largest producer of ammonia, urea, ammonium nitrate, ammonium sulfate, ammophos and nitrophos.
     – In the light of the tasks set by the President and the Government of the country for the industry and all sectors of the national economy on resource and energy efficiency, how do you solve them?
     – Because of more than half a century of operation, the enterprises of the JSC “Uzkimyosanoat” are energy-intensive, therefore, to increase their energy efficiency, projects of modernization and technical re-equipment of production facilities are implemented.
As part of implementation of the December Resolution of the President of the Republic of Uzbekistan of 2016 “On additional measures to accelerate the renewal of physically worn and obsolete equipment, as well as to reduce production costs of industrial enterprises” measures are being developed annually, which are aimed at reducing the cost of production, where one of the main indicators of reducing production costs is fuel and energy resources savings. In 2019 it is planned to reduce energy consumption at production volume: natural gas — 51.1 million m3, electric power – 98,9 million kW/h, oil – 592,5 t, thermal energy — 88.3 thousand Gcal.
     – Odil Shukurovich, it is impossible not to ask a question concerning the harmful impact of the chemical industry enterprises on the environment. What measures are being taken to minimize the adverse impact on the population and the environment?
     – Indeed, the chemical industry today is one of the sources of environmental pollution. However, this is a sensitive issue not only for our country, but also for all industrialized countries of the world. The specificity of chemical emissions is both in the amount of substances emitted during production, and in their toxicity, especially dangerous in emergency situations. Therefore, much attention is being paid by enterprises and government agencies to introduction of modern technologies to ensure safety during production processes and transportation of dangerous goods, compliance with technical standards and safety rules by personnel.
     In order to minimize the risks, the JSC “Uzkimyosanoat” conducts systematic and targeted work to reduce the harmful impact of industry enterprises on the environment, guided by the current laws, regulations of the Republic of Uzbekistan. There is a constant monitoring of emissions into the atmosphere and discharges of wastewater. For this purpose, the enterprises have organized eco-analytical laboratories accredited in the national accreditation system of the Republic of Uzbekistan. With introduction of new ammonia and nitric acid production facilities at the JSC “Navoiyazot” using the “Haldor Topsoe” (Denmark) and “Casale” (Switzerland) technology, the obsolete plants commissioned in 1964-1967 will be decommissioned, which will allow achieving a significant reduction in emissions of pollutants, including nitrogen oxides. Also, the old ammonia and nitric acid plants of the JSC “MAXSAM-CHIRCHIQ” will be decommissioned.
     The JSC “Farg‘onaazot” has also developed a project “Modernization of ammonia and urea production”, the implementation of which will contribute to reducing emissions in the urea production shop: ammonia — by 20%, urea dust — by 30% (by replacing pumps with modern ones and upgrading the granulation tower); in the ammonia–3 shop the nitrogen dioxide emissions will be reduced by 20% by reducing energy consumption.
All these measures allow us keeping the “remote control” of the environmental management under control.
     – Thank you for an interesting conversation and we wish you further success.

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