Tatarstan Fertiliser Complex, Volga Federal District, Russian Federation
In November 2010, the government of Tatarstan awarded construction contracts for establishing a new fertiliser complex in the town of Mendeleyevsk in the Republic of Tatarstan. The plant will be located at about 1,000km east of Moscow.
The integrated fertiliser complex will produce ammonia, granulated carbamide and methanol using natural gas as feedstock. It will also be one of the largest plants to simultaneously produce methanol and ammonia.
The complex will have a capacity of about 2,050 metric tons a day (tpd) of ammonia. When the fertiliser is produced along with methanol, it will have a capacity of 1,382tpd of ammonia and 668tpd of methanol.
The plant is scheduled to become operational in 2015. The cost of construction is estimated to exceed RUB46.2bn ($1.6bn). The payback period of the project will be about seven years.
Fertiliser complex ownership and financing
The Tatarstan fertiliser complex will be owned by OJSC Ammoni, a joint venture between Regiongazfinans (68.5%) and the Tatarstan government (31.5%).
State corporation the Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB) is acting as the financial advisor for the project. VEB will raise funds from Japanese banks.
Background to the Tatarstan project
Ammoni was established in 2006 to construct an industrial-scale fertiliser complex in Mendeleyevsk. The company was set up by Vnesheconombank and the Tatarstan government.
Construction of the plant was scheduled to commence in 2008, which, however, was put on hold due to lack of funding.
In May 2009, the Tatarstan President Rustam Minnikhanov visited Japan and signed a memorandum of intent to construct the methanol, urea and ammonia production plant.
In November 2010, Ammoni finally awarded the engineering, procurement and construction (EPC) contracts for the plant at the Asia-Pacific Economic Cooperation (APEC) summit in Tokyo, Japan.
The Tatarstan fertiliser complex will be the largest of its kind project in Russia to be built in the past 20 years.
EPC contract for Volga Federal District's fertiliser plant
The NAK Azot granulated urea plant was established by reconstructing an existing Urea-3 workshop and building a new granulation unit.
The EPC contract for the urea fertiliser plant has been awarded to a consortium of Mitsubishi Heavy Industries (MHI), Sojitz Corporation of Japan and China National Chemical Engineering (CNCEC).
The value of the contract exceeds $1bn.
Mitsubishi Heavy Industries will lead the consortium and be responsible for the overall construction of the plant.
The scope of works will include basic and detailed designing of the plant, and procurement, installation and testing of the equipment.
Sojitz will undertake all the logistics requirements and transport coordination for the project within Russia.
MHI and Sojitz were chosen due to their successful start-up of a similar fertiliser complex in Malaysia. CNCEC will be responsible for the construction of the plant.
Contractors involved and feedstock
OJSC Giprokauchuk was contracted by Mitsubishi in 2010, to revise or confirm the technical solutions designed for the Ammoni complex with an aim to reduce the capital costs.
The process technology licenses for the fertiliser complex will be provided by Saipem of Italy, Haldor Topsøe of Denmark and Uhde Fertilizer Technology of Netherlands.
The natural gas feedstock for the Tatarstan complex will be supplied by ZAO Tatgazinvest, a subsidiary of Gazprom. The company will annually supply about 800 million cubic metres of gas for the fertiliser and methanol production.
Market growth and Russia's future plans
The Tatarstan urea complex is being built in response to the Russian plans to improve its agricultural and industrial developments. The rise in food production necessitated by growing global population increases the demand for fertilisers.
Russia is one of the largest natural gas producers in the world. The new fertiliser project will provide high value for the natural gas resources.
In 2010, prices of the nitrogen-based fertilisers were increased by 30% to 40% globally. The rise was in response to the economic recovery and efficient drought handling practices. The production from the complex will fulfil the demand in Tatarstan and will also be exported to foreign markets.