Nizhnekamskneftekhim, the Niezhnekamsk-based petrochemical company, cut alpha olefin supply to Tatnefts 10,000 ton-per-year PAO plant last year and has not resumed it, Gabbas Ilyasov, deputy director for development at the Tatneft plant, told Lube Report during the Base Oils and Lubricants in Russia and CIS conference held here last week. “1-decene alpha olefin is supplied by Nizhnekamskneftekhim’s plant. It produces this stock with oligomerization of ethylene,” he said.

Nizhnekamskneftekhim, owned by the investor group TAIF, is one of the biggest ethylene and polyethylene producers in Russia.

Ilyasov pointed to two possible reasons whyalpha olefinsupply halted. It might be the higher margin polyethylene gives over selling [or processing] only ethylene. Second, it is because Gazprom significantly reduced ethane gas supply to Kazanorgsintez, TAIF group’s ethylene plant inKazan, Ilyasov said. He added thatNizhnekamskneftekhim management decided to take the unpopular measure of cutting supply ofalpha olefin to third parties, including Tatneft.

Tatneft fears it will not find a seriousalpha olefinsupplier any time soon, as petrochemical production in Russia has seen constant decline since the collapse of the Soviet Union. Last year saw a huge deficit of ethylene supply in the region. The biggest Russian ethylene, polyethylene and alphaolefins producers are based in the republics of Tatarstan and Bashkortostan. Nizhnekamsk, the second biggest city in Tatarstan, is one of the biggest petrochemical centers in Russia.

Few ethylene projects have been announced in Russia. Lukoil, the countrys biggest independent crude producer, two years ago pledged a $3 billion project for construction of an ethylene plant in the Stavropol region, in Russias south. Initial plans called for a 600,000 t/y ethylene plant to start operation in 2013.

Etilen Polymerniy Kompleks, a Russian company created in December 2010, is investing in a $200 million PAO plant which will also produce small quantities of ethylene, hexane and dicyclopentadiene, Igor Arutyunov, head of polymers chemistry and technology lab at the Moscow United Research and Development Center, told Lube Report. Our center is developing the plants technology processes. It will be based in Tula region and will produce 10,000 t/y of Group IV base oils and will start to operate by 2013, he said.

Our case only confirmed the well-known truth that oil refining is always on back burner in the country where profit gained from selling crude oil is much higher, Ilyasov said, citing several examples of proposed but still-not-started projects for production of base oils and other petrochemical products in Russia.

The Nizhnekamskneftekhim-Oil plant has capacity to produce 10,000 t/y of synthetic and semi-synthetic lubricants. So far we only produce hydraulic, transmission and motor oils. Luckily we have enough PAOs in storage to continue our production of lubricants until late 2011, Tatnefts Ilyasov said. The company is selling its synthetic and semi-synthetic lubes under the Tatneft brand.

The plant is set to expand its infrastructure and is building enough space to accept a 60,000 t/y lubes blending facility, and management is confident about developing a bigger lubricants business. Tatnefts daughter company TANECO is working on a 190,000 t/y Group III base oil plant project in Nizhnekamsk, planned to go online in 2013, Ilyasov concluded, expressing hope that the blending plant in Nizhnekamsk will meet its full potential in the near future.