At its Uren plant in Nizhny Novgorod oblast, Orgkhim makes three types of Norman-branded process oils used in the production of tires, rubber and rubber compounds. It also produces fatty acids, emulsifiers hydroperoxides and bitumen additives. The companys principal plant in Uren has a capacity of 110,000 tons per year, and it has additional 48,000 t/y pine chemistry capacity. Orgkhim operates two additional facilities: 3,700-t/y antioxidants plant in Voronezh oblast and a 8,500-t/y plant in Lesosibirsk, Karsnoyarsk, that produces pine oil, terpinol, terpene hydrocarbons and rosin esters, as well as pelletized rosin and pre-emulsifier products.

Promise in the East

In September, the company confirmed to LubesnGreases that it plans to build an extender process oils plant in Singapore or Malaysia. It also intends to invest in a 25,000-t/y process oil plant in Oswiecim, Poland, tentatively scheduled to go on stream by 2016. Orgkhim also sold its licensed technology for producing low-PAH extender oils to HollyFrontier, an independent refiner from Newport Beach, California, United States. The two companies plan to build a 50,000-t/y process oils plant. The location of the new capacity is a matter of on-going discussion. We are considering a number of potential sites in Oklahoma and Texas. Nevertheless, the new facility is expected to come on stream by 2017, an Orgkhim spokesperson said.

The preferred location for Orgkhims U.S. $50 million plant in Singapore is Jurong Island, the city-states energy and chemical industry hub. We claimed a land plot for construction there back in 2013. By [the end of 2014], we expect to close negotiations and obtain all the necessary authorizations and permits, said Nikolay Khodov, Orgkhims chief executive officer. He added that the company expects the project to receive government tax incentives.

Expected to open by 2016, the 50,000-t/y plant will manufacture and sell the companys Norman-branded industrial oils in the Asia-Pacific region. We already supply a few Asian tire factories, and this plant will help us to significantly increase our presence in the market, the company said.

The new production facility will use a proprietary technology developed by Orgkhims research and development center. A local affiliated research and development office will be opened at the plant site as well.

In all, the company is ready to invest about U.S. $130 million in three units located in Asia-Pacific, Europe and NAFTA in the next couple of years. The Singapore and U.S. construction projects received the highest governmental support, and the projects were endorsed by Rick Perry, governor of Texas and Igor Shuvalov, first deputy prime minister, Khodov said.

Global Trends

Asia has the worlds highest rubber consumption and is the largest tire rubber process oil market in the world, according to Kline & Co. This is why Orgkhim chose to build its plant in the region. Asia-Pacific is of strategic importance for us; therefore, we are determined to start construction as soon as possible, Khodov said in September.

Klines study also found that in the last two decades, global tire production has been shifting to developing economies. Around 60 tire production facilities closed down in the U.S. and Europe and shifted to Asia during 1992 to 2012, Kunal Mahajan, Klines energy project manager, said during an online presentation in November.

Orgkhim has annual turnover of over of U.S. $200 million and boasts that its primary line of business is the production of carcinogenic-safe extender oils used for what it likes to call green passenger car tires and for synthetic rubber resin production. We succeeded in developing this product thanks to our proprietary hydrotreating and solvent extraction process technology, the company said.

The tire industry accounts for more than 60 percent of global rubber consumption and drives global demand for rubber process oils, according to Kline. Process oils made of DAE contain high levels of PAHs, identified as causing tumors on the skin of live animals. Therefore, European Union directive 2005/69/EC restricts the use of eight PAHs such as benzopyrene, benzoanthracene and benzofluoranthene, all of which are identified as carcinogenic.

Many studies have proven that passenger car tires made with high levels of PAH leave a footprint on the environment. One of the earliest such studies is a Swedish Chemical Agency investigation done in 1994, which estimated that 14 tons of PAHs enter the environment from 10,000 tons of tire wear annually. Another regulation, 67/54/8/EEC, imposes labeling requirements on products that contain high levels of PAH. Such products must display risk phrase R 45 (may cause cancer) or T with skull and crossbones images (toxic).

The consultancy also found that because DAE is banned in the EU, it is being substituted in other markets as well, including Turkey, Japan and South Korea. The alternatives are formulations with low PAH such as treated distillate aromatic extract (TDAE) and medium extracted solvate (MES). The EU, U.S., Japan and South Korea have controlled the levels of PAH in tires since 2010. Brazil is expected to do the same in 2016.

The market for DEA is shrinking globally because more countries will likely adopt regulations banning its use in the future. Hence, in the last few years, Orgkhim became a large supplier of extender oils with low PAH content. Its products are shipped to four continents, while its widely used pine oils made in its Pine Chemical plant in Lesosibirsk are exported to Germany, the United Kingdom, Taiwan, India and the U.S. Its main customer base comprises the largest tire manufacturers such as Continental, Goodyear, Pirelli and Hankook, all of which operate production facilities in Europe, Africa, Asia and South America.

Orgkhim began operations in Uren and shipped its first batches of rosin and rosin soap in 2002. One year later, it started to produce emulsifiers for the rubber industry. In 2004, it developed and patented its low-PAH extender oil formulation and expanded in three phases from 2008 to 2013, increasing capacity from 8,000 to 110,000 t/y. The companys products comply with Europes REACH regulation.

It is too bad that the Russian government still hasnt adopted similar regulations that reduce the impact of untreated aromatic extracts on the environment and on human health, Khodov said. In March we proposed a draft of a law banning manufacture and importation of carcinogenic tires into Russia. He added that the project received strong support from the Duma and was submitted to the government for review.