ANNUAL REPORT 2012 Moving Forward
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ANNUAL REPORT 2012 MOVING ForWarD ANNUAL REPORT 2012 Time can be measured, but it cannot be stopped. By sweeping mankind along with the uncontrollable flow time dictates its own ifs and buts forcing people to reject the generally accepted stereotypes and thoroughly search for new development patterns, apply innovative approach- es, design cutting-edge technologies. Evolvement has its definite laws: staying where you are typically means miss- ing real opportunities. Only constant movement, while overcoming time and distance, is the soundest way to for- tify the conquered positions and hit the targets. The entire history of TAIF-NK Public Stock Company is the continuous and steady progression to new objectives, fresh achievements and new reaches of success. Contents Annual report TAIF-NK PSC 2012 Contents GENERAL DIRECTOR’S MESSagE 6 Chapter 1. ABOUT COMPANY 8 Chapter 5. CORPORATE MANagEMENT 50 1.1. Background 10 5.1. Share capital and dividends 52 1.2. Refining sector and Company’s Standing in Refining Sector 11 5.2. Corporate management and control bodies 52 1.3. The Company’s business priorities 18 5.3. Major undertaken transactions 1.4. Main events of the year 19 (major undertaken transactions and interested party transactions) 57 5.4. Information on subsidiaries and affiliates 58 5.5. Information on compliance with the Corporate Code of Conduct recommendations 59 4 Chapter 2. ON THE DEVELOPMENT IN TERMS 5 OF ITS PRIORITY LINES OF BUSINESS 22 Chapter 6. KEY RISK FACTORS 60 2.1. Production operation 24 6.1. Industry related risks 62 2.2. Review of the marketing activities results 27 6.2. Country and regional risks 64 2.3. Main economic and financial indicators of the Company 32 6.3. Financial risks 64 6.4. Legal risks 65 Chapter 3. DEVELOPMENT PROSPECTS 36 Chapter 7. FINANCIAL STATEMENTS 66 Chapter 4. CORPORATE AND SOCIAL RESPONSIBILITY 40 CONTACT DETAILS 72 4.1. Quality, ecology, industrial and occupational safety 42 4.2. Personnel 45 4.3. Social policy 47 4.4. Charity 48 4.5. Tax payments 49 General DirectorAbout’s companymessage Annual report TAIF-NK PSC 2012 In the reporting year the Company kept on implement- whole assortment of goods produced by TAIF-NK PSC will ing its strategic initiatives which were aimed at the develop- possess the enhanced environmental characteristics, includ- ment and extension of the oil refining production, strength- ing lower sulphur content in aromatic and highly volatile ening the Company`s position in the field, increase the assets hydrocarbons. capitalization. Within the frame of the aforesaid project as of the end of The Company maintained its focus on modernization of 2012 the contracts for basic engineering and license on hy- the existing process units – that is CDU/VDU-7 and Middle droconversion technology VEBA COMBI CRACKING (VCC) and Distillates Hydrotreating Complex of refinery, FCC unit of gas- license equipment delivery were concluded with the compa- oline plant – in order to increase the efficiency of production ny Kellogg Brown and Root (USA). The company Toyo Engi- activity, to implement the resource and energy saving, envi- neering (Japan) was adopted as the designer and vendor of ronmentally-friendly technologies along with prevention, the equipment for VCC unit. systematic decrease and avoidance of negative effect of pro- cess facilities on environment. There is plenty of work to be done ahead, but I have no doubt that the TAIF-NK PSC team will do its best for the suc- In the reporting year the Company completely made a cessful realization of the Company`s long-term strategy. switchover to the diesel fuel output of EURO-5 standard, in advance fulfilled the requirements of technical regulation I express my appreciation to TAIF-NK PSC personnel «On requirements to motor and aviation gasoline, diesel and for the complete professionalism and conscientious work. marine fuels, jet fuels and fuel oil». I would like to express gratitude to the shareholders for their 6 7 trust and support. I am sure that the year of 2013 will be the 28 filling stations are put into operation under the brand year of the Company`s new success – a milestone of the name of TAIF-NK PSC, 13 stations of which are served by the Company`s dynamic development and enhance of produc- Company directly. The total oil products sales through the fill- tion efficiency, increase in its share stock and growth of in- ing stations served by TAIF-NK PSC equaled to 46,6 thous tons vestment attractiveness. For this purpose TAIF-NK PSC pos- with the increase of 22% if compared with the previous year. sesses all things – the teams of experts, high technologies, the image of a trustworthy business partner, and the most Beyond any doubt the Company`s most major, capital- important thing is that we have a strong wish to work and intensive and strategically significant project is the construc- achieve better results! tion of Heavy Residue Conversion Complex (HRCC), the main objective of which is the exclusion of highly sulphur fuel oil output through the increase of higher margin light products meeting the world and European quality specifications along Dear SHareHolDers, In the reporting year the Company’s plants processed with the refining depth increase to not less than 95%. The ColleaGues anD BusIness Partners! 8,384 thous tons of crude oil. Average utilization of the refi- aforesaid project implementation makes it possible to create ning capacity equaled to 100.48%. Overall petroleum pro- more than 700 new highly paid work places, to increase the I bring herewith to your attention TAIF-NK Annual Report duct output amounted to 8,132 thous tons, the Company’s budgets revenue of all levels that will result in living stan- that summarizes the results of the Company’s activities over proceeds from sales of products, works and services amoun- dards improvement of the population of Nizhnekamsk city the year 2012. ted to over RUB 128 bln; about RUB 43 bln was directed to the and Nizhnekamsk district along with the economic prosperi- budgets of different levels. The net income equaled to RUB ty of the Republic of Tatarstan and the Russian Federation. A. K. KALIMULLIN I am happy to note that the year 2012 was profitable and 10,8 bln. Net assets made up RUB 36,4 bln showing a 22,2% The mentioned above complex implementation will improve TAIF-NK PSC constructive to TAIF-NK. increase at 2012 year-end. the ecological situation in the region significantly as the General Director about coMpanY The greatest thing in this world is not so much where we are, but in what direction we are moving CHAPTER 1 About company Annual report TAIF-NK PSC 2012 About company • high-octane motor gasoline components MTBE and TAME production units with capacity of 24.8 and 152.8 Nearly all main process facilities thous tons by product respectively were put into opera- of TAIF-NK PSC were either constructed tion in 2009; or revamped through the latest 10 years • commercial gasoline compounding with capacity of 600 thous tons by product. and Atomic Supervision and Federal Agency on Technical 1.1. BACkgROUND • hazardous cargo handling operations for railway trans- portation. As can be seen from the above nearly all main process Regulating and Metrology pursuant to which the refineries facilities of TAIF-NK PSC were either constructed or revamped should provide the sufficient production and supply of the TAIF-NK PSC consists of two large production comple- through the latest 10 years. The intensive development and qualitative oil products to the domestic market meeting the TAIF-NK Public Stock Company was registered on July, xes – refinery and gasoline plant. appliance of modern foreign and national technologies in the requirements of the technical regulation «On requirements 29th, 1998 (State Registration Certificate of legal entity enterprise’s construction and revamping allowed the Com- to motor and aviation gasoline, diesel and marine fuels, jet pany to take a 6th place among the oil refineries of Russia in fuels and fuel oil». The Russian Federation governmental No. 1018/к, issued by State Registration Chamber of the Refinery comprises the following units: feed processing depth. policy aimed to the sector development is also supported by Ministry of Justice of the Republic of Tatarstan, the previous • CDU/VDU-7 – primary oil distillation unit with capacity the existing calculation system of the crude and oil products Company`s full name: TAIF-NK CJSC). of 7.344 thous tons/year by feedstock was constructed export taxes «60-66», introduction of the protective duty in 1979 and revamped in 2003 and within the period of for motor gasolines export at the rate of 90% of the crude The Company exists under the Civil Code of the Russian 2008–2012; 1.2. REFINING SECTOR AND COMPANY’S STANDING duty and increase of excise taxes for the low-grade motor Federation, the Federal Law on Joint-Stock Companies, other • Visbreaking unit with capacity of 1.800 thous tons/year regulatory legal acts of the Russian Federation and the Char- IN REFINING SECTOR fuels along with the introduction of decreasing coefficient by feedstock was built in 2003; for high-grade fuels. 10 ter of TAIF-NK PSC. 11 • Middle Distillates Hydrotreating Complex was put into operation in 2002, and it comprises the following units: TAIF-NK`s key activities are the following: As reported by Ministry of Energy of the Russian Fede- – hydrogen generation unit with capacity of 16.39 thous Crude oil is the base component of economies of many ration in 2012 the oil companies invested about RUB 190 bln • oil refining, oil products and their derivatives sales; tons/year by product; countries, particularly, the economy of Russia that disposes of to the refineries modernization, and in 2013 the investments • building and operation of petrochemical industrial pro- – kerosene hydrotreating unit with capacity of 610 thous the sizeable hydrocarbon reserves along with the fuel-and- for the given goals can be increased almost twice and will be ductions.