Market for polymer-modified bitumen (PMB) in Russia growing more rapidly than forecast

RUPEC.RU

Interview with Dmitry Orlov, Head of Bitumens Department at JSC Gazprom Neft

RUPEC.RU Dmitry Orlov

In mid-January, JSC Gazprom Neft acquired Russia’s leading polymer-modified bitumen (PMB) producer, the Ryazan Petrochemical Experimental Plant. Although growth in the PMB market is relatively recent, this is already the oil company’s third project in the sector. The company has similar production capacities at its Omsk and Moscow Refineries. Dmitry Orlov, Head of Bitumens Department at JSC Gazprom Neft, discussed the PMB business, potential growth in the market, and government support for RUPEC.

„JSC Gazprom Neft refineries have long been producing bitumen for road construction. However, the company only relatively recently became involved in polymer-modified bitumens (PMB). How do these differ from conventional asphalts?”

„Polymer-modified bitumens have high elasticity and thermal stability. An asphalt concrete surface based on PMB is highly resistant to the formation of ruts, withstands high traffic loads, and is crack-resistant at low temperatures. There are three main components in PMB production. Firstly, conventional asphalt is used as a base. Secondly, there is a plasticizer which gives the bitumen plasticity and improves dilution of the polymer. And the third component is the polymer itself. The process used to produce PMB involves mixing these three components using a specific production process.”

„Is it accurate to think of PMB as a novel material for Russia?”

„In theory, there is a history to this material; however, it is difficult to point to any kind of definite starting point. As everyone knows, in 1995, the Federal Road Agency (Rosavtodor) mandated the use of PMB in federal road construction. However, PMB is a very exacting material. High-quality manufacturing requires careful monitoring of the production process, use of prepared raw materials and appropriate equipment, and close tracking of its physical properties. At that time, Russia simply did not have the technology either to produce PMB efficiently or to use it; therefore, initially, no one saw any particular sense in this. As a result, up until recently there has only been a small amount of production in this market, mainly in road-building companies.”

„What does the PMB market look like today? Are there any figures you can give which would characterize it?”

„The market today can be described as ‘balanced’. We are seeing a distinct trend towards an increase in demand for PMB. For example, in 2010, the Russian market was approximately 50,000 tonnes, but by 2013, it had already grown to 140,000 tonnes. Accordingly, new production facilities are under construction and capacity is increasing.

The principal driver behind this growth in the market is the reconstruction of the main federal highways. The most important aspect of these projects is a high-quality road surface. The use of PMB enables this to be achieved. In this sense, Rosavtodor strikes me as a kind of ideologue for the entire road construction sector, when it comes to the question of using PMB. Rosavtodor has adopted a policy of systematically and gradually introducing innovative materials. It seems to me that there will be an increase in both the demand and the supply sides of this market. However, we must acknowledge that, for the time being, the production facilities have some supplies in reserve.”

„You referred to the Federal Road Agency as a kind of ideologue when it comes to the introduction of innovative materials. To what extent is the government generally providing serious support for PMB?”

„It is important to point out that the regulatory authorities have taken a series of actions, gradually removing barriers in existing regulations. There is no doubt that this is useful for the industry. I can give you an example. Before a road is constructed, the project must be approved. The proposals put forward by the engineering companies include the use of particular materials and designs. These are in turn listed in the federal and regional regulatory standards. And these documents originate from and are approved within the Ministry of Regional Development. It was important for polymer-modified bitumen producers that PMB should be included in these reference documents, and this did eventually happen. This was an important point for the development of the business. Another important stage was the enactment of Federal Law No 44 ‘On the Contract System in State and Municipal Procurement of Goods, Works, and Services’, dated 1 January 2014. The very logic of these kinds of contracts in road construction prompts contractors to use improved quality bitumen materials, which allow them to prolong the service lives of road surfaces and, in the long term, reduce road operation and maintenance costs.”

Laying the roadbed

„How does JSC Gazprom Neft see its own long term position in the bitumen and PMB market?”

„Last year, the company renewed its strategy for developing its bitumen business until 2025. It is envisaged that the demand for bitumen materials as a whole will by that time have increased to 7.7 million tonnes. JSC Gazprom Neft wants not only to retain 30% of this market, but also to become the leader in terms of production technology, manufacturing bitumens, and providing associated high-quality services. If we look at the PMB market, our prediction is that it will have trebled in size by 2025 and will by then have reached 500,000 tonnes. However, we can already see that our forecast is quite conservative. The figures from the last three years indicate that the market will grow much more quickly. Of course, it would be difficult to be the overall market leader for bitumen materials without developing the PMB sector, so this is an important future direction for JSC Gazprom Neft. We are planning to develop a complete range, and establish high-quality services for the delivery, packaging, and supply of a whole range of products. Naturally, we are aiming at the end user, and because this creates additional business for our company, we are looking at the potential for export.”

„Not long ago, JSC Gazprom Neft acquired PMB production facilities in Ryazan. Has the company become the country’s largest PMB manufacturer?”

„Actually, yes. We are now the largest PMB manufacturer in Russia. Our main production facility is at the Gazpromneft-Omsk Refinery. We anticipate that in the second quarter of 2014, the even more modern facilities at the Gazpromneft-Moscow Refinery will begin operations. Here, JSC Gazprom Neft has a joint project with the French company Total to produce the innovative polymer-modified bitumen product G-Way Styrelf. It is worth noting that other large, vertically integrated oil companies are not manufacturing SBS modified bitumen. Although there is, of course, definite interest in this business amongst companies in this market.”

The Ryazan Petrochemical Experimental Plant

„Are there differences in production processes when PMB is used rather than conventional bitumen?”

„Use of PMB instead of conventional bitumen in the mix at asphalt concrete plants does not require any special changes in the production process or equipment. Likewise, when laying PMB-based asphalt, the same equipment is used as with conventional asphalt. However, there are distinctions. PMB requires more even temperatures to be maintained during both transportation and storage, as well as during production of the bitumen-concrete mixture at the plant. More careful monitoring of the temperatures and processes are also required when the asphalt is being laid. If the specialists at the manufacturing plants producing the mixture for roads and the road construction workers do not have the necessary skills and experience, the result may be a poorer quality roadbed.”

„What, generally, are the requirements for bitumen raw materials for PMB production? What is the situation with these raw materials in Russia?”

„Essentially, there is only one requirement — consistency in the quality of the bitumen raw material. Plus strict monitoring of the technology used during transportation and during production. These conditions are only met when there is a close relationship between the manufacturer of the base petroleum bitumen and the manufacturer of the PMB. The quality of the PMB is dependent on the level of integration in this production chain. Therefore, JSC Gazprom Neft supplies all its own raw materials for its PMB production. Incidentally, we were one of the first companies in the sector to monitor the quality consistency of the raw material.”

The PMB section at the JSC Gazpromneft-Omsk Refinery

„What are the requirements for the polymer component? To what extent are the production capacities and quality available in Russia sufficient for fully-fledged development of the market?”

„The most common Russian modifiers are currently SBS copolymers and styrene butadiene thermoplastic elastomers. These are manufactured in Russia, and the production quality is on a par with international equivalents. Therefore, almost all major Russian PMB manufacturers use it. Last year there was an increase in production capacity in response to the trend of increased demand for polymer components to be used as bitumen modifiers.”

„What other types of polymers can be used for modified bitumen production?”

„Around the world, styrene-butadiene rubbers, polyolefins, ethylene vinyl acetate, comminuted rubber, and other polymers are used instead of SBS copolymers. These kinds of modifiers are often less expensive, but also usually have a narrow range of properties, modifying only a certain individual characteristic of the binder. Long experience of using modified bitumen in Europe has shown the clear advantages of SBS polymer in view of its capacity to improve the high- and low-temperature properties of the binder, its elasticity, and its adhesive characteristics. Therefore, in Europe today, more than two thirds of all bitumen is modified using SBS. This trend is also typical in Russia. Here, the use of styrene-butadiene-styrene type polymers is included in the National State Standard (GOST). We anticipate that by 2025, demand for styrene butadiene thermoplastic elastomers from the roads sector will be approximately 25,000 tonnes a year.”