Reliable roads – a reality

Dmitry Orlov, CEO, Gazpromneft Bitumen Materials, talks to us about improving the reliability of Russia’s roads, and the current and future domestic market for bitumen materials, in this interview with SIBUR Clients.

Edition: SIBUR Clients

Dmitry Orlov, CEO, Gazpromneft Bitumen Materials

— Can you tell us how bitumens and SIBUR products inter-connect?

— In the very beginning, when the formulation for asphalt mixture — to put it simply, asphalt — was invented, the binder used in all components was bitumen, a viscous petroleum product produced from tar, once oil has been processed into light and dark fractions.

In line with cities’ economic growth, car usage worldwide is increasing exponentially. Road coverings have to be able to withstand very different burdens: traffic speeds, intensity, and so-called “traffic loads” have all increased. Polymer-bitumen binders (PBBs), which are based on polymer-modified binders, can make asphalt more durable, and increase its service life. And this is where cooperation between SIBUR and Gazpromneft Bitumen Materials, operator of the Gazprom Neft bitumens business, begins.

Gazprom Neft was the first company in Russia to launch production of modified bitumens, using a SIBUR polymer at the Omsk Refinery in 2011. Only 50 tonnes a year was being purchased at that time. In 2018, the figure was 7,000 tonnes. We’ve actually increased procurement volumes more than 100-fold over the last seven years — more than RUB1 billion a year!

—What are your plans, regarding cooperation, going forward?

— I see a reliable and likeminded partner in SIBUR, with whom equal, respectful relationships are being developed. We have, for many years, held a joint conference together, and take part in joint industry events. SIBUR colleagues recently visited our Research and Development Centre (R&D Centre) in Ryazan. And, in exactly the same way, a team from Gazpromneft Bitumen Materials visited SIBUR’s Voronezh facility. Meetings like this at production facilities provide an opportunity to discuss all aspects of cooperation, to see technological processes first-hand, and find further opportunities for engagement. It’s precisely here, in subtle adjustments and fine-tuning, that I see a promising area for cooperation. We, as a polymer customer, can formulate further requirements for a specific product more precisely — leading, ultimately, the development of a high-quality, durable road covering.

— And how many modified bitumens are you producing these days?

— Sales volumes of premium binders reached 202,000 tonnes in 2018, including export shipments, and we command a 40-percent share of the total PBB market in Russia — all of it starting from a very modest 2,000 tonnes in 2011. The Russian market is changing: demand for PBBs is growing. As recently as three or four years ago the road-building market could not use more than 200,000 tonnes of PBBs, preferring basic bitumens. But sales of modified bitumens — in terms of road-building companies’ total procurement — are growing steadily. As regards target market share in terms of total sales of bitumen materials, the metrics for us are PBB sales comprising 15 percent in the US, 10–37 percent in Europe, and a record 45 percent in Canada.

— Did you expect this growth in 2014, when Gazprom Neft adopted its strategy of developing its bitumens business as an independent subsidiary?

— We were optimistic about the future, and set ourselves ambitious goals for development.

To start with, we moved up to a new stage of development in 2014: as the company’s bitumen sales department, we had acquired enough skills and competencies, and an understanding of the road-building industry, to become the operator of Gazprom Neft’s bitumens business, as a subsidiary. That’s the evolutionary development any commercial organisation, interested in improving efficiency, developing new technologies, and creating high-margin products, undergoes.

In terms of volumes, we forecast a gradual increase in sales of Gazprom Neft’s premium bitumen binders, to 118,000 tonnes by 2018. Although in 2014 the total volume of PBBs used in road construction was only 3.7 percent. And we were on the right track — total volumes of polymer-bitumen binders already stand at more than six percent of total bitumen production in Russia, exceeding 400.000 tonnes.

— What else have you achieved over the last five years?

— We are the technological leader in terms of product range. Our range covers 180 products — our competitors don’t have anything like that varied a selection. We are usually the first to develop technologically unique solutions on the bitumens market. We’re the trend-makers at the moment.

Gazprom Neft was the first VIOC in Russia to open its own Research and Development Centre (R&D Centre) three years ago, and other “brothers in arms” are now starting to join this initiative.

We pay considerable attention to developing new products and technologies. One such technological solution being protective and restorative compounds. These can deliver a 30 to 35-percent cost-reduction over a road’s 12-year life-cycle. A road-maintenance contractor has to undertake recycling every four years, as a rule — taking off the top asphalt layer and laying a new road covering. Using our formulation means the existing top layer can be retained, and its serviceable life extended. Our ZVS protective binder melds the asphalt components together, forming a layer on the road surface and restoring the durability of the covering while, at the same time, protecting against harmful impacts. This material is abrasion-resistant and increases the adhesion-coefficient, due to its mineral additive — the surface becomes, as it were, slightly abrasive.

Another of our developments is our bitumen strip. Repairing a transverse crack in a roadway, again, usually requires the top layer being removed and a new one being laid — which involves stopping traffic for eight to 10 hours. Imagine if that were the MKAD — the main Moscow ring-road — you’d get multi-kilometre tailbacks. The solution? Our bitumen strip — which is, essentially, a kind of road “plaster”, effectively eliminating defects and, moreover, speeding up roadworks. Traffic can start flowing again within just a few minutes of roadworks being finished.

— And who are your main customers? Who are you doing this for?

— The consumers of our products are — us, ourselves; anyone who drives on roads, every day, because 90 percent of bitumen usage goes on asphalt road coverings — tarmac. And the customer here is the government, the state — specifically, specialist agencies, analysing various factors, who determine where roads are going to go, what category or class they will be, and what sort of traffic they will carry. This drives demand for bitumen materials. Our key contractors are major road-building companies. Our geographic coverage now includes 85 regions, from Kaliningrad to Vladivostok, and from Franz Josef Land to the Krasnodarsky Krai.

Bitumen has also started to enjoy high demand in areas other than road building over the past decade. Scope for suing bitumen derivatives has become much broader — at airports, in housing and utilities, bridge construction, and much more. We undertake research into bitumen, analyse what other products could be produced, and for what industries. We are, already, undertaking developments for the coal industry, and expanding our skills in specialist road-building at coal fields; and there are also opportunities in developing solutions for the metallurgy industry.

As for ourselves, we’ve adopted the philosophy of “not just selling bitumen, but selling it smart” — because we’re also involved in roadbuilding and road coverings, and are working towards making them safe and reliable.

—What do you mean, “selling it smart”?

— Nowadays it’s no longer enough to just supply bitumens in line with national quality standards. Customers need a full, integrated service: a choice of formulations; stable products, of guaranteed quality; delivery; and a range of services. For example, bitumens have to be delivered to inaccessible regions, with undeveloped infrastructure, where customers can’t store products in bulk. In which cases, we arrange for products to be packaged, delivering them in “Clovertainers” — a modern, convenient form of packaging. Where required, we deliver hot product directly to an asphalt plant, for the asphalt mix to be prepared. We also guarantee that quality is maintained in transportation, which is a priority for bitumen. This solves some of the problems for customers.

Now, with the development of the “Save and Reliable Roads” and “Safe and Reliable Highways” special projects it’s important to develop binder formulations in line with specific usage and tarmac-component requirements for individual regions. Thanks to the capabilities of our R&D Centre we can help our customers here, as well as providing highly skilled services in diagnosing the materials and solutions to be used in any construction project, and undertaking audits of road coverings already laid.

—What’s your view of the “Safe and Reliable Highways” project? What role is your company playing here?

— We’ve been in active dialogue, and full engagement, with the Federal Highways Agency and state company Avtodor — right from the very beginning. We’re involved in all aspects of both the first “Safe and Reliable Roads” programme, and the second-stage “Safe and Reliable Highways” project.

Firstly — in terms of deliveries. We produce one third of all bitumen materials in Russia.

Secondly — in being involved in developing and updating all regulation, and changes thereto.

Thirdly — in making sure that those road sections on which our products are used, as well as the materials used, per se, are monitored — through inter-laboratory control systems, and in all processes involved in tracking product quality. Added to which, as part of Russia’s biggest bitumens conference — “PRO Bitumens and PBBs” — we are involved in developing a single and cohesive information platform. The “Safe and Reliable Roads” and “Safe and Reliable Highways” programmes are actively discussed by all delegates as part of the conference’s business programme, which offers the opportunity to put forward a collective point of view from producers, roadbuilding companies, design institutes, and clients — to hear each other, and get an understanding of expectations, problems, and limitations, as well as prospects for collaboration and development.

— You mean the conference you’ve been running with SIBUR for several years now? This used to be called “Bitumens and PMBs — Topical Issues”. How does it differ from other industry events?

— We held our first conference in 2012, for an audience of 40 people. Having witnessed the market’s lively response to a targeted event, we invited SIBUR, the Federal Highways Agency, and state company Avtodor to take part — and have, together, been holding the conference for what is, already, seven years now. Rosneft Bitumen has been a partner since 2017. We’ve renamed and rebranded the conference, giving it a dynamic title and modern logo, with an easily recognisable corporate identity. And attendees this year included more than 600 representatives from across the entire spectrum of Russia’s bitumen-derivative road-building industry — a term that has, already, stuck with attendees to our conference, uniting, as it does, both road-builders and oil-men — who are the people who produce bitumen.

This is the only event solely and exclusively targeted at developing the bitumen industry, where we discuss a whole range of important issues. And we don’t just discuss them, but solve them — something that is reflected in year-on-year increases in the consumption of modern materials in domestic road building, and confirmed by the fact that the country’s use of modified bitumens has been showing double-digit growth since 2012. There hasn’t been a single year in which growth has been less than 10 percent.

The effectiveness of the dialogue marshalled by the conference since 2012 is confirmed by the resolutions that have been put into effect. Eighty five percent of the objectives we set ourselves have, after seven conferences, already been met. Regulation is ever more consistent with today’s realities. The market has become more open, and its rules more transparent. Those barriers that previously impeded the introduction of modern modified bitumens are decreasing, year by year.

This conference is a chance to understand how the market operates, its trends, tendencies and priorities.

— And what potential do you see for development?

— Gazprom Neft is focussed on developing cutting-edge domestic solutions to drive sustainable market demand. We, as the operators of the company’s bitumens business, are committed to developing products that outperform international alternatives. And we’re having some success in moving in that direction. Our product line, which includes modern materials for the roadbuilding industry, protective and restorative compounds for asphalt coverings, and modified bitumen formulations, adapted to the road-use conditions in the regions in which they will be used — all of these are highly competitive products on the Russian market.

—And you export too, don’t you? How are Russian products received on international markets?

— Our international coverage includes 56 countries. — Our international coverage includes 56 countries. Gazprom Neft’s bitumen materials have found their place in Europe, Central Asia, Africa, and South America. That just leaves Central America and Australia. I’m confident we’ll be delivering to these continents too in the next few years.

First and foremost, our high-added-value, innovative bitumen products are in high demand on the global market. The competencies of our Research and development Centre mean we can work to all international standards. That means SuperPave, EH, ACT and, in the post-Soviet era, GOST. And it’s of no small importance that we’re able to adapt any binder formulation in line with the climate of the region in which it will be used. We are ready and able to work to any specification a client gives us. The result being a material best suited to specific usage conditions, regardless of what continent Gazprom Neft’s bitumens are expected to be used in.

It’s important to us to take an individual approach to achieve the best outcome. This practice has thrown up an interesting case, in producing a binder for a Vietnamese customer. According to the documentation — the quality passport — it appeared to be the ideal product, but it didn’t pass testing in Vietnamese laboratories. We started working out why. And it turned out: there’s a so-called “track test”, in which traffic movements — the movement of wheels on the covering — are simulated. It turned out that we run this test at a temperature of 20°С, in a dry environment, but in Vietnam — it’s run at a temperature of 60°С, and in a humid environment. Our R&D adjusted the formulation in line with those climatic metrics, introduced some changes to its composition, and obtained a product that, according to all expert evaluations, turned out to be a benchmark for Vietnam — a binder that exceeded local consumers’ quality requirements. The most important thing here being dialogue with the customer, and a deep understanding of the specifics of the market in each region.

— How do you manage to achieve that sort of efficiency To supply one third of the Russian bitumen materials market, to be the market leader in PBBs, and to achieve geographic coverage in both Russia and abroad, while maintaining an individual approach to customers?

— It’s all, actually, very simple. The secret of our efficiency is — our team. A strong bitumens team. Highly qualified specialists. We’re all half road-builders, half oilmen, and are genuinely committed to improving Russian roads, to finding solutions and products to make our transport network a global benchmark. And that’s our core value.

A company is driven — is formed by — it’s team. We’re scrupulous in recruiting specialists to Gazpromneft Bitumen Materials; we look for professionals in their area, willing to share our values, young at heart, eager for new discoveries. For example — the head of our R&D Centre, also head of our Technological Development and Quality Control Department — is a professional experienced in working with roadbuilding companies, in teaching at the Moscow Automobile and Road Construction State Technical University (MADI), and is highly skilled. And he’s building a team that matches his own standards. The R&D Cente team are unique specialists who know everything, or almost everything, about bitumen, and about asphalt (tarmac) — and who are, moreover, researchers and investigators: looking for new opportunities for using bitumen, for improving asphalt, developing bitumen materials, experimenting, and never letting up.

Two years ago we started developing our own specialist training system for the roadbuilding industry, in order to train future highly qualified roadbuilders, straight from university or college, or even school. We have our own sponsored school, where we are helping develop the next generation, in every way possible, and in 2018 opened a Faculty of Roadbuilding and Aerodrome Construction at the Ryazan Polytechnic Institute. We are in dialogue with key specialists, and look for opportunities to cooperate with academics who have come to our attention at professional roadbuilding- or oil-industry conferences. Or, for example, if we come across some news in the media or an article about some talented young professionals coming up with something new for the roadbuilding industry, our HR department will, as a matter of course, get in touch with these guys, touch base, and take a view on prospects for cooperation. We pay considerable attention to the potential of people whose greatest successes still lie ahead.

— What still needs to be done in order to bring the domestic roadbuilding industry up to international standards?

— Our job, at this point, is to produce a wide range of high-quality bitumen materials, so that our colleagues in the roadbuilding industry can concentrate their strengths and resources not on product quality, but on road construction. I believe that the quality of Russian roads has improved significantly in recent years. I, as a resident of St Petersburg, genuinely admire the new transport interchanges and bridges that are appearing in the city. The new M-11 highway between Moscow and St Petersburg — with the highest quality road covering — is already partly open. The project to build the “Karelia” highway to Sortavala is now under implementation — there’s no difference between this road and a European one. Projects like this are becoming increasingly common, every year. And that gives us every reason to be proud of Russian roads.