EPC – этилен, гелий и не только

EPC – ethylene, helium and beyond

Expertise

In the early 2010s, a client – an independent oil company that had been dynamically developing for over twenty years – conducted laboratory research and discovered ethane in its extracted oil in volumes sufficient for its industrial use in the petrochemical industry. The idea of commercial development of associated gas for the construction of an ethylene and polyethylene production plant was born. By the beginning of 2018, it was decided to organize a tender to select a leading internationally recognized contractor to enter into a contract with the winning participant for engineering, manufacture and supply of production equipment and commissioning work.

Project and Participants

The goal of the project was to build an ethylene production unit with a capacity of over 500,000 tons of ethylene and polyethylene per year. Leading European, US, Chinese and Japanese engineering companies with licensed technology for ethane pyrolysis and production of the finished product on an industrial scale were allowed to participate in the tender.

Participation in the Project and Expertise

Our firm’s participation in the project began in December 2017, during negotiations in Houston, Texas, with the aim of concluding the necessary license agreements for the production of ethylene and polyethylene. The main stage of legal work began in March 2018 with the discussion and consulting of the client in the process of agreeing on conditions of basic design and project financing from each of the foreign tender participants. The summer of 2018 was devoted to preparing the main conditions of an EPC contract, with the involvement of specialized Russian research institutes responsible for preparing and approving working and project documentation. In the early autumn of 2018, our firm helped prepare the documentation that formalized the choice of the tender winner and began designing and coordinating the project documentation with the tender winner. For your understanding, we are talking about hundreds, if not thousands, of pages of documents that detail all aspects of engineering and design work, ordering and delivering equipment manufactured for the designated plant, conducting commissioning work and launching production.

Helium+

An inexperienced reader may ask – what does helium have to do with the project? Plant construction projects are complex and multifaceted. To successfully operate a polyethylene production plant, at least five more plants are required for fractionating ethane from oil, subsequent ethane cracking, and the polymerization process of the corresponding gas fraction to obtain polyethylene. In addition, helium can be present in natural gas extracted alongside oil. It is obtained from associated natural gas by fractional distillation. Each of the described processes requires the construction of a separate plant and obtaining a license. Our firm helped the client throughout 2018 to design and agree on a wide range of documents, including the production of helium and the distribution of liquefied hydrocarbon gas.

Project Completion

The project documentation was successfully approved and signed at the end of 2018 and the beginning of 2019. For example, the signing of documentation for ethylene took 48 hours of continuous work without rest or sleep. This was the first time in the company’s history when the client was surprised to see a bill that indicated the duration of work as 24 hours in a day. Currently, the client company is successfully implementing its project, while our lawyers recall more than nine months of negotiations, sleepless nights, flights to see their families on weekends, and returning to the client’s office early Monday morning to continue negotiations and consulting.

Related articles

See all news
  • English Law for Contracts: Trusted Ally or Trojan Horse?

    Contracts are essential to any business or personal transaction, providing a legal framework that outlines the obligations and responsibilities of all...
    Learn More
    Image of unbiased Themis, the goddess and personification of justice, divine order, law, and custom
  • Open Source Licenses: Navigating the Pros and Cons of Popular Options

    Open source software has become increasingly popular over the years, providing businesses and individuals with access to high-quality and...
    Learn More
  • SaaS, PaaS, IaaS, and More: A Legal Primer on Popular Software Models

    In today's rapidly evolving digital landscape, software has become an integral part of businesses across industries. With the rise of cloud computing...
    Learn More
    Image of code lines showing that authentication failed
  • Russia is making a move to support technology companies

    On April 27, 2023, the Government of the Russian Federation submitted to the State Duma a draft federal law "On the Development of Technology...
    Learn More
  • Startup Valuation: When Cashflow Only in Plans

    There's no doubt that valuing a startup is a crucial part of fundraising for entrepreneurs seeking seed or growth capital. The challenge, however,...
    Learn More
  • Key Legal Trends of 2023: The Big «Eight» in Action

    The legal sphere has always been important for society and the economy, and its role is only increasing. Over the past several years,...
    Learn More
  • Russia announces mechanism for purchase of natural gas in roubles

    On 31 March 2022, Presidential decree no. 172 (the «Decree») was published setting out a mechanism by which countries that have been designated by...
    Learn More
  • Danilov & Partners is ranked by IFLR 1000 for the 2021/22 year edition

    IFLR 1000 has announced its annual research ranking results for its 31st Edition 2021/2022. This ranking confirms that Danilov & Partners...
    Learn More
  • Private Equity Fund

    You can read the Russian version of the article here.
    Learn More
  • Danilov & Partners’ lawyers acknowledged in Best Lawyers’ 2022 Edition

    Best Lawyers, a reputable international rankings, has released its 2022 edition:
    Learn More
  • Webinar on Listing of a Company on the Singapore Stock Exchange

    On April 23, 2021 our firm together with a leading Singapore law firm Drew & Napier held the webinar on Listing of a Company on the...
    Learn More
  • Danilov & Partners reaffirms its positions in The Legal 500 guide

    The Legal 500, one of the largest international legal rankings, has published an annual ranking of Russian legal market leaders. For...
    Learn More