Company Profile

January 31, 2018

Introduction

History

The petrochemical industry in Pancevo is the first petrochemical complex in the northern part of the Republic of Serbia. The complex is located in the industrial area of the town Pancevo on the left Bank of the river Danube. During the economic development of the former Yugoslavia in late sixties high demand for basic chemical products, that were previously imported from Europe and Asia, led to a decision to construct chemical production complexes in the vicinity of the town Pancevo. Petrochemicals complex was one of them. Exceptionally suitable position in relation to important railway, road and river lines of communications enabled cheap transport of plastics to all consumers’ centers, as well as provision of raw materials. The plants of the complex were planned to be located in close proximity to Pancevo Refinery Plant which provided basic raw material - naphtha as well as natural gas.

Key Dates

Present

Today HIP-Petrohemija is the largest and only producer of petrochemicals, polymers (HDPE and LDPE) and synthetic rubber in Serbia and it has more than 1400 employees. It occupies 241 hectares of land. Currently Petrohemija is able to produce more than 600.000 t of petrochemicals a year. Polymer products HIPTEN ® (LDPE), HIPLEX ® (HDPE) and HIPREN ® (SBR) which are trademarks of HIP-Petrohemija’s product portfolio are intended for plastic and rubber processors. Other basic products are the starting point for other purposes in the chemical industries. Beside production plants HIP-Petrohemija has its own storage area, railway loading/unloading facilities, HSQE facilities and transport facilities. HIP-Petrohemija is participating in total annual Serbian export from 1% to 3% making it one of the largest exporters in the country.

Shareholders

18 shareholders, registered in Central Securities Depository and Clearing House of the Republic of Serbia, have ownership of the company’s shares. The largest portion of ownership belongs to Republic of Serbia with its institutions and state-owned companies - 76%, NIS a.d. Novi Sad - 21% and Lukoil Srbija a.d. Beograd - 3%. There are in total 66.851.096 shares.

Shareholder structure in percentages

Production Site Locations

HIP-Petrohemija’s plants are located in three towns:

Pancevo, where main plants are well connected to the capital city of Belgrade and also to the port of Danube in Pancevo
- Ethylene Plant
- High Density Polyethylene Plant (HDPE)
- Low Density Polyethylene Plant (LDPE)
- Waste Water Treatment Plant
- Utility Plants (for energy production and distribution)
- Maintenance Facilities
- Laboratory
Port of Danube in Pancevo
- PE pipes and fittings production Plant
Elemir near city of Zrenjanin
- SBR Plant
Crepaja - 19 km north from Pancevo
- Panonijaplast Plant (PE compound production plant)

Major plants (Ethylene Plant, HDPE and LDPE Plant) are located in industrial area of Pancevo in close proximity to NIS Oil Refinery Pancevo (connected with pipelines and road). Favorable location of the town Pancevo and HIP-Petrohemija’s Plants in the intersection of Pan-European transportation corridor 7 (river Danube - the most important water-way which connects Black Sea with the North Sea together with the Rhein and Main rivers in Germany) and corridor 10 (Salzburg - Ljubljana - Zagreb - Belgrade - Nis - Skopje - Veles - Thessaloniki) linking Europe, Asia Minor and Middle East enable continuous flow of goods and materials. Other major routes are branches of corridor 4 (from Nurmberg to Istanbul).

Air Distance to the biggest cities in Southeastern and Central Europe (km)

Production

Production program:

More info about each product you can find by clicking on the name of the product.

Ethylene Plant

Ethylene Plant started production in 1977. Virgin naphtha steam cracking unit for the ethylene production was licenced by American company Stone&Webster. Unit for hydrogenization of pyrolysis gasoline was designed by Francais du Petrole" (IFP). Two most important products from Ethylene plant are ethylene which is further used in HDPE and LDPE Plants for the polyethylene production and propylene which is completely sold on the domestic and foreign markets. Propylene can be used for polypropylene production. For a long period of time HIP-Petrohemija’s most important project is construction of Polypropylene Plant so the propylene produced in this Plant can be used in further chemical processes and sold not as a raw material but as a final product.

Annual capacity:

Ethylene - 200 000 t
Propylene - 85 000 t
C-4 fraction - 45 000 t
Pyrolysis gasoline - 138 000 t
Pyrolysis oil - 38 000 t

HDPE Plant

High Density Polyethylene Plant started production in 1977. It was designed by American company Crawford&Russell and licenced by Phillips Petroleum Co (Chevron Phillips). Plant consists of three connected sections: PF section where the activation of catalyst is performed, processing section and packing & storage section.

Annual capacity: 90 000 t.

LDPE Plant

Low Density Polyethylene Plant started production in 1979. It was designed by American company FOSTER WHEELER Co and licenced by National Distillers Co. Polymerization of ethylene is continuously carried out in reactor under high pressure up to 2000 bar. Plant consists of three sections: process and synthesis section, silo section and packing & storage section.

Annual capacity: 61 000 t.

SBR Plant

SBR Plant started production in 1983. In 1991 Plant was associated to Petrohemija. C-4 fraction produced in Ethylene Plant is a basic raw material together with styrene and methanol bought on foreign and domestic markets are necessary for obtaining the final product.

SBR Plant consists of three production units:

emulsion Styrene Butadiene Rubber Plant (E-SBR) with annual capacity of 40 000 t, licenced by German company Bunawerke Huls and designed by Lurgi.
Butadiene Extraction Plant with annual capacity of 45 000 t, licenced by Japanese company Nippon Zeon.
MTBE Plant with annual capacity of 35 000 t, licenced by Italian company Snam Progetti.

Other Plants

Waste Water Treatment Plant

Waste Water Treatment Plant started process in 1980. The objective of this Plant is to accept and process all waste waters around HIP-Petrohemija and from NIS Oil Refinery Pancevo in the nearby area. Other Plants in the complex area are connected to closed sewage system. Waster Water Treatment Plant performs primary and secondary treatment through processes of equalization, neutralization, flocculation, flotation and two-stage biological treatment using bio filters and active charcoal. Dislocated SBR Plant posses its Waste Water Treatment Unit.

In Pancevo processing capacity of the Plant is 750 m³ of waste water per hour.
In Elemir processing capacity of the Unit is 70 m³ of waste water per hour.

Utility Plant

Utility Plant for energy fluids production and distribution started operations in 1977. It was designed by American company FOSTER WHEELER Co. It supplies other Plants with the required energy fluids and utilities. Continual operation of Utility Plant is necessary for the functioning of all other Plants and Facilities inside the complex. It supplies nearby NIS Oil Refinery Pancevo with steam and demineralized water in case of need.

PE pipes and fittings production Plant

PE pipes and fitting Plant started production in 1991. PE pipes and fittings Plant import HDPE 100 for its production of polyethylene pipes, fabricated fittings and corrugated electro-insulating pipes. PE pipes are mainly distributed for gas, water and telecommunication installations.

Total annual capacity is 5 050 t of PE pipes plus 6 000 units of fittings.

Panonijaplast Plant

Panonijaplast Plant in Crepaja was founded in 1975. It was associated to HIP-Petrohemija in 1997 as a PE compound production plant. HDPE pellets and PVC pellets are the final products from the production line.

Annual capacity of the plant is 10 000 t of HDPE pellets and 16 000 t of PVC pellets.

HIP-Petrohemija and NIS Oil Refinery Pancevo

Modernization and Development

HIP-Petrohemija is dedicated to ever-going improvement of its products and production, maintaining the existing infrastructure and capacity at the same time. Focus for further development are capacity production increase, better positioning on the market and energy efficiency in accordance to the EU standards.

MAIN CAPEX PROJECTS:

Reinstrumentation of the Ethylene Plant. The objective of this project is implementation of high-end process controlled systems that will enable full control of the reaction of pyrolytic cracking and optimization of energy consumption. First phase will be finalised within the overhaul in Spring 2019. Worth of the project is estimated around 3.5 million € and it will be implemented in full cooperation with respectable global companies. Second phase of the project includes replacement of turbine control systems. Worth of the second phase of the project is estimated around 4.5 million €.
New sections of processing and packing in HDPE Plant. The objective of this project is production capacity increase in HDPE Plant. Estimated value of the project is around 10 million €.
Boiler Economiser installation in SBR Plant. The objective of this project is more efficient energy usage.
Compressor Recounstruction in LDPE Plant. The objective of this project is operational efficiency improvement.

Gross Revenue and Sales

Gross Revenue, 2015 - 2018

Market circumstances and measures taken in the company resulted with a good business performances in the last 3 years. Lower prices of raw materials and naphtha, significant savings due to energy more efficient operations of the production plants and higher degree of capacity utilization have influenced the increase of gross revenue in average 7% in the last 2 years.

Gross Revenue by Market, 2018

HIP-Petrohemija is an export oriented company due to its high product quality. At the same time the company has a leading position on the domestic market. Revenues generated in 2018 were 332.83 million € in total. In 2018, company was among the top 10 exporters in the country.

In 2018, on average 63.3% of revenues were generated from export, mainly from EU markets. Basic products (propylene, ethylene and MTBE) and olefins (HDPE, LDPE and SBR) were mainly exported to the EU member countries Germany, Italy, Romania, Croatia, Hungary, Bulgaria, France, Slovakia, Slovenia and Greece and to non-EU countries Bosnia and Herzegovina and Turkey.

Gross Revenue by Plants, 2017

EBITDA

Employees

The number of employees working in HIP-Petrohemija is 1433 in 2018. Temporary contract workers only represent 8.2% of employees, while the rest 91.8% are permanent employees. Collective Agreement and the Labor Law of the Republic of Serbia are basic legal acts which regulate labor relations and all processes related to employees. Three representative labor unions operate and participate in all processes regarding employees’ personal and social rights under the Labor Law, Collective Agreement and Collective Agreement on the Safety and Health at Work through social dialog with Management Board.

Human Resource Structure, 31.12.2018

Organization Scheme

HIP-Petrohemija has 5 Executive Managers including the General Manager. The Executive Board supports the development of policies and ensures the alignment and continuous implementation of key priorities and strategies across the organization and reports directly to and is advised by the Supervisory Board on an ongoing basis in accordance with Law and Collective Agreement. HIP-Petrohemija’s Supervisory Board has 5 members elected by shareholders’ assembly.

The organizational structure is divided into 4 Functions and 2 independent Sectors.

Core business processes in HIP-Petrohemija are managed through these 4 Functions:

Production & Technical Support,
Finance, Business Planning & Control,
Corporate & Legal Affairs and
Supply Chain

Each Function has its own Executive Manager leading all important businesses in company. Function of Production & Technical Support and Function of Corporate & Legal Affairs are further divided into 2 separate Sectors. There are two more Managers for each part of those Functions (Production Sector Manager, Technical Support Sector Manager, Corporative Affairs Sector Manager and Legal Affairs Sector Manager - in total 4 Managers).

Two independent Sectors are managed by General Manager:

HR Management Sector
Sales & Marketing Sector

In HIP-Petrohemija there are in total 29 active organizational units within Functions and Sectors.

Quality, Health, Environmental and Safety Standards

Integrated Management System

HIP-Petrohemija was awarded with certificates by company QualityAustria complying with the requirements of standards:

ISO 9001:2015, certificate that confirms the application and further development of an effective quality management system, valid until 22^nd June 2020.
ISO 14001:2015, certificate that confirms the application and further development of an effective environmental management system, valid until 22^nd June 2020.
ISO 50001:2011, certificate that confirms the application and further development of an effective energy management system, valid until 22^nd June 2021. Energy management system is in compliance to all demands of EU standards in the field of energy and energy efficiency.
ISO 45001:2018, certificate that confirms the application and further development of an effective occupational health and safety management system, valid until 25^th June 2021.

Certified management systems are applied within all units and all business processes in HIP-Petrohemija.

Laboratory and Mechanical Testing Accreditations

ISO/IEC 17025:2006, HIP-Petrohemija has two laboratories accredited by the Accreditation Body of Serbia where the input materials and final products are tested. Accreditation is valid until 1^st February 2020.
ISO/IEC 17025:2006, HIP-Petrohemija’s Mechanical Maintenance Unit fulfills the requierments and it is accredited by the Accreditation Body of Serbia for vibration testing of the industrial machines, non-destructive testing of processing equipment and pressure testing of safety valves, unfired pressure vessels and industrial pipelines.

Certified Entity in charge of Maintenance (ECM)

ECM certificate, certificate that proves that Petrohemija is able to maintain railway freight wagons and to take care of the safety of railway traffic.

REACH certificate

Being an export oriented company, HIP-Petrohemija successfully completed the REACH registration which is the precondition for export of products to the EU market. This registration covers all basic products (ethylene, propylene, MTBE, C-4 fraction, butadiene and pyrolysis gasoline).

HSE Policy

High level of Occupational Health and Safety at work is one of the priorities in HIP-Petrohemija. All employees and contractors are required to respect the policy at all times. Special attention is paid to the up-to date education of employees and contractors with objective to minimize the risks of injuries and negative influences to the environment.

Data Support

Igor Popovic

Associate for Statistics and Analytics

igor.popovic@hip-petrohemija.rs

telephone: +381 64 8566 384

telephone: +381 13 307 330