With its 48 million inhabitants, the Ukraine is the second largest of the former Soviet republics, boasting a thriving metallurgy industry which is of great importance to the country’s economy.
In 2004 the export of steel products represented 37% of the total export from Ukraine, while there are 10 major metallurgical centres in the country and a total production capacity of about 20 million tonnes per year (tpy).
Contact with the industrial gas market in the Ukraine started in something of an unusual way.
In 1992 the managing director of Dnepropertovsk Oxygen Plant (DOP), Vitaly Kabak, participated in a management course in Vienna. Working with industrial gases, he took the chance to visit a corresponding company in Austria, which just happened to be AGA.
Mr Kabak was well received and contact was established, while in November of the same year, my colleague Ariel Hoff visited Dnepropetrovsk and we realised that the DOP enterprise could be a good starting point for establishing our operations in the Ukraine.
When we (AGA) started working in the Ukraine the turnover in industrial gases was probably more than €700m, of which 90% was produced and consumed in captive plants at steel mills and in the chemicals (fertilizer) industry.
The remaining 10% that was accounted for by the merchant market, was (according to Soviet tradition) supplied by specialised supply centres as well as from captive plants selling to neighbouring consumers.
Supply to the merchant market was then divided as follows:
• Gas companies 55%
• Steel plants 20%
• Chemicals industry 15%
• Engineering industry, shipyards 10%
The total consumption of industrial gases was quite impressive; however the market supplied by the specialised industrial gas companies was still very small – with DOP as the biggest of the six specialised merchant market companies.
Dnepropetrovsk Oxygen Plant (DOP)
The company was founded in 1914 as a subsidiary to the Peron company in St. Petersburg. Peron was an Air Liquide company which also operated in Poland before the Second World War.
The idea to establish an AGA operation in the Ukraine was not especially new, as AGA had planned to build an acetylene plant in Dnepropetrovsk even before the Russian revolution.
DOP has its main activity at a 135,000m2 site, though at our first acquaintance with the company there were 70 plant buildings and 350 employees at the site, which housed the:
• DOP headquarters
• Air gas production
• Air gas filling
• Service facilities
• Heating plant based on natural gas
• High tension power distribution centre (controlled by outside pressure groups)
• Plant for extraction of crude krypton/xenon (out of order)
The air separation plant (Kzh6) was one of just three such plants built within the Soviet Union, designed with liquid capacity of 6 tonnes per hour and started-up in 1985.
The plant was bigger than the typical KAz plants operated by most other gas companies in Russia and the Ukraine.
Rail Road Wagon maintenance shop
In the Soviet system, railroad wagons were used for transporting liquid air gases over long distances - DOP alone had two locomotives and 82 own railroad tankers each with 35-55 tonne capacity.
The company also had an impressive workshop, where annually up to 120 tankers were overhauled and everything related to the cryogenic part of the wagons was handled.
Join us next time for Part 2 of the Ukraine story, as the gasman recalls how AGA followed-up its interest in the Ukraine with the successful acquisition of DOP and its subsequent integration into the AGA group.