Address by Director General

Dear colleagues,

The United Chemical Company Shchekinoazot produces and sells methanol, caprolactam, ammonium, ammonium sulfate, caprolactam, carbamide-formaldehyde concentrate, cyclohexane and sulfuric acid to the Russian and international markets.

We have more than 60 years of experience at Shchekinoazot! As before, the company's management insists on high-quality products and efficient production, management and economic policies.

Thanks to our experience, skills, and knowledge we can offer our clients the best solutions in the field of chemistry: for oil and gas production, transportation and processing, car, electronic, pharmaceutical, agrochemical, paper industries, water purification, textiles, construction materials, industrial and mass-consumption products.

The main advantage of our plants is their advanced production facilities and well-developed transport infrastructure. Thanks to our convenient location right in the centre of Russia, we can provide stable and timely supplies to clients in Europe and countries of the Asia-Pacific Region, thereby guaranteeing secure long-term export agreements.

The company's strategic goals today are to grow the share capital and profitability through the introduction of innovative technologies, diversification of activities, learning and adopting the production of items with high added value, and expanding capacities. Our technological processes meet the highest environmental and industrial safety standards. This, combined with our successful social policy, helps us to carry out our mission: through consistent growth, development and a responsible attitude to the environment we strive to make a positive contribution to society and make our world a better place to live in.

For many years, Shchekinoazot has been one of the largest tax payers in the region, helping to secure social stability. The company's stable growth allows us to provide jobs for more than 3,500 people.

Our development strategy follows the national investment policy.

By focusing on specific technical projects, we can strengthen our competitive advantages and enter markets with high growth potential. From 2005 to 2017, nine major projects were implemented on the Shchekinoazot industrial platform, including several new production plants.

The largest project in Shchekinoazot's history was the construction of the most advanced methanol production plant in Russia, which served as the basis for future processing plants. The plant was officially launched on 20 March 2011. It has an annual capacity of 450 thousand metric tons of methanol. The technology implemented in the project was provided by the world-class licenser Haldor Topsoe. Shchekinoazot and Haldor Topsoe have been in a productive partnership since 2007.

We currently operate a hydrogen plant that was designed and constructed using technologies, equipment and catalysts provided by Haldor Topsoe.

Today, our industrial platform includes operating production plants for carbamide-formaldehyde concentrate and low-methanol concentrated formaldehyde, high-tenacity yarn and spunbond. We are successfully developing a joint venture with the American company Hexion for the production of phenol-formaldehyde resins.

The project of technical renovation of the formaldehyde production with urotropine increased the quality of the product and the sales volume of carbamide-formaldehyde concentrate.

In 2013, the technical capacities at the caprolactam production plant underwent a major upgrade. This increased the quality and competitive capabilities of the product on the market. We significantly lowered the consumption rate of benzene for caprolactam, energy consumption and the negative environmental impact.

The introduction of advanced technologies in the cyclohexane oxidation shop ensured the reliability of equipment, lowered the consumption rate of raw materials and energy.

I cannot emphasise enough the importance of the tasks solved by our energy department. For the first time in our history, they managed to fulfill the energy needs of the industrial platform with just our own generating capacities.

And we will not stop here! Our team continues to work on projects included in the programme for strategic development of Shchekinoazot.

In 2018, the company will finish another series of major projects. We are going to launch joint production of methanol and ammonium M-450/A-135 (licensed by Haldor Topsoe, one of a kind in the world), of sulphuric acid SK-200, perfumery-quality dimethyl ether (in association with the German company PCC SE, the first production of perfumery-quality DME in Russia), and water treatment works.

Since 2005, Shchekinoazot investments in production development as part of its Development Strategy have exceeded USD 882 million.

We recently started to implement our project for the construction of a new M-500 methanol production plant, once more using the trusted technology from the Danish company Haldor Topsoe. The company is planning to create a production plant for carbamide and ammonium. Just as we planned, the first launch will take place in our branch in Efremov. Then we will establish the production of nitrogen fertilisers, whose global demand is increasing every year. We have signed a contract for the construction of a nitric acid and ammonium nitrate production plant. During the Russian Investment Forum 2018 in Sochi, we signed several agreements for joint financial support for future company projects with the Governor of Tula Oblast, Vnesheconombak State Corporation and Gazprombank.

The company's growing productive, intellectual, and economic potential, its advanced sales policy and its team of professionals have all given Shchekinoazot the reputation of an honest business partner and reliable supplier of chemical products for Russian and international companies.

We offer reasonable prices and optimal supply conditions on chemical products and are open for mutually beneficial business offers.

We would be happy for you to become one of our long-term partners.

Yours sincerely,

Director General of

Shchekinoazot

A. Sokol