Global Report on Refining and Petrochemical Integration Commissioned by the World Refining Association “I am very active in the area of refining and petrochemicals and am interested in the discussions the WRA is putting together on the subject of integrated refining and petrochemicals facilities. IFC has been closely involved in several such facilities in Asia, Europe and Africa and I think in this hyper-competitive and volatile environment, where GRMs can easily become negative, integrated complexes are the way to realise maximum value and enhance competitiveness.” Anil Chandramani, Chief Investment Officer & Global Sector Lead, Chemicals & Fertilizers, International Finance Corporation
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Global Report on Refining and Petrochemical IntegrationCommissioned by the World Refining Association
“I am very active in the area of refining and petrochemicals and am interested in the discussions the WRA is putting together on the subject of integrated refining and petrochemicals facilities.
IFC has been closely involved in several such facilities in Asia, Europe and Africa and I think in this hyper-competitive and volatile environment, where GRMs can easily become negative, integrated complexes are the way to realise maximum value and enhance competitiveness.” Anil Chandramani, Chief Investment Officer & Global Sector Lead, Chemicals & Fertilizers, International Finance Corporation
Nathalie Brunelle, Senior VP Strategy, Development, Research, TOTAL
8 Selection of current global
integration projects
10 Meet the expert
Ivan Soucek, Advisor, Refining and Petrochemicals, NIS
12 Global integration survey results
Key questions and analysis of key answers
14 The executive question
What are the main benefits to integration?
15 Meet the expert
Gabor Kenessey, General Manager, Supply Chain, ORPIC
Foreword
Refining facts and figures• Up to 400,000 barrels of crude oil refined every day
at SATORP’s integration plant
In the current market, integration is enabling companies to remain competitive and add value to their existing operations.By collating insights from pioneering companies in this area, we have created a report to enable you to benchmark, analyse trends, learn from issues encountered to date, evaluate the decisions behind operations and identify a strategy that can be implemented into your own business.
This report includes:
• project case studies from TOTAL and SOCAR Turkey
• an overview of some of the most recent global integration projects
• the findings of our Global Integration Survey
• exclusive quick-fire interviews with companies including UOP, NIS and ORPIC and
• recommendations for businesses actually integrating or planning to integrate refinery and petrochemical complexes.
The World Refining Association is committed to creating high quality, strategic and technical conferences across the globe. We also recognise your need for pioneering industry content throughout the year. It’s for this reason that the World Refining Association has commissioned this report, to enable knowledge sharing and learning on a topic as important to the industry as refining and petrochemical integration.
Enjoy the report, and please do get in touch with any feedback or questions.
Best regards,
David WhiteManaging DirectorWorld Refining AssociationTelephone:+44 (0)20 7384 7950Email:[email protected]
What are the main benefits of refining and petrochemical integration?Petroleum refining and the petrochemical industry account for a major share of the world’s energy and industrial markets. In many situations, they represent the economic back-bone of industrial countries.
Today, the continuous change in customer requirements lead to constant pressure to seek opportunities that properly align and coordinate the different components of the industry. In particular, petroleum refining and petrochemical industry coordination and integration is gaining a great deal of interest.
In today’s competitive and volatile business environment, integrated refining and petrochemical complex offer considerable opportunities for enhancing operational efficiencies, and higher return on existing and new assets through increased stream integration and flexibility in operations.
A changing environment due to clean fuel regulations and strong petrochemical markets presents an opportunity to the refiner to partner with the petrochemical industry for cost-effective solutions. The primary integration driver is competitiveness. Desire for higher profitability in an increasingly competitive market pushes companies to innovate ways to squeeze out costs and capture new opportunities.
Petrochemical production is based on the availability of feedstocks such as naphtha and natural gas. The coal to chemicals route is now an important and viable option for producers in some locations including China. A standalone
petrochemicals complex is unable to change the quality of feedstock it receives from the refinery. However, an integrated petrochemical refinery has the advantage of reliable feedstock supply and provides the producer with the flexibility to vary the feedstock quality. Basic petrochemicals produced in a petrochemicals complexes are ethylene, propylene, benzene, toluene and xylenes. A petrochemical complex integrated with a refinery can change its feedstock quality to vary the production of basic chemicals.
Integrated petrochemical complexes can use a different quality of feedstock such as light, heavy or full range naphtha. Using light naphtha as a feedstock means ethylene production is higher compared to the full range naphtha. In a steam cracker light naphtha produces 4-5% more ethylene compared to full range naphtha. Feedstock flexibility gives an advantage to petrochemical producers by giving them the flexibility to alter the production levels of basic petrochemicals.
The integration of a refinery with a petrochemical complex gives equal benefit to the refinery by providing it with hydrogen produced from petrochemical plants as a by-product. Since environmental regulations are expected to be more stringent in the future, refinery and petrochemical complex integration will give huge cost benefits to refiners.
Refining facts and figures• The SOCAR integration project will be the largest
private investment in this field in Turkey’s history
“In today’s competitive and volatile business environment, integrated refining and petrochemical complex offers considerable opportunities”
Kenan Yavuz
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The current environment in the world has evolved, in part, as a response to changing regulations on aromatics and benzene content in gasoline. The extraction of benzene, toluene, or xylenes from reformate at each refinery is not economically viable. However, with existing equipment or minor revamps, several sites have been able to pull an enriched aromatics heart-cut from reformate. The fractions are then moved to a location where they can be combined with material from other sites (and/or treated pygas) for a larger scale BTX extraction. This scheme is economically feasible, helps solve constraints on gasoline blending, and achieves a higher level of profit by making petrochemical feedstock.
The economics of integrated complexes will improve even more if we consider the impact of utilising common utilities, offsite and infrastructure. Common facilities impact the capital expenditure positively when compared to separate facilities for a non-integrated approach, as the capital cost of building utilities and off-sites could be 40% or higher of the total project cost. The integrated facilities also allow for energy optimisation on a site-wide basis, thus improving overall efficiency, which results in lower utility consumption.
The synergies achieved from a joint infrastructure will maximise the benefits of integration. Successful integration will require the centralising of support services such as security, storage, logistics and maintenance. A refinery can optimise profits by reprocessing the by-products from a petrochemical complex such as pyrolysis gasoline, hydrogen and raffinate streams. In general, savings that can be made on capital expenditures, operating costs, working capital requirements and overheads.
The recession led to a decrease in the global petrochemical demand. It became imperative for the producer to maintain a profit margin. Vertical integration between refineries and petrochemical complexes is the most effective way to decrease the cost and maintain profit margins.
Integration was primarily centred in the European refineries to take advantage of proximity to feedstock source and to get cost benefits by a joint infrastructure. However, demand and production has shifted to Asia Pacific and most new projects are developing in this region. Many of the planned complexes coming on-stream by 2015 are integrated projects. This will help the Asian producers gain a competitive advantage in the long term. The Middle East is another region where integration
between refineries and petrochemical complexes has started and it’s expected to build more integrated petrochemical complexes in the future.
Integrated petrochemical complexes provide the producers with a strategic advantage by giving them a secured feedstock supply and flexibility to change the quality of feedstocks. Additionally, decreased transportation costs and faster delivery and distribution of petrochemical commodities helps in improving operational efficiency. Increasing environmental concerns are propelling the establishment of new integrated petrochemicals complexes. Synergy can be achieved by synchronising refinery and petrochemical operations as well as using the technology to reprocess by-products from petrochemical complexes.
In the future, a large number of planned petrochemical projects in Asia Pacific and the Middle East are to be integrated to refineries. This will help them to remain competitive in the long term, i.e. sustainable performance.
Which level of integration adds the most value to a company’s overall flow scheme?Many refineries have already taken advantage of petrochemical integration opportunities to add value to their existing operations while the degree of integration between refinery and petrochemicals in each region varies.
Choosing the right operating model and the required level of integration across the value chain—for each asset and each region—will be crucial for improving margins and sustaining profitability in a volatile market. Achieving the right level of integration requires a holistic approach to determining market opportunities, technology options, and capital asset management strategies.
The integrated complexes can be roughly classified in three categories:• Low to moderate level of integration These
complexes produce nearly 5–10 wt% of the crude throughput as petrochemical products.
• High level of integration These complexes produce nearly 10–25 wt% (typically 15 wt%-plus) of the crude oil throughput as petrochemical products.
• Petrochemical refinery These complexes produce a significant amount of petrochemicals compared to fuels. A petrochemical refinery
“Choosing the right operating model and the required level of integration across the value chain—for each asset and each region—will be crucial for improving margins and sustaining profitability in a volatile market”
tends to be somewhat smaller than world-scale refinery capacities but with world-scale petrochemical units the competitive issues and economics will drive the new refineries toward a high level of integration.
The overall configuration of the complex is highly dependent on the type of crude oil, desired product slate and overall flexibility. The petrochemical refinery can be an especially economically attractive option for medium-sized cracking refineries, particularly for a very light or very heavy crude oil.
Which key technologies tie refinery and petrochemical integration?Key technologies that tie refinery and petrochemicals include:
• steam cracking of naphtha to produce olefins and aromatics;
• catalytic reformers for aromatics and hydrogen production; and
• refinery FCCs to produce olefins and aromatics.
As conventional technology approaches have been pushed in many cases to near theoretical limits, new avenues are being pursued to extend benefits for integrated producers. The first example of this strategy is improving feedstock properties to increase petrochemical yields. This approach derives from an understanding of the kinetic properties of each process operation and seizing on the ability to improve efficiency by tailoring the feeds. By altering the composition of naphtha feed to ethylene steam crackers, this processes give the ability to increase steam cracker ethylene yields by 30%. Further integration is possible by sending the rejected C7+ hydrocarbons that are non-normal to the catalytic reformer. This enrichment also has the benefit to increase octane barrel production, or in a facility integrated with aromatics production, by increasing the output of BTX (Benzene-Toluene- Xylenes).
The second example of advanced process technology hinges on changing the refinery process to maximise the conversion of crude oil fractions to petrochemicals. Some companies have developed a modification of the conventional FCC process to shift the product slate heavily towards petrochemicals such as ethylene and propylene.
This new FCC (Fluid Catalytic Cracking) process will yield over 50% of product into petrochemicals, while traditional FCC will yield
15% into petrochemicals. This significant increase in petrochemicals, primarily propylene, justifies an investment in world-scale propylene derivatives production such as PP plant from an single FCC process unit. The shift to propylene yield also reduces gasoline increasing and altering the gasoline composition. The gasoline is typically highly aromatic and can serve as a feedstock to an aromatics complex for BTX recovery without requiring reforming.
Another technology improvement that can drive higher petrochemical yields is utilisation of advanced reforming catalysts. By converting to the next generation advanced reforming catalyst system, yields for BTX aromatics can be increased as much as 7% over the typical catalyst in use today. This provides even more of an economic incentive to utilise reformer capacity for petrochemical production, as demand for reformate into gasoline begins to slacken in some markets. Process technologies will continue to emerge as integration studies begin to further clarify molecular ‘pinch points’ in the complex, just as heat integration has benefited over the last two decades with the development of heat transfer pinch analysis for energy saving and emission minimisations. Management of hydrogen and sulfur are simple examples where additional technologies have been pushed to eliminate constraints and improve recycle value of various streams in the complex.
The ability to put all the pieces together in real time and manage the increasing volume of data requires advanced application of information technology. Integration is only achievable if all the factors that are important can be modelled and adjusted with real world input data on a dynamic basis. A toolbox of many information-based technologies must be intelligently applied as integration efforts progress to higher levels of sophistication. The IT toolbox for integration management includes the following as examples:
• simulation and modelling of process knowledge;
• planning and evaluation processes and software;
• optimisation and control systems (applied over increasingly broader scale); and
• business alignment processes
The combination of information technology with advanced process technology will continue to push the boundaries of efficiency achievable in more highly integrated complexes.
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“The ability to put all the pieces together in real time and manage the increasing volume of data requires advanced application of information technology. Integration is only achievable if all the factors that are important can be modelled and adjusted with real world input data on a dynamic basis”
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Business Plan: Organisational Strategy Nathalie Brunelle, Senior VP, Strategy, Development, Research, TOTAL
TOTAL’s investment strategy mainly focuses on six major platforms based on the following criteria:• integration between refining and
petrochemicals activities;• location; and• development potential.A strong asset base supports new developments. Integration is one of the primary factors to remain among the leading players in the downstream industry and improve competitiveness on a global stage. For Total Refining & Chemicals, improving organisation within the integration project has remained at the forefront of our focus.
Benefitting from integrationAn integrated management approachIntegration means operating the activities under the same management with common objectives to optimise the assets in mature areas and develop projects in growth regions. Furthermore, merging maintenance teams and finance/HR teams also saves costs on all levels.
Leveraging expertise from petro-chemicals and refining teams that can easily transfer to the other area, benefits the company. For example, in shutdown turnaround practices, we now have the team able to transfer skills to both areas.• Our R&C business segment is an
innovation in itself• We are the only major that took the
decision to really merge refining and
petrochemicals activities and we can see it was the right decision
• We’ve aligned joint forces on a limited number of key common objectives – same management, same line, same objectives
• We’ve defined local business units fully accountable for their P&L
• We’ve harmonised processes which gave us the opportunity to redefine the best practices
• And we’ve pushed integration further than our competitors. It is our aim to become a reference.
Optimising human capitalWe now have a global organisation. We run the business with less people and have strong dedicated teams. Putting together refining and chemicals teams creates synergies and generates new ideas, which brings a lot of innovation. Even more than we initially thought!
The synergies generated by the new organisation and common practices will save us 250M$/yr (post tax) by 2015, with already more than 100M$/yr achieved in 2013.
Adding value at the division levelIntegration also means synergies in organisation (reduce the weight of central functions by 15%), leverage versus suppliers and partners – even in Finance, we have been able to find some gains.
Furthermore, integrating refinery and petrochemicals facilities including naphtha storage allows for optimising capital employment whilst also reducing storage costs.
Indeed the ‘métier’ and competencies are very similar for both activities, therefore teams have rapidly been able to merge and individuals to work together.
Antwerp case studyTargeting more than 50 M$ savings on one platform and developing new profitable projects.
Before reorganisation some synergies were already implemented, especially on utilities exchanges and on common services (IT, human resources). Now Total is going one step further through synergies that are easier to implement and with the emergence of new ideas:• Utilities and hydrocarbon streams
optimisation• Fuel gas and steam networks• Hydrogen optimisation• Cracker feed qualities and stocks
optimised• Cracker side products better valorised
(pentane, raffinates)• Shared central services, improved
purchasing strategy and HR optimisation.
Best practices of implementation include availability and turn-around management.
Our focus now is on developing major new investments. We’re prioritising the use of refinery offgas (which is treated to be used as a feed to the steamcracker valorised at marginal natural gas price) and Toluene (extraction of Toluene from the gasoline pool for better valorisation as chemical stream for TDI supply) projects.
“Our organisation is our main focus, and having people with the same objectives is key”
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1 Port Arthur2 Normandy3 Antwerp4 Jubail5 Qatar6 Daesan
Sadara Chemical Company – Sadara ComplexJubail Industrial City II, Kingdom of Saudi ArabiaProject New constructionCapacity 3.2m tonsInvestment $380mCompletion 2016
Duqm Refinery Project, Oman Oil and IPICDuqm Port, OmanProject New constructionCapacity 11.5m tonsInvestment $15bnCompletion 2017
Refinery and Petrochemicals Integrated Development (RAPID), PetronasJohor, MalaysiaProject New constructionCapacity 300,000 barrels per day (naptha
and LPG feedstock for petchem; gasoline and diesel)
Investment $20bnCompletion 2017
What you see to be the main benefits of integration?Over the last few years, especially with the financial crisis, refining and petrochemical business suffered from low margins, over-capacity in certain regions (esp. Europe), high competitiveness from local and overseas players resulting in the necessity to re-consider different approaches to; operation, management and developing businesses independently from each other.
Specifics of the petrochemical industry is that its profitability is cyclic due to the combined effects of demand cycling and of supply cycling. Projected cycles in operating rates result in corresponding cycles in profitability. The profitability has cyclic character with cycles that capture phase of prosperity and recession. The three traditional reasons are:
• the imbalance of supply and demand –introduction of modern capacities;
• disharmony in the vertical integration – primary products (crude, fuels, petrochemicals) to the final materials (plastics, resins, fibers); and
• the influence of general economic prosperity or recession in the global or regional level
Within the industry, naphtha olefins crackers remain disadvantaged (especially upon the shale gas development and its impact on pricing of all derivatives). However, producers will seek to maximise production from available resources such as natural gas condensate and coal-to-liquids.
Overall, petrochemical companies throughout the world are restructuring, consolidating and implementing domestic and global strategies to improve profitability and contend with forecast economic changes, particularly in Europe where growth is lagging. Survival in the coming years will involve tough decisions by petrochemical operators.
One option to possibly eliminate the ‘poor’ cycle of the petrochemical business is the integration with refining businesses. Several players in the region are effectively integrated and gaining benefits of this, the level of integration is described by the Refineries-Integration Index (see Figure 1).
In general, the synergistic effects of RPI are the increasing availability of feedstocks, higher possibilities for processing and re-processing of streams both from refinery and petrochemical plants and lowering the costs per unit of final products (mainly fixed costs, but very often variable costs also).
The advantages that this brings an integration of type ‘oil refinery and petrochemical complex’ in the field of operating cost and investment expenditures are reduced needs for inventories (and thus also for working capital and investments in tank farms), the savings in transport costs, as well as the division of certain fixed unit costs and infrastructure investment unit costs.
Savings on logistics costs are particularly significant. Some analysis has shown that the reduction of logistics costs by 10% within the supply chain of raw materials/intermediates in chemical production increases profitability by 6-8% (for example, reduction of administration costs by 10% increases profitability by only 2-4%).
The essential benefits of refining and petrochemical integration can be summarised as follows:
• integrated refining-petrochemical plants balance one another
• extend the petrochemical feedstock to non-conventional hydrocarbon sources such as heavy oils and residues
• by-products can be re-processed to increase more valuable products
• reduction of variable costs (transport, utilities)
• reduction of fixed costs per unit of final products (maintenance and other costs of logistics); and
• working capital savings through lower inventories
Strategic advances (less primary and cheap products to trading market, independence and supply security, possibility to adjust structure of finished products deliveries to current profitability in two different markets, common business and investment strategy).
Meet the expert Ivan Soucek, Advisor, Refining and Petrochemicals, NIS
Ivan Soucek
“Overall, petrochemical companies throughout the world are restructuring, consolidating and implementing domestic and global strategies to improve profitability and contend with forecast economic changes”
Refining facts and figures• Sadara’s chemical complex continues to build
its staffing levels and has created job opportunities by hiring more than 1,000 Saudi employees
• It’s predicted that naphtha production from the Middle Eastern refineries will grow at a gigantic CAGR of 16.7% during 2014-2018
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Which level of integration adds the most value to your overall flow scheme?The value of refinery and petrochemical plant output streams can differ even in the case of same products. For example, some aromatic hydrocarbons produced in a refinery are valued according to its usage-value as an octane-boosting additive, while that same aromatic compound produced in a petrochemical complex not only has a different usage, but it also has a different commercial value. And one of the initial motives for moving into petrochemistry for oil companies is through the production of aromatics and their derivatives and the fact that the commercial value of an aromatic hydrocarbon in a petrochemical complex is typically higher than in a refinery.
Possibilities to increase flexibility in terms of valuation of certain material streams are diverse – for example, by adapting an ethylene plant to valorise not only naphtha but also refinery gases, LPG and some heavier refinery streams. Economy of kerosene’s fraction could be significantly increased by extraction of n-paraffins. On the other hand, integrated petrochemical plants could provide cheaper chemical components to be used in economically justified production of motor fuels under the new standards.
Which key technologies tie refinery and petrochemical integration?Specific topics for future integration options remains the use of natural gas, when natural gas is used as a refinery fuel it unleashes a host of opportunities to make a refining and petrochemicals business more efficient. It benefits an integrated complex in multiple ways:
• Use of natural gas releases a good quantity of naphtha, which is normally used as feedstock and fuel for steam reforming and gas turbines. This naphtha can further be utilised for producing value-added petrochemicals feedstocks such as ethylene, propylene and paraxylene
• Use of natural gas as a fuel for the refinery gives the opportunity to recover valuable components such as hydrogen, ethane, ethylene and propylene from off-gases
• Replacement of fuel oil by natural gas enables
a refinery to process complete vacuum residue in the delayed coker to enhance distillate yield.
The price differential between natural gas and crude petrochemical feedstocks such as ethylene, propylene, butadiene, benzene and para-xylene will be a key driver to consider natural gas as a refinery fuel for better integration with a petrochemical complex.
Additionally, refining and petrochemical integration provides a number of key synergistic opportunities:
• recycling of petrochemical by-product streams for fuel blending or reprocessing to petrochemical feedstock, further reducing feedstock cost and/or increasing product revenue
• opportunities for hardware integration and energy optimisation, reducing investment costs, operating costs, and carbon footprint; and
• recovery and re-use of hydrogen through the integrated complex to reduce net hydrogen production costs, reducing cost of production.
ReferencesSouček I, Popovič Z, Ocič O: Refinery and Petrochemical Interface, Refining and Petrochemical Round Table, WRA, Bucharest, 2012Popovič Z, Souček I, Ocič O, Adžič, S: Refining and Petrochemical Interface, Case study: HIP Petrohemija – NIS, Energetika, Zlatibor, 2014Exploiting refinery and petrochemical integration, www.shell.com, 2014Taraphadar T, Yadav P: Natural gas fuels the integration of refining and petrochemicals, PTQ, 3, 2012, www.digitalrefining.com/article/1000557Ratan S, van Uffelen R, Curtailing refinery CO2 through H2 plant, PTQ Gas, 2008Refinery-petrochemical integration index describes percentage of refinery production being delivered to petrochemical processing
“Savings in logistics costs are particularly significant. Some analyses have shown that the reduction of logistics costs by 10% within the supply chain of raw materials/intermediates in chemical production increases profitability by 6-8%”
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Figure 1 Percentage of petrochemical products from integrated capacities
29% Litvinov
27% Burghausen
13% Leuna Spergau
11% Szaszhalombatha
10% Ingolstadt
9% Schwechat
8% Plock
6% Bratislava
4% Vohburg
2% Schwedt
Global integration survey results Key questions and analysis of key answers
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What are the main benefits of integration? 28% Maximising economies of scale and the opportunity to share facilities 24% Adding value to lower-value refinery stream 20% Allowing processing, offsite and utilities facilities to be fully optimised across the whole integrated complex
18% Reducing capital cost in comparison to standalone refining or petrochemicals plants 10% Diversification
“It’s no surprise the industry is highly focused on offsite sharing and economies of scale for creating value from refinery-petrochemical integration. These are the most obvious forms. However, while ranking second in the poll, I was surprised that adding value to low-valued refinery streams did not score even higher – this is where the real value can be created through integration, and it can help drive long-term, sustainable advantage.”
What’s the biggest challenge you see when integrating? 35% Managing complex interfaces 30% Selecting the right configuration 23% Forming strategic alliances 12% Choosing the right product slate
“It is surprising to me to see these as equally weighted in the poll as they are. Managing the interfaces created by integration is obviously a key challenge, but selecting the proper configuration should also be highlighted as a significant challenge – without the right configuration, even great management of the flows will not likely result in value creation.”
What are the key technologies that tie refinery and petrochemical integration?
41% Refinery FCCs to produce olefins and aromatics 36% Steam cracking of naphtha to produce olefins and aromatics 23% Catalytic reformers for aromatics and hydrogen
“The results here, we believe rightly, are very close between steam cracking and FCC – both play a critical role in the integration. We suspect this will be highly regional – in some regions of the world, repositioning of the FCC unit in an integrated fashion with petrochemicals is critical to survival of the unit in a declining gasoline market, for example. Likewise, in a region where only naphtha is available as a cracker feedstock, getting the most of the cracker by using the right naphtha components is becoming a critical requirement.”
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“We see an unmet need... in technologies which can be added cost-effectively to existing complexes to provide strong integration benefits. Stay tuned – we think developments in this area are forthcoming”
Jim Rekoske
Thank you for providing the analysis to Honeywell UOP’s Jim Rekoske, Business Director for UOP’s petrochemical business
Which level of integration adds the most value to your overall flow scheme?
57% Recycling petrochemical byproducts back to the unit 43% Using byproducts for fuel blending opportunities
“These answers ended fairly equally-weighted in our eyes, which is surprising. We would have expected a stronger emphasis on recycling by-products for increased production over fuel blending applications. To a large extent, petrochemical by-products already add to the fuel balance, hence we would have expected a lower proportion in the poll to have selected this approach.”
What is the trend for integration? 74% Recycling petrochemical byproducts back to the unit 26% Using byproducts for fuel blending opportunities
“At first glance, the strong emphasis on new complex investment may seem surprising. However, integration benefits with current technologies are more easily and cost-effectively applied to new builds. We see an unmet need, however, in technologies which can be added cost-effectively to existing complexes to provide strong integration benefits. Stay tuned – we think developments in this area are forthcoming.”
Which geography is witnessing the biggest investment into refinery and petrochemical integration?
52% Middle East 35% Asia 6% North America 6% Western Europe 1% Central and Eastern Europe
The executive question What are the main benefits to integration?
Sorin Graure, Project Director, RompetrolIf we look at integration, the main benefit is integration itself! Another important benefit is the real value added of ethylene and propylene. Instead of using them as refinery fuel gas or for other usage, these gases can be transformed in polymers (polypropylene, high or low density polyethylene).
The second big advantage is utility and business unitary approach. Instead of having two separate systems of utilities, two separate account, financial, managerial and technical systems, a unified system can save a lot of money. For Petromidia Refinery these were the key drivers that triggered reintegration of Petrochemical Division. The quality and diversity of the products (the sole producer of polymers in Romania with more than 200k tones capacity) and its position (Black Sea shore) made Petromidia Refinery a trustful partner in Romania and in the region.
Pete Piotrowski, Senior Vice President and GM, UOP LLC Integration of any type, whether it’s refinery-petrochemical integration or integration of one company with another, comes down to identifying the resource-value synergies. These are the means by which resources can most efficiently be used to create value.
Benefits can include reducing the amount of capital required, driving higher returns on capital employed, improving yields, lowering utility consumption, and reducing operating costs per metric ton of product. Integration of refinery and petrochemical process units and operations is no different, nor is this integration a new phenomenon.
Through our managing licensor approach, UOP has worked for decades with customers including Shell, Reliance, Pertamina and Petrobras to achieve the most cost-competitive production of fuels and petrochemical products. The original Reliance Jamnagar project is a great example, where nearly 20 years ago, the industry learned what could be accomplished from this integration.
Shailendra Mohite, Senior Engineer – Stakeholder Management, Kuwait Petroleum International (KPI)The main benefits of integration are: a competitive edge during the current climate of suppressed and narrow refining margins; spreading the business risks; reduction in gas consumption and CO2 emissions into the atmosphere; improved flexibility and higher refining efficiency – with the choice of upgrade technology; and creating ample job opportunities in the vicinity of the processing hub.
However, some constraints of concern are accurate Capex estimation and economic justification, based on suitable timing of entry into business, as petrochemicals profitability is highly cyclic in nature; and space constraints seriously affect and limit the scope of configuration intended on viable options.
Fuad Mohammed Mosa, General Manager, SABICFor a long time, refineries have faced a lot of pressure due to low profit margins which made the feasibility of building refineries unattractive. The cost of exploring and drilling, and the price of the oil, plays a big role in why some countries are able to build refineries and cope with the challenge of a low profit margin. With the current oil price being so high, and having most of the current reservoirs becoming matured, the situation is now more important than ever. Refineries are the source of many products like gasoline and diesel which highly affect our life. We need more refineries to be built globally to sustain the increase of human population. The only way out of this challenge will come from the integration which will add a lot of value and extra profit margin, and make the whole complex more attractive when compared to building a standalone refinery. Such integration will also bring a lot of advantages in reducing the overall capital and operating costs for refinery and petrochemical complexes.
Sorin Graure
Pete Piotrowski
Shailendra Mohite
Fuad Mohammed Mosa
“Integration of any type, whether it’s refinery-petrochemical integration or integration of one company with another, comes down to identifying the resource-value synergies. These are the means by which resources can most efficiently be used to create value”
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What are the main benefits of refining and petrochemical integration?With refineries, there are target products, usually fuels, e.g. gasoline, gas oil, aviation fuel etc, these have a positive contribution to the refinery gross margin (GRM). However, beside these, there are also other products, e.g. ethane/olefin reach off-gasses, LPG, (light) naphtha, petcoke etc. These have a negative contribution to the GRM.
Among the target products (e.g. olefin, aromatics etc.) in a petrochemical plant there are also side products (light naphtha, raffinate, heavy aromatics, BTX fraction, C4 olefin fraction etc.) usually having negative contribution to the petrochemical margin (PM).
Using the refinery low value side products (e.g. refinery light ends (C2 rich off-gases, LPG, light naphtha) in a stream cracker, heavy naphtha in an aromatics plant) as feedstock for the petrochemical plant, these can be upgraded to high value petrochemicals as well as using the petrochemical side products in the refineries (e.g. MTBE, alkylate from C4 olefin stream, heavy aromatics blended into gas oil etc.) Those low value streams can be upgraded to high value refinery fuels. This way, the integrated refinery/petrochemical margin can outperform the simple addition of RGM and PM.
Another aspect, especially for the petrochemical plants is the availability and the cost of feedstock. The economics of non-integrated petrochemical plants is often negatively impacted by the freight costs of the feedstock as well as the availability of the right quality feeds.
Meet the expert Gabor Kenessey, General Manager, Supply Chain, ORPIC
Which level of integration adds the most value to a company’s overall flow scheme?In general, the most value can be extracted from a refinery/petrochemical integration if most of the products have a positive contribution to the integrated margin and the sales of intermediates is limited.
The trick here is the right implementation as usually there are refineries already existing when a project idea comes to integrate them with a new petrochemical plant. Which petrochemical technology to use is subject to the existing refinery configuration and the relative position, e.g. being long in refinery light ends or short in octane, etc.
Which key technologies tie refinery and petrochemical integration?Again, it is not the technology which is important, but the selection of the right technology, which may differ from case to case.
What has to be ensured is that the highest synergy is achieved via the integration over and above a simple addition of the RGM and the PM.
Gabor Kenessey
“In general, the most value can be extracted from a refinery/petrochemical integration if most of the products have positive contribution to the integrated margin and the sales of intermediates is limited”
Refining facts and figures• 2017 will see the most investments into increasing
ethylene capacity• The refining capacity of Middle East region will
expand at a CAGR of 7.9% during the period 2013-2018
Refining facts and figures• Rompetrol’s Petromidia refinery integration
project featured 280 companies, 3,500 people, 200 parts weighing 5,600 tons, 2,400 tons of pipelines, 280,000 centimetres of welding for ground consolidation and 130km of electric grids
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CIS Oil and Gas Transportation Congress Increasing the energy security of Europe and the CIS through new and traditional oil and gas routes28-30 October 2014Parco dei Principi Grand Hotel & Spa, Rome, Italywww.theenergyexchange.co.uk/pipes
Downstream & Petrochemical Asia 2014The region’s largest conference and exhibition for the refining and petrochemical industries, addressing both strategic and technical challenges for project development, process and performance optimisation.29-30 October 2014Sands Expo & Convention Centre, Singaporewww.downstream-asia.com
CIS Downstream Week The largest and most prestigious meeting place for the CIS refining and petrochemical industry2-4 December 2014Marriott Hotel, Berlin, Germanywww.cis-downstream.com
North Africa Downstream SummitThe only event dedicated to the North Africa downstream industry7-9 December 2014Sheraton Club Des Pins Resort, Algiers, Algeriawww.northafricadownstream.com
Oman Refining & Petrochemical Exhibition and ConferenceSupporting Oman’s expanding downstream sphere16-18 March 2015Oman International Exhibition Centre, Muscat, Omanwww.downstream-oman.com
Middle East Pipelines Linking the total value chain May 2015Abu Dhabi, UAEwww.wraconferences.com
Abu Dhabi International Downstream Conference and ExhibitionThe region’s premier fully integrated downstream event10-12 May 2015Abu Dhabi, UAEwww.adidownstream.com
Global Petrochemicals ConferenceThe only global strategic petrochemicals conference2-4 June 2015Düsseldorf, Germanywww.wraconferences.com/gpc
CEE and Turkey Refining and Petrochemicals 2015The only meeting place for all key stakeholders in the CEE and Turkey downstream industryOctober 2015Gdansk, Polandwww.wraconferences.com/cee
Operational Excellence Middle EastLeadership, people and change – efficiency through innovation and integration11-13 October 2015Manama, Bahrainwww.opexme.com
“I have attended several conferences organised by the World Refining Association, mostly because they do such an excellent job organising the events, attracting a very interesting selection of participants and keeping the events lively and engaging.” Anil Chandramani, Chief Investment Officer & Global Sector Lead, Chemicals & Fertilizers, International Finance Corporation
If you would like to contact the World Refining Association, please email [email protected] or call Catherine Dicker on +44 (0)20 7384 8015
