Naphtha-Mogas pool optimization

Istvn KTAI, Istvn RABI, dr. Lszl SZIRMAI, Zsolt Nmeth, Szabolcs SIMON MOL Group

2nd Annual

European Petrochemicals Conference Dsseldorf

March, 2015

V6: Feb 27. 2015

2

MOL Downstream Petrochemicals synergy

Utilisation options for naphtha

How to calculate Steam Cracking economics as a function of naphtha

quality ?

Steps of a naphtha pool linear programming model revision

Conclusions

Agenda

3

Refinery Petchem unit

UP

ST

RE

AM

D

OW

NS

TR

EA

M

GA

S M

IDS

TR

EA

M

REGION EBITDA 2013 KEY DATA

Operation in 40 countries

38 million barrels of oil-

equivalent hydrocarbon

produced

8 bn USD market capitalisation

~30 000 employees

750 000 retail transactions daily

24,1 bn USD revenue

2,3 bn USD EBIDTA

576 MMboe SPE 2P

reserves (1)

960 MMboe Recoverable

Resource Potential (2)

96 mboepd production (3)

Production in 8, exploration

in 13 countries (2)

MOL Group in numbers

4 refineries, 417 thbpd

19 Mtpa sales

1 900+ (4) service stations

2 petrochemical plants

Gas Transmission:

5.560 km pipeline in

Hungary

(1) End of 2013 SPE-2P, 2P reserves of North Sea assets not included yet, to be booked in 2014

(2) Already including the North Sea assets (UK) of Wintershall which deal was closed in Q1 2014

(3) Excluding ZMB and S7 fields, divested in August 2013; & excluding 49% of Baitex LLC, deal closed in Q1

2014

(4) Including the 208 service stations, acquired from ENI Group; deal has not closed yet

MOL GROUP UPSTREAM-DRIVEN, INTEGRATED COMPANY

4

Bratislava

Danub

e Sisak

Rijeka

KEY STRENGTH

Complex, diesel geared refineries

Integrated petrochemical units to handle surplus gasoline/naphtha pool

Strong land-locked market presence 20% motor fuel market share in the CEE; market leader in 4 countries

Region-wide Logistics, Wholesale and Retail network serve the market - above 55% end-user share

Refinery Mtpa thbpd NCI

MOL Group

20.9 417 10.0

Danube 8.1 161 10.6

Bratislava 6.1 122 11.5

Rijeka 4.5 90 9.1

Sisak 2.2 44 6.1

REFINERY YIELD 2014E

over

80% white prd.

19.4 Mt refined product & petrochemical sales

Retail: 1.900+ FS (1) over 3.5 Mtpa sales

Petchem: 1.3 Mt ext. sales

2013 FIGURES REFINERY CAPACITY & COMPLEXITY

3% 9%

20%

52%

4% 3%

3% 6% LPG

Naphtha

Motor Gasoline

Middle Distillates

Fuel Oil

Bitumen

Other

Other chemical prds.

(1) Including the recently acquired CZE, SVK, ROM Agip network

TWO LARGEST ASSETS AMONG THE BEST IN EUROPE Integrated operation in adjacent markets

5

MOL IS AMONG THE TOP TEN POLYOLEFIN PRODUCERS IN EUROPE

LDPE capacities in Europe (2012)

145

150

160

196

220

245

310

420

500

505

645

835

845

870

873

DIOKI dd.

TDEASA

Total Petrochemicals

KazanorgsintezJSC

Sibur ZAO

10. MOL

Petkim

Repsol

INEOS

Dow Chemicals

Borealis

Versalis

ExxonMobil

LyondellBasell

SABIC Europe

HDPE capacities in Europe (2012)

100

120

140

220

230

355

375

400

420

510

535

615

920

1100

1630

Rompetrol

Gazprom

Dow Chemicals

Versalis

Nizhnekamsknefekhim

PKN Orlen (Unipetrol)

Repsol

Lukoil

7. MOL

Kazanorgsintez JSC

Borealis

SABIC Europe

Total Petrochemicals

INEOS

LyondellBasell

PP capacities in Europe (2012)

180

180

200

230

250

260

290

490

535

545

905

1150

1270

1885

2855

DOMO Int.

Hellenic Petroleum

Polychim

Sibur ZAO

ExxonMobil

Lukoil

PKN Orlen (Unipetrol)

Repsol

7. MOL

Braskem Europe

INEOS

SABIC Europe

Total Petrochemicals

Borealis

LyondellBasell

Butadiene capacities in Europe (2015 estimated)

124130141

176178

207210

230260270

300300302

320415

TITAN GroupMOL

PKN OrlenTotal Petrochemicals

NizhnekamskneftekhimRepsol

ENI (Versalis)SABICBASF

DowSIBUREvonik

OMVLyondellBasell

INEOS

6

REFINING PETROCHEMICALS INTEGRATION AT MOL

Optimization of product placement between:

4 Refineries

2 Petchem sites

REF

ININ

G

NAPHTHA LPG

GASOIL PROPYLENE

Petrochemicals processing chain

PYGAS: AROMATICS HYDROGEN

I-BUTENE

PLASTIC PRODUCERS

STEAM CRACKERS

OLEFINS POLYOLEFINS

ETHYLENE SALES

POLYMER UNITS

LDPE HDPE Polypropylene

BRATISLAVA SITE - 220 ktpa LDPE - 250 ktpa PP

TVK SITE

- 420 ktpa HDPE - 65 ktpa LDPE - 140 ktpa ethylene - 280 ktpa

polypropylene

7

Naphtha-Mogas pool optimization Utilisation options for naphtha

Naphtha components

Steam Cracking prefers paraffinic low boiling point naphtha Quality measured by: monomer yields

Reforming prefers aromatic naphthenic naphtha Quality measured by: Reformate RON, MON = f(N+2A)

Some naphtha may go to Diesel / Kero pool: paraffinic higher boiling point naphtha

components

8

Reforming economics is determined by feed N+2A

Reforming prefers aromatic and naphthenic naphtha

Higher reformer feed N+2A

Higher reformate RON and MON

Better reformer economics

Aromatics: B,T, X,

Naphthenics: Cyclo-paraffins

9

How to calculate SC economics as a function of naphtha quality ?

Steam Cracking prefers paraffinic (iso and n-paraffins) low boiling point naphtha

Normal paraffins Isoparaffins

Steam Cracker margin is determined by the monomer yields.

Which naphtha parameter correlates best with Steam Cracker yields?

Candidates:

- Density

- Boiling points - IBP - T50 - FBP (T95)

- Group composition - Isoparaffin - n-paraffin - aromatics - naphthenic

- Combinations of the above parameters

10

Steps of a naphtha pool linear programming model revision

Concept Data

acquisition

Steam Cracker

modelling

Correlation analysis

Regression analysis

Prepare PIMS data

Start up and use new model

Target Improved Naphtha pool optimisation based on Steam Cracker economics calculated

from expected product yields Consistent handling of own produced and external naphtha components Implementation steps

11

Step 1: Concept

An internal MOL Lean study statement:

Less aromatic naphtha Higher Petchem profitability

Source: MOL internal Lean study: L. Szirmai, M. Bublik, G. Grdonyi, Sz. Simon

12

Step 2: Data acquisition

Naphtha stream lists, sampling points

Laboratory analyses Data preparation

Danube Refinery naphtha streams DCDU3 Light NAPHTHA DCDU2 Light NAPHTHA DCDU1 light Naphtha

Slovnaft naphtha streams Heavy naphtha from BADU5 Heavy naphtha from BCDU6 Heavy naphtha from SPL C5/C6 fraction from AD 5

Import naphthas Source A Source B

Naphtha tank data Refinery tanks Petchem site tanks

Density

Boiling points IBP T50 FBP (T95)

Group composition Isoparaffin n-paraffin aromatics naphthenic

Yearly averages for main streams in naphtha pool

Define typical naphtha compositions for each petchem site

13

SPYRO yields for each steam cracker and each naphtha component

Expected once-through product yields for each steam cracker and each naphtha component

SC-1 yields Naphtha stream A Naphtha stream B

SC-2 yields Naphtha stream A Naphtha stream B

Grouping of individual components to real components

Apply empirical corrections, simplifications

Step 3: Steam Cracker simulator (SPYRO) calculations

Product yieldsNaphtha

stream A

Naphtha

stream B

Naphtha

stream C

Hydrogen 0,0021 0,0021 0,0021

Methane 0,1728 0,1562 0,1461

Ethylene 0,2868 0,2670 0,2436

Propylene 0,1661 0,1507 0,1341

BT 0,0533 0,0775 0,0912

C8 0,0036 0,0065 0,0132

C9+ 0,0107 0,0222 0,0343

Quench 0,0113 0,0294 0,0577

Repyrolysis ethane 0,0351 0,0326 0,0301

Repyrolysis propane 0,0161 0,0148 0,0135

Repyrolysis C4 0,1498 0,1459 0,1294

Repyrolysis C5 0,0686 0,0583 0,0534

Yields of physical products

Compound yieldsNaphtha

stream A

Naphtha

stream B

Naphtha

stream C

wt% (dry) wt% (dry) wt% (dry)

Hydrogen 0,9443 0,93947 0,93452

Methane 16,438 14,854 13,886

Acetylene 0,46549 0,44746 0,41425

Ethylene 30,582 28,464 25,961

Ethane 3,5686 3,3087 3,0521

Methyl-Acetylene 0,51535 0,46407 0,41622

Propadiene 0,34563 0,31213 0,28064

Propylene 18,152 16,468 14,653

Propane 0,43352 0,40291 0,37228

Vinyl-Acetylene 0,054135 0,05928