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nalcochampion.com CONTENTS January 2019 Volume 24 Number 01 ISSN 1468-9340

03 Comment 45 Smooth sailing to IMO 2020 05 World news Andrew Normand, KBC (A Yokogawa Company), UK, discusses the implications for oil refineries of the 12 A star on the rise International Maritime Organization’s sulfur limits, and Valentin Kotlomin, Euro Petroleum Consultants, Russia, how asset management and integrity teams are going to examines the growth of the refining sector in the have to cope. Middle East and North Africa. 49 Bringing data to light 18 Back in full swing Steve Sabin and Randy Chitwood, Brüel & Kjær Vibro, USA, Jesse Yoder, Flow Research, USA, explores various methods share a cost-effective method of performing rotating of flow measurement in the oil and gas industry. machinery condition monitoring.

23 Appealing to the masses 53 Saving face David Bowers, ABB Measurement & Analytics, UK, explains Rick Dunlap, BrandSafway, USA, outlines the cost- and the benefits offered by Coriolis mass flowmeters for time-saving benefits of implementing WorkFace Planning custody transfer installations and the key factors involved during refinery construction and maintenance operations. in selecting a flow computer to calculate measured values. 57 Digitalising danger zones 29 Keep oil in the unit Paulo Jorge de Almeida, Pepperl+Fuchs GmbH, Germany, Troy Davis, Athlon, USA, offers refiners an overview of the explains how Industry 4.0 technology can create a mobile challenges and potential solutions to keeping hydrocarbons worker ecosystem in hazardous areas. in processing units in order to increase production. 60 Old dog, new tricks 35 A salty issue Ben Berwick, Honeywell Connected Plant, USA, talks Mike Preston, Black & Veatch, USA, explores reverse through methods of digital transformation for the digitally osmosis brine reduction treatment options and techniques. mature refinery.

41 A fresh approach to seawater 65 Catalyst review Roi Zaken Porat, IDE Technologies, Israel, outlines how Hydrocarbon Engineering reviews some of the most multi-effect distillation technology can be implemented in advanced catalyst technologies available within the seawater desalination to meet the water needs of refineries. downstream industry today.

Athlon is a Halliburton service providing industrial water THIS and process treatment solutions to refinery, petrochemical, ammonia/fertilizer and co-generation operations. Through MONTH'S on-site technical service and engineering support, Athlon helps its customers with their business goals such as FRONT improving reliability, increasing throughput, and enhancing COVER the efficiency/flexibility of their operating units.

2019 Member of ABC Audit Bureau of Circulations Copyright© Palladian Publications Ltd 2019. All rights reserved. No part of this publication may be reproduced, JOIN THE stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. All views expressed in this follow like join journal are those of the respective contributors and are not necessarily the opinions of the publisher, neither CONVERSATION @HydrocarbonEng Hydrocarbon Hydrocarbon do the publishers endorse any of the claims made in the articles or the advertisements. Printed in the UK. Engineering Engineering ---INTRODUCING------A----NEW----NAmE------IN---INDUSTRIAL------PROCESS------SOLUTIONS---

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CONTACT INFO CALLUM O'REILLY EDITOR

MANAGING EDITOR James Little [email protected] s we usher in 2019, many of us will have set personal goals and targets for the EDITOR Callum O'Reilly year ahead. Taking a quick straw poll of [email protected] colleagues, some of the most common EDITORIAL ASSISTANT Laura Dean Aresolutions seem to include exercising more, [email protected] taking up a new hobby, eating healthier, and EDITORIAL ASSISTANT Alex Hithersay spending more time with friends and family. [email protected] At the end of last year, OPEC and 10 non-OPEC producers met to discuss

ADVERTISEMENT DIRECTOR Rod Hardy their own resolutions for the year ahead. Following intense negotiations, they [email protected] eventually agreed to cut oil production by 1.2 million bpd for the first six months of 2019, starting on 1 January. The decision was the group’s latest attempt to help ADVERTISEMENT MANAGER Chris Atkin [email protected] create a stable and balanced oil market, and follows broad consensus that 2019 is likely to see higher supply growth than global requirements. OPEC also noted ADVERTISEMENT EXECUTIVE Sophie Barrett [email protected] that the global economic outlook for this year is slightly lower than for 2018, which combined with the implications of macroeconomic policies could have PRODUCTION Ben Munro ramifications for global oil demand in 2019. [email protected] However, as anyone who has bought a gym membership, spiralizer or ukulele at WEB MANAGER Tom Fullerton the start of a new year may be able to attest to, the best-laid plans can quickly go [email protected] awry. Crude prices failed to rally after OPEC’s announcement, diving to just above

DIGITAL EDITORIAL ASSISTANT Nicholas Woodroof US$50/bbl at the end of last year in light of the aforementioned economic and [email protected] supply concerns, as well as lingering geopolitical uncertainty. Back in December, several analysts raised concerns that the size of the production cuts may prove SUBSCRIPTIONS Laura White [email protected] insufficient. Rystad Energy’s Head of Oil Market Research, Bjørnar Tonhaugen, said: “The OPEC+ agreement predictably came up short of what Rystad Energy argued CONTRIBUTING EDITORS Nancy Yamaguchi Gordon Cope would be required to fully balance the market in 2019. The agreed production cuts will not be enough to ensure sustained and immediate recovery in oil prices.” Greg Sharenow, a Portfolio Manager at Pacific Investment Management Co. (PIMCO), remains a little more optimistic, contending that the OPEC+ production SUBSCRIPTION RATES Annual subscription £110 UK including postage cuts should eventually lead to “a gradual stabilisation of Brent prices and, dare one /£125 overseas (postage airmail). say, a return to a lower-volatility environment.”1 However, he warns that there are Two year discounted rate £176 UK including postage/£200 overseas (postage airmail). “known unknowns” that could quickly scupper such plans, including “whether the US is able to continue to exceed production expectations; whether the slowdown SUBSCRIPTION CLAIMS Claims for non receipt of issues must be made within 3 months of in the global economy devolves into something worse, or if policy makers can publication of the issue or they will not be honoured without charge. help change the trajectory; and how effective additional US pressure on buyers of APPLICABLE ONLY TO USA & CANADA Iran crude will be.” Hydrocarbon Engineering (ISSN No: 1468-9340, USPS No: 020-998) is published monthly by Palladian Publications Ltd GBR and distributed All in all, it looks as though we are in store for another unpredictable year. in the USA by Asendia USA, 17B S Middlesex Ave, Monroe NJ 08831. Indeed, the International Energy Agency’s (IEA) Head of Oil Markets, Neil Atkinson, Periodicals postage paid New Brunswick, NJ and additional mailing offices. POSTMASTER: send address changes to HYDROCARBON recently told Bloomberg that “Forecasting trends in the oil market for the new year ENGINEERING, 701C Ashland Ave, Folcroft PA 19032. looks to be even more hazardous than usual. There is a long list of uncertainties on the demand and supply side of the balance.”1 And if all that wasn’t enough, the IMO’s marine fuel regulations are now just one year away. “As the new year 15 South Street, Farnham, Surrey progresses […] we will learn whether the shipping and refining industries are GU9 7QU, ENGLAND prepared for this major regulatory change without serious disruption to the Tel: +44 (0) 1252 718 999 fuel market,” added Atkinson. In just one of the many articles that we are set to Fax: +44 (0) 1252 718 992 publish on this topic in the year ahead, KBC (A Yokogawa Company) discusses the operational challenges of IMO 2020 that refineries are set to face in 2019, starting on p. 45.

1. SELL, C., ‘Here’s what to expect from oil in 2019’, Bloomberg, (3 January 2019). Do you want your bottom of the barrel this clear?

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clg_HE_july_2018_LCSLURRY.indd 1 8/3/2018 5:18:36 PM WORLD NEWS Turkey | SOCAR and BP to evaluate Thailand | JGC awarded petrochemical JV synthetic resin

P and SOCAR Turkey have signed a new STAR refinery and Petkim production plant Bheads of agreement (HoA) to petrochemicals complex, both owned project evaluate the creation of a joint by SOCAR Turkey. venture that would build and operate BP and SOCAR expect to work GC Corp. has been awarded a world-scale petrochemicals complex towards a potential final investment Jthe contract for the in Turkey. decision this year, which could result construction of chemical plants The proposed facility in Aliaga, in start-up of the new plant in 2023. that will be the foundation of a western Turkey, would produce BP and SOCAR are longstanding high-performance synthetic resin 1.25 million tpy of purified terephthalic partners in a number of major oil and manufacturing and sales acid (PTA), 840 000 tpy of paraxylene gas production and transportation undertaking in Thailand involving (PX) and 340 000 tpy of benzene. projects in Azerbaijan, Turkey and the Kuraray Co. Ltd, PTT Global Following the signing of the HoA, wider region. For example, the Chemical Public Co. (PTTGC) and BP and SOCAR Turkey now expect to Shah Deniz 2 gas project in Azerbaijan Sumitomo Corp. undertake design work for the facility, that began production in 2018, The project aims to create a which would allow for the integration exporting natural gas to Turkey and globally competitive of feedstock supplies from the nearby beyond. high-performance synthetic resin manufacturing and sales business that employs butadiene and The Netherlands | Saudi Aramco completes isobutylene produced at a petrochemical complex in the acquisition of ARLANXEO Hemaraj Eastern industrial estate by PTTGC. audi Aramco has completed its value basis, makes it 100% owner of The derivatives of butadiene Sacquisition of LANXESS’s interest ARLANXEO, enabling further and isobutylene will be used in in ARLANXEO Holding B.V., a diversification of Saudi Aramco’s the production of a wide range of Netherlands-based speciality downstream portfolio, and items including electrical and chemicals joint venture between strengthening the company’s electronic components, Saudi Aramco and LANXESS capabilities across the energy and automotive parts, daily necessities launched in 2016. chemicals value-chain. and medical equipment. Saudi Aramco’s purchase of ARLANXEO will maintain its JGC is also carrying out the LANXESS’s 50% share in ARLANXEO, current base in Maastricht, front end engineering design for valued at €1.5 billion on an enterprise the Netherlands. this project.

USA | US gasoline exports to increase

ccording to ESAI Energy’s recently However, at the same time, the In 2019, the Asia-Pacific and former Areleased ‘One-Year Global Fuels gasoline deficit in Latin America, Soviet Union (FSU) gasoline surpluses Outlook’, the US gasoline surplus will which receives most US exports, will will both increase. Meanwhile the expand by approximately 80 000 bpd narrow slightly as regional gasoline Middle East’s deficit will shrink in 2019 as demand continues to output recovers. dramatically from over 300 000 bpd plateau and output keeps rising. With total US gasoline exports to less than 150 000 bpd due to major Since first moving into surplus in expected to rise and the deficit in the supply growth in Saudi Arabia, Iran, 2016, the US gasoline balance has US’ primary export market shrinking, and the UAE, where significant refining risen steadily to approximately exporters will look not only to capacity is coming online. These 350 000 bpd in 2018. As a result of a capture greater market share in Latin developments, in combination with growing surplus, combined US America by replacing volumes from rising US exports, will exert bearish exports of finished gasoline and other exporters in Europe and Asia, pressure on global gasoline markets motor gasoline blending components but also look to increase exports to and gasoline spreads to crude will will rise to over 1 million bpd this year. other markets. weaken even further in 2019.

HYDROCARBON 5 January 2019 ENGINEERING B:216 mm T:210 mm S:190 mm

Creating a particle WORLD NEWS of difference. Enabling your growth is our expertise, because your success shapes the industry. That’s UAE | ADNOC and Cepsa award first IN BRIEF why we’re committed to providing you with Ruwais Derivatives Park contract the same advantaged catalysts and process he Abu Dhabi National Oil Co. under ADNOC’s AED165 billion technologies that we use in our own facilities to usa (ADNOC), and its project partner (US$45 billion) Ruwais downstream WorleyParsons has been awarded T help deliver results and long-term value. Cepsa, have announced the award of investment programme. an engineering, procurement and a key contract, as both companies The front end engineering design construction management contract by move forward with plans to develop contract, a key milestone in the Where common challenges meet shared INEOS Styrolution America LLC. The a world-scale linear alkyl benzene development of the LAB project, has services relate to the construction of solutions. ExxonMobil Catalysts and (LAB) plant in the Ruwais Derivatives been awarded to Técnicas Reunidas a new acrylate styrene acrylonitrile Park. SA (TR), a Spanish-based engineering Technology Licensing (ASA) facility in Bayport on the US The LAB project is the first of the company which has been active in Gulf Coast. The new ASA facility derivative units to be advanced the UAE since 2006. will have a 100 000 t capacity and is expected to be operational by 2021. india Oman | APICORP announces financing for McDermott International Inc. has been awarded a technology Duqm Refinery B:303 mm S:277 mm contract by HPCL Rajasthan Refinery T:297 mm Ltd (HRRL) for the license and he Arab Petroleum Investments APICORP said that this move basic engineering design of two TCorp. (APICORP) has announced demonstrated its commitment to 490 000 tpy polypropylene plants a US$100 million investment as part Oman with over US$380 million in Pachpadra Tehsil, Barmer District, of a consortium of international and currently committed to the energy Rajasthan, India. regional banks to finance the sector in country. construction of Oman’s Duqm The announcement continues argentina Refinery. APICORP’s collaboration with Kuwait, On 27 December 2018, Exmar Situated within the Duqm Special a 17% shareholder in APICORP, with a announced that its floating LNG Economic Zone, the refinery is a joint continued partnership in the (FLNG) liquefaction unit, to be venture between Kuwait Petroleum financing of foreign investments in renamed Tango FLNG, had left International and Oman Oil Co. petrochemical projects such as China, just one month after contract APICORP contributed MEGlobal in Canada and signing. The voyage to Bahia Blanca, US$100 million to the financing of the Netherlands, and for Argentina, was expected to take the refinery: US$50 million sharia Equipolymers in Switzerland, as well approximately 45 days. compliant, and US$50 million as the Nghi Son refinery and conventional tranche. In a statement, petrochemical plant in Vietnam. angola Total has agreed to develop joint activities in the downstream petroleum sector in Angola with Indonesia | Toyo awarded petrochemical Sonangol. Already long-term partners project in the upstream business, the two companies have decided to establish oyo Engineering Group has been engineering and offshore supply a joint venture company to develop Tawarded a contract for an acrylic services. A consortium of PT. Inti a common retail and distribution acid production plant with a Karya Persada Tehnik (IKPT), Toyo’s activity in the country. The capacity of 100 000 tpy in Cilegon, Indonesian subsidiary, and PT. SMCC transaction is subject to competition Banten, on the western tip of Java, Utama Indonesia, an Indonesian authorities’ review. Indonesia from PT. Nippon Shokubai subsidiary of Sumitomo Mitsui Indonesia (NSI), the Indonesian Construction Co. Ltd, is responsible subsidiary of Nippon Shokubai Co. for engineering, domestic www.catalysts-licensing.com Ltd (NSCL). procurement and construction work. Toyo Engineering Corp. is The plant is scheduled for responsible for a portion of the completion in 2021. © 2019 ExxonMobil. All trademarks used herein are trademarks or registered trademarks of Exxon Mobil Corporation or one of its subsidiaries. L0518-087E49 January 2019 6 HYDROCARBON ENGINEERING

Filename: 729934-1_CatalystAd_V2.indd

CLIENT: BBDO New York ExxonMobil Corporation PRODUCT: C&L Print Ad Agency Job Number: None Cradle Job Number: 729934-1 JOB#: P00013599 SPACE: A4 Proof #: 2 Path: EG-PLUS-NY:EGPlus_Departments:Print:A—F:BBDO:Exxon:729934-1_Synthetics_Catalyst_ Created: 12-3-2018 11:02 AM BLEED: 216 mm x 303 mm Ad:729934-1_Mechanicals:729934-1_CatalystAd_V2.indd Saved: 12-7-2018 2:21 PM TRIM: 210 mm x 297 mm Operators: Patricia Chong / Patricia Chong Printed: 12-7-2018 2:21 PM SAFETY: 190 mm x 277 mm Print Scale: None GUTTER: None PUBS: Hydro Carbon Processing, Ink Names: Cyan OOH Scaling Info: Fonts: EMprint Semibold, Regular PTQ Magenta Build Scale: 100% ISSUE: None Yellow Final Safety : 277 mm H x 190 mm W TRAFFIC: Darcey Lund Black Final Viewing Area : 297 mm H x 210 mm W ART BUYER: None Final Trim : 297 mm H x 210 mm W ACCOUNT: Amanda Baratta Final Bleed : 303 mm H x 216 mm W RETOUCH: None PRODUCTION: Len Rappaport ART DIRECTOR: None Ink Density: None Page: 1 of 1

IMAGES: 729934-1_catalysts_licensing_zeolite_vizzed_5000×5000_V1_CMYK_HR.tif CMYK 1004 ppi exmo_tag_tm_white.eps B:216 mm T:210 mm S:190 mm

Creating a particle of difference.

Enabling your growth is our expertise, because your success shapes the industry. That’s why we’re committed to providing you with the same advantaged catalysts and process technologies that we use in our own facilities to help deliver results and long-term value.

Where common challenges meet shared solutions. ExxonMobil Catalysts and Technology Licensing B:303 mm S:277 mm T:297 mm

www.catalysts-licensing.com

Filename: 729934-1_CatalystAd_V2.indd

IMAGES: 729934-1_catalysts_licensing_zeolite_vizzed_5000×5000_V1_CMYK_HR.tif CMYK 1004 ppi exmo_tag_tm_white.eps CUT COSTS AND WORLD NEWS EMISSIONS. China | Wison Group signs light hydrocarbon THAT’S IN BRIEF project in Tianjin usa ison (China) Holding Co. and density polyethylene (LLDPE), SMART. Alfa Laval has won an order to supply WTianjin Development Zone acrylonitrile, and butadiene, as well air cooler systems to a gas processing Administrative Committee officially as supporting utilities and auxiliary plant in the US. The order has a value entered into an ‘Investment and production facilities. Installed tail gas thermal of approximately SEK110 million. It Cooperation Agreement on Light By leveraging its proprietary and oxidizers with our exclusive TrīLo was booked late December 2018 in Hydrocarbons Comprehensive internationally advanced process the Welded Heat Exchangers unit of Utilization Project’ at the Investment technology, cheap and abundant Technology are cutting fuel costs the Energy Division, with deliveries Service Center of Tianjin light hydrocarbon (LPG) is used as the up to 40%, delivering NOx scheduled for 2019. The order Development Zone. feedstock to produce basic chemical comprises Alfa Laval Niagara’s air cooler Phase 1 of the project has raw materials such as ethylene and emissions as low as 5 ppm, systems. These will be used as part investment at around 15 billion yuan propylene, and high-end chemicals H S emissions of less than of a refrigeration system to separate and an area of about 1.7 million m2, such as polyethylene and 2 and transport the natural gas into its mainly including a 1 million tpy light acrylonitrile to meet the growing 5 ppm, and CO emissions individual pure component streams. hydrocarbons cracking unit, domestic and international high-end of less than 50 ppm at downstream units for high density market demands. In addition, a smart new zealand polyethylene (HDPE), linear low demonstration plant will be built. the lowest temperatures Royal Dutch Shell plc (Shell) has completed the sale of its shares in known in the market. Shell entities in New Zealand to OMV USA | Alpek JV acquires M&G’s Corpus for US$578 million. This includes the That’s smart. That’s JZHC. Maui, Pohokura, and Tank Farm assets, Christi Project and the sale of Shell’s interest in (and operatorship of) the Great South Basin lpek S.A.B. de C.V. has The Corpus Christi Project venture, which was subject to a separate Aannounced that Corpus Christi assets include the integrated agreement. Polymers LLC (CC Polymers), a joint PTA-PET plant under construction venture among certain subsidiaries in Corpus Christi, Texas, US, australia of Alpek, Indorama Ventures certain M&G intellectual property, Albemarle Corp. has announced that it Holding, and Far Eastern Investment and a desalination/boiler plant has begun earthworks at the Kemerton (Holding) Ltd, has successfully providing water and steam to the Strategic Industrial Area, in Western completed the acquisition of the site. Australia, for the construction of the Corpus Christi Project from M&G When completed, the company’s Kemerton lithium hydroxide USA Corp. and its affiliated debtors Corpus Christi plant is expected (LiOH) conversion site. for an aggregate amount of to have a nominal capacity of US$1.199 billion in cash and other 1.1 million and 1.3 million tpy of PET usa capital contributions. and PTA, respectively. Chevron has awarded Matrix Service Inc., construction of the first alkylation unit in the US designed to use ionic USA | Orbital secures purchase orders liquids, at Chevron’s Salt Lake City refinery. The unit, which will replace rbital Gas Systems, a Gulf Coast customer of Orbital’s an existing HF alkylation unit, will Owholly-owned energy subsidiary with the balance secured from a rely on the ISOALKYTM Technology of CUI Global Inc., has announced second Gulf Coast energy operator, developed by Chevron USA Inc. and that it was awarded purchase orders comprise custom analytical licensed by Honeywell UOP, to produce for integration projects totalling integration systems for two new high-octane, cleaner burning fuels. US$3.3 million from a large fractionation units. Orbital will With construction scheduled to begin Texas-based engineering, provide complete online analysis in January 2019, the unit is expected to procurement and construction (EPC) systems for process control of the become fully operational in 2020. company during 4Q18. new fractionation units and the The purchase orders, the largest analysis systems for EPA monitoring of which originates from a key of each unit. For patent and trademark information, see johnzinkhamworthy.com/legal johnzinkhamworthy.com | +1 918 234 1800 ©2019 John Zink Company LLC. January 2019 8 HYDROCARBON ENGINEERING CUT COSTS AND EMISSIONS. THAT’S SMART.

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For patent and trademark information, see johnzinkhamworthy.com/legal johnzinkhamworthy.com | +1 918 234 1800 ©2019 John Zink Company LLC. WORLD NEWS Singapore | TechnipFMC awarded expansion of DIARY DATES Neste's renewable products facility 25 - 28 February 2019 Laurance Reid Gas Conditioning Conference echnipFMC has been awarded an based on Neste’s proprietary NEXBTL Norman, Oklahoma, USA TEPC management services technology. pacs.ou.edu/lrgcc contract by Neste for the expansion Nello Uccelletti, President of of its renewable products refinery in TechnipFMC’s Onshore-Offshore 26 - 28 February 2019 Singapore. business, stated: “This award ME-TECH This project will increase the demonstrates our long-standing Abu Dhabi, UAE overall Neste Singapore Refinery relationship with Neste, established europetro.com/week/metech2019 renewable products production by in 2007, with the delivery of two 17 - 19 March 2019 up to 1.3 million tpy and includes world-scale renewable fuels units in AFPM Annual Meeting TechnipFMC’s steam reforming Rotterdam and Singapore. We are San Antonio, Texas, USA technology. proud to support Neste in the quest www.afpm.org/conferences This expansion aims at meeting for renewable products, as well as the market demand for renewable collaborate with this client on a 24 - 28 March 2019 products. The production process is leading-edge technology.” Corrosion Conference & Expo 2019 Nashville, Tennessee, USA nacecorrosion.org Saudi Arabia | Clariant and Saudi Kayan to 25 - 27 March 2019 ARTC evaluate alkoxylates joint venture Bangkok, Thailand artc.wraconferences.com lariant has announced that it has facility for alkoxylates, which are Csigned a Memorandum of used in a variety of applications. 26 - 28 March 2019 Understanding (MoU) with This facility is planned to combine StocExpo Europe Saudi Kayan, a Saudi joint stock Clariant’s alkoxylates production Rotterdam, the Netherlands company in the field of chemicals, technology with Saudi Kayan’s raw www.stocexpo.com polymers and speciality products. materials and would therefore be As defined by the MoU, both based within Saudi Kayan’s 1 - 5 April 2019 parties will evaluate the formation Petrochemical Company complex LNG 2019 of a joint venture with the aim of in Jubail Industrial City, Shanghai, China www.lng2019.com establishing a manufacturing Saudi Arabia.

14 - 17 April 2019 GPA Midstream Convention The Netherlands | Air Products to supply three San Antonio, Texas, USA www.gpamidstreamconvention.org nitrogen plants to national energy project 28 April - 2 May 2019 ir Products and N.V. Nederlandse applications currently served by the SOGAT 2019 AGasunie have announced the domestic Groningen source. Abu Dhabi, UAE signing of an industrial gas Air Products will supply Gasunie www.sogat.org equipment agreement aimed at with three generation plants to helping to address a matter of produce the nitrogen needed to 21 - 24 May 2019 national energy importance for condition imported natural gas to AFPM Reliability & Maintenance Conference and the Netherlands. the specification required in Exhibition The country has long sourced commercial and consumer Grapevine, Texas, USA www.afpm.org/conferences natural gas from its domestic applications throughout the Groningen Field, but that extraction country. 11 - 13 June 2019 has resulted in seismic activity The three plants, to be located Global Petroleum Show 2019 which now requires a switch to in Zuidbroek, near Groningen, will Calgary, Canada imported gas. Complicating the new produce a combined 180 000 m3/hr www.globalpetroleumshow.com supply issue is that the imported of nitrogen when brought onstream natural gas is incompatible with the in October 2021.

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www.ChartIndustries.com Valentin Kotlomin, Euro Petroleum Consultants, Russia, examines the growth of the refining sector in the Middle East and North Africa.

January 2019 12 HYDROCARBON ENGINEERING ince 1988, the Middle East has been the world’s largest amount to 37 million bpd (it currently sits at approximately oil producer, but its refining capability still remains 32 million bpd). behind Asia Pacific, North America and Europe, with the Another critical factor is the region’s strategic location, local refineries only capable of processing around 30% with access to the main export markets in Europe, Asia Pacific Sof the crude oil produced in the region. However, the situation and Africa. While Europe is a mature market with a trend is now changing. As global crude oil prices remain unstable, towards shrinking consumption of petroleum products, the oil-producing companies are forced to seek deeper integration Asia Pacific market is far from being saturated: demand here is with refining. As a result, in the period from 2010 to 2016, the expected to keep growing, albeit at a slower pace than before. Middle East was the region with the fastest growing refining As for Africa, many analysts believe that the region’s demand capacities (Table 1). for petroleum products will keep growing in the long-term Following the refining capacity growth, the export of and, as a result, petroleum product consumption in Africa will petroleum products from the Middle East also increased: while double by 2040 as compared to the current value. in 2010 petroleum products export from the region amounted The final driver of the refining industry in the Middle East to approximately 150 million tpy, in 2016 it grew to more than is, of course, the domestic demand growth. The increase is not 210 million tpy (Figure 1). expected to be as rapid as in 1990 – 2016, when petroleum Diesel exports saw the greatest increase (from product consumption in the region grew at a rate of 20 million to 55 million tpy), with naphtha and LPG following 3.8% per year, but up until 2040 the rate will still increase closely behind (from 38 million to 50 million tpy; and 40 million 1.1% per year, according to the BP forecast. to 54 million tpy, respectively). On the other hand, fuel oil exports fell from 28 million to 19 million tpy as a result of the Saudi Arabia increasing conversion rate of regional refineries and the Saudi Arabia is the region’s largest oil refiner (Figure 2), which is shrinking fuel oil yield (decreasing from 30% to 25%). not surprising given the country’s leading position in the oil Furthermore, there has been an increasing demand within the production market. region for fuel oil to be used as bunker fuel, in relation to the In 2017, the country’s total refining capacities exceeded growing maritime industry. 2.8 million bpd, which is approximately 30% of the region’s The continued development of the Middle Eastern refining capacities. However, the country is unsatisfied with what has industry is due to a number of reasons, including feedstock already been achieved and has a number of projects currently availability. According to a forecast by BP, in the period running being implemented aimed at the refining scope increase and up to 2040, oil production in the Middle East will keep growing depth, strengthening the integration between refining and at a rate of 0.6% per year and by the end of this period, it will petrochemicals. Current projects include Petro Rabigh Refinery & Petrochemical Complex Expansion – Phase 2, modernisation and expansion of SASREF refinery, Saudi Aramco’s Jizan and Ras Tanura refineries, etc. The announced projects are part of the Vision 2030 economic transformation programme, the main goal of which is the creation of a world-leading downstream sector in Saudi Arabia, built on four key drivers: maximising value from the country’s crude oil production through integration across the hydrocarbon chain; enabling the creation of conversion industries to produce semi-finished and finished goods to help diversify the economy; developing advanced technologies and

HYDROCARBON 13 January 2019 ENGINEERING innovation; and enabling sustainable development in alignment will be located in Yanbu on the west coast of the Arabian with the country’s National Transformation Program. Peninsula. One of the most interesting projects is the crude oil to chemicals (COTC) complex, a joint project of Saudi Aramco and Iran SABIC. It is expected that the complex’s capacity will be The development of the chemical field is relevant for Iran, which 400 000 bpd, and the associated product slate will include has one of the world’s largest reserves of natural gas. about 9 million tpy of chemical products and base oils. Nevertheless, the country is one of the regional leaders in oil Investment in the project is estimated at more than refining – according to data for 2017, refineries in the country US$20 billion; the expected start of operation is slated for 2025. had a total capacity of more than 2.1 million bpd. According to Saudi Aramco, the complex is expected to Naturally, given its position on the gas market, Iran places create an estimated 30 000 direct and indirect jobs, further greater emphasis on the production of petrochemical products stimulating the country’s economic diversification efforts. By in its downstream development strategy. According to the 2030 the COTC complex is expected to have 1.5% impact on the National Petrochemical Company, 62 projects are being country’s GDP. developed and implemented in the country, most of which are In 2018, Wood and KBR were selected to carry out project focused on gas processing (production of methanol, ammonia management and front end engineering. In November 2018, and their derivatives). Saudi Aramco and SABIC announced that the COTC complex Nevertheless, refining development projects are also being implemented and announced, including both the modernisation Table 1. Refining capacities AAGR by regions of existing refineries (Tehran, Bandar Abbas, Isfahan, Tabriz and Region AAGR 2010 – 2016 (%) Abadan refineries) and the construction of new facilities (Anahita Oil Refinery, Siraf Refining Park, etc.). Middle East 2.7 The key problem for further development of Iranian oil CIS 1.8 refining is the current sanctions and the resulting financing issues Asia Pacific 1.6 (the modernisation of existing refineries requires US$14 billion), Africa 1.4 the availability of technology and qualified contractors. North America 0.7 Following the US’s decision to abrogate the Joint Comprehensive Plan of Action nuclear deal and reimpose economic sanctions South and Central America -0.2 on Iran, in June 2018 South Korea’s Daelim cancelled a Europe -1.5 US$2 billion contract to modernise the Isfahan refinery. UAE The development of the UAE’s refining industry is an excellent example of the diversification of the Middle Eastern economy – in comparison with 2010, the country has increased its oil refining capacities by more than 60%, becoming one of the three leaders in the region. Future plans are no less ambitious. In May 2018, Abu Dhabi National Oil Co. (ADNOC) unveiled plans to invest US$45 billion over the next five years to become a leading global downstream player. These plans relate to the Figure 1. Petroleum products exported from the Middle East, expansion of Ruwais Industrial Complex and million tpy (source: IEA). include the expansion of refining capacities by 600 000 bpd by 2025, as well as the development of petrochemicals. Construction of one of the world’s largest mixed feed crackers will increase production from 4.5 million tpy in 2016 to 14.4 million tpy by 2025. The Florexx project is of particular interest. There is an opinion that the Middle East, as a region possessing large fossil hydrocarbon reserves, is not interested in alternative technologies for fuel production, but in June 2018 an exclusive agreement was announced between Florexx International Investments LLC and SNC-Lavalin for the extended basic engineering and subsequent Figure 2. Refining capacities in the Middle East, thousand bpd (source: BP Statistics). design and delivery of an Advanced Topping Refinery in the UAE. It is planned that the

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FFC Plus truly is mercaptan treating made better. capacity of the refinery will be 100 000 bpd and it will be integration with the petrochemical complex, the configuration located in Fujairah. of which has not yet been determined. Iraq Israel In 2018, SNC-Lavalin was successful in oil refining projects in Iraq Israel’s refining industry is based on two refineries, in Haifa as well. In October, Iraq’s Oil Ministry approved a preliminary (197 000 bpd) and Ashdot (100 400 bpd), the latest changes in agreement with Vancouver-based Pacific Future Energy to build a production capacities of which were in 2013: the Haifa refinery refinery in Nassiriya. Pacific is likely to work on the project in commissioned a hydrocracking unit and increased its capacity by tandem with SNC-Lavalin. 10 000 bpd. Iraq is one of the region’s leaders in terms of announced grassroots refining projects – in addition to the mentioned Bahrain refinery in Nassiriya with a capacity of 300 000 bpd, Bahrain Petroleum Co. (Bapco) is actively modernising its only construction of three more refineries is also planned – in Maysan refinery in Sitra. The company launched the (150 000 bpd), Karbala (140 000 bpd) and Kirkuk (70 000 bpd). Bapco Modernization Programme (BMP), which includes a reduction in the output of fuel oil to 7% vol. from 15 – 16% vol. Kuwait due to the construction of a residue hydrocracking unit, as well Kuwait is the only country in the region that has reduced its as an increase in refinery capacity from 267 000 bpd to refining capacities in comparison with 2010. This was the result 380 000 bpd. The Sitra modernisation project is scheduled to be of the Shuaiba refinery shutdown in March 2017. completed in 2022. In parallel with the closure of the Shuaiba refinery, Kuwait National Petroleum Co. (KNPC) launched the Clean Fuels Project Elsewhere (CFP) to improve the quality of motor fuels produced at two The development of refining in Syria and Yemen is held back by other refineries of the company – Mina Abdullah and ongoing armed conflicts in these countries, while Jordan is taking Mina Al-Ahmadi – as well as to increase their total capacity from steps to modernise its only refinery. 736 000 bpd up to 800 000 bpd. At the time of this writing, the In 2017, Jordan Petroleum Refining Co. (JPRC) signed completion of CFP was expected in early 2019. agreements with engineering companies on the Zarqa refinery A new grassroots refinery in the Al-Zour area, 90 km south of expansion project from 100 000 bpd to 120 000 bpd, which also Kuwait City, is also under construction. Known as the Al-Zour includes refining configuration changes to increase refining ratio Refinery project (ZOR), it will be able to process 615 000 bpd of and product quality. Investment in the project is estimated at local crudes and produce Euro V motor fuels and US$1.6 billion. petrochemicals products such as paraxylene and propylene. In January 2018, the Kuwait Integrated Petroleum Industries Co. North Africa (KIPIC) confirmed that all five packages of the integrated North Africa is a region both geographically and economically complex are proceeding in line with the original schedule, with close to the Middle East. The region’s refining capacity is all packages due to be completed by the end of 2019 and initial estimated at over 2.2 million bpd, which is more than 60% of all refining units still on track for start-up in May 2019. African capacities. Major refining development projects in North Africa have been announced in both Algeria and Egypt. Qatar The Algerian state oil and gas company Sonatrach has Qatar’s refining industry is represented by refineries in Mesaieed announced plans to significantly expand its refining capacity, (137 000 bpd), Laffan Refinery 1 and Laffan Refinery 2 which is currently estimated at 651 000 bpd. As well as upgrading (292 000 bpd), which process condensate. its existing refineries in Algiers, Arzew and Skikda, the company While Qatar Petroleum has not announced plans for the plans to build three new refineries in Biskra, Hassi Messaoud and development of refining capacities, it has declared its readiness Tiaret, each with a capacity of more than 100 000 bpd. to integrate into the production of petrochemical products. In Egypt is the largest African refiner, with the total capacity of May 2018, the company announced its plans to construct a new Egyptian refineries estimated at between 721 500 – 810 000 bpd. petrochemicals complex at Ras Laffan Industrial City, the core of However, this does not fully satisfy the country’s domestic which will be an ethane cracker with a capacity of more than demand for petroleum products. The Mostorod refinery 1.6 million tpy of ethylene. The planned start-up of the complex, expansion project is expected to be fully commissioned in 2019, which will also include derivative plants, would be in 2025. which will add 84 000 bpd. The expansions of the Assuit refinery by 12 700 bpd and Midor’s refinery in Alexandria by 60 000 bpd Oman have also been announced. Unlike Qatar, Oman intends to radically expand its refining capacity. In August 2017, the final investment decision (FID) on Conclusion the construction of Duqm Refinery and Petrochemical Complex Presently, the Middle East is one of the world’s oil refining was made. Refinery capacity is 230 000 bpd, and its start-up, centres, and the implementation of the announced scheduled for 4Q20, will increase Oman’s refining capacity by development projects can only further strengthen its position. 75%. Most countries in the region focus on monetisation of Duqm Refinery and Petrochemical Complex is a joint project hydrocarbon deposits, increasing the refining ratio and enhancing of the Oman Oil Co. and Kuwait Petroleum International. As with integration with petrochemical plants, which is in line with the most of the grassroot projects in the region, it involves development trends of the global refining industry.

January 2019 16 HYDROCARBON ENGINEERING 180925_Hydrocarbon Engineering Ad_MSC.indd 1 9/25/2018 10:33:12 AM JANUARY ISSUE

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