PUBLIC STOCK CORPORATION TAIF
Getting Utmost Value From Each Drop Of Oil Is The Future Of Petrochemistry And Oil Refining
Just after commissioning its new catalytic cracking unit, which became a part of intraplant facility named “Motor Gasoline plant”, and reaching its design capacity in 2006-2007, TAIF Group started developing and looking for approaches and plans aimed at conversion of residual heating oil and vacuum residue into light oil products. Having started production of all-grade motor gasolines and diesel fuel with the quality equal or better than EURO 4 TAIF Group faced a big and unsolved challenge – unavoidable yield of heating oil that amounted to 28% - 29% of crude feedstock. Almost one third of the oil purchased for TAIF-NK’s Refinery today remains practically unrefined and is sold as heating oil with a very high content of sulfur, asphaltenes, tars and metal compounds because of heavy crude feedstock. In addition, in order to upgrade the quality of this heating oil to the market standards it must be blended with lighter and cleaner fractions such as diesel and kerosene throughout the subsequent years. Naturally and historically, heating oil by itself has always been cheaper in the market than the crude purchased and, if blended with expensive diesel and kerosene cuts, significantly worsens and reduces revenues and profits of any refinery, including TAIF Group’s Refinery. Basically, while purchasing over 7 MTA of oil, TAIF Refinery has to sell over 2.1 MTA of heating oil (mazut) at a price lower than crude purchase price thus lowering its earnings and sales margin. The situation around production and sales of mazut is often worsened by both foreign and domestic markets – in the course of a year, especially in summer months, either mazut price drops or buyers may simply abandon purchasing mazut for some period of time. Such a “natural and technical disease” exists for almost all Refineries in the Russian Federation resulting from low conversion depth and, thus, low yield of light oil products. Therefore, a true oil conversion ratio for “light”, i.e. more expensive, oil products in Europe is 80% - 85%. In the Russian Federation, this index often is below 68% - 74%. Out of 285 – 290 MTA of oil refined in the Russian Federation, approximately 100 million tons are low-value mazuts and cokes that neither bring profit, nor growth in returns.
During the past 6 years TAIF Group’s specialists continuously and uninterruptedly looked for such oil refining processes that would bring Tatarstan oil conversion depth at Nizhnekamsk facilities to the level 90% - 95%. In other words, a task was assigned to be able upgrade each 1000 kg of local heavy oil produced in the Republic with at least 900-950 kg yield of high quality feedstock for petrochemicals, gasoline grades, kerosene grades and diesel meeting EURO 4 and EURO 5 standards. The target was to abandon commercial production of mazut, coke and/or asphalt.
In the course of the past 6 years, a plenty of meetings and discussions were held, among them - with representatives of global leaders such as Chevron, Shell, ยะ, Exxon Mobile, and with all Russian and foreign engineering companies open for discussions. In the period mentioned all specialists offered only classic technologies for mazut and vacuum residue conversion into light oil products.
Such technologies inevitably require establishment and construction of several big units simultaneously with a final one being a large and expensive hydrocracking unit. Capital investments in engineering and construction of such a complex in any of the scenarios considered are not less than 3 to 4.5 billion US dollars (some proposals were over 6.5 billion US dollars). But the most essential problem, for which such classic technologies provide no solution, is a considerable amount of residual super-dark and hard-to-sell products such as coke and/or asphalt. Thus, a «primary processing» classic coker unit operating on local super-heavy crude will inevitably produce low-quality and non-saleable coke in the amount over 33% of the mazut converted that cannot be utilized for other purposes but burning. Another example: a classic «primary processing» deasphalting unit inevitably produces so-called asphaltite in the amount as much as some 50% of mazut feed that constitutes asphalt, which, due to its properties and poor quality, may be utilized only for burning, this time, in unique, special-purpose and expensive furnaces. Burning of such coke or asphalt in any region either produces a very big amount of hazardous emissions that is absolutely unacceptable for the city of Nizhnekamsk, or requires construction of unique furnaces and special treatment facilities, whose cost is quite comparable to the cost of an extremely expensive hydrocracking unit. With this in mind, treatment facilities, including gas treatment, do not eliminate hazardous and toxic residues resulted from such burning – they only concentrate them in a solid or a liquid phase, which further must be buried that is hazardous and inevitably results in increase in operating costs of any production facilities and processing itself.
In the course of the fifth year of researches, at the beginning of 2010, TAIF Group’s specialists encountered a new unique proposal from the company Kellogg Brown and Root (USA) in order to solve the tasks faced by TAIF-NK’s Refinery. The company offers a new yet already licensed process providing solutions for 95% conversion of all available vacuum residue into nafta, diesel and kerosene. Actually, it was a unique and innovative hydrocracking fully meeting TAIF Group’s goals that contained 4 hydrocracking reactors in line. Along with this, due to a licensed process, first three reactors allow conversion of low-quality vacuum residue or even any bitumen oil into a clean “synthetic” oil or a clean vacuum gas oil (VGO). The fourth reactor is a classic one, but it is only one reactor instead of two or four hydrocracking reactors and it is able to convert clean vacuum gas oil into nafta, kerosene and diesel. Along with this, kerosene and diesel quality meets EURO 5 standards. It is worth mentioning that this is not a complex of units but rather one large-capacity unit.
In the course of 2010 and 2011, TAIF Group specialists investigated this process, its history, experience of commercial operation and carried out capital investment cost analysis. Its economic efficiency was undoubted since the very beginning – the process offered implied 2 – 2.5 higher profit generation from oil refining if compared to all known processes.
When studying this process it turned out that it is not a new process but rather a “forgotten” and significantly improved old one, which was successfully used in 1935 – 1945 in Germany. In Germany, however, the unit was fed with coal, often blended with residual oil that made the process much more complicated from technical point of view and made it quite expensive taking into account comparatively cheap oil in the world. This was the process that covered 92% of gasoline demand in German aviation during the World War II. It should be noticed that from the very beginning of active utilization of oil in people’s life and to the end of the ีี century, mainly light and low-sulfur oil was used globally, including Russia, that always gives minimal yield of high-quality vacuum residue and coke .
From the first half of the XX century the process patent was owned by a German company VEBA, which was acquired by a global corporation BP at the beginning of 2000s and became its property along with the process. BP’s Research Center, together with VEBA’s specialists, improved the process and adapted it for such feedstock as either vacuum residue, or natural bitumen or other super-heavy residual liquids coming from oil refining thus having abandoned the use of coal. This improved process was officially licensed by BP and named “VEBA COMBI CRACKER” technolgy or “Veba combined cracking”.
In 2008 and 2009, BP offered the world engineering companies on a bid basis to design, sell, distribute and construct plants using VEBA COMBI CRACKER process, or VCC. Such a bid was won by an American company «Kellogg Brown and Root», from which, at the end of 2011, TAIF-NK PSC bought a license for commercial use of VEBA COMBI CRACKER process. Today, on the 14th of February 2012, TAIF Group, represented by TAIF-NK PSC, signed a VCC Unit Basic Engineering Contract. The unit feedstock processing capacity is 2.7 MTA for bitumen and 0.7 MTA for vacuum gasoil. The cost of such a unit together with all infrastructure required is estimated by the parties in amounts equivalent to US$1.5 billion. The start of this project is deemed the effective date of the Basic Engineering Contract. Commissioning of the VCC Unit in Nizhnekamsk is scheduled for the year 2015.
TAIF Group is not the first company to purchase the VCC license and enter into a basic engineering contract. The first company, which took the opportunity to build the VCC Unit, was one of the four largest state companies of China that is intended to put such a unit into operation as early as at the beginning of 2013. The third company looking into possibility to use the VCC Unit for its engineering and commercial purposes is an Indian company “Reliance” owning and operating the world biggest 58 MTA refinery.
Upon successful timely completion and commissioning of this large-scale unit based on VCC process, TAIF-NK’s Refinery in Nizhnekamsk, starting from 2015, will be capable of refining over 7.3 MTA of the republic-produced oil and yield 7.1 MTA of high-quality petroleum products, including feedstock for petrochemical production, having quality no lower than Euro 5. The refinery’s aggregated return must grow 1.7-2 times. This project’s motto is “No mazut, no coke, no asphalt”.
Engineering and construction of a VCC Unit will be a closing stage of modernization and development of TAIF-NK’s Refinery - after that no large-scale and significant projects will be required for, at least, 15-20 years. Such vision of development elaborated by the Government of Tatarstan is fully compliant to industrial policy of the Government of the Russian Federation, which, in 2011 introduced legislative requirements to upgrade all the Russian existing refineries within 5-8 years with the aim to deepen oil conversion and produce only high-quality petroleum products. Such a requirement of RF’s Government, figuratively called as “60/66” and supported by a quadruple agreement with every Russian refinery, is affirmed by introduction of new increased revenue and excise duties for all dark and/or off-grade petroleum products received from refining of Russia-produced oil.