Refinery – Petrochemicals Integration – Trend For Sustainable Profitability

<p>As crude prices start its upward journey, refineries will experience a resurgent challenge of managing their feedstock costs with a result of huge pressure on the margins. Coupled with this global phenomenon, refiners are getting region specific challenges to modify its processes to comply with BS-VI /Euro &ndash;VI product neutral Sulphur emission norms. The % Sulphur content in ULSD (Ultra Low Sulphur Diesel) will almost be equivalent to Gasoline /MS as per BS-VI /Euro-VI standards.</p><p>While the dynamic pricing in retail market eases the pressure, it does not give an ultimate relief to refiners from input cost pressures due to operational/process engineering changes which involves CAPEX and high costs of feedstock in the inventory. In such a dynamic market situation, Refiners needs to find new ways of ensuring margins and profitability in the future. A much obvious answer to it is the refinery &ndash;Petrochemicals integration to build new product portfolio which has better demand in the markets. Polypropylene, Propylene are some of the examples of products in demand for quite some time now, which can be targeted by refiners for the integration.</p><p>Some of the examples of Refinery-Petrochemicals integration are Reliance off-gas plant commissioning in Jamnagar, India; Sabic &amp; Aramco building Refinery &amp; Petrochemical facility in Jazan, Saudi Arabia; MOL building joint facility in Hungary.&nbsp;<strong><u>This Integration promises high value products and helps in improving gross margins.</u></strong></p><p><strong>Refinery and Petrochemical complexes can typically be integrated as follows:</strong></p><p>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Refinery integrated with a steam cracker to produce ethylene, propylene, and other derivatives</p><p>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Refinery integrated with an aromatics complex and a steam cracker&nbsp;</p><p>&nbsp;The first method of integration is less expensive to build and quick to operate, others need significant investments in modifications to the earlier refinery designs. More than 98% of the ethylene is produced from steam cracking globally; Naphtha and mixed feed based steam crackers represent the highest number of installations. Ethane based crackers have gained ground in the Middle East, Africa and North America in recent years.&nbsp;&nbsp;One of the reasons for the increasing number of gas crackers is the discovery and production of shale gas, better yield and hence attractive economics.</p><p><strong>Challenges &amp; Opportunities of Integration:</strong></p><p>With two entities integrating, there is an increase in the complexity of the combined system along with limited operational flexibility as the two entities are now dependant on each other for feedstock and Utilities. Refining companies are taking stock of global and local market trends, and availability and reliability of feedstock, and restructuring the business accordingly. Single site Integration brings capital, OPEX and resource opti&shy;misation through shared infra&shy;structure, storage and utilities, lower logistics and energy costs, with least overheads and waste, and a trained workforce and contractors in the same place. &nbsp;</p><p>Integration of petrochemical complexes with refineries is a natural choice and a petrochem&shy;ical refinery can best respond to high competition and pressure on gross refining margin. Such integration not only adds high value products but also optimises the costs of utili&shy;ties. Refinery petrochemical inte&shy;gration has worldwide scope and demand and in India it can provide an effective solution to the nation&rsquo;s high import bill for petrochemicals.</p>
KR Expert - Anand Chourikar