Banias Refinery Company BRC Syria

Clean Fuel Production Strategies in Syrian Refining Sector

OAPEC-Kingdom of Bahrain Conference25-27 October 2010

Eng. Nazih JouhraProcess Manager

11

OutlinesOutlines

Introduction (Refining Sector & Projects in Syria)Introduction (Refining Sector & Projects in Syria) Outlook on Syrian Petroleum Products MarketOutlook on Syrian Petroleum Products Market Clean Fuel Production StrategiesClean Fuel Production Strategies Impact of Revamping Projects on Refining SectorImpact of Revamping Projects on Refining Sector ConclusionConclusion         

22Upgrading Oil Refineries to Produce Clean Fuel Upgrading Oil Refineries to Produce Clean Fuel Symposium 25-27 October 2010 OAPEC/NOGA Symposium 25-27 October 2010 OAPEC/NOGA

ManamaManama

Refining Sector & ProjectsRefining Sector & Projects

Syria have two Government-owned refineries are Syria have two Government-owned refineries are operating in with a total crude distillation capacity operating in with a total crude distillation capacity around 12 million tons per year. around 12 million tons per year.

The refineries process blends of Syrian Light and Heavy The refineries process blends of Syrian Light and Heavy crude oils in varying proportions, with Syrian Light crude oils in varying proportions, with Syrian Light crude typically being 40 to 60 percent of the blends. crude typically being 40 to 60 percent of the blends.

- One of the refineries is located in Homs, a city that - One of the refineries is located in Homs, a city that is approximately 200 km. north of Damascus,is approximately 200 km. north of Damascus, Capacity: 121 k.bbl /day, Scheme: Delayed Cocker Capacity: 121 k.bbl /day, Scheme: Delayed Cocker - The second refinery is located on the Mediterranean- The second refinery is located on the Mediterranean Sea coast at Banias city,Sea coast at Banias city,

- Capacity: 131 k.bbl /day, Scheme: Visbreaker- Capacity: 131 k.bbl /day, Scheme: Visbreaker33

Projects of Improving Refineries Sector Projects of Improving Refineries Sector

The goal of these projects is to allow Syria to refine all its crude oil production The goal of these projects is to allow Syria to refine all its crude oil production domestically, also eliminating the need to import refined products.domestically, also eliminating the need to import refined products.

These projects will include: These projects will include: Banias Refinery Revamping ProjectBanias Refinery Revamping Project: The project has been designed:: The project has been designed: To increase the refinery’s diesel approximately 900 k ton/y by reducing fuel oil, To increase the refinery’s diesel approximately 900 k ton/y by reducing fuel oil,

also increasing LPG , gasoline and HVGO quantities. also increasing LPG , gasoline and HVGO quantities. Upgrading the quality of gasoline and diesel production to Euro IV standards, Upgrading the quality of gasoline and diesel production to Euro IV standards, Revamping Project will include 4 new main units, ( Hydrocracker, Hydrogen Revamping Project will include 4 new main units, ( Hydrocracker, Hydrogen

plant, Isomerazation and Sulfur Recovery Unit ). plant, Isomerazation and Sulfur Recovery Unit ). Homs Refinery Revamping Project: Homs Refinery Revamping Project: The project has been designedThe project has been designed Maximise the Maximise the white products white products of the barrel and decrease the bottom of the of the barrel and decrease the bottom of the

barrel of crude oilbarrel of crude oil To produce products with Euro. V specifications and to face the new strict To produce products with Euro. V specifications and to face the new strict

environmental laws and standards by reducing the emission .environmental laws and standards by reducing the emission . Revamping Project will include 5 new main units, ( Vacuum Distillation, Revamping Project will include 5 new main units, ( Vacuum Distillation,

Hydrocracker, Hydrogen plant, CCR Reforming, Isomerazation and Sulfur Hydrocracker, Hydrogen plant, CCR Reforming, Isomerazation and Sulfur Recovery Unit ).Recovery Unit ).

44

Projects of Improving Refineries SectorProjects of Improving Refineries Sector

China National Petroleum Corp. RefineryChina National Petroleum Corp. Refinery ( (CNPCICNPCI) : ) :

((CNPCICNPCI) is developing a grass root refinery project near Dier Ez ) is developing a grass root refinery project near Dier Ez Zor region in eastern Syria.Zor region in eastern Syria.

The refinery will have the capacity to process 100,000 barrels /day The refinery will have the capacity to process 100,000 barrels /day of Syrian Heavy/Light crude oil - according to new MOU issue, in of Syrian Heavy/Light crude oil - according to new MOU issue, in 2008. 2008.

A Feasibility Study for the project is now being prepared and is A Feasibility Study for the project is now being prepared and is expected to be completed during 2010. expected to be completed during 2010.

The selected refinery configuration includes ( Hydrocracking + The selected refinery configuration includes ( Hydrocracking + Delayed Coking ) units.Delayed Coking ) units.

The quality of its gasoline and diesel production to Euro V The quality of its gasoline and diesel production to Euro V standards.standards.

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Projects of Improving Refineries SectorProjects of Improving Refineries Sector

The Al Furqlus Refinery projectThe Al Furqlus Refinery project : :

The project will be joint venture between four parties: Syria, Iran, The project will be joint venture between four parties: Syria, Iran, Malaysia and Venezuela.Malaysia and Venezuela.

The project The project will consist of an integrated refinery with crude oil will consist of an integrated refinery with crude oil capacity of 140,000 BPSD and include process units, utilities, off-capacity of 140,000 BPSD and include process units, utilities, off-sites, support facilities, and infrastructure as necessary.sites, support facilities, and infrastructure as necessary.

The selected refinery configuration includes (Hydrocracking + The selected refinery configuration includes (Hydrocracking + Delayed Coking) units to produce maximum diesel.Delayed Coking) units to produce maximum diesel.

The quality of its gasoline and diesel production to Euro V and IV The quality of its gasoline and diesel production to Euro V and IV standards. standards.

Environmental friendly process is adopted in the project.Environmental friendly process is adopted in the project.

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Grass Root Refineries Projects Grass Root Refineries Projects ProductionProduction

Al Furqlus RefineryAl Furqlus RefineryCapacity 140 kbbl/dCapacity 140 kbbl/d

Chinese RefineryChinese Refinery

77

Locations of the existing & new Locations of the existing & new refineriesrefineries

Chinese Refinery

Al-Furqlus Refinery.

88

Outlook on Syrian petroleumOutlook on Syrian petroleum products Market products Market

Total demand for all petroleum products will grow 5% annually during Total demand for all petroleum products will grow 5% annually during the 2010-2030 period.the 2010-2030 period.

According to Mahrukat, “the Government-owned petroleum According to Mahrukat, “the Government-owned petroleum product distribution and marketing company”, consumption of product distribution and marketing company”, consumption of diesel/gas oil demand is projected to be 5% annually during the diesel/gas oil demand is projected to be 5% annually during the 2010-2030 period. 2010-2030 period.

About 50 % of the total current diesel/gasoil demand is for home About 50 % of the total current diesel/gasoil demand is for home heating, with the balance used for transport and some for industry. heating, with the balance used for transport and some for industry. Whereas increase in population contribute to growth in heating oil Whereas increase in population contribute to growth in heating oil demand. demand.

Growth in the diesel-fueled vehicle fleet and increased transport of Growth in the diesel-fueled vehicle fleet and increased transport of goods across Syria, from the Mediterranean to Iraq and the Gulf, is goods across Syria, from the Mediterranean to Iraq and the Gulf, is driving growth in diesel demand for transport.driving growth in diesel demand for transport.

IIn early May 2008 Diesel/gas oil consumption fell sharply after the n early May 2008 Diesel/gas oil consumption fell sharply after the Government increased prices.Government increased prices.

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Total demand for petroleum products grew 5.8 % annuallyTotal demand for petroleum products grew 5.8 % annually during the 2000-2007 period. But, it is projected to grow at during the 2000-2007 period. But, it is projected to grow at 5% annually during the 2009-2030. 5% annually during the 2009-2030.

The total products demand are projected to increase by over The total products demand are projected to increase by over 12 million tons at 2007 to be 28.5 million tons at 2030.12 million tons at 2007 to be 28.5 million tons at 2030.

Gasoline demand growth has been strong during the past few Gasoline demand growth has been strong during the past few years, averaging 11%.years, averaging 11%.

Now consumption for all refined products approximately Now consumption for all refined products approximately 14 million tons /year. 14 million tons /year. The consumption products are dominated by diesel/gas oil The consumption products are dominated by diesel/gas oil

and fuel oil, which together account for more than 77% of and fuel oil, which together account for more than 77% of Syria's total consumption of petroleum products .Syria's total consumption of petroleum products .

Demand of Refined products in Syria

1010

Actual refined products consumption

in Syria at 2009

LPG Super Gasoline jet gas oil fuel oil Betumin coke

Weight percentWeight percent

1111

Gross Demand for each Petroleum Product from 2010-2030

K. Ton/y

1212

Increasing demand for Increasing demand for productsproducts

Syrian existing refineries production of products recently has Syrian existing refineries production of products recently has been stable at approximately 11 million tons/year. been stable at approximately 11 million tons/year.

Due to increasing demand for diesel/gas oil, the import of the Due to increasing demand for diesel/gas oil, the import of the product has increased from about 1 million tons in 2002 to over 4 product has increased from about 1 million tons in 2002 to over 4 million tons in 2007.million tons in 2007.

Syria’s trade position for gasoline, fuel oil has shifted from a Syria’s trade position for gasoline, fuel oil has shifted from a substantial export position to a balanced to slightly deficit substantial export position to a balanced to slightly deficit position during the past 5 years.position during the past 5 years.

Import of large quantities from LPG, Gas oil, fuel oil and little Import of large quantities from LPG, Gas oil, fuel oil and little gasoline. gasoline.

A big deficit will be in the future on refined products due to A big deficit will be in the future on refined products due to limited refineries production.limited refineries production.

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Net Demand for each product from Net Demand for each product from 2010-2030 in Syria 2010-2030 in Syria

-8,000

-7,000

-6,000

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000LPG Gasoline Jet Gasoil FueloilBitumen Coke

-533-432

0

-1,955 -1,276

-23 0

-1,600

-3,245

0

-8,627

-4,122

-854

0

K. Ton/y

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Strategies to produce clean Strategies to produce clean fuelfuel

To achieve To achieve Strategies to produce clean fuelStrategies to produce clean fuel the ministry has the ministry has

depended on:depended on:

1.1. Following revamping projects for existing refineries to produce clean fuel.Following revamping projects for existing refineries to produce clean fuel.

2.2. Constructing grass root refineries to produce clean fuel with Euro. IV & V Constructing grass root refineries to produce clean fuel with Euro. IV & V specification ( IV at least).specification ( IV at least).

3.3. Importing Diesel for vehicles with Euro. IV specificationImporting Diesel for vehicles with Euro. IV specification

4.4. Improvement of Syrian Standard Specifications for Oil ProductsImprovement of Syrian Standard Specifications for Oil Products

Whereas 50 % of the total current gasoil demand is for home heating, Whereas 50 % of the total current gasoil demand is for home heating,

with the balance used for transport and some for industry and with the balance used for transport and some for industry and

population increases contribute to the growth in home heating oilpopulation increases contribute to the growth in home heating oil

demand.demand.

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To perform this To perform this Strategies will apply the followsStrategies will apply the follows:: Two kinds of Gasoil will be used:Two kinds of Gasoil will be used:

- Gasoil for heating oil- Gasoil for heating oil

- Diesel for vehicles with Euro. IV & V specification.- Diesel for vehicles with Euro. IV & V specification. Also, two kinds of Gasoline RON.95 according to Euro.IV in addition to Also, two kinds of Gasoline RON.95 according to Euro.IV in addition to

present Gasoline RON.90present Gasoline RON.90 Improvements of Improvements of Syrian standardSyrian standard Specifications for Oil Products have been Specifications for Oil Products have been

issued in 2009 for Gasoline & Diesel.issued in 2009 for Gasoline & Diesel.

Further to achieve these strategies to produce and use clean fuel, theFurther to achieve these strategies to produce and use clean fuel, the

Ministry has created the Public Establishment for Refining &Ministry has created the Public Establishment for Refining &

Distribution in February 2009 to follow and observe all new projects Distribution in February 2009 to follow and observe all new projects

especially grass root refineries.especially grass root refineries.

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Strategies to use clean fuelStrategies to use clean fuel

Improvement of Syrian StandardImprovement of Syrian Standard Specifications for Oil Products Specifications for Oil Products

The government oriented MPMR with Syrian Arab The government oriented MPMR with Syrian Arab Organization for Standardization and Metrology(SAOSM) Organization for Standardization and Metrology(SAOSM) to state the new specification for each diesel and heating to state the new specification for each diesel and heating oil. oil.

In 2009 SAOSM with MPMR have issued gasoline In 2009 SAOSM with MPMR have issued gasoline specification RON.95 on Euro.IV in addition to RON.90specification RON.95 on Euro.IV in addition to RON.90

Also, Syrian Arab Organization for Standardization and Also, Syrian Arab Organization for Standardization and Metrology has issued new specification for each diesel Metrology has issued new specification for each diesel and heating oil.and heating oil.

The objectives are supplying heating oil from existing The objectives are supplying heating oil from existing refineries to be more economic for people and importing of refineries to be more economic for people and importing of diesel for transportation vehicles. diesel for transportation vehicles.

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Syria is planed to construct two Syria is planed to construct two newnew refineries refineries

There are many main reasons for that:There are many main reasons for that:

Increasing demand on petroleum products respectively LPG ,Increasing demand on petroleum products respectively LPG , Gasoline, Gasoil/Diesel and Fuel oil. Gasoline, Gasoil/Diesel and Fuel oil. limited capacity for existing refineries.limited capacity for existing refineries. The available pipelines are not enough to trans all this imported The available pipelines are not enough to trans all this imported

quantity from the shore to the internal region in the future.quantity from the shore to the internal region in the future. Lot of quantities will be imported from other countries such as in Lot of quantities will be imported from other countries such as in

2010 will be more than 3.5 million tons, in 2030 will be 17 2010 will be more than 3.5 million tons, in 2030 will be 17 million tons.million tons.

Production of new refineries will be Euro. IV& V specificationsProduction of new refineries will be Euro. IV& V specifications Environmental friendly process is adopted in all the projects.Environmental friendly process is adopted in all the projects. The need to new refineries capacities to supply the domestic The need to new refineries capacities to supply the domestic

market, that, eliminate the deficit in the next years.market, that, eliminate the deficit in the next years.1818

The total imported products quantitiesThe total imported products quantities

2009 2010 2015 2020 2025 2030

-3,402

-3,023

-4,824

-8,188

-12,194

-17,019-20000

-15000

-10000

-5000

0

5000

Year

Total Net products

K. ton/y

1919

Syria will import lot of refined products quantities from 2010-2030 if the new projects are not executed .

New New Refineries Projects ProductionRefineries Projects Production

Refineries production projections have developed by assuming Refineries production projections have developed by assuming that:that:– The CNPC Refinery, Al Furqlus Refinery are in operation. The CNPC Refinery, Al Furqlus Refinery are in operation. – The Banias Refinery Revamp Project is implemented and The Banias Refinery Revamp Project is implemented and

operatingoperating– Also, the Homs refinery Revamp Project is implemented and Also, the Homs refinery Revamp Project is implemented and

operating.operating. In recent years, total Syrian refined products demand has been

exceeded and after the startups of the new refineries will balance for about five years in the future .

A forecast increase in production between 2015 and 2018 A forecast increase in production between 2015 and 2018 reflects impact of startups of the new refineries on the reflects impact of startups of the new refineries on the production. production.

2020

Forecast timeline for the Forecast timeline for the new new projection projects projection projects Impact of projects production at 2015-2030 especially onImpact of projects production at 2015-2030 especially on products demand after start-up of the new projects in products demand after start-up of the new projects in Syria will be:Syria will be: The Homs refinery Revamp Project is started to revamp The Homs refinery Revamp Project is started to revamp

the atmospheric distillation and will continued on stagesthe atmospheric distillation and will continued on stages In 2015In 2015 is predicted to BRC project to be in operating. is predicted to BRC project to be in operating. In 2016In 2016 is predicted to Chinese refinery to be in is predicted to Chinese refinery to be in

operating.operating. In 2017In 2017 is predicted to Al-Furqlus refinery to be in is predicted to Al-Furqlus refinery to be in

operating.operating.

2121

Comparison of net demand before executing all projectsComparison of net demand before executing all projects & after executing BRC refinery project & after executing BRC refinery project

2222

The deficit & surplus of refined products afterThe deficit & surplus of refined products after executing all projects executing all projects

2323

Comparison of net products demand beforeComparison of net products demand before & after executing all projects in Syria & after executing all projects in Syria

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Impact of Revamping Projects on RefiningImpact of Revamping Projects on Refining Sector in Syria Sector in Syria

The startup of these projects with new refineries would result in an initial gasoline surplus of nearly 1.7 million tons in 2017 and an export for gasoline that is forecast to continue through 2030 about 960 k tons.

Also, the startups of the new refineries would eliminate Syria’s currently, major diesel import position, but also would result in diesel export position for several years after their startups.

Syria’s diesel imports would increase from approximately 1.2 million tons in 2009 to 8.6 million tons in 2030 if no new projects are built.

Syria’s future diesel trade position will be highly dependent upon the amount of new refining capacity that is built.

The local Syrian market is considered to be the Project’s primary target market since the main purpose of the Project is to supply petroleum products to displace Syria’s current diesel imports and to meet incremental Syrian domestic refined product demand. However, potential export markets were considered as possible secondary markets for the Project’s gasoline and diesel.

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The Economic Evaluation of Projects

Project Project NameName

BRCBRC HRCHRCChinese Chinese RefineryRefinery

Al Furqlus Al Furqlus RefineryRefinery

CapacityCapacity

50/ 50 Syrian Heavy 50/ 50 Syrian Heavy / light/ light

131,000 131,000 BPSD BPSD Average 2003-2004 Average 2003-2004

(Crude & Products)(Crude & Products)

60/ 40 Syrian 60/ 40 Syrian Heavy / lightHeavy / light

121,000 121,000 BPSD BPSD Average 2005 Average 2005

(Crude & Products)(Crude & Products)

70/ 30 Syrian 70/ 30 Syrian Heavy / lightHeavy / light

100,000 100,000 BPSDBPSDAverage (2005-2007)Average (2005-2007)

(Crude & Products)(Crude & Products)

25/25%25/25% Syrian Syrian Heavy / lightHeavy / light

20% Iranian20% Iranian

30% Synthetic30% Synthetic

140 K140 KBPSDBPSD

InvestmentInvestmentUS$ 692 MM

US$ 973 MM

€ 1,6 Billion

US$ 2,6 Billion

NPVNPVUS$ 1134

MMUS$ 3652

MM€ 271.3

MMUS$ 1576

MM

at 6%at 6%at 12%at 8%

IRRIRR19.5 %36.4%14.65%19.8%

POT, yearsPOT, years3.92.145.243.8 2626

Constantly, the ministry follows The Constantly, the ministry follows The Strategies to produce Strategies to produce andand

use clean fueluse clean fuel depending on depending on upgradingupgrading in in Syrian refining sector.Syrian refining sector. RevampingRevamping of the existing refineries BRC & HRC are very of the existing refineries BRC & HRC are very

important projects to optimize Syrian refining sector.important projects to optimize Syrian refining sector. Also, Constructing new grass root refineries are very important Also, Constructing new grass root refineries are very important

projectsprojects. . Above mentioned upgrading will add the following advantages:Above mentioned upgrading will add the following advantages:

Supply the domestic market with petroleum products to eliminate Supply the domestic market with petroleum products to eliminate the deficit in the next years,the deficit in the next years,

IncreaseIncrease production of white products: LPG, Gasoline and production of white products: LPG, Gasoline and Diesel/Gas oil,Diesel/Gas oil,

Improve the product specifications to Meet EU IV,V standards,Improve the product specifications to Meet EU IV,V standards, Improve the environmental and ecological conditions.Improve the environmental and ecological conditions.

ConclusionConclusion

2727WWW.brc-sy.netWWW.brc-sy.net

Thank You

Eng. Nazih JouhraProcess Manager

SyriaSyria

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