Many Russian refinery projects plagued by financing problems

Mikhail G. Rudin
Raytheon Engineers & Constructors
Puteaux, France

• Russina Refineries [197,629 bytes]
• The old Tuapse refinery urgently needs renovation. Lack of financing and uncertainty of Rosneft Co.'s status prevents acquisition of funding (Fig. 1 [34,868 bytes]).
• As part of its modernization program, the Ukhta refinery has several new tanks under construction (Fig. 2 [13,965 bytes]).

A roundup of the status of Russian refinery projects reveals the country's modernization steps to meet quality-fuel production.

The direction of Russian modernization programs in 1996 has previously been presented (OGJ, Aug. 18, 1997, p. 31). As they have been implemented, the programs have been modified to accommodate financing and product needs.

Since 1996, several projects have been cancelled or postponed. Lack of financing cancelled plans for two new refineries in the Tyumen region: Nizhevartovsk and Torgili. Rosneft Co. has cancelled plans to build a new catalytic reformer in Krasnodar.

In 1997, Russian refineries refined 3.9 million b/d of crude, 60% of their capacity. This article covers the situation in 11 companies and 23 refineries with more than 5 million b/d of distillation capacity.

Lukoil

Lukoil Co. owns two refineries, one in the city of Perm, West Urals, and the other in Volgograd, the Lower Volga, 300 miles north of the Caspian Sea.

Perm refinery

The Perm refinery modernization program, prepared by ABB Lummus Global Inc. in 1994, was altered in 1997 by refinery management. The new program will construct the following units:

• Long-residue vacuum distillation, 36,000 b/d capacity, domestic technology
• A T-star vacuum gas oil (VGO) hydrocracker, 67,000 b/d capacity, IFP and Texaco Inc. technology
• Short-residue hydrocracker (LC-fining), 40,000 b/d capacity, ABB Lummus Global, Oxy Research & Development Co., and Amoco Corp. technology
• Di-isopropyl ether (DIPE) unit, 10,000 b/d capacity, licensor not yet selected
• Hydrogen unit, 60 MMcfd, Linde AG technology
• Sulfur recovery, 78,000 metric ton/year (mty) capacity, Stork Comprimo BV technology
• Alkylation unit, 6,000 b/d capacity, Stratco Inc. technology.

In addition to new units, the following units were scheduled for revamps as part of the modernization program: the catalytic-cracking unit (increasing the existing Thermofor's capacity to 35,000 b/d with Stone & Webster Inc. technology), the crude units, the asphalt plant, the catalytic reformers, and the delayed-coking unit.

The first phase of the revamp was mostly completed in 1997. This phase included the new vacuum unit and revamps of the crude units and asphalt plant.

The remaining projects are split into two groups. The first group consists of the T-star unit, the Thermofor revamp, the DIPE unit, the catalytic reforming modernization. This first phase will cost $340 million and will be complete in 2003.

The second group, which includes all the remaining projects, is estimated at $290 million. It is expected to be completed after 2007.

Volgograd refinery

The modernization of the Volgograd refinery is also split into two phases. The first phase consists of the following upgrades:

• The diesel hydrotreater to 25,000 b/sd capacity
• The saturated-gas plant to 3,000 b/sd capacity
• The unsaturated-gas plant to 6,000 b/d capacity
• The isomerization unit to 8,000 b/d capacity
• The sulfur-recovery unit to 20,000 mty.

The hydrotreater and both gas plants will use domestic technologies. Comprimo is the licensor for the sulfur-recovery process, and UOP's technology will be used for isomerization.

The second phase of the project consists of a grassroots VGO hydro cracker (25,000 b/d, UOP technology) and a grassroots hydrogen plant (40 MMcfd).

The cost of the first phase was estimated at $180 million, and the capital investments for the second phase were estimated at $145 million. Program execution is at its early stages, and the projects will be complete after 2005.

Yukos

The Yukos Co. has four refineries: the Achinsk refinery in East Siberia and three refineries located on the Middle Volga River, near the cities of SamaraNovokuibishevsk, Kuibishev, and Syzran.

Achinsk refinery

The Achinsk refinery began a construction project in the 1980s which included a 50,000 b/sd long-residue vacuum-distillation unit and a 12,000 b/sd delayed coker. To date, this project has not been completed because of technical and financial problems.

A $62 million credit was approved by the European bank for reconstruction and project financing in 1996. The construction has been suspended because the former parent company, East Oil Co., did not solve problems connected with the loan.

Novokuibishevsk refinery

In 1993, the refinery began construction of a complex to produce high-quality gasoline, which included a 45,000 b/sd naphtha splitter (Russian technology), a 38,000 b/sd naphtha hydrotreater (Russian technology), a 30,000 b/sd CCR-catalytic reforming unit (UOP licensed), and a 7,000 b/sd isomerization unit with an adsorption section (UOP technology).

Currently, all construction has ceased. The refinery decided to revamp the obsolete catalytic reforming units, which ran from 1962 to 1968. This revamp is scheduled for the 1998-99 timeframe.

There are also plans to construct a visbreaking unit of 35,000 b/sd in capacity, but the licensor and contractor are not yet determined.

Kuibishev refinery

The Kuibishev refinery's grassroots crude unit, started in 1997, has 65,000 b/sd of capacity. Currently, the refinery is selecting a licensor for a 6,000 mty unit for the regeneration of spent-sulfuric acid, which it plans to build in 1999-2000.

The refinery is also evaluating different options for the revamp of three existing catalytic-cracking Thermofor units.

Sidanko

Sidanko Co. has three refineries. They are located in East Siberia (Angarsk), the Far East (Khabarovsk), and the Volga area (Cracking-Saratov).

Unfortunately, all projects have been suspended at Sidanko refineries because of the unsatisfactory financial status of the company (that is, tax debts, nonpayments, a lack of demand for solvent production). The parent company and its principal shareholder, Onexim Bank, have postponed work until after 2000.

Angarsk refinery

Angarsk Petrochemical Co. (APC) manufactures motor fuels, lube oils, plastics, synthetic alcohols, and fertilizers. It is the leading product manufacturer in Russian refineries.

In 1995, ABB Lummus Global prepared the master plan for APC's modernization. The total investment was estimated at $1.95 billion, of which $1.1 billion was for the refinery. The refinery investment included revamps of vacuum units, catalytic-cracking units, catalytic-reforming units, and delayed-coking units. A new VGO hydrocracker was also planned. The completion of these projects had been planned for 2001.

Khabarovsk refinery

This refinery is a main supplier of oil products to the Russian Far East. It could be the source of export products through Pacific Ocean terminals. Unfortunately, the existing process flow does not allow the refinery to produce world-quality fuels.

The reconstruction plans for this refinery introduce it to modern technology. The first stage envisages the construction of a 15,000 b/sd catalytic reformer with continuous regeneration (UOP licensed). This reformer will end the production of leaded gasoline and increase the output of high-octane gasoline.

The front-end engineering was completed by Chiyoda Corp., Japan. The total value of this reconstruction plan, to have been completed in 1999, is $100 million.

Cracking-Saratov refinery

This refinery, onstream since the early 1930s, needs modernization. The first stage of reconstruction, reported by the Spanish Dragados and Russian Vnipineft, includes a mild hydrocracker of VGO (Unocal-UOP licensed) and associated hydrogen and sulfur recovery units.

The capital requirement was estimated at $300 million. It is assumed that 85% of the loan will be supplied by U.S. and Spanish banks, and Sidanko will be a guarantor for this loan.

Surgutneftegaz

The 17 million mty Kirishi refinery (Kinef) is Surgutneftegaz Co.'s only facility. The refinery is located in the city of Kirishi, about 80 miles southeast of St. Petersburg, to which it supplies oil products.

As a result of a good geographical location, Kinef can export more than 30% of its production to West Europe. In 1996, the first Russian linear alkyl benzene (LAB) and linear alkyl benzene sulfonate (LABS) plants were completed at Kinef.

Kinef suffers from a lack of bottom-of-the-barrel conversion units-crude conversion does not exceed 45%. Chevron Research & Technology Co. and ABB Lummus Global provided basic design for the modernization. The plans include a new Isocracking unit which will maximize production of middle distillates such as diesel and jet fuel. The new complex will contain:

• An 80,000 b/sd vacuum distillation unit
• A 50,000 b/sd Isocracking hydrocracker
• A 30,000 b/sd visbreaker
• A hydrogen plant
• An amine treater and sulfur plant.

The modernization cost was estimated at $750 million. Although completion is planned for 1999, engineering and financing have not yet started. Kinef is considering different proposals submitted by Western engineering companies that may decrease the cost of the project.

Some Western banks and financing corporations have proposed financing options, but Surgutneftegaz has delayed approval. General contractors and subcontractors have not yet been defined.

Sibneft

The Omsk refinery leads Russian refineries in design capacity with 560,000 b/sd. By the end of this year, the Omsk refinery plans to have completed the construction of a sulfuric acid alkylation unit with 8,600 b/sd of capacity, licensed by Stratco and engineered by Technip SA.

Also under construction is a revamp of a domestic semiregenerative catalytic reforming unit with 25,000 b/sd of capacity (UOP's continuous regeneration technology). This project will cost about $55 million and will be completed in 2000.

After this project is completed, the refinery plans to add an isomerization unit with 10,000 b/sd of capacity.

Rosneft

Rosneft owns antiquated refineries located in Komsomolsk, the Far East, Tuapse, the Black Sea coast, and Krasnodar.

Komsomolsk refinery

The Komsomolsk refinery was completed before World War II and is obsolete. It has no catalytic reforming or hydrotreating units, and its offsite facilities are in poor repair. A series of negotiations with Japanese financial groups to finance the construction of fuel-upgrade projects (catalytic reforming, diesel hydrotreating) have occurred, but no final decision has been reached.

Tuapse refinery

The Tuapse refinery is the sole Russian refinery on the Black Sea coast with excellent export opportunities. The refinery is old and it includes only crude units and a small catalytic reforming unit. Raytheon Engineers & Constructors completed a feasibility study of the reconstruction of the Tuapse refinery in 1995. The study proposed new catalytic reforming and diesel hydrotreating units for bottom-of-the-barrel conversion. Lack of financing and uncertainty of the Rosneft status (company still not privatized) prevents acquisition of reconstruction funding (Fig. 1 [34,868 bytes]).

Tyumen

Kvaerner Process (John Brown Engineering & Construction) continues to participate in the first stage of modernization of Tyumen's Ryazan refinery.

The contract includes detailed engineering, procurement, and construction management services for revamping the fluid-catalytic cracking (FCC) unit. Completion of the project will increase the unit's capacity from 20,000 b/sd to 45,000 b/sd. Amoco Eurasia is providing process technology, operating know-how, and overall management service.

Current revenues were initially financing the work. As this source diminishes, reconstruction is slowing down.

The Ryazan refinery had an insufficient supply of oil in the past 3 years. In 1996 and 1997, it achieved only 22.4% and 23.9% of its design capacity, respectively.

The refinery is one of the main budget debtors in Russia. Tyumen was acquired by the Alfa-Group, a Russian financial group, in 1997. One of the conditions of this transaction was discharge of Ryazan debts and completion of unfinished projects.

Slavneft

Slavneft, a state-owned company, has three refineries: Novo-Yaroslavl, Yaroslavl-Mendeleev in Russia, and Mozyr in Belarus.

As already reported (OGJ, Aug. 18, 1997, p. 31), the Yaroslavlnefteorgsintes refinery 1996-1999 reconstruction program includes its catalytic cracking unit.

Stone & Webster, which is providing the construction, says that exports could potentially involve more than 30 U.S. suppliers in nine states. The catalytic-cracking unit's capacity will be increased to 25,000 b/sd.

The next steps in the Novo-Yaroslavl renovation include the construction of a grassroots 15,000 b/sd catalytic reforming CCR unit (UOP licensed) and a 36,000 b/sd visbreaker (licensor not yet identified).

The refinery also wants to complete the construction of a 40,000 b/sd hydrocracking unit that began in the 1980s and was suspended in the 1990s. The total cost of these three units is over $240 million. Financing was proposed by German and Japanese companies and is expected to be secured by the Japan-Exim Bank.

Komitek

This company's Ukhta refinery, near the Arctic Circle, has a modernization program that includes the following ( Fig. 2 [13,965 bytes]):

• 6 million mty atmospheric distillation unit. This unit was intended to replace existing obsolete crude units. At least 50% of the equipment has been installed. As a result of a lack of funding, however, the construction has been suspended. It is uncertain when construction will resume.
• 22,000 b/sd middle-distillate hydrotreater. Stork-Comprimo-SKL GmbH, Magdeburg, Germany, was selected in September 1996 for engineering, procurement, and construction of this unit. The contract is valued at $40 million, but financing problems are not yet solved.
• 22,000 b/sd catalytic cracker. Refin, a consulting consortium in the former Soviet Union, is supervising selection of licensors and engineering companies.

Norsi

The Norsi Oil Co. refinery is located in the town of Kstovo, 20 miles from Nizhny Novgorod.

Currently, a 25,000 b/sd continuous catalytic-reforming unit, licensed by UOP and engineered by Raytheon, is under construction. This $100 million project was expected to have been completed in 1997, but in 1996, the construction was temporarily suspended as a result of a lack of financing.

Construction resumed in October 1997. The unit is currently scheduled to come onstream at the end of 1998 or spring of 1999.

The planned 80,000 b/sd bottom-of-the-barrel complex includes a vacuum-distillation unit, a vacuum gas-oil treater, and an FCC unit. UOP will be the licensor for the FCC unit. Engineering has not yet started for this project.

Bashkir

Bashkir Petrochemical Co. owns three refineries: Novo-Ufa, Ufa, and Ufaneftekhim. The revamp program for the Ufaneftekhim refinery includes:

• Revamp of the hydrocracking unit designed by IFP/Technip. Highlights of the project are new catalyst, a lower reactor pressure, and a new pressure-swing adsorption (PSA) unit to supply makeup hydrogen. The revamp was completed in 1997.
• Reconstruction of the aromatics plant. Paraxylene production will be increased to 235,000 mty. At the time of writing, preliminary contract studies have been carried out with the potential licensor and contractor.
• Revamp of the sulfuric-acid recovery plant. The new 450 ton/day capacity will allow increased loading to the hydrocracker. The present sulfuric acid recovery plant limits the hydrocracking loading by 70%. The contract for the revamp with Western companies is under preparation.

Salavatnefteorgsintes

The Salavatnefteorgsintes plant manufactures motor fuels, polyolefins, ethylene oxide, synthetic alcohols, ammonia, and urea. The plant was constructed in the early 1950s; many of the units need replacement or modernization.

Several years ago, the plant began a project to install a new 200,000 mty ethyl benzene-styrene unit to replace an obsolete one. This over-$140-million project was expected to be completed in 1998. Lurgi Anlagenbau, Chemnitz, Germany, provided engineering based on Russian financing and was supposed to arrange financing.

Unfortunately, the client did not submit a financing guarantee and construction has since been suspended.

Nizhnekamskneftekhim

The Nizhnekamskneftekhim petrochemical plant in Tatarstan produces styrene, polyethylene, synthetic rubbers, and other chemicals. A 120,000 b/sd crude unit supplies straight-run naphtha to the ethylene plant.

In 1997, the Tatarstan Republic let a contract worth more than $100 million to ABB Lummus to build a 45,000 b/sd middle distillate hydrotreating complex in Nizhnekamsk. The new complex will have a kerosine and gas-oil hydrotreater, hydrogen production, amine and sourwater stripping, and sulfur recovery.

Financing is secured in a U.S.-Russia intergovernmental agreement.

Other refineries

At the end of 1997, Kogalym mini-refinery in West Siberia started up a 13,000 b/sd crude unit.

Surgutgasprom Co., in the city of Surgut, built a new 1,200 b/sd catalytic-reforming unit. An analagous unit is under construction at Kogali.

Construction began for a new 12,000 b/sd refinery in 1997 in the settlement of Isetskoye in the Tyumen region. The customer of this new refinery will be Zapsibgasprom, a branch of Gasprom.

The Author