As western Europe's refiners begin to tackle their problem of surplus capacity, eastern Europe's refiners could offer a new threat to already low operating margins (OGJ, Mar. 25, p. 21).
Bela Cseh, senior vice-president of Hungary's state owned MOL Rt, outlined at a London conference the problems of an eastern European refiner in preparing for western European opportunities.
Hungary's crude distillation capacity amounts to 11 million metric tons/year. Of the country's three refineries, Zala processes locally produced crude oil, while the Tisza and Danube refineries process oil from Russia.
"The complexity factor may be considered high only for the Danube refinery," Cseh said. "Tisza refinery is directly connected to the adjacent petrochemical plant and is of hydroskimming complexity."
The refineries have pipeline links for receipt of Russian, domestic, and other crudes. Tying in the import lines to western Europe's oil pipeline system would be a simple matter technically, Cseh said.
Danube complexity
Construction of the Danube and Tisza refineries began in 1960 and 1972, respectively. Their existence was justified by a ready supply of Russian crude oil. Access to Hungarian oil came later.
"From the 1970s onward," Cseh said, "there were many occasions when existing process units using Soviet technologies were revamped to increase yields and capacities, reducing energy consumption."
Cseh reckons the Danube refinery today is as complex as the average western European plant. Most leaded gasoline production will end this summer, with production switching to unleaded grades.
Crudes dilemma
While the Danube refinery can meet western standards for white products, motor fuels, and petrochemicals feedstock when running Russian crudes, in some products areas western norms can be met only with domestic crude.
Cseh said the plant's lube oil complex needs a hydrocracker to enable it to produce high and very high viscosity index base oils from Russian crude, although it can do so from paraffinic domestic crudes.
Paraffinic local crudes are required for wax production, too. Russian crudes are currently used for production of bitumen, but here too bitumen meeting western requirements can be made only from Hungarian crude.
And for production of low sulfur fuel oils, running Russian crude will not enable western specifications to be matched, while domestic crudes will.
Installation of a residue upgrading plant to improve quality is said to be much too costly, as Russian crude oil prices inch toward international levels (OGJ, Oct. 30, 1995, p. 12).
Also, Hungary's crude oil production can provide only 15-20% of the country's demand for petroleum products. Those problems have led MOL to change its crude buying tactics.
Cseh said, "MOL is willing to count on Russian crude imports on a long term basis but is induced, at the same time, to diversify its crude purchases due to the ever increasing crude price."
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