Grupa Lotos formally wraps EFRA project at Gdańsk refinery

Grupa Lotos SA and subsidiary Lotos Asfalt Sp. Z.o.o. have completed reliability testing to officially conclude the long-planned effective refining program (EFRA) to increase the yield of high-margin middle distillates while simultaneously reducing output of less-profitable heavy products at the companies’ jointly shared 10.7 million-tonnes/year refining complex in Gdańsk, Poland (OGJ Online, Feb. 13, 2018; July 15, 2015).

Despite current market disruptions stemming from the coronavirus outbreak, Grupa Lotos and Lotos Asfalt finalized lenders reliability testing of the EFRA project as of Mar. 25, Grupa Lotos said.

The testing—which involved processing the project’s maximum charge volumes as well as monitoring for quality and quantity control of resulting products—was to satisfy conditions required by financial loan agreements.

Testing unanimously confirmed that installations built as part of the EFRA project—including Lotos Asfalt’s coking complex located at the Gdańsk site—can stably maintain required production quality and quantity as intended by the 2.3 billion-zloty investment, Grupa Lotos said.

“The successful completion of the EFRA project's [lenders reliability testing] is the end of a key investment implemented jointly by Grupa Lotos and Lotos Asfalt,” said Paweł Jan Majewski, president of Grupa Lotos’ management board.

Completion of lenders reliability testing follows preliminary testing and commissioning in 2018-19 of multiple EFRA installations, Grupa Lotos said in a June 2019 statement and in its recently released 2019 annual report to investors.

Designed to boost the Gdańsk refinery’s overall production of high-margin products (primarily diesel oil and aviation fuel) by about 900,000 tpy and coke by 300,000 tpy, as well as lift its refining margin by about $2/bbl, the EFRA project involved upgrades of existing units and construction of a series of new major units, including the new coker complex—comprised of a delayed coking unit, coking naphtha hydrotreating unit, and installations for coke storage and distribution of coke—a hydrowax vacuum distillation unit, a hydrogen generation unit, an LPG treatment unit, an oxygen production plant, a power distribution plant, a diesel hydrodesulfurization unit, an amine regeneration unit, a sour-water stripping unit, sulfur recovery units, and associated infrastructure (OGJ Online, Oct. 26, 2015).

The EFRA project also equips the refinery with greater flexibility to optimize production depending on market prices of raw feedstocks and products, as well as the ability to process a wider range of crudes, including heavier and less expensive feedstocks, the operator said.

Future plans at Gdańsk

With the EFRA project now formally completed, Grupa Lotos said in its 2019 annual report that it is considering four new expansion projects to further develop the Gdańsk refinery, including:

• Construction of a new blending unit to enable production and sale of high-margin Group 2 and Group 3 base oils (the HBO project).
• Addition of a complex for production of motor gasoline from naphtha.
• Construction of a new olefins complex with an ethyl tertiary butyl ether (ETBE) unit, for which Grupa Lotos would be an equity investor.
• Construction of a combined heat and power (CHP) plant.

While Grupa Lotos confirmed the HBO project has been approved for further studies and preparatory works, the operator has yet to reveal definitive timeframes for reaching final investment decisions on any of the proposed projects.