1 September 2009

Global perspectives: Refinery upgrade in Ukraine

By Cris Whetton

JSC Ukrtatnafta inked a contract with CRI/Criterion Catalyst Co. Ltd. and Shell Global Solutions Eastern Europe BV for a revamp of two processing units at its 360,000 bpd refinery in Kremenchug, Ukraine. The work includes Shell reactor internals and a Criterion catalyst system for diesel hydrotreaters. One of the revamped units will produce vacuum gas oil with less than 0.2% of sulphur by weight. The other will allow the refinery to produce automotive diesel with a sulphur content of less than 350 ppm and batches of diesel with sulphur content below 50 ppm.

Poland’s PKN Orlen S.A, owner of the Lithuanian oil refinery Mazeikiu Nafta, has decided to change the company’s name to Orlen Lietuva. The company reported the new name would facilitate the company’s identification with Orlen Group and ensure smoother, clearer, and simpler communication and cooperation with wholesale and retail consumers of products.

In Ukraine, the Anglo-Russian TNK-BP closed a transaction that brings its effective shareholding in the Lisichansk Refinery close to 100%. Going forward, the company is interested in further modernizing its Ukrainian refining assets, aiming to increase refining efficiency and enable the company to meet Ukraine’s market demand for high quality motor fuels. In addition, the company plans to continue its work to further improve environmental standards, industrial safety, and labor conditions for its staff in Ukraine. The Lisichansk Refinery, located near the eastern border of Ukraine, is the most modern refinery in the country.

Ukraine and Azerbaijan are continuing negotiations about oil refining at four Ukrainian enterprises. Boris Klimchuk, the Ukrainian ambassador to Azerbaijan, said all factors promoting the development of ties in the area are better than last year. “SOCAR (State Oil Company of Azerbaijan) did not lose an interest to these projects,” said Klimchuk. “Relevant discussions are underway, but there is a question of money.” Earlier, he said that Azeri specialists had studied the capacities of the Galichina and Neftekhimik Prikarpatya refineries, belonging to Privatbank Group, and continued to study the Kherson Refinery (Investor Oil Group) and a refinery belonging to the Continuum Group of Companies. Klimchuk also noted economic changes affecting negotiations, saying: “There’s a big difference between negotiating with the price of $130 per barrel and $40-50 per barrel. A question of profitability of oil transportation appears in case of a lower price. At the same time, we continue commercial talks on construction of oil refineries, but those still bear close character.”

Libya seems interested in the joint development of oil deposits and refining in Ukraine. “We are ready to develop our partnership in the energy sector,” said Libyan Prime Minister Al-Baghdadi Ali al- Mahmudi in Kiev during a meeting of the Ukrainian-Libyan cooperation commission headed by the prime ministers. “I am not only talking about construction of an oil refinery. This also means [oil] exploration, production, and the sale of oil products.” Ukrainian Prime Minister Julia Timoshenko, in turn, said the possibility of creating a joint Ukrainian-Libyan enterprise for the construction of the oil refinery and the realization of joint efforts to ensure it gets raw materials was part of the discussion during the session.

Cris Whetton is InTech’s European correspondent.