S06 ORME 7 2021 Analysis_Layout 1 02/11/2021 03:10 Page 22
Refining & Petrochems
Reinventing
refineries Sonia Sanchez, conference executive, Euro Petroleum Consultants and Stefan Chapman, vice president, Euro Petroleum Consultants discuss the complex environment for refiners, and how they are addressing the challenges and opportunities of the energy transition.
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The demand for petrochemicals has increased drastically.
URING THE PAST few years, we have seen a number of refineries shut down, convert to logistics terminals, or convert – partially or totally – to biofuels. These changes were market driven. Today we have the added parameter of the Covid-19 pandemic. We have seen that the lockdowns, due to the pandemic, have resulted in a decrease in transportation fuel demand but an increase in demand for petrochemicals. This has led to an increase in investment for petrochemical projects including in crude oil-to-chemicals (COTC) facilities. The demand for petrochemical products, which include everything from water pipes to nail polish, has drastically increased, and it is predicted to keep growing due to the increased demand for plastics in developing countries, along with the maturing demographics. Petrochemicals will account for more than a third of global oil demand growth by 2030 and nearly half through 2050, the International Energy Agency predicts. In order to meet future petrochemicals demand,
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Issue 7 2021
naphtha yields in refineries will have to increase from current levels of 12% to 19% by 2040 – a growth driven by both rising demand and slower natural gas liquids supply growth (IHS Markit). The drop in demand for transportation fuels, combined with other factors such as the growth of electric vehicles, has led to forecasts that gasoline demand will continue to decrease, which will result in the unavailability of the "by-product" naphtha. Refineries will then have to be reconfigured to increase naphtha and other petrochemical feedstocks and products, and that can be done in two ways:
In order to stay competitive, refineries must adopt low-carbon strategies.”
• New greenfield projects, designed with petrochemical yields of more than 40%, such as the current COTC project recently built in Asia, to be discussed later on. • Brownfield investments in existing refineries, with technologies that enable increased petrochemicals production, either by retrofitting existing units, such as FCCs and hydrocrackers, or by using newer technologies being developed for repurposing existing refineries (IHS Markit). There is no doubt that today, more than ever, refining companies are facing a more challenging and complex market environment. The growth of electric vehicles, as mentioned previously, together with the ongoing digital transformation being led by automation, analytics and artificial intelligence are all having a profound impact on downstream operations and market demands. Furthermore, as the world is slowly transitioning to a low-carbon economy, the demand for oil products is evolving and pressure for carbon emission cuts intensely increasing. In order to stay competitive
