RPME looks at how the region is moving to produce cleaner fuels to meet the evolving demands of international markets
More stringent legislation on fuel quality and emissions throughout the world, and in many of the region’s export markets, has accelerated the need to increase production capacity for clean fuels.
As the Middle East’s hydrocarbon industry looks to diversify its revenues away from exploration and production, it is proving quick to embrace such changes.
Saudi Arabia has been leading the regional shift by working to implement projects that will improve gasoline and diesel qualities.
Naturally, this will lead to a dramatic reduction of sulphur levels from June 2012, when Saudi Arabia’s maximum sulfur level for diesel was greater than 500 ppm. In addition to lowering toxic emissions, developments throughout the country will allow it to continue sell ing higher-value transportation fuels to markets that are becoming more regulated.
The Yanbu Refinery, owned and operated by Yanbu Aramco Sinopec Refining Company, for example, will be connected to a new clean fuels unit that is expected to reduce sulphur in gasoline by 98 per cent in 2013 and in diesel by 2016, according to a report by Saadallah Al Fathi, former head of the Energy Studies Department in the OPEC Secretariat in Vienna.
The joint venture refinery will use 400,000 bpd of Arabian Heavy crude oil to produce ultra-clean transportation fuels for international and domestic markets as well as high-value refined products.
Construction of the Yanbu project is expected to be completed in June 2014, with start-up commencing in September 2014 and the first commercial shipment of refined products is expected in the fourth quarter of 2014.
In addition to the Yanbu project, Saudi Aramco has committed itself to developing the Riyadh Refinery Clean Transportation Fuel project, a 124,000 bpd refinery in Riyadh that will be supplied with crude from the country’s East-West pipeline. The $1 billion project will see a reduction in sulfur content for produced diesel from 330 ppm to 10 ppm and also decrease benzene levels in gasoline.
Then there is the PetroRabigh Clean Fuels project with a capacity of 400,000 bpd, designed to reduce sulfur content in gasoline from 300 ppm to 10 ppm. The plant has a capacity of 400,000 bpd and is designed to produce a total of 2.4 MMT of petrochemical solids and liquids.
But Saudi Arabia is not alone in moving towards clean fuels, other oil producing countries throughout the Gulf region have taken the initative to begin adding value to their exports, while also ensuring that their downstream products are eligible to be sold on the increasingly regulated international markets.
After dragging its feet for almost half a decade, with delay after delay, Kuwait has entered the clean fuels-scene by awarding contracts for the Al-Zour refinery to AMEC; and the Clean Fuels Project (CFP) at the Mina Al-Ahmadi and Mina Abdullah refineries to Foster Wheeler.
When completed in 2018 the multi-billion dollar Al-Zour refinery is expected to be the largest in the Middle East and will increase Kuwait’s refinery capacity by 615,000 bpd.
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Naturally, this will be a key part of Kuwait’s long term strategy, producing cleaner fuels to meet its electrical power generation growth and demand while adhering to the latest environmental standards. As spending on downstream projects begins to taper in Western Europe and North America, such developments will keep this region busy.
The upgrade and expansion of the Mina Al-Ahmadi and Mina Abdullah refineries, is also expected to increase their combined throughput by 264,000 barrels per stream day to 800,000 barrels per stream day. But the emphasis on increasing output, is also being matched by the desire to meet tighter specifications for sulphur content in transportation fuels.
According to a report published by Oil&Gas Journal, after completion of the CFP, the reconfigured Mina Abdulla and Mina Al Ahmadi complex will produce gasoline with no more than 10 ppm sulfur, compared with 500 ppm now.
Such a move will allow Kuwaiti gasoline to meet to the European Union’s “EURO VI” standard, which specifies a maximum of 10 ppm of sulfur in gasoline for most highway vehicles.
Abu Dhabi has, of course, been ahead of the game for quite a while. The emirate’s Ruwais refinery, which should be completed by 2014, solicited Honeywell UOP’s technology and engineering services in 2008 to help expand the project to produce propylene, unleaded gasoline, naphtha, liquefied petroleum gas (LPG) and other hydrocarbon derivatives.
Al Fathi also points out that Bapco in Bahrain, expects to complete its $10 billion refinery modernization project by the end of this year which will enable it to produce clean fuels, while Qatar and Oman already produce low sulphur fuels and further improvements may be due.
Clearly the money is heading towards producing cleaner fuels, which appears to be a natural response to the rising price differential between ordinary and clean fuels as legislation around the world becomes more environmentally friendly.
In a region where the refining capacity export oriented, producers will have to adapt quickly to the evolving demands of their international customers.
