Srinivasan Raising the Bar – Premium Base Oils Produced by the All-Hydroprocessing Route Presented at ARTC 7 th Annual Meeting April 2004 Singapore

Mr. Sook-Hyung (Sam) Kwon Vice President and Project Director SK Corporation Dr. Ashok Krishna Managing Director Chevron Lummus Global LLC and ChevronTexaco's Technology Marketing

Raising the Bar – Through Partnership The Past – History of Hydroprocessing at SK, ChevronTexaco, the partnership begins… The Present – Influence of SK, CLG on base oil market, development of technology and catalyst, the partnership evolves… The Future – Extending the hydroprocessing chain for further improvement, the bar is raised, the partnership innovates…

Srinivasan The Past – Hydroprocessing at ChevronTexaco 1963: Pascagoula ISOCRACKING Unit #1 1966: Richmond ISOCRACKING Plant : Pascagoula ISOCRACKING Unit #2 and El Segundo ISOCRACKING Unit Mid-1970’s and Early 1980’s: LSFO projects (diesel, VGO, RDS and VRDS Hydrotreaters) in all three refineries 1984: Richmond Lube Oil Plant (RLOP), world’s first all-hydroprocessing route to base oils

Srinivasan Development of ISODEWAXING/ Hydrofinishing : Invention, development and commercialization of ISODEWAXING® Catalyst 1993: First generation, ICR 404, installed at RLOP 1993-Now: Multiple industry awards, licensing takes off 1996: Second generation ISODEWAXING® Catalyst commercialized, ICR 408 ChevronTexaco ISODEWAXING/Hydrofinishing become industry leaders Base Oil Market driven by supply and demand from finished lubricants evolving specifications

Srinivasan Licensing of ISODEWAXING/ Hydrofinishing

Srinivasan 1993 – ISODEWAXING Application at RLOP Light HCR Heavy HCR Solvent Dewax - Hydro- finishing Unit ISODE- WAXING Unit Hydro- finishing Unit Light Neutral Medium Neutral Heavy Neutral Light & Heavy VGO Heavy VGO Shut Down

Srinivasan Pre –RLOP Light HCR Heavy HCR Solvent Dewax Hydro- finishing Unit Catalytic Dewaxer Hydro- finishing Unit Light Neutral Medium Neutral Heavy Neutral Light & Heavy VGO Heavy VGO

Srinivasan Present, All- Hydroprocessing Light HCR Heavy HCR ISODE- WAXING Unit Hydro- finishing Unit ISODE- WAXING Unit Hydro- finishing Unit Light Neutral Medium Neutral Heavy Neutral Light & Heavy VGO Heavy VGO

Srinivasan Marketplace Evolution 1990Now ClassificationNoneAPI Group II/III Market Share (North America) 10%> 50 % Premium Over Group INoneYes % of Paraffinic Base Oil Market In North America

Srinivasan Current Events SK challenges CLG to improve lube quality/yield further CLG’s catalyst development program results in next-generation ISODEWAXING® and ISOFINISHING® Catalysts SK and CLG do joint testing, validation -- ICR 422 currently operating in LBO #1 ICR 418 selected for new plant LBO #2, to be started up in 3Q 04

Srinivasan Yield and V.I. Improvements on LN Feed (Group II, 150N)

Srinivasan 100N Performance (Feed-Normalized)

Srinivasan Higher Performing Lubricants Are Required for Future Automotive Applications Transmission FluidHeavy Duty Group II/II+/III Base oil Required Passenger Car GF-4 and Euro-IV 2004 Fuel Economy, Volatility Oxidation Resistance PC-10 and Euro-IV Soot Handling, Volatility Oxidation Resistance DEXRON-IIIH New Factory Fill Specs Group III for Oxidation Resistance

Premium Base Oil Capacity Continues to Grow – SK Leading the Way Refineries throughout Asia are actively seeking ways to upgrade to group II/II+/III Market Share of Premium Base Oils

Future – Success Through Partnership Finished lubricants specifications will continue to drive base oil demand towards Group II, II+, III, GTL- based SK/CLG drive to continually improve base oil yield, qualities are now extending upstream of ISODEWAXING/Hydrofinishing Unit to the hydrocracking step Collaboration on studying feasibility of revamping existing hydrocracker for greater capacity, improved performance AND better base oil yields and qualities Process and catalyst developments are keys to Raising the Bar on Performance

Srinivasan Feasibility Case - Configuration, CLG Catalysts HCR debottleneck by >30%, using CLG’s Optimized Partial Conversion (“OPC”) concept. Increase amount of high quality feedstock for ISODEWAXING/Hydrofinishing Unit by >60% Minimal modification to H.P. loop, downtime for modifications reduced Better catalyst life, despite higher throughput Flexibility to select different viscosity grades Can segregate low viscosity, high V.I. material, SK’s primary product New CLG catalysts improve base oil V.I. for low viscosity material HCR bottoms enhance yields, V.I. in ISODEWAXING Process SK has done PP tests along with CLG to validate the concept

Srinivasan ICR 240 – CLG’s Latest Catalyst, Uniquely Suited to SK’s Primary Product Objective

Srinivasan Partnership in Action SK and CLG have demonstrated the synergy and impact of a partnership in all- hydroprocessing base oil production Separately we have innovated, and profoundly influenced the base oil market Together we have raised the bar…

The Past – SK’s Growth 1962: Korea Oil Corporation established 1964: No. 1 Crude Distillation Unit commenced operation, 35 KBD 1992: Heavy Oil Upgrading (HOU) Plant commenced, including VRDS 1995: Lubricating Base Oils Plant (LBO #1) commenced, Hydroprocessing-based, included UCO Lube Process 1996: RFCC Plant commenced, also pre-treat RDS 1996: No. 5 Crude Distillation Unit 1997: LBO #1 commenced as ISODEWAXING/ Hydrofinishing Unit, with ICR 408/407 Currently, second largest refinery in the world (OGJ) Major manufacturer/marketer of Group III base oils

Application of SK UCO Technology #2 VD U R1R2Fs VDU #2 VDU R1R2Fs VDU Original HCK Design After SK UCO Technology Application VDUCDW 15,000 35,000 FF 35,00050,00050,000 Diesel¯ 5,000 15,000 20,000 30,000 FF +5,000 35,00050,00050,000 Unit : B/D 20,000 Diesel¯

Application of SK UCO Technology HTHC FractionatorDistillationIntermediate Storage Existing HCK Reactors Recycle Oil Surge Drum Excess Distillates VG O UCO 70D 100D 150/250D Process Integration Scheme

SK’s UCO Lube Process, Properties – Test ItemTest Method Solvent Refining Lube Hydrocracking SK UCO Lube Process (Old) 100  C, cSt ASTM D Viscosity IndexASTM D Pour Point,  C ASTM D97-12 CCS -20  C, cP ASTM D26022,1002,0001,650 Flash Point,  C ASTM D Noack Volatility, Wt %DIN Aromatics, Wt %ASTM D Sulfur Content, Wt %ANTEC

IDWCDW DewaxingIsomerizationCracking Pour Point-12°C VI Flash Point250°C232°C Noack Vol Yield Naph.10.5%33.8% Dist’4.5%6.0% Lube85.5%64.5% REMARK M/U H21,900Nm3/hr4,500Nm3/hr - 2, N Case Description ISODEWAXING/Hydrofinishing SK’s Project Result

Catalyst Conversion Lube Product Yield 60.0% 65.0% 70.0% 75.0% 80.0% 85.0% 90.0% 95.0% OPERATION DAYS YIELD (%) 70N100N150N CDW ISODEWAXING

Catalyst Conversion Lube Product Quality OPERATION DAYS VI NOACK VINOACK wt % CDW ISODEWAXING

History of SK HCK & Lube Process #2 VD U R1R2Fs VDU #2 VDU R1R2Fs VDU Original Design (HCK Only) Original Design (HCK Only) Combination of HCK and #1 LBO VDUCDW 15,000 35,000 FF 35,000 50,00050,000 Diesel¯ 5,000 15,000 20,000 30,000 FF +5,000 35,00050,00050,000 Unit : B/D 20,000 Diesel¯

History of SK HCK & Lube Process #2 VD U R1R2Fs VDU HCK Capa. Increase #2 VDUIDW 10,000 42,000 FF 42,00052,00052,000 Unit : B/D Diesel¯ #2 VD U R1R2Fs VDU HCK Capa. Increase #1 HCK Capa. Increase #1 VDUIDW 10,000 40,000 FF 40,000 50,00050,000 Diesel¯

History of SK HCK & Lube Process #2 VD U R1 R2Fs VDU HCK Revamp + # 1 LBO + # 2 LBO HCK Revamp + # 1 LBO + # 2 LBO VDU #1 IDW 45,000 FF 45,00055,00055,000 VRDS/Asphalt Diesel¯ VDU #2 IDW UCO 10,000

Feasibility Study – Modified Two-Stage HCK Maximization of UCO for Lube Products Maximization of Premium Lube Base Oil (100N Product ) Upgrading Lube Quality (VI, CCS, Noack,etc) 1. Main Objectives of Feasibility Study

Feasibility Study – Modified Two-Stage HCK #2 VD U R1R2Fs VDU 2-Stage HCK Modification + #1 LBO + #2 LBO VDU #1 IDW 60,000 FF 60,000 35,000 30,000 Diesel¯ VDU #2 IDW New VDU New Fs 25,000 5, Study Concept

Feasibility Study – Modified Two-Stage HCK 3. Study Basis Sub-itemsSub-items Lube Production, B/D Feasibility Study Case BaseBase Base 1st Stage Conversion, % Fract Bottom fr 1 st Stage, B/D 2 nd Stage Conversion, % Fract Bottom fr 2nd Stage, B/D Waxy Distillate, B/D - - Hydrocracker Type Single Stage Hydrocracker Capa., B/D 45, ,000 30, ,000 20,000 25,000 Two-Stage 60,000 Recycle Oil Rate, B/D 10,500 35,000

Feasibility Study – Modified Two-Stage HCK 4. Feedstock of HCK  Typical Crude Slate : Middle East  Feed type : Mixture of SR VGO (85%) plus HGO (15%)  Feed Properties

Feasibility Study – Modified Two-Stage HCK 5. Scheme developed Naph Kero Diesel 35,000 RF 5,000 HHPS HLPS Unit : B/D 30,000 25,000 60,000 FF 20,000 VDU New VDU

Feasibility Study – Modified Two-Stage HCK 6. Result of Feasibility Study Feasibility Study Result Yield, vol% Vis. VI Description 10% 3.0 cSt 104 Base 6 % 3.0 cSt 115 From New Scheme Yield, vol% Vis. VI 10% 4.3 cSt % 4.3 cSt 128 Yield, vol% Vis. VI 11% 7.6 cSt % 7.6 cSt N 100N 250N +13 Delta B/D Base + 6,000 Total Lube Product Lube Product +10% B/D Base + 7, N Product

Feasibility Study – Modified Two-Stage HCK 7. Summary FUELS HYDROCRACKER NAPHTHA, KEROSENE, DIESEL UCO PROJECT VHVI BASE OILS YUBASE UPGRADING VI, LUBE YIELD,WHITE OIL HYDROCRACKER REVAMP SINGLE  TWO STAGE - MORE PREMIUM LUBE - BETTER QUALITY - MORE PRODUCTION SK UCO TECHNOLOGY SK UCO TECHNOLOGY + ISODEWAXING SK UCO TECHNOLOGY + CLG “OPC” HCK + ISODEWAXING