1. KNPC Think K Event Tuesday 27th October 2015 Refinery – Petrochemical Integration

2. Agenda World Refining Scenario Benefits of integration
Strategic Advantage
KPC’s Strategic Direction
ZOR – Petchem Study
Configuration options
Conclusion & Path Forward

3. World Refining Scenario
In the past, Refining was seen as more of an independent business enjoying good margins.
Currently Refining business is facing challenges due to
Volatile oil prices
Unstable refining margins
Increased alternative fuel awareness
Global overcapacity
Superior product quality requirements
Stringent emission regulations
Increased processing of heavy and sour crude
Increased emphasis on bottom-of-the-barrel conversion
Integration with Petrochemical is vital to deal with ongoing uncertainty in refining business and to sustain and improve Profitability.

4. Benefits of integration
Proximity of Feedstock
Reduction in transport (costs and risks)
Working capital savings
Synergies from joint infrastructures and logistics
Reduction in Operating costs (steam, utilities)
Shared support services: maintenance, HR, HSEQ management, F&A, etc.

5. Strategic advantage Product Diversification
Reduced exposure to market risk
Independence and supply security
Long-term stream exchanges
Common business and investment strategy

6. KPC’s Strategic Direction
Grow KPC domestic refining capacity up to 1.4 mmbpd on the medium term
Maximize disposal of Kuwaiti heavy crude in domestic refineries
Maximize complexity of KPC domestic refineries, while meeting local energy demand requirement
Provide petroleum products that  meet domestic energy, transportation and industrial requirements and international market needs in terms of Quantity and quality
Operate KNPC refineries with high standards of operational excellence
Provide required Gas Processing capacity according to upstream Gas availability profiles
Maximize integration of refining and petrochemical operations domestically

7. Objective of ZOR-Petchem Integration Pre Feasibility Study
“Establish the most feasible petrochemical option for Kuwait on a commercially competitive basis and to develop a configuration for a World-Scale Petrochemical Complex Integrated with ZOR”
Achieved by conducting:
Market Study
Strategic Assessment
Prefeasibility Study
Feasibility Study
Single configuration to be selected to develop in more detail

8. Key study basis
Two crudes would be run for each proposed configuration:
Mixed crude as the reference case
Kuwait Export Crude (KEC)
Maximise economic returns for each proposed configuration
Meet gasoline (95/98 octane) demand (1-2 MMTPA) while minimising impact on LSFO supply
Increase synergies between the domestic refining & petrochemical business
8 of 10

9. Configuration options
(Paraxylene)
Options
(Propane Dehydrogenation)

10. Conclusion and Path Forward
Option 3 and Option 6 are shortlisted after Pre Feasibility Study
Option 3 results in good integration economics, Option 6 provides higher product diversification.
One option will be selected at the end of Feasibility Study which is expected to complete by Dec. 2015
FEED is expected to start by early 2017
World scale Grass root ZOR – Petrochemical complex will place KPC and Kuwait in a privileged position in World’s Oil Industry

11. Thank you

12. Glossary PDH – Propane Dehydrogenation PX – Para Xylene
FCC – Fluidised Catalytic Cracker
SC – Steam Cracker
LSAR – Law Sulfur Atmospheric Residue
VGO – Vaccum Gas Oil

13. Products considered in ZOR - Petchem Integration study
Option 3
Core Products
Derivatives
Key Uses
Aromatics Block
Para Xylene
PTA / PET
Plastic Industry
Benzene
Styrene
FCC Block
Propylene
To PDH Block
Mogas
Local Market / Export
PDH Block
Poly Propylene, Propylene Oxide, Propylene Glycol, Polyols
Acrylic Polymers, Glycol, Epoxy Resins
Option 6
Core Products
Derivatives
Key Uses
Aromatics Block
Para Xylene
PTA / PET
Plastic Industry
Benzene
To Cracker Block
FCC Block
Propylene
Mogas
Local Market / Export
Cracker Block
Ethylene
PE (Poly Ethylene), EAO (Ethanol Amine), MEG (Mono Ethylene Glycol), Styrene
PVC (Poly Vinyl Chloride), Polyesters
Poly Propylene, Propylene Oxide, Propylene Glycol, Polyols
Acrylic Polymers, Glycol, Epoxy Resins

14. Back Up

15. Petrochemical derivatives considered
6-Jan-06
Petrochemical derivatives considered
EAO
Ethylene
Benzene PX
Butene-1 PE EO
Styrene PP PO
Propylene
MEG PG
Polyols
Butadiene
PTA
PET
Core
Assessed
Abbr.
Long form PE
Poly Ethylene EO
Ethanol Oxide
EAO
Ethanol Amines
MEG
Mono Ethyl Glycol PP
Poly Propylene PO
Propylene Oxyde PG
Propylene Gylcol
PTA
Purified Terephthalic Acid
PET
Polyethylene Terephthalate
OrgChartTemplate.ppt

16. Petrochemical Derivatives

17. Option 3 configuration Aromatics Block FCC Block PDH / PP Block
* all values in TPD
Aromatics Block
PDH / PP Block
FCC Block

18. Option 6 configuration Propylene Derivatives * all values in TPD
Ethylene Derivatives
Propylene Derivatives

19. Incremental Economics
Refinery
Option1
Option2*
Option3
Option4
Option5
Option6
Total Project Capex
18180
24238
22823
25177
30383
30284
31874
Total Project IRR
-1.10%
0.8%
3.4%
4.6%
2.6%
4.5%
Integration IRR
6.0%
10.2%
13.8%
7.3%
7.4%
9.9%
Based on Economics Option 2, 3 && 6 are shortlisted
Option-2 was excluded as it is more of a refining option, without much integration with petrochemicals
Option 3 & 6 both have Aromatics and FCC. Additionally Option 3 has PDH and Option 6 has Steam Cracker
Option 3 provides integration with Propylene Value chain
Option 6 provides integration with Propylene as well as Ethylene value chain
Options

20. Preferred Options Based on Economics Option 2, 3 && 6 are shortlisted
Option-2 was excluded as it is more of a refining option, without much integration with petrochemicals
Option 3 & 6 both have Aromatics and FCC.
Additionally Option 3 has PDH and Option 6 has Steam Cracker
Option 3 provides integration with Propylene Value chain
Option 6 provides integration with Propylene as well as Ethylene value chain
Options

21. Integration Synergies / Benefits
Naphtha, raffinate and LPG integration
Use of these streams can be optimized by routing to steam cracker feed, PX feed, hydrogen feed or gasoline pool as optimal
One naphtha hydrotreater only to serve the entire project
All LPG used internally
Depending on the selected option, all naphtha also used internally
FCC and steam cracking have a number of synergies:
Ethylene recovery from FCC dry gas
Propylene recovery
C4s and MTBE
Use of LCO as quench oil (not in the LP)
Common or linked hydrogen system
Common or linked fuel gas system
Capital cost synergies in the utilities and off-site system
Estimated at 1-2% of OSBL costs in a very preliminary manner
Operating cost synergies
Specific to Option 6
FS expected to provide a better estimate

22. Ethylene Uses
Ethylene - C2H4 - is used for accelerating the ripening of bananas, and maturing the color of citrus fruits. It is also used to increase the growth rate of seedlings, vegetables, and fruit trees; in oxyethylene welding and cutting of metals; in manufacture of mustard gas, ethylene oxide, ethylene alcohol, polyethylene and other plastics; and as an inhalation anesthetic.
The simplest member of the olefinic hydrocarbon series and one of the most important raw materials of the organic chemical industry; chemical formula, CH2 {double bond} CH2. It occurs in both petroleum and natural gas, but the bulk of the industrial material is produced by heating of higher hydrocarbons. Numerous large-scale processes have been developed, using raw materials ranging from ethane to whole crude oil; in the U.S., ethane and ethane-propane mixtures are commonly used.
Ethylene undergoes polymerization (combination of small molecules to form large molecules) to polyethylene, a plastic material having many uses, particularly in packaging films, wire coatings, and squeeze bottles. The polymerization may be carried out at high pressures and temperatures or by the more recently introduced Ziegler process, which uses a catalyst. With sulfuric acid, ethylene forms a mixture of sulfates that can be hydrolyzed to ethyl alcohol; it combines with chlorine or bromine to yield the corresponding ethylene dihalides, useful solvents and gasoline additives. The reaction of ethylene and oxygen gives ethylene oxide, used in the manufacture of antifreeze, detergents, and other derivatives. Ethylene and benzene combine to form ethylbenzene, which is dehydrogenated to styrene for use in the production of plastics and synthetic rubber.
In botany, ethylene is a plant hormone that inhibits growth and promotes leaf fall. In fruit, how-ever, ethylene is regarded as a ripening hormone. Involved in its action in fruit is some other
factor that influences ethylene sensitivity of the tissues.
Pure ethylene is a colourless, flammable gas having a sweetish taste and odour; it freezes at ° C (-272.9° F) and boils at ° C (-155.0° F).