Refining in the Iberian Peninsula- Challenges and Opportunities · 2017-11-28 · 3 INDEX 1. Refining in Iberia: • The harware • Logistics • Recent investments 2. Challenges

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ALVARO MAZARRASA 27th May, 2013,Lisbon

Refining in the Iberian Peninsula- Challenges and Opportunities

Oil Conference by Diário Económico & Apetro

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Integrated downstream oil companies which market oil products in Spain with refining capacity in the EU.

Its main objective is to defend its Associates’ general interests.

AOP follow up legislation, advise and co-operation with Spanish Central Administration and regional governments, institutions and oil industry in general.

AOP:

THE SPANISH OIL DOWNSTREAM INDUSTRY ASSOCIATION

http://www.bpesp.com/

http://www.cepsa.es/

http://www.petrogal.pt/

http://www.sarasenergia.com/

http://www.shell.es/

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INDEX

1. Refining in Iberia:

• The harware

• Logistics

• Recent investments

2. Challenges

• Internal demand drop

• Competition from refineries in USA, Asia, Middle East & Russia

• Over regulation burden in the EU. High taxation environment

3. Opportunities

• Delivering products that are needed

• Strategic location for exports

• Flexible & cost competitive crude diet

• Innovation

4. Conclusions

IBERIAN REFINERIES, LOCATION

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= 30,000 Bbl/día

La Coruña

Bilbao 85% Repsol

Tarragona

Castellón

Puertollano

San Roque

La Rábida

Santa Cruz de Tenerife

Cartagena

Sines

Matosinhos

Asesa 50%Repsol/50%Cepsa

IBERIAN REFINING CAPACITY, 2013

FCC Equiv.

Mt/y Proccesing Units

Capacity

Mt/y

Capacity

Kbbl/day

Cartagena 11.0 220,000 8.4 Atm. Dest. 76.8 1,536

A Coruña 6.0 120,000 4.0 Vacuum Dest. 30.52 540

Puertollano 7.5 150,000 4.9 Vacuum Lubs. Dest. 2.77 50

Tarragona 9.0 180,000 3.9 FCC 10.41 197

Bilbao 11.0 220,000 7.0 Hydrocracking 9.20 176

Tenerife 4.6 92,000 0.6 Visbreaking 8.82 153

San Roque 12.0 240,000 2.6 Coquer 8.70 150

La Rábida 9.2 184,000 4.6 Reforming 9.10 214

Castellón 5.4 108,000 3.6 HDS/HDT 51.56 1,087

Asesa 1.1 22,000

TOTAL 76.8 1,536,000 39.6

SPAIN

PORTUGAL

Refinery Atmos. Desti.

Mt/year

Atmos. Desti.

Bbl/d

Nelson Complexity

Index

Matosinhos 5.5 110,000 10.7

Sines 11.0 220,000 7.7

TOTAL 16.5 330,000 8.7

EFFICIENT AND VERY FLEXIBLE SUPPLY SYSTEM FOR THE LOCAL MARKET & FOR EXPORT. SECURITY OF SUPPLY IS GUARANTEED

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La Coruña Bilbao

Tarragona

Castellón

Puertollano

San Roque

La Rábida

Santa Cruz de Tenerife

Cartagena

Sines

Matosinhos

Finished & Intermediate products

Crude & products

CLH pipelines (4,000 km) Repsol pipeline Intermediate

products Shipping

DIESELIZATION OF EU DEMAND, EVOLUTION OF THE MIDDLE DISTILLATE/GASOLINE DEMAND RATIO, THE RATIO IS EVEN HIGHER IN PORTUGAL AND SPAIN

7

0

1

2

3

4

5

6

7

0

50

100

150

200

250

300

350

400

450

500

2000 2005 2010 2015 2020 2025 2030

Middles distillates demand Gasoline demand

MD/Gasoline demand

Sources: CONCAWE (WoodMackenzie), DGEG Portugal, CORES and AOP

Total demand for Gasoline & MDs in EU27+2 (Mt/a)

Total demand for Gasoline & MDs in Spain (Mt/a)

Total demand for Gasoline & MDs in Portugal (MT/a)

-1,0

1,0

3,0

5,0

7,0

9,0

0

20

40

60

2005 2010 2020*


MD/Gasoline demand

-1,0

1,0

3,0

5,0

7,0

9,0

0

2

4

6

8

10

2005 2010 2020*


MD/Gasoline demand

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LPG

GASOLINES

KEROSENE

GAS OIL

FUEL OIL

OTHERS *

19% 16% 14%

25%

17% 14%

33% 46% 53%

6% 8%

9% 13%

10% 7%

5% 4% 2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2010 2020

GROWING MIDDLE DISTILLATES WEIGHT IN THE DEMAND, HEAVIER AND LIGHT PRODUCTS WILL CONTINUE LOOSING GROUND

IBERIAN DEMAND STRUCTURE

54% 38%

Sources: APETROL, CORES and AOP

LIGHT

MEDIUM

HEAVY

* Others include heavy (coke, asphalt, lubes) and light (naphthas & petrochenistries raw material)

62%

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POOLE POSITION FOR IBERIAN REFINERS IN ADAPTING TO MARKET DEMAND REQUIREMENTS, ENVIRONMENTAL IMPROVEMENTS AND ENERGY EFFICIENCY

Security of supply, employment & gross added value has improved.

Positive contribution to current account balance

Cleanest products

Transformation of fuel-oil & heavy

gas oil into diesel

Growth in the capacity of crude

processing

Improved energy efficiency

• Atmospheric and vacuum destillation units at La Rábida,

Cartagena, San Roque, Matosinhos & Sines

• Cokers at Castellón, Cartagena and Bilbao

• Hydrocrackers at Huelva, Cartagena and Sines

• Hydrogen plants and HDS

• New CHP (cogeneration) units at Bilbao, Castellón, Huelva

and Matosinhos

More than 8,100 millions € investment in the period 2008-2012

9.5 millions of ton aditional middle destillates production

5.2

5.7

Before After the expansion

+ 0.5 Mm3/year

10

6.0 6.2

0 1 2 3 4 5 6 7 8 9

10


2.7

6.4

0 1 2 3 4 5 6 7 8 9

10

Before After the

expansion

º

Bilbao

MIDDLE DISTILLATES PRODUCTION GROWTH, SPAIN

La Rábida

+ 3.7 Mm3/year

S. Roque

+ 0.2 Mm3/year

2.0 2.4

0 1 2 3 4 5 6 7 8 9

10


Castellón

+ 0.4 Mm3/year

18

28

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30


SPAIN

+ 10 Mm3/year (~8 Mt/y)

Source: AOP

2.0

7.3


Cartagena

+ 5.3 Mm3/año

2.0 2.3


+ 0.3 Mm3/year

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Matosinhos

MIDDLE DISTILLATES PRODUCTION GROWTH, PORTUGAL

7

8.9

0 1 2 3 4 5 6 7 8 9

10


PORTUGAL

+ 1.9 Mm3/year (~1.5 Mt/y)

Source: Galp

5.0 6.6


Sines

+ 1.6 Mm3/año

-12% -10% -8% -6% -4% -2% 0% 2%

0

5000

10000

15000

20000

2007 2008 2009 2010 2011 2012

Total Productos Petrolíferos % Variación

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OIL PRODUCTS CONSUMPTION BADLY AFFECTED BY THE ECONOMIC CRISIS IN BOTH COUNTRIES

-10% -8% -6% -4% -2% 0% 2% 4%

0 10000 20000 30000 40000 50000 60000 70000 80000

2007 2008 2009 2010 2011 2012

Total Productos Petrolíferos % Variación

Sources: DGEG Portugal, CORES and AOP

-29%

Spain (kt)

-21%

Portugal (kt)

Total demand evolution

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EU WILL BE EXPOSED TO A STRONG COMPETITION FROM REFINERIES BASED IN USA (GC), ASIA, MIDDLE EAST & RUSSIA

USA:

• Decline in gasoline demand is leading to a reduction of imports from Western Europe.

• Overcapacity, cheap energy cost (20 % of refinery cost vs 60 % in Europe) has reversed the

closure of East Coast refineries.

• Gulf Coast: deep conversion refineries, heavier crudes and shale oil (Bakken & Eagle Ford) are

substituting more expensive light/sweet crudes. Exports to Europe, Latin America and West

Africa.

ASIA & MIDDLE EAST:

• India mega hubs exporting oil products, fiscal advantages.

• Saudi Arabia will reduce by 50 % their gasoline imports in one year. UAE, Kuwait, Qatar, Oman

also expanding refineries.

RUSSIA:

• VGO exports due to dissapear, upgrading refineries will be able to export finished products.

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LEGISLATIVE REGULATION IN EUROPE, COMPLEX AND BURDENSOME. PARLIAMENT, COMMISSION & COUNCIL NO CLOSE ENOUGH TO THE INDUSTRY, DIFFICULT AND EXPENSIVE TO FOLLOW UP THE PROCESS

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EXAMPLE: SOIL, WATER and WASTE LEGISLATIVE EVIRONMENT. INVESTORS ARE HEROES

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THREE DIRECTIVES WILL HAVE A SUBSTANCIAL IMPACT ON OUR INDUSTRY , WE REQUEST THE SUPPORT OF THE PORTUGUESE AND SPANISH GOVERNMENT TO DEFEND NATIONAL INTEREST

FQD, Art. 7 A:

• DG CLIMA is intending to descriminate crude by its relative emisions of CO2, that would penalize heavier

crudes and badly affect the competitiveness of our business without any gain to global CO2 emissions.

• Our impact analisis , we estimate an income loss for spanish refiners of 460 millions € per year in case that

non conventional oils will be discriminated. In order to avoid that loss we should blend more biofuels that

are more expensive that mineral fuels.

EID:

• Our estimates for Spain is that the total investment in order to reduce emmissions will be in the range of

500 million € in the next years.

• Industry is defending the bubble concept in order to optimize investments and grant operation flexibility.

MARINE FUEL D:

• Marine Fuel Oil will have to have less than 0.5 % Sulphur content by 2020. Again, the EU has gone further

than what it was agreed at the IMO. It is questionable product availability which may affect security of

supply to shipping.

IN THE MEDIUM TERM OIL PRODUCTS WILL BE ESSENTIAL FOR TRANSPORT REQUIREMENTS AND AS FEEDSTOCK FOR THE PETROCHEMICAL INDUSTRY

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Source: BP Energy Outlook 2030

OIL SHARE IN SECTOR TRANSPORT DEMAND BY FUEL

ESTRATEGIC LOCATION FOR EXPORTS TO NORTH AND LATIN AMERICA, AFRICA, NWE, EAST MEDITERRANEAN

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STRUCTURAL CHANGE IN 2012: FROM BEING NET PRODUCT IMPORTERS THE INTERNAL DEMAND DROP HAS OBLIGED IBERIAN REFINERS TO EXPORT. POSITIVE CONTRIBUTION TO CURRENT ACCOUNT BALANCE

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355 84

2300

6696

3233 3837

16505

300

3379

176

6192

1438

5595

17080

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

LPG Gasolines Querosenes Gas Oil Fuel Oil Other products

Total

Imports Exports

Balance, net exports:

1,303 kt

Source: CORES

Thousands tonnes

SPANISH EXPORTS BY DESTINY (thousand mt)

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Europa 10,.929 (64%)

América 2,621 (15%)

África 2,858 (17%)

Asia 672 (4%)

Source: CORES

17%

9%

7% 7% 5%

55%

France

Portugal

Netherlands

Italy

Belgium

Others

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WELL DIVERSIFIED CRUDE SUPPLY, IBERIAN REFINERS ARE ABLE TO PROCESS HEAVY AND SOURER CRUDES WHICH GIVES THEM A COMPETITIVE EDGE

Lybia 8%

Saudi Arabia 13%

Russia 14%

Mexico 15%

Nigeria 14%

Irak 8%

Venezuela 4%

Others 24%

Source: CORES

57

43

0

10

20

30

40

50

60

Opec Non Opec

%

OIL IMPORT SOURCES, SPAIN 2012

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Innovation is playing an important role in our industry. Technological research centres for

investigating new processes, new sources and alternative fuels. Upstream (Deep water,

unconventional crude and gas, CCS), GTL, BTL, HVO and other biofuels.

Advanced Biofuels are being investigated, when viable economically they will be developed at

a industrial scale . The process of UCO through hydrogenation to get biodiesel in our refineries

is already a reality, most sustainable. Hydrotreated Vegetable Oil (HVO) biodiesel is the best

biofuel quality wise, produced and blended by refiners.

Our industry is able to attract skilled scientists and engineers that are working for the future

and trying to find the best energy solutions.

OIL INDUSTRY IS CONTINUOSLY INNOVATING, VERY DINAMIC, WE HAVE BECOME AN ENERGY INDUSTRY

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Portugal & Spain, like the rest of the countries, are going to depend on oil products for transport

and as petrochemical industry feedstocks for several years.

Refining is a strategic industry in order to make possible an easy transition toward a low carbon

economy. This transition is going to be gradual and long, our industry will play a key role.

Efficient and competitive production in Iberia of oil products is essential to guarantee the security

of supply. Investments have been made to adapt local production to market demand, improve

energy efficiency and environmental standards.

Refining industry contributes to the added value of the oil marketing and petrochemical

industries, its suppliers and contractors, engineering firms and the service activities linked with

them. High quality employment generator.

Oil industry is committed to decrease its carbon foot print, and is proved by the progressive

blending of biofuels, the energy efficiency and reduction of CO2 emissions in their processes and

the production of cleanest fuels.

CONCLUSIONS

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www.aop.es

Refining in the Iberian Peninsula- Challenges and Opportunities · 2017-11-28 · 3 INDEX 1. Refining in Iberia: • The harware • Logistics • Recent investments 2. Challenges

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