Crude oil :Type, Selection , Production Plan vs Crude Plan

17th Jan12

Tarasish Adhikari Process Manager Haldia Refinery

Crude Oil Selection & Refinery PlanningArea covered A) Crude oil- International Scenario. -Pricing -Source -Type - Selection - Factors affecting Refinery Margin

B)C)

Crude Mix / Crude Basket for RefineryProduction Planning

Role of Crude: Refinery Economics(Fig in %

INTERNATIONAL OIL SCENARIO & SOURCING FOR INDIA

GLOBAL OIL RESERVES

Reserves : 1201 billion Barrels Reserves : 164 billion Tonnes

INDIAS RESERVES: 5.9 billion BBLS (0.5% OF WORLD RESERVES) 0.8 billion TONNES Source:BP

Crude oil scenario-IndiaCAIRN HOC Others OILONGC CAIRN

BG

Others

RIL

ONGC

OIL

Domestic Exploration Area

Domestic Production AreaNote: This shares have changed with the beginning of production of Oil & Gas from RILs Blocks in KG Basin

Crude Oil Source & Type

Crude SourceHS Crude: 71.1% (2007-08) Arab Mix (80:20), Basrah Lt., Upper Zakum, Kuwait

IraqSaudi Arabia

NigeriaLS Crude: 28.9% (2007-08) Bonny Lt., Labuan, Miri Light, Girasol, Forcados, EA Blend

Malaysia

BACK HAUL VOYAGE WEST AFRICAN CRUDE CARGOES

NW Europe

US

VADINARECI KAKINADA / SANDHEADS

Product TO US / NWE

BACK_HAUL TO INDIA

For Illustration only

Crude Types for RefiningBasically four types of crudes are available to Refiners around the world Light Sweet ( 30-40 API, < 0.5 wt % Sulphur) Light Sour ( 30-40API, 0.5 to 1.5 wt % Sulphur) Heavy Sour ( 15-30API, 1.5-3.1 wt % Sulphur) Extra Heavy ( < 15 API, >3 wt % sulphur)

Types of CrudesBITUMINOUS High Sulfur Lube bearing Basrah Light NON-BITUMINOUS High sulphur Arab medium Kuwait

Arab mixNon-lube bearing Suez Mix Dubai

Low sulphurQua I boe Miri light Labuan

Hydrocarbon Classification(CONTD.,)

PARAFFINIC BASEWAXY, LESS ASPHALTIC, LOW SULPHUR, HIGH POUR

NAPHTHENIC BASENAPHTHENIC BASE STOCKS, LESS WAX, LESS ASPHALTIC, LOW POUR

ASPHALTIC BASEHIGH SULPHUR, NITROGEN, SUITABLE FOR BASE OILS

World Crude Oil QualityProperties of Crude Oil S in crude Oil (wt%) API Gravity of Crude oil Metal in crude oil Residue (ppm wt)1985 1990 1995 2001 2011

1.14

1.12

1.31

1.41

1.51

32.7 275

32.6 286 19.4 3.26

32.4 297 19.8 3.61

32.2 309 20.2 3.91

31.8 320 21.3 4.0

Residue in crude (vol%) 19 S in crude oil residue (wt%)3.07

Properties of Crude oilCharacteristics Density, gm/ml API gravity o Pour point, C Kinematic Viscosity o @40 C o @50 C Water content, %wt Salt content, ptb Sulphur, %wt TAN, mgKOH/gm CCR, %wt Wax, %wt Asphaltene, %wt ASTMDistillation cracking point, oC Metal content, ppm Nickel/vanadium Basrah Light 0.8745 30.3 -30 nil 10 3.1 5.9 1.2 2.6 339 Bombay High 0.8200 41.0 21 3.4 nil 0.09 0.1 1.1 12.7 0.25 372 Arab mix 0.8664 31.6 -24 10.0 8.9 nil L20 2.7 0.14 6.4 2.5 2.3 322 4/23 Kuwait 0.8741 30.3 -27 11.1 8.5 nil 2.0 2.8 0.14 5.4 6.0 2.5 335 4/33 North Gujarat 0.8932 26.8 27 65.6 31.4 4.1 200 0.08 1.93 2.5 5.9 0.05 367 61/L10

CRUDE OILS PRICING

PRICING BASIS OF CRUDE OILSNorth/South American RegionNorth Sea, Nigerian, Angolan, Libyan Grades etcWTIBRENT DUBAI/ OMAN TAPIS

Middle Eastern GradesMalaysian, Indonesian, Australian Grades

$/bbl-CONVESION

CRUDE MT GROSS MARGIN, RS GROSS MARGIN ,RS/MT $ / RS 52

1 1000 1000 1bbl 19.23 2.61 Crude density m3 MT/bbl 0.159 0.136 kg/m3 855

GROSS MARGIN ,$/MTFactor: Rs/MT to $/bbl

383 23.9

GROSS MARGIN ,$/bbL

Factor: Rs/MT to cent/bbl

Crude price , $/bbl

110

Crude price , RS/ MT

42076

Price Trends : Marker Crude Oils(Annual Average Prices)

(Figs in $/bbl)

Crude Oil Movement Apr10- Nov11

$/bbl

20

Elements of Imported Crude CostCOST ELEMENT %

1 2 3 4 5 6 7 8

FOB OCEAN FREIGHT INSURANCE OCEAN LOSS PORT CHARGES CUSTOM DUTY/ NCCD DEMURRAGE OTHER CHARGESTOTAL

98% 1.0% 0.04% 0.3% 0.08% 0.15% 0.002% 0.456 %100.0%

Crude Pricing(Typical : Yr 10-11:crude procurement of Labuan( 79 $/bbl & Bas Lt 76 $/BBL

LS Rs./ MT 1 2 3 4 5 6 FOB Freight DV Freight Insurance ((1)*0.04%) Ocean Loss((1+2+3+4)*0.6%) Landing Charge 26580 700 200 20 250 100 % 94.9% 2.5% 0.7% 0.04% 0.9% 0.4% 25585 600 200 15 150

HS Rs/ MT % 95.5% 2.2 % 0.8% 0.1% 0.6%

10050 100 26800

0.4%0.2% 0.4% 100%

78

Custom Duty (Edu Cess)Demurrage Total

50100 28000

0.2%0.4% 100%

Crude Oil Selection

BASIS OF SELECTIONTypes of Crude oil Refinery and Refinery configuration Product & Product demand Environment & Environmental issues

Crude Oil selection Study of Crude Oil Assay. Technical Feasibility. Product Quality.

Profitability.

Combined TBP curves of Basrah Light Crude oil100.0 90.0 80.0 70.0

% Yield

60.0 50.0 40.0 30.0 20.0 10.0 0.0 0 100 200 300 400 500 600

vol% wt%

Temperature, oC

Yield Pattern of Crude OilsYield, %wt LPG Naphtha Kerosene Gas oil VGO Short resid Basrah Bombay Arab mix Kuwait North Bonny lt Light High Gujarat 1.0 1.0 1.0 2.0 1.0 1.4 12.0 21.0 12.0 15.0 5.0 14.1 15.0 20.0 16.0 18.0 10.0 26.2 20.0 27.0 20.0 17.0 21.0 24.0 36.0 27.0 29.0 25.0 33.0 25.7 16.0 4.0 22.0 23.0 30.0 8.6

Crude Oil selection Case Study on: Rajasthan Crude Oil ( Mangla crude). Production Started : Sept09 onward

Factors Affecting Refinery Margin

FACTORS AFFECTING REFINERY MARGIN FOB COST REDUCTION WIDENING CRUDE BASKET.

OPTIMISATION OF CRUDE MIX

REDUCTION COST

OF

TRANSPORTATION

OPTIMISATION OF PRODUCT MIX

Haldia Refinery Block Flow DiagramFuel Gas LPG SRNH2

ATU&ARUOff Gas NHDT&CRU

SRU

Sweet Fuel Gas Sulphur LPG NaphthaMS(BS-II, Euro-III ,Export)

H2

MSQ C D U 1 C D U 2GO SO

Reformate

HGU-IFCC GasolineHCN

HGU-IIH2

Crude

Kero Cut St.Run G.O JBO

KHDS

H2

MTO RTF/ATF KeroseneHSD (BS-II, Euro-III ,Export)

DHDS

LPG LCN

JBO (2 GRADES)Kero HCN HSD

FCCUExtractOHCU Bottoms

OHCUH2

ATU&SRU

FGSulphur

RCO

PDAAsphalt

Extract DCO

V V D D U U 1 2SR LO

CBFS100N/150N/500N/850N/ 150BN GR-I LOBS

LO / IO / HODAO

FEU NMP

Raffinate

SDUSlack Wax Raffinate

DWO

HFUH2

CDWUH2

70N/100N/150N/500N/ 850N/150BN GR-II LOBS

VBU

VB Tar

MCW BTUBitumen Emulsion

MCWFO (2 GRADES) Bitumen(3GRADES) Bitumen Emulsion

IFO

Panipat RefineryIndianOilOFFGAS OFFGAS LPG FUEL GAS

ATU

HGUNAPHTHA HY. NAPH. COKER NAPHTHA H2

SR LPG TREATER

LPG

NAPHTHA

CRUDE AND VAC. DIST. UNIT

KEROLGO HGO

COK. LPG TREATERHSD

DHDT

H2 VGO LPG LPG NAPHTHA SULPHUR

DCU

LCGO HCGO

HCU

GAS OIL

SRUCOKE

IFO

CRUDE OIL & CRUDE MIX :OPTIMISATION USE OF LP MODELS IN OPTIMISING THE CRUDE OIL SELECTION PROCESS SELECTION/PURCHASE OF CRUDE OIL ON INDIVIDUAL REFINERY ECONOMICS/ LOGISTICS AND AVAILABLE HARDWARE ( PROCESS UNITS)

CRUDE -VS -PRODUCT PRICE : Jan12

LPG MS38100

SKO

NAPH

ATFHSD LS crude FO HS crude

Bitumen

Crude & Product Spreads (Crack) Apr10- Nov11

Apr10- Mar11

Apr11- Nov11

35

REFINERY PLANNING: CRUDE SELECTIONPROD.PRICE CRUDE PRICE,RS/MTRS./MT API LPG 32890 MS 36898 NAP 30055 ATF 33538 SKO 33318 HSD 34750 LUBES 48000 FO 23574 BIT 22580 F&L TOTAL DIST (%) CRUDE VALUE, RS/MT PROD VALUE, RS/MT GR.MARGIN, RS/MT HIGH SULPHUR CRUDES UP.ZAK ARAB MIX 28612 28240 34.1 31.5 1.8 1.0 3.8 3.8 7.0 6.7 3.8 2.3 2.7 2.7 35.5 35.1 5.6 6.0 23.1 25.6 8.5 8.5 8.2 8.3 100.0 100.0 54.6 51.6 28612 28240 28661 28447 49 207 BASRAH 26100 31.5 1.2 3.8 6.9 2.3 2.7 36.1 6.0 23.8 8.5 8.7 100.0 53 26100 28496 2396

REFINERY PLANNING: CRUDE SELECTION PROD.PRICE Q.IBOE ESCRAVOS BONNY MIRI LABUAN CRUDE PRICE,RS/MT RS./MT 29000 29420 29560 28015 27800 API 36.8 34.1 31.4 31.4 32.1 LPG 32890 0.7 1.1 0.6 0.6 0.6 MS 36898 3.8 3.8 3.8 3.8 3.8 NAP 30055 7.3 9.0 7.7 7.7 7.7 ATF 33538 1.8 1.8 2.5 2.5 2.5 SKO 33318 2.7 2.7 2.7 2.7 2.7 HSD 34750 44.1 45.4 52.6 52.6 52.6 LUBES 48000 0 0 0 0 0 FO 23574 37.7 34.3 28.2 28.2 28.2 BIT 22580 0 0 0 0 0 F&L 1.9 1.9 1.9 1.9 1.9 TOTAL 100.0 100.0 100.0 100.0 100.0 DIST (%) 60.4 63.8 69.9 69.9 69.9 CRUDE VALUE, RS/MT 29000 29420 29560 28015 27800 PROD VALUE, RS/MT 29542 29835 30578 30578 30578 PRICES GR.MARGIN, RS/MT 542 415 1018 2563 2778

JUL'08

Gross product Worth of crude OilAPI

32S, wt% Price, /MT Yield, wt fraction

34.4 2.13GPW

35.22 0.11

0.08

LabuanLPG Naphtha MS Kero Gasoil Fuel oil Fuel & Loss Total BPT GPW, $/bbl Freight $/bbl Crude Price (Calc for Netback-Zero) Landed Price, $/bbl Gross Margin,$/bbl

Basrah 1.9% 7.4% 8.4% 14.4% 41.9% 18.0% 8.0% 100.0%

Qua Iboe 1.7% 5.0% 8.4% 15.3% 50.0% 11.6% 8.0% 100.0%

Labuan 7.51 53.38 66.72 145.95 480.38 13.34 767.28 7.24 105.98 2.25 103.73 109.15 -3.18

Basrah 15.85 61.72 70.06 120.10 349.45 150.12 767.28 7.35 104.39 1.17 103.22 102.45 1.94

Qua Iboe 14.18 41.70 70.06 127.60 417.00 96.74 767.28 7.38 103.97 2.00 101.97 115.97 -12.01

834 952 1050 968 982 530

0.9% 6.4% 8.0% 17.5% 57.6% 1.6% 8.0% 100.0%

INPUT COST REDUCTION:WIDENING CRUDE BASKETRegular Crude oils Basket HS

Bas Lt, Arab Mix, Up Zakum, Dubai , Kuwait LS

Escravos, Bony Lt, Labuan, Iran Mix, East Africa, Girasol, Masila, etc

Input Cost OptimizationMINIMIZATION OF CRUDE INPUT COST : FOB COSTo BUY CHEAPER CRUDES

o BUILD UP FLEXIBILITY IN REFINERY TO PROCESS HEAVIER CRUDE IN LARGE QUANTITYo HAVE BIGGER CRUDE BASKET SO THAT LARGE NOs OF CRUDES ARE AVAILABLE FOR PURCHASE o DEPENDENCY ON PARTICULAR CRUDE IS MINIMIZED.

Input Cost Optimization OCEAN FREIGHT: BUY CRUDE WHICH CAN BE DELIVERED IN BIGGER PARCEL e.g IN VLCC/ULCC TANKERS. FROM NEAREST LOCATION. MINIMIZE DEMURRAGE BY PROPER PLANNING AND SCHEDULING.LR-II SUEZ MAX VLCC

Gulf to Vadinar $/bbl

1.3

0.8

0.5

Reduction in Ocean Freight for Imported CrudeWEST COAST

All transportation by VLCCcrudes in Suez Max Equivalent are coloaded in VLCC EAST COAST

HS/LS in VLCCOnly crudes of Far East transported by LR-II lighterage minimized : Partial discharge from VLCC at Vizag / Kakinada.

CRUDE PURCHASE CASE STUDY: TypicalTag Refinery Input - MT/CD Indigenous Crudes BOL BONNY LIGHT ESC ESCRAVOS GIR GIRASOL LAB labuan blend Low Sulfur Crudes A80 Arab Mix BAS BASRAH LIGHT High Sulfur Crudes TOTAL CRUDE LS CRUDE% Tag Refinery Output - MT/CD LPG LPG NHP Naphtha MS1 MS SKO MTO/ATF/SKO HSD HSD FO1 FO B65 Bitumen SUL SULFUR LO2 LOBS Refinery Fuel & Loss % Total OBJ Original Obj. Fcn SALES PURCHASES UTILITIES Lab=160 0.0 25.55 25.51 25.34 26.18 22.59 22.19 Bon=160 0.0 160.0 Esc=160 0.0 160.0 160.0 160.0 170.0 170.0 340.0 500.0 32.0 14.8 31.8 38.2 56.0 183.3 65.5 40.0 1.9 18.0 10.0 499.4 92.51 1278.0 1180.2 5.3 80.0 80.0 160.0 170.0 170.0 340.0 500.0 32.0 15.4 28.6 40.7 55.0 164.3 86.8 40.0 1.8 18.0 10.1 499.7 66.00 1244.7 1173.5 5.3 Gira=160 0.0

160.0 170.0 170.0 340.0 500.0 32.0 16.5 28.4 40.5 55.0 172.1 77.2 40.0 1.7 18.0 10.1 499.7 85.54 1260.8 1170.0 5.3

160.0 170.0 170.0 340.0 500.0 32.0 15.9 32.2 40.5 55.0 166.4 78.8 40.0 1.7 18.0 10.1 498.8 78.92 1253.6 1169.4 5.3

26.38 26.97 33.55 32.00 31.97 17.21 15.68 3.38 44.12

GRM

92.51

85.54

78.92

66.00

INPUT COST REDUCTION

BY HS CRUDE MAXIMIZATION HS PROCESSING CAPABILITY IS RESTRICTED AT 65 TO 75% DUE TO DHDS CAPACITY LIMITATION (SUPPLY OF ALL BS-II & E--III GRADES OF HSD W.E.F JAN-FEB05).

HS PROCESSING CAPABILITY CAN BE INCREASED TO 80 TO 85% LEVEL AFTER OHCU COMMISSIONING ALONGWITH INCREASED TPUT TO 7.5 MMTPA AND TOTAL HSD E-III & E-IV PRODUCTION FROM APR10.

OPTIMUM % LS CRUDE: TYPICAL CASE# Basis : Crude : 500 TMTPM Bitumen : 40 TMT LOBS : 18 TMT

LS crude % ->

Product mix Optimisation

REFINERY OPTIMISATION LP TOOLS RPMS: Module PRODUCT MIX OPTIMISATION OPTIMISATION OF BLENDING OPTIMISATION OF OPERATING COST

ECONOMIC STUDIES OPTIMIZING PRODUDT MIX

LPG NHP MS1 MTO HSD JBC FO1 B65 SUL LO2 LO3 LO5 AP3 LA1 LA2 LA3

TOTAL CRUDE LPG Naphtha MS MTO/ATF/SKO HSD JBO Fuel Oil Bitumen SULFUR 150N API Grade 2 500N API Grade 2 70N API Grade 2 HN API Grade 1 150 N API Grade 1 500 N API Grade 1 BN API Grade 1 Total Lube ProductRefinery Fuel & Loss %

29.25 25.25 27.53 37.13 28.15 35.74 14.70 17.20 3.20 48.50 49.71 35.86 48.06 45.98 47.21 50.14

500.0 15.7 31.9 40.0 56.0 165.4 2.8 77.8 40.0 1.9 3.0 5.0 1.0 1.0 2.0 4.0 2.0 18.010.1

500.0 14.7 32.0 38.0 55.0 165.0 3.0 80.0 40.0 1.8 3.0 6.0 1.0 1.0 3.0 4.9 2.0 20.99.9

ECONOMIC STUDIES OPTIMIZING PRODUDT MIX

Tag BOL LAB A80 BAS

Refinery Input - MT/CD BASECASE BONNY LIGHT 24.24 70.0 labuan blend 28.12 70.0 Arab Mix 22.59 180.0 BASRAH LIGHT 22.19 180.0 TOTAL CRUDE 500.0 LO2 150N API Grade 2 48.50 3.0 LO3 500N API Grade 2 49.71 5.0 LO5 70N API Grade 2 35.86 1.0 AP3 HN API Grade 1 48.06 1.0 LA1 150 N API Grade 1 45.98 2.0 LA2 500 N API Grade 1 47.21 4.0 LA3 BN API Grade 1 50.14 2.0 Total Lube Product 18.0 Refinery Fuel & Loss % 10.1 Total 5000.0 GRM -18.82

case1 70.0 70.0 180.0 180.0 500.0 3.0 6.0 1.0 1.0 3.0 4.9 2.0 20.9 9.9 500.0 -14.68

Crude Oil Procurement, Refinery Tput, Market demand CO-Optimisation & IT role

Days

Rs / $

31 Obj Fn T'put HS Crude PROFIT T'put HS Crude PROFIT

47.24 TMTPM % Rs Crores Rs/MT TMTPM % Rs Crores Rs/MT TMTPM % Rs Crores Rs/MT TMTPM % Rs Crores Rs/MT TMTPM % Rs Crores Rs/MT TMTPM Rs Crores Rs/MT $/bbl

J

P

M

T'put HS Crude PROFITT'put HS Crude PROFIT T'put HS Crude PROFIT T'put PROFIT

B

H

5 Refineries Margins

Basecase Pur Free (500 TMT) + Term togethr for East+West 75.37 1066 50.4 204 1914 1386 80 410 2958 782 61 240 3069 430 3 38 884 711 55 131 1842 4375 1023 2338 6.78

Case-1 Case-2 Case-3 HSD Purchase = HSD Purchase = HSD Purchase = 400 TMT 300 TMT 200 TMT

75.06 1170 52.8 201 1718 1395 79 413 2961 797 61 241 3024 440 3 38 864 723 55 131 1812 4525 1024 2263 6.56

74.16 1233 49.8 190 1541 1395 79 409 2932 797 61 244 3061 473 3 42 888 744 55 136 1828 4642 1021 2199 6.38

72.74 1273 53.4 194 1524 1395 77 431 3090 806 60 248 3077 516 3 34 659 744 55 76 1022 4734 983 2076 6.02

THANK YOU

Algeria 0.74 Indonesia 1.20 Iran 3.38

OPEC MEMBERS AND PRODUCTION QUOTA( 23 MMBPD)Founder members

KuwaitLibya 1.23

1.85

Nigeria 1.89 Qatar 0.60 Saudi Arabia 7.48

1 Saudi Arabia 2. Iran 3. Iraq 4. Kuwait

UAEIraq

2.012.65 ---

Venezuela

5. Venezuela

Angola

---

Source : OPEC

RESERVES TO PRODUCTION RATIOYears

INDIAS R/P RATIO: 20 YRS