Position of the Mineral Oil Industry to Ethanol · 2019. 7. 2. · OMV Aktiengesellschaft Move & more Position of the Mineral Oil Industry to Ethanol 2. European Bioethanol Technology

OMV Aktiengesellschaft

Move & more

Position of the Mineral Oil Industry to Ethanol

2. European Bioethanol Technology MeetingDetmold, April 25-26, 2006

Dr. Dipl.-Ing. Walter BöhmeHead of InnovationOMV AG

2 | OMV AG, Position to Ethanol

Business Units of OMV AG

Exploration andProduction

Refining and Marketing incl.Petrochemistry

Gas


Exploration & Production - Worldwide ActivitiesStable production volumes from Austria and Romania

Significant growth in North Africa, Middle East/Caspian and in the North Sea/ Atlantic Margin

Valuable contribution from New Zealand

Substantial position in Russia

Core Area

Potential Core Area

Key

350,000 boe/d

Core country

Potential core country


R&M: A Leading Market Position in CEE

Source: RM TM1 04/2005

20% market share within the D-13 area leads to a dominant position for

Optimizing the refining systemOperating above a critical mass in retail

Entering new markets improves the portfolio life cycle (mature to growing)

50.0 mn t

15.4 mn t

15.9 mn tPetrobrazi

Arpechim

Bayernoil

BurghausenSchwechat

Oil products market in mn t in 200418% total market share OMV Group (retail and commercial)

Retail Network2500 stations

34 % of Petrol Ofisi


Gas – Vision and strategy 2010

Core marketsEconGas sales clusterPetrom/OMV Gas sales cluster

Expansion of transit capacity of TAG and WAGPromote Nabucco project

Potential integration projects with OMV/Petrom E&P

Sales and Trading: Gaslogistcs:

CZ

SK

H

SLO(North) Italy

(South)Germany

TAG

WAG

Nabucco 2011

RO

BGYU

HR

BA

?

?

? North Africa

? Iran

Existing storage facilities Potential storage facilities Potential LNG plant

Dynamic growth in Sales and Trading (EconGas, Petrom), Transit (Austria, Nabucco, LNG) and Storage (Austria, Romania)


Detmolder Ridge in the Austrian Alps


Market Environment


Europe oil product balances

-60

-40

-20

0

20

40

60

LPG Gasoline Jet/Kero Diesel

2003 2005 2010 2015 2020

Mt

Deficit

15% of production 2015

Surplus Gasoline Exports: 42% of the production in 2015

Source: Wood Mackenzie


Gasoline wordwide flows at 2015

[Mton]

Source: ENI R&M at 7th Annual European Fuels Conference, Paris 2006


Fuel sales volume in Germany

15

20

25

30

35

1990

1995

2000

2005

2010

2015

2020

mill

ion

tons

Diesel Gasoline

Forecast

Source: MWV aktuell, Special Edition Biofuels, Feb 28,2006


Share of Diesel Cars increase

Source: Fuels Conference, 01Lawrence_Eagles_IEA.pdf, Session 1, chart 18

Share of Diesel fuelled new passenger car registrations [%]


Reasons for shift to diesel fuel

Good performance of diesel engines

Low cost of operationLow fuel consumptionLower mineral oil taxes on diesel oil

0100200300

AT BE DK FI FR DE GR IE IT LU NL PT ES SE UK Del

ta M

OT

[ €

]


Trend of mineral oil tax in Germany

0

10

20

30

40

50

60

70

8019

50

01.0

5.19

53

01.0

4.19

60

01.0

1.19

66

01.0

1.19

72

01.0

7.19

73

01.0

4.19

81

01.0

1.19

86

01.0

4.19

88

01.0

1.19

91

01.0

1.19

93

31.1

0.19

95

01.0

1.20

00

01.1

1.20

01

01.0

1.20

03

Tax

[€ce

nt/l

]

Gasoline Diesel

Source: MWV aktuell, Special Edition Biofuels, Feb 28,2006, internal view


0

100

200

300

400

500

600

2000 2001 2002 2003 2004 2005 2006

[ €/1

000

l]

Gasoil

Gasoline

Product Price: Platts Barges Fob Rotterdam


Resume Market Environment

EU Diesel shortage will increaseEU Gasoline oversupply will increase

ChallengeBalance the demand

- Mineral Oil Taxes- Car Taxes- Car Emission Regulations- etc.


Ethanol for the Fuel Market


Production costs of bioethanol

010203040506070

Brasil(sugarcane)

USA (corn) EU (wheat, S) EU (wheat, L)

[€/1

00 l]

Gross (w/ o subsidy) Net (w subsidy)

Source: Study by IEE, Nachhaltige Biomassenutzungsstrategien im europäischen Kontext


Basic conditions for Ethanol market launch

TechnicallyUsed in the vehicles without modificationsExisting product standards (warranty)Products can be blended (supply chain)Use of existing transport logistics and dispensers

EconomicallyInterest for all stakeholdersSelf financing for the oil company?Customers needs?


Way’s to introduce Ethanol

Today according to the fuel standard EN 228Ethanol blended up to 5% (v/v) in gasoline (= 3,4% energy)ETBE blended up to 15% (v/v) in gasoline (= 6,2 % energy)Oxygen content max. 2,7 % (m/m)

TomorrowEthanol blended > 5% (v/v) in gasoline ?Ethanol (E85) for flexible fuel vehicles ?Neat FAEE and FAEE blends in diesel oil ? Ethanol and ethanol derivative in diesel fuel ?Neat ethanol fuel (E95 with additives for diesel engines) ?


Question for refineries: Reduce output volumes

Ethanol Blend = Substitution

5 % (v/v) ethanol substitute min. 3,4 % (energy) gasoline

Ethanol Derivate = Change

ETBE substitutes MTBE


More barriers for Ethanol direct blendingVapor pressure

Influence on emissions and driveabilityEthanol and ethanol-blends increase vapor pressure, need for dedicated logistic supply chain

Presence of waterWater elutes ethanol Water absorption of gasolineClouding of the product

Resistance of materialsCorrosion (new vehicles-old vehicles)New, ethanol/water resistant materials have to be used in the fuel system of the vehicles as well as in the distribution system.

Highly integrated and fungible (exchangeability) nature of the transport fuel market

OMV Biofuels Österreich praktische Umsetzung_en, ch. 28


Ethanol direct blending impact

Refinery productionReduction of gasoline output = reduction of utilizationAvailability of low RVP components

SupplyPipeline transport not possible if the system also deliver aviation fuel

StoragesFixed roofs, more delivery systems (export, product portfolio)

Retail StationWater


Ethanol implementation in Austria

390

400

410

420

430

440

450

until 30.09.07 * ) S-free 01.10.07 * * ) S-free + min.4,4% (v/v) Bioethanol

417 *)

432

445

412 **)

3315

Mineral oil tax [€/1000l]

+ 13

- 5

OMV Biofuels Österreich praktische Umsetzung_en, ch. 27


Advantage of tax differentiation

Defined products on the market – with or without biofuels, easy to monitor

About the amount of the tax differential the authorities can control the amount of biofuels on the market

The system is independent from crude oil prices

Same system for Biodiesel in Austria since 1.10.2005 –Result = 100% of diesel on the market contain 4,8% of Biodiesel.


Detmolder Ridge – How to conquer it?

ETBE Ethanol direct blendesp. in summer Tiring and inconvenient Very casually to deal with it


Summary: Position on Biofuels

In the energy sector biomass should be used where its offer the best energy efficiency and the greatest GHG avoidance (should be considered by legislation and tax treatment)Costs of today’s biofuels (in the transport sector) exceed significantly those of the conventional fuels they are respected to replaceHarmonization of biofuels implementation mechanisms between Member States is desirableIntroduction of biofuels must not compromise fuel product qualityRegulatory mechanisms must not discriminate between biofuels and biofuelsblends on the basis of their origin (feed, country)Flexible Mechanism that use market forces to encourage competition will deliver the best efficiencySubstitution targets should be framed over total road transport fuel volumes and should consider markets needs.


But

The implementation of biofuels now is a political decision

Until the costs of biofuels exceed significantly those of the conventional fuels the authorities can promote and control the implementation about tax treatments.

According to the Commission’s own assessment EU biofuels would become cost-competitive with sustained oil prices above ca. 110 $/bbl for bio-ethanol

With shrinking of the gasoline demand in the EU also the need and potential for substitution of gasoline is shrinking.


Thank you

Any “distillation residue”?

Documents

Position of the Mineral Oil Industry to Ethanol · 2019. 7. 2. · OMV Aktiengesellschaft Move & more Position of the Mineral Oil Industry to Ethanol 2. European Bioethanol Technology