philip leighton
TRANSCRIPT
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WRA Refining and Petrochemicals in Russia and the CIS14th Annual Roundtable
Lessons the Russian Industry can Learnfrom the Middle East
November 2010
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Agenda
Part 1 Petrochemical Opportunities Gas Production in Russia and the CIS
Middle East and CIS Compared
Russia and CIS Competitiveness issues
Petrochemicals from associated gas
Conclusions
Part 2 Project Development Project Development Challenges
ME model
Russian model Conclusions
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23% World Total Reserves 18% Global Gas Production 3% Global Ethylene Production
7% World Total Reserves 5% Global Gas Production 0.2% Global Ethylene Production
Gas Production/Reserves in Russia/CIS
Enormous!
Most Russian gas is very dry (98%Methane)
Limited opportunity to extract
Ethane for Ethylene or otherpetrochemicals
Presently there is limited petrochemicals production in Russia / CIS
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Russian Oil and Gas Production Areasare Geographically Separate
Gas ProductionCentre
Oil ProductionCentres
It will require new infrastructure to capture wet gas
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Russia/CIS compared to Middle East
Russia/CIS gas production is 3 x of combined ME!
Russia oil production is similar to Saudi Arabia
Russia/CIS resemble Qatar as most hydrocarbon reserves are in gas
GAS Production (Reserves)
Mn toe
OIL Production (Reserves)
Mn toe
% Production (Reserves)
as GAS
Russia 475 (40,000) 494 (10,200) 49% (80%)
CIS 150 (13,000) 143 (6,400) 51% (66%)
Saudi Arabia 70 (7,100) 460 (36,000) 13% (16%)
Kuwait 11 (1,600) 121 (14,000) 9% (10%)
Qatar 80 (23,000) 58 (2,800) 58% (89%)
United Arab Emirates 44 (6,000) 121 (13,000) 27% (31%)
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Russia Competitiveness Issues
Feedstock
Potential cost is low for associated gas derived feedstocks. This might be the major source ofcompetitive advantage
Logistics
are poor, controlled access to domestic pipelines, otherwise exports by rail.
Distances are large for exports either WE (~2000km), or East to China (~7000km).
logistics create a $100-200/ton cost disadvantage compared with ME
However with current high oil prices this cost disadvantage is diluted
Refinery integration
presently very limited.
Opportunities for Refinery-PC integration are theoretically achievable.
However the focus of refinery upgrades has been to add value to exports of atmospheric gasoil and long residue rather than petrochemicals opportunities
Feedstock availability, feedstock pricing and product logistics are majorissues for Russia to address to build a competitive export industry
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Could Russian Future Gas be More Productive?
BCM
Will Yamal gas yield sufficient ethane to make extraction for Petrochemicalseconomic?
Yamal: 11 gas fields 5 oil and gas condensate fields
Gazproms Gas is too Dry to Support Petrochemicals
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While Russia invests very little in petrochemicals, Central Asia is becoming active
Kazakhstan and Uzbekistan have new plans for ethane based petrochemicals projects
Kazakhstan is proposing to use the wet gas from Tenghiz oil
Uzbekistan considers a new Ethane Cracker using wet gas from Aral Sea gas fields
Kazakhstan is also looking at propane based PP production
Turkmenistan is presently doing relatively little despite its very large reserves
CIS activities in Petrochemicals
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Global Petrochemicals Long Term Trends
Market Growth: driven by Asia, especially China and India
New Investments: centred around ME, Asia, LA Future Trade flow: largely ME to Asia and Rest-of-World
ME will be the main net exporter of basic Petrochemicals
Asia will continue to grow as net importer due to high regional demand
N. America will remain more or less in balance with shale gas/tight gas providing a newsource of cost competitive feedstock
Europe will experience significant onslaught of surplus exports from ME
Feedstock:
ME ethane supply will be limited
Increased use of mixed feed and heavier feeds such as LPG and naphtha
Producers with feedstock flexibility and ability to process heavier, but low cost, feeds will
have competitive advantage
Can Russia develop a role for itself in the globalPetrochemicals business same as ME?
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Associated Gas Flaring ME approach
In 1980s, Saudi Arabia constructed the Master Gas System (MGS)
Gathered and processed associated gas
Sales gas used for power and industrial uses
Recovered LPG and condensate was exported
Ethane was recovered for use in petrochemicals
Developed a world class Petrochemicals industry!
Other ME countries adopted similar gas recovery schemes
Gas Use in the GCC - 2008
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
Kuwait KSA Qatar UAE
Mscm
Sales Gas Flaring Reinjection Shrinkage
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Qatar Petrochemicals is based on Moderately Wet Gas
Hydrocarbon reserves mainly as gas
North Field Gas is non-associated with alow liquids content (~6vol% ethane, ~3vol%LPG).
Qatar Government actively encouragesethane extraction for petrochemicals
A new 1.6Mt/yr Ethane cracker is in plan
Oman
Syria
Saudi Arabia
Yemen
13.5% World Total Reserves
3% Global Gas Production
1.3% Global Ethylene Production
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What Price Russian Ethane?
Ethane from Associated Gas - Russia is in a similar position to Saudi Arabia.
Associated gas is being flared
This gas is also remote from the existing gas export infrastructure
Associated gas yields a relatively large amount of liquids (LPG and condensate)
Recovered dry gas and ethane can therefore have a negative cost
Ethane is not a fungible commodity and cannot be readily exported
Wet Gas
GasProcessing
Plant
DryPipeline
Gas
NGLs
(by pipeline)NGL
FractionationPlant
Ethane, Propane,Butanes, Condensate
Wet Gas
GasProcessing
Plant
DryPipeline
Gas
NGLs
(by pipeline)NGL
FractionationPlant
Ethane, Propane,Butanes, Condensate
GasProcessing
Plant
DryPipeline
Gas
NGLs
(by pipeline)NGL
FractionationPlant
Ethane, Propane,Butanes, Condensate
Upgrading and monetisation of ethane from flared associated Russian gasrepresents a valuable opportunity
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Part 2 Project Development
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