TNK-BP Leads Lisichansk Refinery 
to European Standards

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   The decrease in production by the national oil refinery companies was owed to the government’s regulations driving the cut in prices on the domestic market at the expense of import stimulation. At the same time many oil refinery companies managed not only to survive but to go on with production, making a cutback sensibly.

   “The strategic model to supply the oil products for the developing Ukrainian market is an optimum import and own production balance”, comments Sergei Lizunov, President of TNK Commerce, Ukrainian TNK-BP Division. In the middle of August the company focusing on the refinery facilities projects implementation at Lisichansk Oil Refinery Plant announced its plans to stop production of gasoline A-80 in favor of more demanded A-92 and A-95. In the opinion of Mr. Lizunov, “in one year and a half the notion of A-80 should become obsolete”. According to RBK Ukraine, the consumption of this type of gasoline has been decreasing in the country by one third per year in recent years.

   The decision of the company can be considered a timely one. It is assumed that the sales of oil products that do not meet Euro-4 standards (including low-octane gasoline) will not be allowed starting from 2011. The move forward, encouraging the shaping of the quality fuel market, was possible due to larger high-octane types of gasoline share of the product balance thanks to optimization of octanizing unit performance.

   Lisichansk refinery (LINIK) is considered the newest in Ukraine: its first units were launched on 17 October 1976. This facility is graded as fuel-oriented refinery with deep refining and petrochemical segment. Initially the refinery was initially designed to provide oil products for Ukraine’s industrial eastern regions, as well as to the southern regions of Russia. In Soviet times, the refinery was the largest in Eastern Europe, boasting 23.7 mln tpa of oil refinery run in 1991.
However, in early independence years the throughput began dwindling rapidly (general trend throughout the former USSR), reaching the historic minimum of 531,300 tpa in 1999 due to slashed oil supplies from Russia. The situation on the dying facility changed rapidly with the change of the owner – in 2000 Ukraine’s government inked the dotted line, selling the control stake in the refinery (67.41% to Russia’s TNK. After Russia’s TNK and British Petroleum merged into TNK-BP, Lisichansk refinery (LINOS) became the new company’s asset in Ukraine. Subsequently Open JSC LINOS was transformed into Closed JSC LINIK.

   Several issues had to be solved if the company was to sustain severe competition from the Russian and Belarusian refiners:
– boosting the refining depth and process flow flexibility, expanding the production range;
– ensuring compliance of refinery’s products to European quality regulations in the context of constant tightening of EU standards;
– implementation of a large-scale program targeting boosting environmental safety of the products and environment protection;
– ensuring compliance to industrial safety standards (at the time the refinery was known for high depreciation of the equipment and high accident rate).

   This required practically full modernisation and upgrading of the refinery as process flow inherited from the Soviet days was inadequate for solving the piled problems.

   From 2000 TNK-BP invested over $400 mln into the refinery, installing six new units. The modernisation resulted in Lisichansk refinery becoming the first in Ukraine unit (from 2005) that produces more gasoline than fuel oil. The load of primary distillation unit more doubled, reaching 85%, while refining depth edged up by 2% to 63%. In mid-2009 this index reached 70.8%.

   Currently Lisichansk refinery capacity stands at some 8 mln tpa. The feedstock crude is delivered via Samara-Lisichansk pipeline, one-third is supplied by the railway.

   The refinery includes: two enlarged integrated primary distillation units ELOU-AVT-8; two catalytic reforming units L-35/11-1000 и LCh-35/11-1000; two diesel fuel hydrotreatment units LCh-24-2000; TS-1 jet fuel production unit (Mericat-II technology); elemental sulphur production unit; catcracking unit G-43-107М/1 with MTBE production block (methyl-tert-butyl ether, high-octane gasoline additive); NK-70°С fraction isomerisation unit; hydrogen production unit; EP-300 ethylene production unit; polypropylene production; bitumen production unit; internal power station.

Lisichansk refinery process flow is as follows:
Crude oil is supplied for primary distillation at the enlarged integrated units ELOU-AVT-8 No. 2 and 3. End product of primary distillation units is fed into secondary treatment cycle: catalytic reforming units L-35/11-1000 and LCh-35/11-1000, diesel fuel hydrotreatment unit LCh-24-2000 No. 1 and 2, polypropylene production unit EP-300, catcracking unit G-43-107М/1.

   Propane-propylene cut of catcracking unit is fed into propylene polymerisation unit. The process flow covers production options for homopolymer, static polymer, heteropolymer with ethylene and thermopolymer. Lisichansk refinery is the only Ukrainian producer of polypropylene.

   Hydrogen sulphide, which is produced in the process of diesel fuel stripping at diesel fuel hydrotreatment units and VGO stripping at catcracking unit, is used as feedstock for 60,000 tpa double-flow sulphur production unit.

   Bitumen production quality parameters can be adjusted according to the clients’ requests. This is the only CIS “multi-programmable” bitumen production facility.
All implemented modernisation projects in one way or another aim at boosting the units’ energy saving features. There is a separate programme “Energy saving”, which has already resulted in:
– installation of steam condensate stripper, which cut down fuel and thermal energy consumption in DM water preparation process;
– energy-saving modernisation of nitrogen production unit;
– fume flue gas sensors installed at all process furnaces and power station boilers; – better fuel utilisation resulted in lower fuel consumption levels.

   The refinery experts continuously change auxiliary equipment to low-energy versions of the same.
In the fall 2003 TNK-BP management decided to implement at Lisichansk refinery the integrated HSEQ (Health, Safety, Environment and Quality) management system.

   The refinery exports over a half of the produced polypropylene (up to 50,000 tpa). This product (licensed by Highmont) is bought by European and Asia Minor countries. Small amount of polypropylene is supplied to Russia.
Virtually all produced light and heavy oil products consumed domestically, the refinery exports only surplus diesel fuel, which appears from time to time.
CJSC LINIK is one of Ukraine’s leading producers of motor gasoline with below-150ppm sulphur and Euro-4 premium quality diesel fuel with below-50ppm sulphur content. Throughout the production process, oil products quality is controlled by LINIK testing centre, which pioneered certification to ISO/IEC 17025 standard in Ukraine.

   The centre operates the latest computerised equipment from leading producers such as Waukesha (USA), Koehler (USA), Herzog (Germany), Mettler Toledo (Germany), Trace (Italy).
The refinery’s crude oil and oil products tankage facilities consist of 187 tanks with total capacity of 1.3 mln. m³.
In 2009 TNK-BP followed its long-term strategy on developing oil products retail network in Ukraine. The company acquired from Gepard group two tank farms and 36 fuel stations in Kyiv and Kyiv region.
Presently TNK-BP owns 50 fuel stations in Ukraine (six in Lugansk region and 44 in Kyiv region). In the next few years the company plans to expand its network to 100 proprietary and 300 franchise stations. The priority regions here are Kyiv, Dnipropetrivsk and Donetsk.

   TNK-BP are the leaders of Ukrainian market for introducing new standards of fuel station servicing. These include: terminal location, its design, equipment and quality of the service. The company was first in Ukraine to announce the change from “fuelling station” concept to “fuelling complex” concept, in line with the standards of the holding. The company was first in Ukraine to announce the change from “fuelling station” concept to “fuelling complex” concept, in line with the standards of the holding.

   In 2009 TNK-BP plans to invest $41.3 mln in Lisichansk refinery. Main investment directions are the projects on industrial and environmental safety, labour protection ($9.5 mln), change of obsolete equipment and catalysts ($18.0 mln), change of control systems and production safety systems ($5.3 mln) and acquisition of quality control equipment ($ 2.2 mln).
In 2008 the company invested in the refinery $54 mln; bulk of the money was invested in scheduled refinery maintenance and in sustaining industrial and environmental safety of the asset.

   The base strategy of the company stays unchanged, says president of TNK-BP Commerce Sergey Lizunov. It targets improving economic efficiency and competitive edge of Lisichansk refinery, as well as retention and consolidation of the achieved positions long-term. The company will expand in individual wholesale and retail segments in high-priority regions of the country. This year, the accent is on supporting the Lisichansk refining operations.
Last year’s record high oil prices changed the refinery’s process flow, including into the feedstock bucket a number of alternatives such as VGO of straight-run gasoil.

   TNK-BP analysts forecast that in 2009 average oil prices will hover at about $50/bl. In this scenario, Lisichansk refinery will be able to take up extra 600,000-700,000 t VGO, says Sergey Lizunov. In this case the total refining feedstock would top 4.5 mln tpa. In case oil price growth outstrips VGO price dynamics, the company would boost VGO acquisition.

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