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Mol to diversify refining business, focus on petchems

14 Oct 2016 15:03 (+01:00 GMT)
Mol to diversify refining business, focus on petchems

Budapest, 14 October (Argus) — Hungarian integrated oil firm Mol has approved a new long-term business strategy to 2030, diversifying away from producing motor fuels to focus more on high-yield petrochemicals.

Mol operates four refineries in Hungary, Slovakia and Croatia with a combined capacity of 423,000 b/d. Total refinery throughput at the four plants increased by 3pc in the second quarter year on year to 4.96mn t.

The company plans to cut the share of motor fuels in its product slate and increase the share of other refinery products to over 50pc by 2030, from less than 30pc today. It says this is a response to its "mid-term view of fuel markets trends, fast-spreading alternative technologies and changing consumer behavior".

The company said it would expand further into petrochemicals, spending about $4.5bn in total on new projects in five-year investment cycles in central and eastern Europe up to 2030. It will raise its petrochemical feedstock intake to 3mn t/yr and introduce new products.

Future petrochemical and chemical investments "should be built upon existing hydrocarbon molecules within Mol's refineries", the firm said. It said it would also "move towards" semi-commodity and specialty products. Two new product groups Mol is looking into are polyols, which are used to produce polyurethane, and superabsorbent polymers, mostly used for diapers, the firm said at a meeting with Hungarian trade unions in June. Both of these product areas typically use propylene-based feedstocks, where Mol has an excess of capacity. Expansion down this value chain could lead to investments in propylene oxide or acrylic acid. Mol has a close relationship with Hungarian chemicals company Borsodchem, a major supplier of isocynates.

In olefins, Mol operates two steam crackers at its Tiszaujvaros complex in northeast Hungary with a combined capacity of 660,000 t/yr ethylene and 335,000t t/yr propylene. Ethylene feeds downsteam LDPE and HDPE units with a combined capacity of 485,000 t/yr. Steam cracker propylene is supplemented by 70,000 t/yr propylene from Mol's Szazhalambatta refinery FCC unit and feeds two PP units of a combined 280,000 t/yr. Mol launched a new 130,000 t/yr butadiene plant last year at Tiszaujvaros, and is building a 60,000 t/yr synthetic rubber unit in a joint venture with Japanese producer JSR. This plant is scheduled to come online in 2017.

At the Bratislava site of Slovakian subsidiary Slovnaft, Mol also operates a steam cracker with 220,000 t/yr ethylene and 135,000 t/yr propylene capacity. Mol completed the €300mn ($330mn) construction of a new 220,000 t/yr low-density polyethylene (LDPE) plant earlier this year. This unit is still ramping up, after which two smaller units with capacity of 130,000 t/yr are expected to be closed. The adjacent refinery adds another 50,000 t/yr propylene capacity and with the steam cracker supply and some imports from Hungary feeds a 225,000 polypropylene (PP) unit.

In aromatics, Mol has 400,000 t/yr total production capacity for benzene, toluene, xylenes and orthoxylenes at its Szazhalambatta refinery in Hungary and Bratislava refinery in Slovakia.

Mol's olefins production increased by 21pc in April-June to 486,000t from a year earlier, while polymers output rose by 13pc to 287,000t. Total petrochemical product sales to customers outside the Mol group rose by 4pc from a year earlier to 327,000t in the second quarter.

Mol is not the only refiner in Europe looking to focus more on petrochemicals. At Schwechat, Austria's OMV has closely tied its petrochemical, refining and utility facilities, allowing it to cut costs by sharing utilities, infrastructure and personnel. The company is also focused on more integration between its refining sites.

Europe's refiners currently offload around 10pc of production to petrochemical sites, and there is scope for this figure to rise. But with a low likelihood of new steam cracking capacity coming online, this option is realistically only available to those who already have facilities in place.

Mol's reference to "fast-spreading alternative technologies and changing consumer behavior" as drivers of its new strategy is an indication that European refiners are mulling the eventual impact of alternative fuels on their business. Another indication came today when Greek refiner Hellenic Petroleum's chief executive told the board of the European Refiners Association that the industry's future is challenging and that new themes to address include low carbon emissions, decarbonisation, and electrification of transport.