The presence and the future of the oil industry

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• The presence and the future of the oil industry

Béla Kelemen SCM Director of MOL Group BME,
Budapest, 13th of March 2008,
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Contents

• General overview of the oil industry
• Gasoline Diesel balance
• Alternative fuels and their future
• CO2 emissions

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Old and new refineries
Newhall Refinery California 1876
Modern refinery units in 2008
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The motorization as the driving force of the
industry
Tipical crude processing
() HEATING, SOLID FUELS, LUBRICANTS, ASPHALTS,
PACKAGING
Pannon University
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Creating value for the customers via effective
supply chain
Market pull
Production push
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• Gasoline Diesel balance

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Relationship of crude and transportation
93 koolajtermék
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Main Gasoline Trade Movements in 2006
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FSU
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Europe 41 Mt
North America - 43 Mt
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3
1
Middle East
Asia-Pacific - 6 Mt
6
1
1
5
1
Africa
1
Latin America
Source IEA 2006
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Main Diesel Trade Movements in 2006
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F.S.U.
Europe - 26 Mt
2
North America -1 Mt
2
Middle East
3
4
Asia-Pacific 10 Mt
2
1
3
1
Africa
5
1
Latin America
1
Source IEA 2006
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Worldwide flows of gasoline at 2015 (Mton)
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Worldwide flows of middle distillates at 2015
(Mton)
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Motor Fuel Demand in EU 25
Diesel continues its strong growth Gasoline is
decline(Source Eurostat)
Gasoline
Diesel
Diesel/Gasoline ratio
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Gasoline and diesel regional imbalance
Diesel
Gasoline
Poland
Czech Republic
Slovakia
Austria
Hungary
Slovenia
Romania
Croatia
BiH
The supply and demand imbalances of different
products are not proportional with the crude
yield differences
Serbia
Simple capacity increase/dercrease cannot resolve
product specific supply/demand deviations
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Dieselisation the driving forces in the EU
CO2 greenhouse effect NOx
particles CH
Environmental regulations Tools tightening of
emission limits, taxation and other measures
Health threatening

• Higher fuel efficiency and lower emissions than
  gasoline
• Synergistic effect between engine technology and
  fuel quality improvements
• Enhanced consumer appeal for diesel engines and
  increased diesel car registrations

• High income (GDP)
• and low price elasticity
• of diesel demand
• Unmatched flexibility of road transport
• Freight transport to grow 50 in EU 25 by 2020

Expansion of road transport
Research Development Engine technology Fuel
quality
Dieselisation has been quicker and more intensive
than expected
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Dieselisation MOLs response
Overview state-of-the-art refinery pool with
competitive product slate
Share of Sweet Crude in Total Crude
Processing and Yield of Selected Light Products
and HFO
Average Nelson Complexity Index
without refinery losses and refineries own
consumption Sources PFC country reports, data
of national petroleum associations, MOL, Oil
Gas Journal Based on 2005 / 2004 data
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Heavy investment in conversion capacity and
product quality
Dieselisation MOLs response
11/2001
Future developments
Residue upgrade project realisation
Capturing diesel growth opportunity
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The result sharp improvement in product slate
and competitiveness
Dieselisation MOLs response
MOL Plc. product slate before the residue
upgrade (excl. Slovnaft)
MOL Group targeted product slate by 2010
MOL Group product slate (2005)

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• Alternative fuels and their future

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Alternative Fuel Options
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Todays Biofuels

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Biomass is a limited resource for which there are
competing demands
FOOD
PAPER PULP
POWER
FUELS
HEAT
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MOLs biofuel program responses
GASOLINE
BIODIESEL

• Bio-diesel tender in 2006
• conclusion of 5-year purchase contracts
• joint venture of MOL (25 ) and Rossi
• Beteilgungs GmbH, building of a 150 kt/year
• biodiesel plant in Komárom
• joint venture of Slovnaft (25 ) and Envian
• building of a 100 kt/year biodiesel plant
• in Slovakia
• new plants completed by the end of 2007
• Entry into joint research and development of
• second generation biodiesel
• University, agriculture and construction
  partners

• MTBE component is replaced by bio-ETBE made from
  bio-ethanol
• Investigation of direct blending of bio-ethanol
• ETBE-related investments
• transformation of MTBE units at Százhalombatta
  and Bratislava into ETBE units in 2005 / 2006
• establishment of a new ETBE unit at Tiszaújváros
  under analysis
• Procurement by international tendering

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• Emissions

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Vehicle emissions reduce faster than any other
sector
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Extreme dieselisation increases total CO2
emissions
Source EUROPIA
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CO2 emissions by sectors in EU 25
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CO2 emissions during the crude oil pathway
Sources of emissions in crude oil pathway
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What is the future?
Primary energy source
Conversion technologies
Trends in Energy
Products
Oil
Refining
Motor fuels
Depleting fossil fuel reserves
Biomass
Chemical products
Electricity generation in power plants
Shortage of regional capacities
Other renewables
Electricity
Coal
Global warming and environment
Syngas conversion
Gasification
Natural gas
CO2 storage and management (EOR)
Politically driven, economically non-rational
solutions
Reforming
Other
Current MOL competencies
Possible options
Possible options
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• Thank you for your attention!
• bela.kelemen_at_slovnaft.sk
• www.mol.hu

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• New trends in refining

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New technologies to improve complexity

• New technologies increase complexity and produce
  higher value products
• Increased complexity will eliminate heating fuel
  production
• E.g. with the new planned hydrocracker plant in
  MOL Danube refinery MOL increases white product
  yield and improves quality as well to improve
  profit

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Gasoline Main environmental requirements

• ?MTBE removal/reduction of oxygen content
• Contamination of groundwater
• ?Reduction in vapour pressure
• Reduction of volatile organic hydrocarbons
  -ozone
• ?Reduction in olefins
• Ozone
• ?Reduction in benzene and aromatics
• Toxicity. Further reductions in benzene
  content?
• ?Ultra low S 10/30 ppm
• Enables technologies for emissions control

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Diesel (on-road/ off-road)Main environmental
requirements

• ULS diesel (10/15 ppm)
• Enables technologies for emissions control
• Off-road diesel also from 1000/500 ppm to 10/15
  ppm
• AromaticsEU will require max 8 polyaromatics by
  2009
• Gasoil used in inland waterways
• Possible reduction from 1000 to 300 ppm by 2010
  and to 10 ppm in 2012
• Probably not other requirements
• But achieving ULSD will become more difficult

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New products - new technologies

• New products
• Bioethanol
• ETBE
• TAME
• Biobuthanol
• New generation biofuels
• New technologies
• Renaissance of the Fischer-Tropsch synthesis
  (gasification)
• (biomass as raw material)
• New desulphurisation technologies
• New hydrocrack technologies

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