Russian industry of aromatic hydrocarbons tries to get out of closed circle but producers and processors are awaiting the first step from each other.
On Tuesday, 18 October Creon held International Conference "Aromatics 2011". Quest International Trading was the partner of the conference, the event was supported by IAC Kortes. Russian industry of aromatic hydrocarbons` production and processing is in raise and there are a number of new and ambitious investment projects, including ones related to unconventional gas feedstock utilization for aromatics synthesis. At the same time, processors today face aromatic hydrocarbons` deficit and instability of prices. Last year Creon called players of petrochemical market "to feel aromatics" and now the company is glad that the call has helped the industry to "wake up" and to create plans for the future. This was described in the welcome address of CEO of Creon Sandjar Turgunov.
Combined review of aromatics hydrocarbons` market prepared by Creon and IAC Kortes was presented by the director of the conference Anastas Gatunok. During the economic crisis both benzene production and consumption decreased visibly in Russia and have not yet returned even to the level of 2006. In 2010 1062 kt of benzene were produced in the country, the major manufacturers are NKNH, Gazprom neftehim Salavat and Omsk oil refinery, each of them produces more than 100 thousands tons annually. Moreover, for five years their share in total production has increased and now reaches 43%. The production of coke benzene has increased, but its share in total output remains low and in 2010 accounted for just 14% of the manufacture.
In Russia about 30% of benzene being processed by manufacturers themselves, however, the volumes of in-plant processing decline while benzene "free market", in contrast, growing. Key benzene derivatives in Russia are styrene, caprolactam and phenol, marketable benzene being purchased by more than 10 companies, among them the largest buyers are Kemerovskiy Azot and KuybyshevAzot and also Sibur-Khimprom. The prices on the marketable benzene in Russia follow world ones and roughly the same as global excluding transportation costs.
Domestic toluene market volume is about 300 thousands tons that`s relatively low. In 2010, both production and consumption of toluene decreased dramatically. Oil toluene is produced by 7 oil refineries: in Omsk, Ryazan, Kirishi, Perm, YaNOS, Ufaneftekhim and Gazprom neftekhim Salavat. Up to 70% produced toluene is consumed at oil refineries for fuel components manufacture, however, it`s expected, that demand in this segment will decrease due to implementation of stricter environmental requirements. Also toluene is used in industry of coatings and for explosives manufacture. In general, prices on toluene in Russia follow gasoline wholesale ones.
Xylene manufacture in Russia is stable and was 514 thousands tons in 2010. Product is produced by three oil refineries in Omsk, Ufaneftekhim and Kirishi as they only have necessary equipment for deep extraction of aromatics from petroleum fraction. Slightly less than half of produced xylenes being exported, although export volumes have reduced. Shipments are made through Finnish ports. More than half of xylenes in Russia is used for TPA production, third of ones is for phthalic anhydride. Herewith, TPA production is the only growing segment of demand in the country. Prices on xylene as well as on benzene depend on global ones and differ from them in the margin of transportation costs.
Kirill Popov, Deputy Director of the Coordination of gas and energy operations and sales of petrochemical gas processing products of Management of Lukoil, told about prospects of increase of aromatic hydrocarbons production in Russia. According to him, many participants` believe in emergence of new marketable benzene volumes due to Russian oil refinery`s transition to the Euro-4 standard is not justified enough. Benzene is carcinogenic and its concentration in fuel according to the program of transition to the Euro Standard must decrease radically. At the same time, benzene and other aromatic hydrocarbons have high octane number and for their substitution it`s necessary to add in the fuel more expensive ether additives or isoparaffins derived from alkylation and reforming units of the refinery. Oil refineries and ethylene crackers of petrochemical facilities are main sources of benzene-toluene-xylenes production. Nevertheless, there are just six regularly operating capacities to make marketable benzene in Russia, and just three of them are enable to extract xylenes too. According to Mr. Popov`s estimates, matching all of volumes of Russian gasoline to Euro-4 standards could increase aromatic hydrocarbons output by 2 million tons per year. However, significant increase of marketable high-octane gasoline manufacture in coming years will absorb any surplus of aromatics after full adaptation of Euro-3 and Euro-4. Moreover, Mr. Popov supposed even possibility of decrease of aromatic hydrocarbons` marketable production due to constant grow of gasoline output by refineries and concurrent decrease of benzene production by ethylene crackers as a result of wider use of gas feedstock that has lower feedstock to benzene ratio. He used Lukoil`s Stavrolen facility as an example, as the plant will have just a quarter of traditional oil-based feedstock in its feedstock basket after completion of the project of Caspian gas and chemical complex.
Participants of the Conference disagreed with Mr. Popov about stance and prospects of Russian benzene market. Member of the Board of Camtex-Khimprom Vladislav Shinkevich supposed that the reason of benzene deficit in Russia is monopoly-inflated prices on gasoline that leads to lack of reasons to increase output of marketable benzene. According to Roman Efimychev, the Head of Petrochemical and Liquefied petroleum gas Business Unit of Gazprom Neft, in Russia volumes of produced aromatics is two times more than marketable volumes. However, MTBE and other ether additives are more expensive than any aromatic hydrocarbonates that doesn`t promote their substitution in compounded gasoline. Total production of aromatics in Omsk oil refinery, belonging to company, depends on demand on paraxylene, the most expensive of aromatic hydrocarbons which is exported extensively. Transition to Euro-3 and higher standards is already in process, however, it hasn`t yet led and will unlikely lead to any surplus of marketable aromatics. Nevertheless, raw materials base of aromatics extraction systems will grow as the result of increase of processing of heavier petroleum products. Taking it into account the Company together with Sibur develops the project of new complex of TPA and PET. Independent expert Valeriy Sharykin was not surprised by such views of oil companies. According to his opinion that was backed by Mr. Popov, benzene is a side-product, which share in companies` sales is relatively low. It explains well very limited investment interest of oil companies to this product and his "brothers". According to Andrey Bylinin, Commercial Director of Kuibyshev Azot, conservative oil companies` opinion about benzene market doesn`t change for years. Processors solve the problem of deficit by import, however, if such schemes are profitable in terms of current favorable market situation, that it`s hard to say what will happen when prices for benzene derivatives decrease. Vladimir Proskuryakov, the Head of Marketing Management of Plastics and Petrochemicals Direction of Sibur noticed that global and Russian prices on styrene decrease although this monomer is already low-margin product. Speaking about the structure of ethylene crackers` feedstock, it changes constantly depending on market situation and it`s hard to make long-term forecasts.
Coke production is less powerful producer of aromatic hydrocarbons, but offers a number of specific products. Sergey Basalov, the Head of Raw Materials Department of Evraz Holding told participants about naphthalene market of CIS countries. Naphthalene is not only effective weapon in battles against moth, but valuable chemical feedstock too. It used for phthalic anhydride, naphthalene sulfonate plasticizer manufacture and so on. In China manufacture of insecticides is the main direction of naphthalene processing along with phthalic anhydride production. Russian naphthalene is exported mainly to Asian countries (China, India, Saudi Arabia) and also to German customers. Poliplast Company is the key consumer of this product inside the country and processes it into plasticizers for concrete at three plants in Tula, Leningrad and Sverdlovsk regions. Now naphthalene is one of the most valuable coke-chemical products, but, according to Mr. Basalov the lack of coking pitch prevents the increase of the output, and moreover the pitch is exported duty-free now.
Producers` conservatism doesn`t stop technological progress in the industry; the major part of reports was devoted to new processes and technologies, which are in different stages of introduction. The combined report of Leonid Saprikin and Alexander Shabanov, Heads of Laboratories of NIPIGasprocessing was devoted to making benzene-toluene-xylene fraction out of associated petroleum gas. According to the reporters, associated gas is no target product of oil production for oil companies, but it doesn`t reduce its value as chemical feedstock. There are foreign technologies of aromatic production out of individual propane-butane, however, in Russia the primary task is the production of aromatic compounds not at Gas refinery, but directly at remote oil fields. Technology of BTX direct synthesis of associated gas means that not only rich fractions, but methane being involved in the reaction. Working unit prototype, created with domestic technologies, has capacity 100-150 kg per day. Manufactured product (aromatic concentrate) contents up to 50% naphthalene fractions, and the audience was interested in how it may be used. Reporters suppose to use such feedstock for production of fuel for diesel engines locally. Interest to purchase of such units was shown by minor oil companies, as production is cost-effective subject to of 100-150 millions cubic meters of associated gas processing per year.
Sergey Dolinskiy, CEO Deputy of New gas technologies- Synthesis Company told about another technology of associated gas processing into aromatic compounds. It means processing of 1 billion cubic meters of gas and more and complete use of methane, containing in associated gas. Methane is processed to methanol and then to aromatics. Gas "rich fractions" are also processed to aromatics and then mixed with methanol-derived products. This blend of BTX is gone to synthesis of terephthalic acid, PET and other products made of it. Aromatization is performed by UOP technology, zeolite catalyst with nano-structure is used for it. Now Rosnano along with one major oil company and private investors create the industry-scale unit, which could work by such technology. Roman Efimychev recommended paying more attention to economic component of project, stressed, in particularly, low profitability of aromatic hydrocarbons small-scale production, great costs of environmental protection and high costs of finished products transportation. According to him, Gazprom Neft had a good look for purchase of such unit for LPG processing of Omsk oil refinery but abandoned this idea.
Professor of Russian State Gubkin Oil and Gas University Mikhail Levinbuk told the audience about project of switching of some old cracking units of oil refinery to aromatic hydrocarbons production. According to him, similar technological solutions being developed extensively, in China, Turkey and Middle Eastern countries in particular. Oil refinery reconstruction to "gasoline minus" scheme can become the principal direction of global oil refineries` modernization for the nearest future. Cheap oil is the Russian competitive advantage (according to the professor, it is due to undervalued exchange rate of the ruble), and it makes more than 60% of aromatics cost. At the same time, global demand on benzene and paraxylene is 60 and 40 million tons respectively and continues to grow. Technologies of hydrocarbons of BTX group transition to each other, depending on market demand on each of them have attracted great commercial interest. Particularly, demand on metaxylene is very small and that`s why the greater part of it volumes being transferred to two other isomers (paraxylene and ortoxylene). According to Mr. Levinbuk, there are plans of reconstruction for such purposes of three old vacuum gasoil cracking units at oil refineries of Samara region.
Despite significant problems of Russian chemical engineering, there are many prospect domestic technologies, relating not only to aromatic hydrocarbons production, but their further processing. Independent expert of the industry Yuriy Pavlov told about domestic catalysis developments for caprolactam production. Their characteristics could be matched to foreign analogues, however due to their double cheapness and the same service life period, caprolactam`s cost may be 3-5 % lower.
Distribution Engineer of Sulzer Chemtech Elena Kiba told about hybrid units of aromatic hydrocarbons separation. Asia is the principal sales market for such units but the company is interested greatly in Russia too. According to her, in Russia the greatest interest in such units, allowing manufacturing products of high purity is shown by coke-chemists, as coke feedstock is rich of different special fractions. For example, company`s units allow manufacture purest naphthalene, separate different xylene isomers, which boiling at nearly similar temperatures. Interest in the latter processes is expected to come from Russian companies, planning to enter paraxylene market.
