CONFIDENTIAL

CHT - Integrated Refinery

Business Improvement Program
BPCL Kochi
Shell approach to Masterplanning
March 2007
1
2
Confidential
Supply and Manufacturing Masterplan
Development of a roadmap
From corporate vision and broad strategy to a
recommended, financially robust project outline
integrating supply and manufacturing options
Confidential
Project Spec
Project Spec
BOD
BOD
BDP
BDP
D&E, Procurement
Construction
D&E, Procurement
Construction
Basic Design
Master Plan
Definition
EPC
Implementation
Design
Preparation
Cost of
changes
Cost of
changes
100%
Progress
100%
Shell Global Solutions has proven to add value
Scouting
Influence over
margin & cost
Influence over
margin & cost
Our major input is in the project phases
Our major input is in the project phases
with highest influence and impact
with highest influence and impact
3
4
Confidential
Premises : Key Business Drivers
$
Market Demands & Prices
Available Crudes & Prices
Emissions & Product
Quality Legislation
Fuels, Components Import
and Export Options
External factors
Available Options
max
Business
Aspirations
Return on Investment
Cash Flow
Strategic
Considerations
Market Deregulation
Chemicals Options
Staged Investment
Opportunity
Growth
Minimum Investment
Case
Power Sales Options
5
Confidential
European emissions: trends in
specifications
6
Confidential
European Market projections
Diesel demand growth
Gasoline demand drop
EU is promoting shift from gasoline to diesel (fuel efficiency)
by means of tax incentives in view of Kyoto commitments
Reduction SO2 emissions on-shore and in coastal waters
substitution by Natural Gas (Cogen) LSFO
High-Sulphur Fueloil demand drop
Gradual replacement of depleting North Sea by sour crudes
High-Sulphur Fueloil production increase
7
Confidential
Market projections Europe
-80
-60
-40
-20
0
20
40
60
80
2005 2010 2015
P
r
o
d
u
c
t

b
a
l
a
n
c
e
s
Million tonnes per year
H
eavy F
u
elo
il
G
a
s
o
lin
e
D
i
e
s
e
l
Source: Wood McKenzie and Shell
Surplus
Deficit
8
Confidential
Diesel Fueloil 3.5 % S price differentials
$/barrel
60
F
u
t
u
r
e

?
A
c
t
u
a
l
40
20
0
2
0
1
0
2
0
1
5
J
a
n
-
0
1
J
a
n
-
0
2
J
a
n
-
0
3
J
a
n
-
0
4
J
a
n
-
0
5
9
Confidential
Masterplanning: road map to the future
Sustainable competitive position & Value creation
Long term
vision
Premises
Develop
options
Evaluation
Recommended
Supply Option(s) &
MF configuration
Where do
you want
to go
Quantification
boundaries
How can
you get there
What are the cost,
benefits, risk and
financial sensitivities
Roadmap
to the future
1
st
phase 2
nd
phase 3
rd
phase
10
Confidential
Basic Principles of Masterplanning
Strategy driven
- Based on integrated corporate strategies
- Market ambitions (volume growth, product quality)
- Supply options (crudes, feedstocks, blending components)
- Integration objectives (crude/oil products/chemicals/power/others)
Business premises
(to be defined by client; SGSi can help the client to develop robust premises through a challenge process)
- Crude availabilities, Target markets and Product demand levels
- Consistent pricing assumptions for crudes and products
- Capital ceiling and investment criteria
- Operating cost data
Options to be considered
- Alternative supply Options
- Manufacturing configuration options
From long list to most promising option
11
Confidential
Masterplanning: road map to the future
Sustainable competitive position & Value creation
Long term
vision
Premises
Develop
options
Evaluation
Recommended
Supply Option(s) &
MF configuration
How can
you get there
1
st
phase 2
nd
phase 3
rd
phase
12
Confidential
Residue conversion options
Carbon rejection Hydrogen addition Oxidation
Atm Residue
Vac Residue
Cracked Residue
C
o
k
i
n
g
D
e
a
s
p
h
a
l
t
i
n
g
R
e
s
i
d
H
D
M
R
e
s
H
D
S
E
b
u
l
/
S
l
u
r
r
y

H
C
C
a
t

C
r
a
c
k
i
n
g
F
i
x

B
e
d

H
C
B
i
t
u
m
e
n
H
y
c
o
n
b
u
n
k
e
r

P
o
w
e
r

g
e
n
.
G
a
s
i
f
i
c
a
t
i
o
n
T
h
e
r
m
C
r

/
V
i
s
b

and many combinations only study options after initial
screening
Key driving forces steers best fit-for-purpose option
13
Confidential
VGO Conversion options
Maximum Diesel yield (%vol)
in VGO conversion
VGO
Conversion
40
Thermal Cracking feed + heat products + C
Catalytic Cracking feed + heat products + C
Hydro Cracking feed + H2 products + heat
cat
cat
35
80
14
Confidential
Hydrogen options
By-product
H2 plant
Hydrogen
CDU
Crude
HCU VDU
HDS
Residue
Conversion
Gasification
Crude
CDU HDS
Natural Gas
HMU
Hydrogen
HCU VDU
Residue
Conversion
By-product
Choice depends on
price of Natural Gas
versus By-product
15
Confidential
De-coupling of technology selection and
process licensor provides an
independent advice
Type of technology and required capacities selected in
master planning exercise, not process licensor
Starting point is to include all possible process
configurations (long list), discuss and select via detailed
joint discussions taking into account
study premises, client drivers, capex constraints,
operability, maintainability, constructability
16
Confidential
Local Business Environment
Existing refinery Configuration / Integration options
Utilities Refinery Facilities, Export/Import options
Logistics facilities Export/Import options
Natural Gas Availability and Price
By-products Markets and Prices
Economy of scale Refinery capacity increase / residue import
Operability Reliability / Integration
Investments Restrictions / Financing options
Local Business Environment
will have major impact on optimum solution
17
Confidential
Masterplanning: road map to the future
Sustainable competitive position & Value creation
Long term
vision
Premises
Develop
options
Evaluation
Recommended
Supply Option(s) &
MF configuration
What are the cost,
benefits, risk and
financial sensitivities
1
st
phase 2
nd
phase 3
rd
phase
18
Confidential
Refinery simulation tool: REFSIM+
Special Exports
planned export pools
Main Product Blenders
(revenue driven blend
optimiser)
LPG
Mogas
Kero
GasOil
FuelOil
Refinery Fuel
RFG
RFO
Non-linear
Process
Models
based on
Shell GSI
Knowledge
Balances
Mass
Energy
H2
Crudes
- Mathematical
Representation
of Crude
(Properties)
Imports
Feedstocks
Blending Components
o Mathematical
Representation of
Both (Properties)
GRM
19
Confidential
Masterplanning: road map to the future
Sustainable competitive position & Value creation
Long term
vision
Premises
Develop
options
Evaluation
Recommended
Supply Option(s) &
MF configuration
Roadmap
to the future
1
st
phase 2
nd
phase 3
rd
phase
20
Confidential
Tailored Optimisation
Big investment requirements ($ 0.5 1.5
billion) + Wide variety of technologies
+ Impact of local business environments
+ Integration opportunities with existing refinery
warrants
Highly experienced team
Systematic procedure & appropriate tools
Comparison of all available options
Knowing how to successfully operate residue units
21
Confidential
Profitable residue upgrading
at Gdask refinery
Basis and justification
of a capital-intensive project
Karol Sep Grupa Lotos SA
Paul Wessels Shell Global Solutions International BV
What does our customer think of our services?
22
Confidential
Challenges CEE oil industry and Gdansk
Refinery, a client example
Competitiveness with rest of Europe
Long term profitability
EU legislation - Produce cleaner fuels EU4
EU legislation - Reduce refinery emissions
IMO legislation, e.g. Bunker 1.5% S in Baltic Sea
Create Business opportunities & Employment
Response to Challenges
Improve competitiveness / Long term profitability
Cutting deeper into the barrel
Use heavy refinery residue for clean hydrogen, power & steam
23
Confidential
Key driving forces of Gdansk project
Key drivers Best option
Zero HS fueloil production Combination of
Deasphalting & Gasification
Diesel Market/Quality Mild Hydrocracking
Profitability World-scale units
Alternative: Export to
Rotterdam bunker market
Resulting in highest rate of return
24
Confidential
Key features of project
ROSE
Deasphalting
Shell Mild
Hydrocracking
Shell Gasification
Hydrogen Power Plant
Diesel 10 ppm S + VGO for FCC
to produce Gasoline 10 ppm S
LPG
Naphtha
Diesel
Low-S VGO
Atmospheric
& Vacuum
Residues
Hydrogen
Power
Steam
Highest yield of suitable
Hydrocracker feed
Clean Power, Steam & H2
for existing + new complex
Sufficient feedstock by
Expansion topping capacity
Import of residues
e.g. HCU
reactors of
600 m
World-scale units
25
Confidential
Gdansk Refinery Configuration
Planned Revamp
Claus
Claus
E4
ROSE
Atmosph. Resid
Base
Oils
Configuration with highest IRR
REF Gasoline
CDU
LPG
Splitter
LPG
Planned New
Existing
ISOM
HCU
HDT
Possible Closure
Diesel/
Gas oil
Jet
Hydrowax
Hydrogen
Steam
Power
Sulphur
HSFO
Bitumen
Crude and
Vacuum Resid
Base Oils
Merox
HDS
Import of Residues
for World-scale Units LHF
HVU
MHC
Desalt
IGCC
26
Confidential
Conclusions jointly drawn with client
Challenges of Gdansk
Refinery can be profitably
met by
Investment in residue 100% conversion complex
Comprising ROSE, Mild Hydrocracking, Gasification
Producing clean fuels, and
Replacing Utilities to reduce emissions drastically
27
Confidential
Masterplanning
to meet long
term business
objectives