Grupa Lotos Refinery Upgrade

Grupa Lotos is a Polish oil company based in Gdansk. The company is engaged in the refining of crude oil and its conversion into high-value hydrocarbon products.

These products include unleaded petrol, diesel, fuel oils, aviation fuels, motor and industrial lubricants, bitumens and gases, which are sold through its own chain of 500 outlets (the company acquired the former Esso and Slovnaft petrol station networks in Poland to increase its retail influence) throughout Poland and the Czech Republic.

Grupa Lotos is the market leader in lubricant oil in Poland and is expected to gain a 10% market share in the Polish fuels market by 2012.

The company operates the Gdansk refinery, which is the second largest in the country and refines in excess of six million tonnes of crude oil a year.

The refinery has three units – a fuel block processing six million tonnes of petroleum a year, an oil block that manufactures 250,000t of lubricant oil a year and a hydrocracking complex to process heavy oil fractions. It produces ultra low-sulfur diesel, petrol, heavy fuel oil (HFO), liquefied petroleum gas (LPG), light heating oil, bunker oils, jet fuel, base oils and bitumen. The refinery obtains supplies of crude oil from a terminal in the northern port of Gdansk and also the Przyjazn pipeline.

Grupa Lotos refinery development

The Grupa Lotos strategy since the early 2000s has been one of investment. The Gdansk refinery investment programme is part of the Comprehensive Technical Upgrade Programme (CTUP), which involves three contracts awarded in 2007.

In December 2007 Technip was awarded a turnkey contract (engineering, procurement, construction), which is worth €472m to upgrade the Gdansk refinery.

The investment involved the construction of a 45,000bpd (2.2 million tonnes a year) mild hydrocracking unit, which is based on technology licensed from Shell.

This upgrade will increase the throughput capacity of the refinery by 75% to give a total processing capacity of 10.5 million tonnes a year with an improved conversion ratio.

In August 2007 Fluor Corporation was awarded a €200m ($275.3m) contract to provide engineering, procurement and construction management services to build utilities and off-sites at the Gdansk refinery.

The project included the construction of a new tank farm, new interconnections, LPG washing unit, revamping of a high-voltage power distribution system, revamping of water systems and other outside battery limits units.

The project enabled Grupa Lotos to comply with the EU requirements concerning the quality of diesel oils. Fluor started construction work on the €1.5bn project in February 2008 and the project was completed in February 2010. Production from the refinery began in January 2011

In October 2007 Lurgi (Krakow) was awarded a contract worth €102m for the construction of a 4.5 million tonnes a year crude oil distillation unit at the Gdansk refinery. Lurgi also supplied a hydrogen unit (capacity of seven metric tonnes an hour) in a contract worth €80m and a vacuum distillation unit. These units came on-stream in September 2009. They are expected to help the refinery’s new throughput goal of 10.5 million tonnes a year.

The hydrogen plant has the capability to process a number of different feedstocks including natural gas, naphtha and LPG. In December 2006, ABB was awarded a €95m EPC contract for a diesel desulphurisation project at the refinery.

Financing

In 2008, Grupa Lotos secured funding from 14 banks for the refinery upgrade. The banks included Bank Polska Kasa Opieki, BTM, BNP Paribas, RBS, ING, Caja Madrid, DnB NorBank, Nordea Bank, BBVA, Bank Zachodni WBK, SG, Rabobank, Calyon, Fortis Bank, KBC and SMBC.