Banias Refinery Company BRC Syria Clean Fuel Production Strategies in Syrian Refining Sector OAPEC-Kingdom of Bahrain Conference 25-27 October 2010 Eng. Nazih Jouhra Process Manager

Outlines Introduction (Refining Sector & Projects in Syria) Outlook on Syrian Petroleum Products Market Clean Fuel Production Strategies Impact of Revamping Projects on Refining Sector Conclusion      Upgrading Oil Refineries to Produce Clean Fuel Symposium 25-27 October 2010 OAPEC/NOGA Manama Upgrading Oil Refineries to produce cleane fuel

Refining Sector & Projects Syria have two Government-owned refineries are operating in with a total crude distillation capacity around 12 million tons per year. The refineries process blends of Syrian Light and Heavy crude oils in varying proportions, with Syrian Light crude typically being 40 to 60 percent of the blends. - One of the refineries is located in Homs, a city that is approximately 200 km. north of Damascus, Capacity: 121 k.bbl /day, Scheme: Delayed Cocker - The second refinery is located on the Mediterranean Sea coast at Banias city, - Capacity: 131 k.bbl /day, Scheme: Visbreaker

Projects of Improving Refineries Sector The goal of these projects is to allow Syria to refine all its crude oil production domestically, also eliminating the need to import refined products. These projects will include: Banias Refinery Revamping Project: The project has been designed: To increase the refinery’s diesel approximately 900 k ton/y by reducing fuel oil, also increasing LPG , gasoline and HVGO quantities. Upgrading the quality of gasoline and diesel production to Euro IV standards, Revamping Project will include 4 new main units, ( Hydrocracker, Hydrogen plant, Isomerazation and Sulfur Recovery Unit ). Homs Refinery Revamping Project: The project has been designed Maximise the white products of the barrel and decrease the bottom of the barrel of crude oil To produce products with Euro. V specifications and to face the new strict environmental laws and standards by reducing the emission . Revamping Project will include 5 new main units, ( Vacuum Distillation, Hydrocracker, Hydrogen plant, CCR Reforming, Isomerazation and Sulfur Recovery Unit ).

Projects of Improving Refineries Sector China National Petroleum Corp. Refinery (CNPCI) : (CNPCI) is developing a grass root refinery project near Dier Ez Zor region in eastern Syria. The refinery will have the capacity to process 100,000 barrels /day of Syrian Heavy/Light crude oil - according to new MOU issue, in 2008. A Feasibility Study for the project is now being prepared and is expected to be completed during 2010. The selected refinery configuration includes ( Hydrocracking + Delayed Coking ) units. The quality of its gasoline and diesel production to Euro V standards.

Projects of Improving Refineries Sector The Al Furqlus Refinery project : The project will be joint venture between four parties: Syria, Iran, Malaysia and Venezuela. The project will consist of an integrated refinery with crude oil capacity of 140,000 BPSD and include process units, utilities, off-sites, support facilities, and infrastructure as necessary. The selected refinery configuration includes (Hydrocracking + Delayed Coking) units to produce maximum diesel. The quality of its gasoline and diesel production to Euro V and IV standards. Environmental friendly process is adopted in the project.

Grass Root Refineries Projects Production Chinese Refinery Al Furqlus Refinery Capacity 140 kbbl/d

Locations of the existing & new refineries Chinese Refinery Al-Furqlus Refinery.

Outlook on Syrian petroleum products Market Total demand for all petroleum products will grow 5% annually during the 2010-2030 period. According to Mahrukat, “the Government-owned petroleum product distribution and marketing company”, consumption of diesel/gas oil demand is projected to be 5% annually during the 2010-2030 period. About 50 % of the total current diesel/gasoil demand is for home heating, with the balance used for transport and some for industry. Whereas increase in population contribute to growth in heating oil demand. Growth in the diesel-fueled vehicle fleet and increased transport of goods across Syria, from the Mediterranean to Iraq and the Gulf, is driving growth in diesel demand for transport. In early May 2008 Diesel/gas oil consumption fell sharply after the Government increased prices.

Demand of Refined products in Syria Total demand for petroleum products grew 5.8 % annually during the 2000-2007 period. But, it is projected to grow at 5% annually during the 2009-2030. The total products demand are projected to increase by over 12 million tons at 2007 to be 28.5 million tons at 2030. Gasoline demand growth has been strong during the past few years, averaging 11%. Now consumption for all refined products approximately 14 million tons /year. The consumption products are dominated by diesel/gas oil and fuel oil, which together account for more than 77% of Syria's total consumption of petroleum products .

Actual refined products consumption in Syria at 2009 Weight percent

Gross Demand for each Petroleum Product from 2010-2030 K. Ton/y

Increasing demand for products Syrian existing refineries production of products recently has been stable at approximately 11 million tons/year. Due to increasing demand for diesel/gas oil, the import of the product has increased from about 1 million tons in 2002 to over 4 million tons in 2007. Syria’s trade position for gasoline, fuel oil has shifted from a substantial export position to a balanced to slightly deficit position during the past 5 years. Import of large quantities from LPG, Gas oil, fuel oil and little gasoline. A big deficit will be in the future on refined products due to limited refineries production.

Net Demand for each product from 2010-2030 in Syria K. Ton/y

Strategies to produce clean fuel To achieve Strategies to produce clean fuel the ministry has depended on: Following revamping projects for existing refineries to produce clean fuel. Constructing grass root refineries to produce clean fuel with Euro. IV & V specification ( IV at least). Importing Diesel for vehicles with Euro. IV specification Improvement of Syrian Standard Specifications for Oil Products Whereas 50 % of the total current gasoil demand is for home heating, with the balance used for transport and some for industry and population increases contribute to the growth in home heating oil demand.

Strategies to use clean fuel To perform this Strategies will apply the follows: Two kinds of Gasoil will be used: - Gasoil for heating oil - Diesel for vehicles with Euro. IV & V specification. Also, two kinds of Gasoline RON.95 according to Euro.IV in addition to present Gasoline RON.90 Improvements of Syrian standard Specifications for Oil Products have been issued in 2009 for Gasoline & Diesel. Further to achieve these strategies to produce and use clean fuel, the Ministry has created the Public Establishment for Refining & Distribution in February 2009 to follow and observe all new projects especially grass root refineries.

Improvement of Syrian Standard Specifications for Oil Products The government oriented MPMR with Syrian Arab Organization for Standardization and Metrology(SAOSM) to state the new specification for each diesel and heating oil. In 2009 SAOSM with MPMR have issued gasoline specification RON.95 on Euro.IV in addition to RON.90 Also, Syrian Arab Organization for Standardization and Metrology has issued new specification for each diesel and heating oil. The objectives are supplying heating oil from existing refineries to be more economic for people and importing of diesel for transportation vehicles.

Syria is planed to construct two new refineries There are many main reasons for that: Increasing demand on petroleum products respectively LPG , Gasoline, Gasoil/Diesel and Fuel oil. limited capacity for existing refineries. The available pipelines are not enough to trans all this imported quantity from the shore to the internal region in the future. Lot of quantities will be imported from other countries such as in 2010 will be more than 3.5 million tons, in 2030 will be 17 million tons. Production of new refineries will be Euro. IV& V specifications Environmental friendly process is adopted in all the projects. The need to new refineries capacities to supply the domestic market, that, eliminate the deficit in the next years.

The total imported products quantities Syria will import lot of refined products quantities from 2010-2030 if the new projects are not executed. K. ton/y

New Refineries Projects Production Refineries production projections have developed by assuming that: The CNPC Refinery, Al Furqlus Refinery are in operation. The Banias Refinery Revamp Project is implemented and operating Also, the Homs refinery Revamp Project is implemented and operating. In recent years, total Syrian refined products demand has been exceeded and after the startups of the new refineries will balance for about five years in the future . A forecast increase in production between 2015 and 2018 reflects impact of startups of the new refineries on the production.

Forecast timeline for the new projection projects Impact of projects production at 2015-2030 especially on products demand after start-up of the new projects in Syria will be: The Homs refinery Revamp Project is started to revamp the atmospheric distillation and will continued on stages In 2015 is predicted to BRC project to be in operating. In 2016 is predicted to Chinese refinery to be in operating. In 2017 is predicted to Al-Furqlus refinery to be in operating.

Comparison of net demand before executing all projects & after executing BRC refinery project

The deficit & surplus of refined products after executing all projects

Comparison of net products demand before & after executing all projects in Syria

Impact of Revamping Projects on Refining Sector in Syria The startup of these projects with new refineries would result in an initial gasoline surplus of nearly 1.7 million tons in 2017 and an export for gasoline that is forecast to continue through 2030 about 960 k tons. Also, the startups of the new refineries would eliminate Syria’s currently, major diesel import position, but also would result in diesel export position for several years after their startups. Syria’s diesel imports would increase from approximately 1.2 million tons in 2009 to 8.6 million tons in 2030 if no new projects are built. Syria’s future diesel trade position will be highly dependent upon the amount of new refining capacity that is built. The local Syrian market is considered to be the Project’s primary target market since the main purpose of the Project is to supply petroleum products to displace Syria’s current diesel imports and to meet incremental Syrian domestic refined product demand. However, potential export markets were considered as possible secondary markets for the Project’s gasoline and diesel.

The Economic Evaluation of Projects Al Furqlus Refinery Chinese Refinery HRC BRC Project Name 25/25% Syrian Heavy / light 20% Iranian 30% Synthetic 140 KBPSD 70/ 30 Syrian Heavy / light 100,000 BPSD Average (2005-2007) (Crude & Products) 60/ 40 Syrian Heavy / light 121,000 BPSD Average 2005 50/ 50 Syrian Heavy / light 131,000 BPSD Average 2003-2004 Capacity US$ 2,6 Billion € 1,6 Billion US$ 973 MM US$ 692 MM Investment US$ 1576 MM € 271.3 MM US$ 3652 MM US$ 1134 MM NPV at 8% at 12% at 6% 19.8% 14.65% 36.4% 19.5 % IRR 3.8 5.24 2.14 3.9 POT, years

Conclusion Constantly, the ministry follows The Strategies to produce and use clean fuel depending on upgrading in Syrian refining sector. Revamping of the existing refineries BRC & HRC are very important projects to optimize Syrian refining sector. Also, Constructing new grass root refineries are very important projects. Above mentioned upgrading will add the following advantages: Supply the domestic market with petroleum products to eliminate the deficit in the next years, Increase production of white products: LPG, Gasoline and Diesel/Gas oil, Improve the product specifications to Meet EU IV,V standards, Improve the environmental and ecological conditions. WWW.brc-sy.net

Thank You Eng. Nazih Jouhra Process Manager Syria Thank You Eng. Nazih Jouhra Process Manager www.brc-sy.net