Petrochemical Complex Integration Feasibility Studies - an Investment that pays out

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1 Petrochemical Complex Integration Feasibility Studies - an Investment that pays out Frederik Baars Global Petrochemicals Summit, Lisbon, 16 November Fluor. All rights reserved. FLUOR is a registered service mark of Fluor Corporation. 1

2 Refinery Petrochemicals Integration In which region(s) are high levels of refinery petrochemical integration? 1. Western Europe 2. North America 3. Middle East 4. Asia 2

3 Fluor: what we do Client with an idea and a business plan Fluor Turning ideas into reality Operating facility producing the right product in a cost competitive and sustainable way a passion to design and build! 3

Fluor - Energy & Chemicals The Energy & Chemicals business line serves the global oil and gas production/processing, chemicals, and petrochemicals

1 on ENR (Engineering News-Record) magazine s list of Top Design Firms in the Petroleum sector Full range of services including design,

4 Fluor - Energy & Chemicals The Energy & Chemicals business line serves the global oil and gas production/processing, chemicals, and petrochemicals industries. Ranks No. 1 on ENR (Engineering News-Record) magazine s list of Top Design Firms in the Petroleum sector Full range of services including design, engineering, fabrication, procurement, construction, and project management Consulting services for feasibility studies and project financing Global office platform optimizes execution of all sized projects including mega-projects in remote locations with challenging environments 4

5 Chemical Competencies 5

6 FLUOR Projects Overview Tatneft and Taneco Refinery and Petrochemical Complex PMC ZapSibNeftekhim West Siberian Complex, Polyolefines Production, Pre-FEED, PMC 2013 TASNEE Polyolefines, Acrylic Acid, Butanol & Syngas and Super Absorber Polymer Complex, FEED, EPC, PMC Lukoil Volgograd VGO Conversion Complex S, 2015 BASF TDI project, FEED, EPCM 2015 Lukoil, Vysotsk Prouct Terminal (St. Petersburg) EPC, 2005 Dow Chemical Company/ PIC Olefins II Petrochemical Complex, FEED, EPC, PMC QP/Shell Al Karaana Petrochemical Complex, FEED SEIC,Sakhalin LNG FEED, 2001 Sibur Tobolsk-Polymer Propane Dehydration & Polypropylene Production, S, FEED, PMC. 2010, 2012 Abu Dhabi Polymers Borouge 2 Expansion, Polyethylene, Polypropylene FEED, E, P Socar Petrochemical complex Licensor evaluation, 2015 Usolye-Siberian Silicon Siberian Polycrystalline (SIPC) Project FEED, P Exxon Neftegas Ltd Sakhalin Island, Various projects Stavrolen Limited Co North Caspian Gas Processing & Petrochemicals Project, FS BASF-YPC (BYC) IPS Expansion Project, EPCM 2011 Integrated Petrochemical Site, CM, EST, FEED, PMC

Comprehensive Services Pre-Design Engineering Procurement Construction Start-Up Operations & Maintenance Client Solutions Process Simulation Conceptual Design

Cost Control Planning & Scheduling Systems Integration Safety Planning Materials Management Requirements Planning Sourcing Low Cost Country Sourcing Purchasing

Material Control Quality Control Safety Programs Contractor Management Commissioning Engineering Support Pre-commissioning Systems Checkout Initial Production Plant

7 Comprehensive Services Pre-Design Engineering Procurement Construction Start-Up Operations & Maintenance Client Solutions Process Simulation Conceptual Design Estimating Feasibility Studies Routing Permitting Project Financing Scope Definition Siting Technology/ License Evaluation Front-end Engineering Detailed Engineering Cost Control Planning & Scheduling Systems Integration Safety Planning Materials Management Requirements Planning Sourcing Low Cost Country Sourcing Purchasing Supplier Quality Expediting Logistics Warehousing Contracts Management Construction Management Craft Staffing & Training Equipment & Tools Supply Field Mobilization Material Control Quality Control Safety Programs Contractor Management Commissioning Engineering Support Pre-commissioning Systems Checkout Initial Production Plant Readiness Turnover Validation Asset Performance Improvement Facility Management Plant Operations & Maintenance Small/Sustaining Capital Projects Turnaround, Outages & Shutdowns 7

8 Pre-FEED Execution Approach Kick Off Mtg Products Screening Configurations Development CAPEX Estimate ITB Preparation CAPEX Estimate for the Complex Licensor Input/ In-house Data Contracting Strategy Bids Preparation by Licensors Economic/Financial Model Development Configuration Selection CAPEX Estimate Technology Licensors Evaluation & Selection Marketing Study UI&O Configuration Development Plot Plan Development Site Selection and Geological Study Off-Plot Scope - Power Supply Concept - UI&O PDP Packages Preparation - Logistics Studies (Products and Equipment) - Power Supply Concept - UI&O PDP Packages Update - Logistics Studies Review Off-Plot Scope Update 8

9 Pre-FEED Execution Zooming In 9

10 Configuration Development Feedstock type Feedstock availability Cracker configuration Downstream units types LLC Tobolsk-Polymer, Polypropylene (PP) Production Complex Technologies available for licensing Products screening Maximum proven capacities vs smaller capacities 10

Technology Input from Licensors / In-house Data RFI (Request for Licensor Information) Typical data request Block Flow Diagrams Mass balances Maximum

11 Technology Input from Licensors / In-house Data RFI (Request for Licensor Information) Typical data request Block Flow Diagrams Mass balances Maximum Proven Unit Capacity Utility & Chemicals Consumption Staffing requirements Plot space requirements etc. Typical response time to prepare proposal = 4 6 weeks 11

space requirements CAPEX (Class V and IV during Pre-FEED) Class V: Capacity factored Class IV:

12 Input to Financial Modeling Marketing studies (performed by marketing consultants) Licensor Data Mass balances Utilities and chemicals consumption Maximum proven units capacities Plot space requirements CAPEX (Class V and IV during Pre-FEED) Class V: Capacity factored Class IV: Sized Equipment based/parametric models Financial Assumptions (Client, Fluor, Marketing Consultants) 12

13 Financial Modeling 13

Financial Modeling (cont d) Execution modes: by FLUOR (with the use of proprietary Model) by the Client (with input from Fluor) Jointly by FLUOR and the

14 Financial Modeling (cont d) Execution modes: by FLUOR (with the use of proprietary Model) by the Client (with input from Fluor) Jointly by FLUOR and the Client Results: Financial Parameters for all configurations considered, i.e. NPV IRR Payback Period ROE etc. On both Leveraged and Unleveraged Cash Flows 14

15 Supporting Activities Siting (site selection) Plot-Plan Development Infrastructure (outside and inside the fence): Rail Roads, Motorways, Jetty, Pipelines, Pipe racks, Buildings etc. Utility Generation Systems: PDP Packages Development (Air and Nitrogen Systems, Cooling Water System, Flare, Waste Water Treatment etc.) Power Supply Sources Off Sites storages, tank farms Products Logistics Study (within the facility) Equipment logistics study for construction Development of Project Management Level Schedules 15

16 Licensor Evaluation Procedure Methodology: Develop list of potential Licensors Pre-Screen Licensors Execute Secrecy Agreements Develop and Issue ITB (Invitation to Bid) Jointly with the Client develop criteria and weighting for KT Analysis Licensors evaluation with the use of KT Analysis Why Fluor? Technology neutral Fluor does not own or have a vested interest in Chemical technologies Trusted by our Clients to provide technology independent assessment Trusted by Licensors willing to share technical data Vast project experience base covering most of Chemical Value Chain 16

17 Rigorous & Detailed Licensor Evaluation Process Evaluation of Licensors based on: Licensor Qualifications Technical Economic Commercial Weighing of the various elements agreed with Client 17

18 Project Implementation Plan Schedule Considerations Product to market date Geographic location Prevailing EPC market conditions Complexity of facilities & technology Finance requirements Client Gate process Contracting strategy Contracting Strategy FEED & EPC considered separate Contract model for FEED & EPC together Bidding requirements Potential bid slate Lumping of units into Bid Packages Project Master Schedule Duration based on: Actual Fluor project experience Fluor experience for actual site location Staging of PDP, FEED & EPC Typically by Unit 18

19 Fluor Integration Studies Major integration between Refinery and Petrochemicals, SOCAR OGPC, Azerbaijan ( ) Pre-FEED, Sibur ZapSibNeftekhim, Russia ( ) Steam Cracker and Polyolefines Units Pre-FEED, Confidential client, Russia (2015- ongoing) World scale Steam Cracker and Polyolefines Units Licensor Selection, Confidential client, CIS (2016 ongoing) Gas Processing Plant, Steam Cracker and Polyolefines Unit 19

20 An EPC Perspective on Project Development Industry best practice has proven that a phased approach provides overall best results Funding for the first phases project is underestimated Synergy among the process units lead to cost reduction Integration (across businesses) Existing infrastructure is a competitive advantage Recommendations Allow time to perform detailed concept development Technology selection Integration Implementation plan development Project schedule Project funding requirements Contracting strategy From Fluor s experience for large complex projects PMC gives the best Cost, Schedule and Safety Results

21 Summary Frederik Baars

CHALLENGES FACING RUSSIA IN THE EFFORTS TO MODERNIZE THE PETROCHEMICAL AND GAS CHEMICAL INDUSTRY

OAO VNIPIneft CHALLENGES FACING RUSSIA IN THE EFFORTS TO MODERNIZE THE PETROCHEMICAL AND GAS CHEMICAL INDUSTRY V.M. Kapustin OAO VNIPIneft General Director, Gubkin Russian State Oil & Gas University, Head