Pavlodar Oil Chemistry Refinery Upgrading Project

Pavlodar Oil Chemistry Refinery Upgrading Project

History and Structure of the Refinery 1971 start of construction; 1978 start-up and commissioning; Since August 2009 POCR LLP entered the Group of Companies of NC KazMunayGas JSC. General designer: 1971 1986 Giprogrozneft (City of Grozny); since 1986 Omskneftehimproekt OJSC (Omsk). Design capacity 6 mln.tons per annum; Processing depth 85% Structure of the Refinery: Name of units Capacity mln.tons per year Complex LK-6U (1978) CDU (ELOU-AT) 6 Name of products Motor gasoline, grades RON 80, RON 92, RON 95, RON (K2); Jet fuel (ТС-1); Diesel fuel (K2 winter type, summer type); Fuel oil. Mazut; Petroleum Bitumen (structural, roofing, paving); Hydrocarbon liquefied fuel gas; Technical sulfur; Petroleum coke, not calcined; Vacuum gasoil. Gasoline hydrotreating 1,2 Catalytic reforming 1 Diesel fuel hydrotreating 2 Gas fractionation 0,45 Complex KT-1 (1983) Vacuum distillation of mazut 4 Vacuum gasoil hydrotreating 2,4 Catalytic cracking 2 Absorption and gas fractionation 1,25 Waste-heat recovery - Bitumen Production unit 0,5 Sulfur Production unit 25 th. tons/year Delayed Coking Unit 1 Hydrogen Production Unit 31 th. Tons Nm/h 2

Scheme of main crude oil pipelines Russia-Kazakhstan-China Samara Tuimazy Ufa Yurgamysh Omsk Crude oil quality deterioration: Sulfur- 1,6-1,8 % 5 mln.tons Pavlodar Kenkiyak Atasu Atyrau Kumkol Karakoin supply from Russia Supply of the Kazakh crude Shymkent The Kazakh section TON-2 Agreement for transit of 7 mln. tons of crude oil. The Kazakh section of TON-2 (Tuimazy Omsk Novosibirsk-2) -185,6 km Increase in carrying capacity from 7 up to 10 mln. tons per year (replacement of TON-2 pipeline section). The project cost - 32 billion of Tenge Kumkol Kuatamlonmunay, Kazgermunay, Turgay Petroleum, KazPetrolGroup, NC KOR, Souths-Oil. Kenkiyak СНПС-Aktobemunaygas, Kazakhoil-Aktobe, Ada Oil company, Alties Petroleum Ent. B.V. 3

Crude oil extraction, export and processing over 2012-2016 (plan) (mln.tons) 90 80 70 60 79.2 81.7 80.8 79.4 77.4 72.9 72 62.2 60.9 60 50 40 30 20 10 0 14.2 14.2 14.9 14.1 13.6 Extraction Export Processing 2012 year 2013 year 2014 year 2015 year 2016 year Crude Oil Processing in refineries of Kazakhstan over 2012-2016 (plan) mln.tons 5.2 5 4.8 4.6 4.4 4.2 4 3.8 5.03 5.01 5.06 4.8 4.7 4.8 4.8 4.9 4.6 4.4 4.4 4.5 4.3 2012 year 2013 year 2014 year 2015 year 2016 year POCR PKOP Atyrau Ref. 4

Crude oil balance over 2010-2015 years (mln. tons) Crude oil balance 2010 2011 2012 2013 2014 2015 Opening balance (changing) 3 498 4 776 5 121 3 228 4 706 6 876 1. Extraction of oil and gas condensate 79 686 80 060 79 215 81 789 80 826 79 457 1. Import 7 047 7 751 6 094 7 037 0 0 2. Export 71 085 71 845 72 989 72 077 62 273 60 950 via pipeline 53 900 55 618 54 575 56 771 54 460 56 965 incl. Atyrau-Samara 15 100 15 427 15 432 15 375 13 885 13 490 incl. Caspian Pipeline Consortium 28 700 28 085 27 903 28 712 35 026 38 015 incl. Atasu - Alashankou 10 100 10 893 10 400 11 828 4 831 4 794 incl. Karachaganak Petroleum Operating- Orenburg 0 1 211 838 856 718 666 across marine port of Aktau 8 785 7 982 7 064 6 269 5 487 3 171 by railway 8 400 8 244 11 349 9 034 2 325 814 3. Transit of the Russian crude oil (Rosneft) 6 985 6 900 4. Processed at refineries of Kazakhstan 13 682 13 725 14 213 14 296 14 911 14 171 The Kazakh crude oil processed 7 349 7 313 8 229 7 340 9 985 9 361 The Russian crude oil processed 7 021 7 155 5 983 6 956 4 926 4 810 5. Balance of crude oil 4 776 5 121 3 228 4 706 6 876 10 754 6. Processed by mini-refineries 688 1 321 881 975 1 472 833 5

Pavlodar Refinery Upgrading Project Project mission: Production of motor fuels of environmental class К4, К5 according to requirements of the Technical Regulation of the Customs Union. Companies - partners Eni S.p.a, APS Engineering FS development Technip S.p.a, Kazgiproneftetrans, VNIPIneft JSC front end engineering design development Omskneftehimproekt PJSC development of detail documentation UOP (England) Vacuum Gasoil Hydrotreating, Catalytic Cracking, Isomerization and Naphtha Splitter. Siirtec Nigi (Italy) sulfur recovery and tail gas treatment Rominserv S.R.L. (Romania) / Vladimirteplomontazh ЕРС-contractor for Isomerization and Naphtha Splitter NFC (China) ЕРС contractor of Sulfur Recovery Complex Main financing figures of the Project: Total cost of the Project - 616 mln. US dollars PBР 10 years; IRR 4,12% Haldor Topsoe (Denmark) hydrotreating of naphtha, hydrotreating of diesel fuel and kerosene Start of commissioning works May 2017. Completion of commissioning works July/August 2017. Completion of reconstruction and production of diesel fuel К5 end of 2017. 6

Project Optimization ЕРС Rominserv S.R.L Cost of scope of work - $ 1072 million Feed West-Siberian crude oil/ the Kazakhstani crude oil New units: Licensor UOP Hydrotreating and dewaxing of diesel fuel, kerosene fraction; LPG teratment (Merox) ; Isomerization unit (571 th. t/ year); Naphtha Splitter (1961 th. t/ year); Licensor Siirtec Nigi Sulfur recovery unit and tail gas treatment Not licensed units Amine regeneration unit Sulfur granulation unit Sour water stripper (2 lines) Automated gasoline blending station Automated fuel oil blending station Utilities and Offsites 18 new tanks Reconstruction of existing units CDU (ELOU-AT) ( capacity 6 mln. t/year); Licensor UOP Catalytic Reforming (capacity 1 mln. t/ year); Conversion of the existing DHT to Coker Naphtha Hydrotreating; Hydrotreating of vacuum gasoil (capacity 2,4 mln. t/year); С-200 Catalytic cracking (capacity 1,9 mln. t/ year); Reasons for optimization 1 Worldwide deterioration in economic situation 2 Prolongation of the Agreement between Russia and Kazakhstan for crude oil supply SWAP-operations not less than 7 mln. t/ year Guaranteed supplies of the Russian crude oil - 456 mln.$ No need to process the Kazakhstani crude oil Rominserv S.R.L/ Vladimirteplomontazh/NFC Cost of scope of work - $ 616 million Feed West-Siberian crude oil New units: Isomerization unit (571 th. t/ year); Naphtha Splitter (1961 th. t/ year) Sulfur recovery unit and tail gas treatment Amine regeneration unit Sulfur granulation unit Sour water stripper (2 lines) Automated gasoline blending station 2 isomerate tanks Utilities and Offsites Reconstruction of the existing units CDU (ELOU-AT) (capacity 6 mln. t / year); Catalytic Reforming (capacity 1 mln. t / year); Licensor UOP Vacuum Gasoil Hydrotreating (capacity 2,4 mln. t / year); - Catalytic cracking* *capacity increase from1 200 up to 1 900 th.t/year. 2003 reconstruction was made with capacity decrease from 1925 to 1200 th. t /year. Licensor Haldor Topsоe Naphtha Hydrotreating DHT and KHT (capacity 2 mln. t/ year/ 364 th. t/year). 7

Pavlodar Refinery Upgrading Project Total cost of project implementation - 616 mln. USD Pavlodar Oil Chemistry Refinery LLP Cost of scope of work - $ 284 million Sulfur Recovery Complex: Sulfur recovery unit and tail gas treatment Amine regeneration unit Sulfur granulation unit Sour water stripper (2 lines) RominservS.R.L / Vladimirteplomontazh JSC Cost of scope of work - $ 332 million Isomerization Complex: Isomerization Unit (571 thousand t/year); Naphtha Splitter (1961 thousand t/year); Reconstruction of the existing units Utilities and Offsites Utilities and Offsites 8

Complex of Isomerization and Naphtha Splitter Units Licensor and Basic Design Developer - UOP (England) Project development Technip (Italy) EPC contractor Rominserv S.R.L. (Romania) / Vladimirteplomontazh JSC Isomerization Unit - 571 000 t/ year Naphtha Splitter Unit - 1,961 mln. t/ year Product component of motor gasoline (isomerate) Commissioning 2017 9

Chronology of construction. Isomerization Complex May 2015 April 2016 November 2016 October 2015 April 2016 November 2016 Concrete works- 95%, installation of metal structures - 98%, installation of equipment- 97% Start of construction May 2015 10

Chronology of Utilities and Offsites Construction Implemented U/O objects: Cooling water system and water towers, plant air and instrument air unit, caustic supply and removal system, fire-fighting system, nitrogen distribution system, flare system, interconnecting racks, system of demineralized water and condensate return. Plant Air and Instrument Air Unit March 2016 July 2016 November 2016 Main Control Room June 2016 June 2016 November 2016 Start of construction March 2016. 11

Complex of Sulfur Recovery Units POCR Client NFC (China) ЕРС Contractor Siirtec Nigi (Italy) Licensor and Basic Design Developer Capacity - 60 000 tons/year Commissioning 2017 Composition of complex: Sulfur recovery unit and tail gas treatment Sour water stripper (2 lines) Amine regeneration unit Sulfur granulation unit 12

Chronology of construction. Complex of Sulfur Recovery Unit. August 2015 January 2016 November 2016 March 2016 July 2016 November 2016 Concrete works - 96%, installation of metal structures - 99%, installation of equipment - 97% Start of construction August 2015 13

Reconstruction of LK and KT complexes Column К-102 (LK-6U) Replacement of 23 sets of valve trays. Producer: KOCH GLITCH Column К-301 (LK-6U) Replacement of 23 sets of valve trays. Producer: KOCH GLITCH Reactors of Vacuum Gasoil Hydrotreating Replacement of 2 reactors. Producer: Volgogradneftemash In accordance with UOP Basic Design reactors of vacuum gasoil hydrotreating were replaced 14

FCC Reconstruction based on UOP Technology UOP licensor of the process, developer of Basic Design NEFTEHIMPROEKT CJSC detail documentation designer Grif management supplier of the main equipment for reactor-regenerator section HASON authorized manufacturer of UOP EMTROL-BUELL technical support of equipment manufacturing OMUS-1 Executor of construction and assembly works Works within shutdown period of 2016: Replacement of internals of the main FCC rectification column Assembly of domes with cyclones Works on lining Plan of works within shutdown period of 2017: Replacement of dome with cyclones in reactor-regenerator section Replacement of feed injection to reactor 15

Production of internal devices for reconstruction of reactor-regenerator section of catalytic cracking at HASON plant Hason plant manufactured: 8 two-stage cyclones of regenerator 6 one-stage cyclones of reactor Segments of dome parts and receivers of reactor and regenerator Regenerator air distributor Hason authorized manufacturing plant according to UOP recommendation 16

Reconstruction of Catalytic Cracking based on UOP technology Reconstruction of reactor-regenerator section. Internal devices are going to be replaced with application of lining without replacement of apparatus casing Mechanical works Works on replacement of lining Application of lining to new domes and collection chambers of reactor R-201 and regenerator R-202 Replacement of heads of reactor and regenerator with collection chambers and groups of cyclones Replacement of ballistic separator of reactor R-201 with vortex separation system, replacement of riser section Replacement of cascade trays of stripper section of reactor R-201 with AF packing system Replacement of reactor steam distributors Replacement of Y-shaped section of reactor, reactor feed distributor Replacement of remaining part of lining Replacement of overhead line 201 of reactor R-201 Replacement of gate valves and hydraulic drives of transport lines Replacement of air distributor of regenerator Lining replaced in 2015 Replacement of lining in 2016 : Planned scope of lining replacement Additional scope of lining replacement Replacement of the remaining lining in 2017 Work on replacement of lining is performed by Aliter Axi 17

Reconstruction of Hydrotreating Units based on Haldor Topsoe technology Naphtha Hydrotreating Diesel fuel Hydrotreating Kerosene Hydrotreating Increase in productivity up to 1,2 mln. tons per year; Preparation of feed for isomerization unit and catalytic reforming): New equipment 7 units Vessel 1 Pumping equipment 2 Heat-exchanging equipment Feed filters 2 2 Guarantee of diesel fuel production (summer type) of K5 ecological class New equipment 13 units Reactor 2 Vessel 4 Pumping equipment 4 Heat-exchanging equipment Feed filters 2 1 Production of jet fuel with sulfur content less than 10 ppm New equipment 25 units Vessel 4 Heat-exchanging equipment Heat-exchanging equipment Heaters 2 Rectification column 1 Filters and internals 7 4 7 Rectification column K-202 of Naphtha Hydrotreating Unit 18

Transportation Route of DHT Reactors POCR jetty 19 km 10 000 km (5,500 miles) Novyy Port 4 000 km 25 th of August POCR jetty 2 nd of October Mipo Port 17 th of July Total length is 14 000 km Manufacturer HYUNDAI HEAVY INDUSTRIES 19

Delivery of diesel fuel hydrotreating reactors 17 th of July shipping of reactors, Mipo port, South Korea 25 th of August transshipment of reactors to river barges 19 th of September completion of foundations assembling 2 nd of October delivery of reactors to temporary jetty 20

Conclusion Technologies In the process of Pavlodar Refinery Upgrading the advanced technologies and experience of leading worldwide companies were applied. Project optimization Optimization allowed reducing of capital expenses by 456 mln. US dollars. Training and experience exchange To maintain new units there was 161 new workplaces created. The personnel was trained and had extension courses in the refinery (Atyrau), in Yokogawa offices, on simulating equipment of NFC (China) and T-soft (St.-Petersburg). The refinery staff has got the experience in upgrading project management for crude oil processing. Completion date and quality of products Implementation of POCR Upgrading project shall be finished in 2017 with production of motor fuels of К4 and К5 ecological classes (analogue of Euro 4 and Euro 5). 21

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