Libya - The Local Refineries.
There are four oil refineries in Libya with a total topping capacity of 418,000 b/d. NOC owns these refineries and operates them through its subsidiaries. In the late 1980s, it had plans to raise the total capacity to more than 620,000 b/d by the mid-1990s. One project then under consideration was a 200,000 b/d export refinery at Misurata. But the planners have since changed their minds.
For years NOC has been reviewing options to build a new refinery in the south-west of the country. The project is part of a larger plan aimed at bringing on board JV partners to support NOC's efforts to upgrade and expand its refineries.
Another new refinery has been proposed to be built at Sebha, about 700 km south of Tripoli and close to al-Wafa' gas and Murzuq oilfields - the latter producing light/sweet crude oils. Amari Dkhakhni, petrochemical department manager at NOC, was in March 2005 quoted as saying: "Because of the sheer distances across Libya and the increasing transportation cost, NOC is studying the possibility of building a hydroskimming refinery to meet the local demand in the south-west".
The plant was then estimated to cost $150m and was proposed to have a capacity of 20,000 b/d to produce LPG, gasoline, kerosine, diesel and heavy fuel oil. MEED in 2005 said an un-named European company was co-operating with NOC on the study for the refinery.
For years, the az-Zawiya refinery has been in urgent need of upgrading because most of its products are of low quality. An upgrade and expansion project was tendered in 2000. Bids by shortlisted contractors were opened by NOC on Feb. 4, 2001. Technip-Coflexip of France made the lowest bid at about $250m and was awarded a letter of intent for an EPC contract. But later NOC changed its mind and re-tendered the project.
LG Engineering of South Korea was contracted at $280m in May 2002. But, after disagreements and delays caused by NOC, LG withdrew from the project in May 2003. That move put on hold a $3.5 bn programme.
NOC executives have said the main objective in the expansion projects is to shift the output of the refineries in favour of high quality fuels, not only to improve the environment in Libya but also to meet EU fuel specifications. Now high sulphur fuel oil accounts for almost 50% of the plants' actual output.
Az-Zawiya refinery, located 45 km west of Tripoli on the north-west, came on stream in 1974 with a capacity of 60,000 b/d. Built by Snamprogetti of Italy, its capacity was raised to 108,000 b/d in 1977. The plant now can run at 120,000 b/d of crude oil. The plant has a 30,000 t/y lubricants unit for the local market. The plant is run by az-Zawiya Refinery Co. (ARC), a unit of NOC.
The refinery's output meets most of the demand in Tripoli and nearby areas. Part of its production of jet fuel, gasoil and naphtha is for export. It processes heavy Syrian crude oil, known as Suwaidiyah Blend, with some of the products shipped to Syria. It has also processed light/sweet crude oil from al-Sharara field in the Murzuk Basin produced by Repsol (see Gas Market Trends).
NOC has been in talks with Uhde since 2004 but there has been no agreement. As was initially conceived, the first phase contract called the installation of a new continuous catalytic reformer (CCR) unit, naphtha and gas/oil hydrotreaters and an isomerisation unit. The Phase-2 expansion called for a new residual catalytic cracker unit, MTBE facilities and a sulphur treatment plant.
A $15m 55,000 t/y LPG recovery unit at the plant had been built at the refinery. Tecnimont of Italy was in charge of detailed engineering design for the LPG unit and provided procurement services as well as supervising the building work. John Brown Engineering of Britain worked with NOC's London affiliate Teknica on a maintenance project at this refinery.
The refinery and its sea-water desalination unit were upgraded in 1991, under a $30m contract signed in July 1988, by Rendel Palmer & Tritton of Britain and its engineering subsidiary High Point Rendel. The topping unit was upgraded in the subsequent years. ARC also had a new cracking facility built in 1996. One of the desalination units at the plant was upgraded further subsequently.
A $150m oil terminal, built at az-Zawiya's port, consists of two berths - one able to serve a 50,000 dwt tanker and the other for tankers of up to 3,000 dwt. In late 2008, ARC invited pre-qualified local and international companies to bid for a major new contract to build another harbour at az-Zawiya. The works involve construction of a port including two break-waters of 1,450 metres and 600 metres in length, loading and unloading platforms, a dock for tug boats, handling systems and other civil and eletro-mechanical facilities.
The Ras Lanuf refinery, completed in early 1984 with start-up operations delayed until the first half of 1985, is the biggest in the country with a capacity of 220,000 b/d. Operations were delayed to 1985 as the topping plant's products did not match market needs. NOC's unit in charge, Ras Lanuf Oil and Gas Processing Co. (Rasco), could not find term buyers. Now it can only run at 200,000 b/d.
Ras Lanuf processes Sarir, Messla and other crude oils. An important part of its output is supplied to power plants on the Mediterranean coast. Another part is supplied as feedstocks to nearby petrochemical plants.
The Tobruk refinery, of the Arabian Gulf Oil Co. (Agoco), came on stream in late 1985. A year later NOC decided to double its 24,000 b/d capacity. In November 1989, CTIP won FEED job for the expansion. Energoinvest got the contract for related building work. Processes were licenced in mid-2000 from IFP for naphtha hydrotreatment, light paraffin isomerisation, de-isohexanizer recycling, and a catalytic reforming benzene elimination unit. They went on steam in 2006. The plant processes Sarir crude oil. The Sarir topping plant, 400 km south of Marsa Al-Brega, came on stream in 1986. This plant is also operated by Agoco and has a capacity of 10,000 b/d.
The petrochemical sector in Libya has faced a relatively stagnant situation for years. Several projects proposed, including export ventures, have failed to get off the ground. Planned expansions at the petrochemical complexes, mainly the ones at Marsa el-Brega and Ras Lanuf, have been affected by financial constraints, a slump in the global petrochemical business in the early 1990s, and by the political situation facing Libya through the 1990s and in recent years. A planned second fertiliser complex in Sirte was postponed.
Long drawn-out negotiations between NOC and Dow Chemical late 2008 finally reached a decisive phase. The two companies then confirmed they would enter into a JV to operate and expand the Ras Lanuf petrochemicals complex. Based on naphtha cracking, the plant produces 330,000 tons/year of ethylene, 170,000 t/y of propylene, 130,000 t/y of mixed C4s, 325,000 t/y of pyrolysis gasoline, 80,000 t/y of LLDPE and 80,000 t/y of HDPE (see the background in down2LibRefJuly9-07).
After refurbishment and expansion of the existing facilities, a new ethane cracker and polyethylene and polypropylene plants will be added. At a later stage, additional hydrocarbons, plastics and chemical production facilities based on natural gas will also be built.
The second JV was announced in 2008. Under the agreement, Yara Int'l of Norway will upgrade and expand the ammonia and urea plants at Marsa el-Brega on the Mediterranean coast. The plants produce 700,000 t/y of ammonia and 900,000 t/y of urea. About 150,000 tons of ammonia are available for sale and Yara will be responsible for marketing the plant's products for export.
Libya has often shown that the signing of an agreement does not guarantee a project will go ahead according to plan. A deal with Shell highlights the difficulties IOCs continue to face in Libya. In May 2005, Shell signed a long-term gas E&P/LNG agreement. This gave Shell exploration and development rights in five blocks in the Sirte basin, in return for a commitment from the IOCto upgrade the LNG plant at Marsa el-Brega. Depending on the quantity of gas it finds, Shell may also build a new LNG terminal. It has already been allocated a site near Ras Lanuf for the facility. Progress is slow, however, and the initial rejuvenation phase of the Marsa el-Brega revamp has not begun.
JVs with foreign investors feature significantly in NOC's plans. MEED on June 8, 2007, quoted "Omar Gazal, general manager of oil & gas downstream processing at NOC", as saying: "NOC's current policy is to deliver these developments through joint ventures with international companies active in downstream industries". MEED then quoted "an industry analyst" as saying: "Libya will need outside help if it wants to make progress on its ambitious plans. It needs the direction, money and technology. It does not have the expertise. The Western Libya gas project was not as complicated as a refinery and there were 18,000 people in three countries working on it".