The conversion project aims to adjust the production profile to the needs of the Iberian market, where diesel is currently in short supply, by maximising the annual production of diesel from 2012 onwards and by reducing the production of fuel oil, depending on the crude diet.
The increased use of heavy crude oil, which is available on the market at lower prices, will reduce raw material costs.
The conversion of fuel oil to diesel is imperative as fuel oil demand is expected to shift lastingly from gasoline to diesel (as the market becomes increasingly diesel-driven) and diesel prices exceed fuel oil prices in international markets. In addition, the demand for fuel oil is bound to fall because it is less environmentally friendly.
When completed, the upgrade project will have cost €1.4 billion, from which 75% on the Sines refinery and 25% on Matosinhos refinery. It will reduce imports of diesel, naphtha and propane and add more value to Galp Energia’s production. The process redesign will add to the two refineries’ operational fit and create a completely integrated refining system, with product exchanges between the two plants. At the same time, the various units will gain increased flexibility, which will enable changes in the production profile for a faster response to changing patterns in the demand for refined products. In view of the swift progress so far,completion of the works is expected early in the second quarter of 2011 at the Matosinhos refi nery and by the end of the year at Sines. At the same time, the upgrade project of the Matosinhos refinery will raise nominal distillation capacity by 20,000 barrels of oil per day, due to the increase of fuel factory capacity, increasing Galp Energia’s overall refining capacity to 330,000 barrels of oil per day.
Galp Energia's refining system after conversion
The project for conversion of the Matosinhos refinery started its construction phase in December 2008. The project consists of the construction of a new vacuum distillation unit for obtaining vacuum gasoil (VGO) and a visco-reduction unit for the soft thermal cracking of the resulting vacuum residue. In addition, environmental protection will be enhanced by the construction of new units for water treatment and removing sulphur.
In parallel, construction of a cogeneration unit will cover the needs for optimising the refining system, particularly in terms of steam and electric power. The cogeneration plant at the Matosinhos refinery will come on stream in 2011 with a capacity of 80 MW.
The project for conversion of the Sines refinery started its construction phase in December 2008. The project consists of the construction of a new hydrocracker, i.e. a unit for hydrocracking heavy gasoil, for the production of diesel and jet fuel. This unit will enable the production of diesel through deep conversion of the heavier fractions of crude oil. This technology will make the selection of crude oil to be processed more flexible, which will allow the purchase of heavier crude oil for processing in the distillation column. The naphtha produced in the Sines refinery will be sent to Matosinhos as raw material for the aromatics plant, which will be a further step to integration of the two units.
In addition to the main plant, a steam reformer for producing hydrogen and a unit for recovering sulphur from produced gases will be built, both of which will be necessary for operating the hydrocracker. These units will imply the construction of seven new tanks and the adjustment of the utilities systems (water, steam, electric power and compressed air). The effluent system will also have to be adapted for the exchanges with wastewater treatment plants to occur in environmentally adequate conditions.
The new premises will occupy an area of 28 ha of newly-acquired land in the Sines complex.
Environmental profile of the conversion project
In 2008 Galp Energia's conversion projects of the refineries were classified as PIN+ (National Interest Project with strategic importance). In 2008, the evaluation process of the environmental impact of the conversion projects was completed. In parallel, environmental licences with access request to the national reserve for new facilities of greenhouse effect gas emission licences and industrial licensing were reviewed.
Studies related to the environmental and safety risks inherent to the refineries' activity were performed.
The studies revealed that, for any considered scenario, risks for people are acceptable, there is no intolerable risk and consequences for the environment are moderate or light.
The conversion projects of the refineries, which will adjust the national production to market demand, used the best available techniques in the sector. Energy integration between existing units and new units was one of the priorities.