Clean Fuels

Refinery and Product Development of MOL

Szentendre27th of October, 2005

Dr. Márta KrámerHead of MarketingRefining and Marketing Division

Currently the Oil Industry’s Main Development Area is Correspondence to the EU 2005 Motor Fuel

Quality Regulation

Environmental regulationsGoal: reduction of emissionTool: tightening of exhausts’ limit values

Reduction of sulphur and aromatic content

Lower density

Mot

or fue

ls’ qu

ality

impr

ovem

ent

Synergy effect

In long term the biggest problem is CO2: the reduction of specific energy consumption is over-compensated by the extensive impact of economic growth

Harmful materialsCO2: „greenhouse effect"

NOx: healthparticle: destructiveCH:

Develop

men

ts of engin

e prod

ucers

* "lean burning", DI engines

Reduction of specific consumption: CO2 andparticle-emission willdecrease as well

To reduce NOx-and particle emission „catch” and catalyst is necessary

Sulphur highly worsens their efficiency

An Important Objective of EU Energy Policy is to Decrease Pollution of the Environment

CO2 emission continuesto be a problem!

CO2 emission continuesto be a problem!

0

20

40

60

80

100

120

1995 2000 2005 2010 2015 2020

%

CO Benzene NOx Diesel particle VOC CO2 SO2

The effect of "Auto Oil 1" Program on the emission of harmful substances

CO2 Emissions by Sector in EU-25

*Including off-road

Source: European energy and transport – Scenarios on key drivers (European Commission, 2004)

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

1990 2000 2010 2020 2030

Mt

CO

2

Electricity-steam production Transports* Industry Households Tertiary

One of the main problems of EU energy sector is the growing dependency on

imported crude oil

Mt

*

* Includes Norway, Switzerland, Romania, Bulgaria and Turkey

Source: Green Paper: Towards a European strategy for the security of energy supply (European Commission, 2001)

2005 is the Year of Motor Fuel Quality Change in Europe

The main direction of quality improvement: reduction of sulphur content

- motor gasoline: from 150 ppm to 50 ppm- diesel: from 350 ppm to 50 ppm

The leading oil companies decreased the sulphur content below 10 ppm

(according to the EU directive it will be a compulsory requirement as from 2009)

European refineries completed USD 10 billion worth investments in order to reach the above objective

In present years refineries worldwide spend cca. USD 100 billion on technological developments principally with environmental purposes

Modern Engines Require „Sulphur Free” Motor Fuels

0

10

20

30

40

50

60

70

80

Time/ kilometre performance

NO

x-co

nve

rsio

n,

%

350 ppm 50 ppm 0 ppm

• The effect of its decrease is: - to raise the operational lifespan of the vehicles’ catalysts - to decrease the pollution of the environment (in case of diesel engines it also moderates particle emission)

• Solution in the refinery industry: desulphurisation catalytic process

Source: "The future of the Diesel engine in passenger cars" Volkswagen AG, 2001

THE EFFECT OF SULPHUR CONTENT ON EMISSION

Regional Oil Companies’ Correspondence to EU Requirements Concerning Motor Fuel Quality

-max. 10 ppm sulphur content

max. 50 ppm sulphur content

Quality inadequate to EU regulations

MOL’s Motor Fuel Quality Improvements as from 1990 I.

Reduction and Annulment of Lead Content of Motor Gasoline

FCC Plant

HF Alkylati

onCCR

Reformation

MTBE Plant

FCC Intensificati

on

KB Isomerization

Plant

0

100

200

300

400

500

600

700

800

900

1000

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Lead e

mis

sion,

ton/y

ear

MOL’s Motor Fuel Quality Improvements as from 1990 II.

Reduction of Benzene Content of Motor Gasoline

Benze

ne c

onte

nt,

v/v

%

0

1

2

3

4

5

6

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Gasoline Blending

Plant

Reformer redistilling

column

MTBE Plant

FCC Plant capacity increase

Reconstruction of the

Isomerization Plant

Only in Hungary, in the EU the regulation allowed maximum 5% until 2000

Gasolines Gasoils

Su

lph

ur

con

ten

t (m

/m)

%

Su

lph

ur

con

ten

t (m

/m)

%

0.2

0.5

0.05

01. 01. 1993.

0.2

01. 01. 1993.EU (01. 10. 1994.)

0.05

01. 01. 1997.(01. 10. 1996.)

0.015

01. 01. 2000.

0.035

01. 01. 2000.(01. 01. 2000.)

10 ppm !!

01. 07. 2005.

10 ppm !!

01. 07. 2005.

MOL’s Motor Fuel Quality Improvements as from 1990 III.

Reduction of Sulphur Content

VGO HDS

CLAUS-4

HDW-GOK* 2

Gas oil blender

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

HDS intensificationHDS intensification

GOK*-3Gasolinedesulphuriser

Hydrogenplant 2.

* Gas oil desulphurizer

MOL’s Preparation to Production of EU 2005 Motor Fuel Quality

In Százhalombatta during 2004 the following installations were

realised:

- new 2.2 Mt/year capacity gasoil desulphurising plant

- new 40 th m3/h capacity hydrogen plant

- converting gasoil blending plant

- auxiliary facilities

At Bratislava during 2004 the following installation was realised:

- new 1.7 Mt/year capacity gasoil desulphuriser

At Százhalombatta

- new gasoline desulphuriser

The total value of the above investments is about USD 350 M

The Result of Developments

Significant reduction of motor fuels’ sulphur content down

to 10 ppm

MOL’ s motor fuel quality is better than prescribed in the

EU Directive

Improving environmental conditions in Hungary

- from 1st of July 2005, a higher excise tax is due on motor fuels

with sulphur content higher than 10 ppm

Sulphur emission from motor fuels sold by MOL in Hungary

decreases from 730 tons/year to less than 30 tons

Further Directions of Motor Fuel Quality Improvements

Reduction of aromatics content by 2008-2009

Assurance of a certain proportion of biofuels in the

total motor fuel consumption

Goal: holding back CO2 emission causing „greenhouse effect”

Directive 2003/30/EC of the European Parliament and of the

Council:

Member states must ensure that the amount of biofuels used

will reach a minimum proportion:

- EU Directive 2% until 31st December 2005

5.75% until 31st December 2010

Use of Biofuels in MOL Group

Gasoline: the product’s MTBE component is replaced by bio-ETBE

made from alcohol of agricultural origin

Investments

- transforming the MTBE units at Százhalombatta and Bratislava into ETBE units - establishing a new ETBE unit at Tiszaújváros (greenfield investment) - raw material: dehydrated alcohol product of agricultural origin (bioalcohol)

Gasoil: blending of guaranteed quality biodiesel of agricultural origin

Requirement for raw materials: correspondence to the hydrocarbon industry’s standards and the assurance of continuous supply

Source: EUCAR IG-Fuels, November 2001

Oil Based Fuels Continue to Have a Dominant Role in the Long Run

Trend in demand for fuels Main direction of development