Posted at 7/25/19, 12:11 PM Interviews

Petromidia, record after record

The Petromidia refinery has reached four decades of activity, and the story of the seafront platform highlights the turbulent history of the Romanian refining sector.  
The Petromidia refinery has reached four decades of activity, and the story of the seafront platform highlights the turbulent history of the Romanian refining sector. Gradually, Petromidia became the central pillar of this industry in Romania, being the largest refinery in the country and one of the most modern in South-Eastern Europe. At the same time, Petromidia contributes significantly to the development of Rompetrol's activities in Romania and in the Black Sea region. It links the trading and supply activities to the distribution of fuels through Rompetrol stations in Romania, Moldova, Bulgaria and Georgia.

The marine terminal is the most important logistic asset of the refinery. It is located at 8.6 km offshore and can receive ships of up to 160,000 TDW. Through this terminal and the entire logistics system developed by the company in the region, Romania has the potential to become a regional energy hub, a platform between Asian natural resources and Europe's demand for raw materials processing and petroleum products.

In over 40 years of activity, the Petromidia refinery has, on the backdrop of significant investments, continuously developing its production activities. For example, from a quantity of raw material processed in 1979 (commissioning time) of 1.26 million tons to 3.82 million tons in 2007 (the time of acquisition by KazMunayGas), 5.66 million in 2017 and 5.92 million tons last year.

Aligned to Best Available Technologies (BAT) standards, Petromidia is the first Romanian refinery to successfully align with European environmental regulations and fuel quality standards. Over 450 million dollars have been invested to reach the current refinery's degree of complexity and to ensure full compliance with the EU's environmental requirements. The refinery has the highest white yields in the region (85%), ranked 9th out of the 250 refineries in Europe and Africa.

From an operational point of view, the Petromidia refinery managed in the first quarter of 2019 to achieve a processed raw material level of 1.51 million tons, of which 1.35 million tons of raw materials processed in the Atmospheric and Vacuum Distillation Unit, rising by more than 14 kt compared to the same period last year. Improvements on one of the main refinery plants are due to the implementation of the Advanced Process Control software, which helped to reach a very high level of refinery supply during the winter.

However, the story of the seafront refinery is tumultuous, the four-decade road of Petromidia being crowded with many obstacles. The history of the largest refinery in Romania begins in the 1970s when, for the accomplishment of Romania's development program established by the Romanian state in 1970-1975, it was decided to build on the Black Sea shore a petrochemical plant with an annual capacity processing of 3.5 million tons of crude oil and integrated with a petrochemical sector (200,000 tons of ethylene and 100,000 tons of propylene).

Năvodari was chosen to the detriment of the towns of Cumpăna, Cernavodă or Valu lui Traian, considering the distance to the Black Sea, considering the refinery to process the heavy / sulphurous crude oil and the necessary agricultural land, when about 37 hectares, of the over 480 hectares of the combined, had being recovered from the sea.

In order to better understand the momentum of the Romanian industry, it is enough to mention that during the 1970s and 1980s, new refinery installations were built in Pitesti, Ploiesti and Onesti, with a similar capacity to that of the Petromidia refinery. At the end of 1970, there were refineries in Piteşti, Brazi, Teleajen, Oneşti, Vega, Câmpina, Dărmăneşti, Suplacu de Barcău and Ploieşti (Astra), with a total processing capacity of about 16 million tons of crude oil per year. As an interesting insight, as opposed to the other refineries in the country built on the basis of the same project (at Brazi, Piteşti or Oneşti), all the installations in Năvodari were made in Romania.

Construction works of the Petromidia platform began in 1976, and in 1979 the refinery began to operate and process about 1.25 million tons of crude oil with a yield of white products of 44.6%. Until 1989, a total of 16 plants in the refinery and seven in petrochemistry were designed, built and integrated into the technological flow of the refinery and petrochemistry.

Logistics connections with Constanta port were made through three underground pipelines: one for the transport of crude oil from Constanţa to the Midia refinery and two other pipelines, one for gasoline and one for diesel, for the transfer of these products to Oil Terminal Constanţa. By building the Danube-Black Sea channel, Rompetrol Rafinare was able to deliver products using barges.

Regarding the social impact, the platform played a major role in the development of Năvodari, from an establishment of fishermen and breeders with a population of about 500 inhabitants to an industrial town of 7,000 inhabitants in 1975, 26,000 in 1983, 32,400 in 2002 and about 40,000 at present. Over the past 30 years, approximately 30,000 people have worked on the Petromidia platform.

After December 1989, after the change in the political regime, the state gradually withdrew from the refinery's shareholders, each company developing its own strategies for survival and especially for the development of re-technology programs in line with international environmental standards.

At the beginning of 1990, there were 10 refineries in Romania, which registered a record quantity of processed raw material in 1989 - about 34 million tons of oil. In 1975, around 20 million tons of crude oil was refined in Romania. The economic conception in the communist era was strict: let's not depend on imports and produce everything in the country. Starting from here, oil played a crucial role, it was the pillar on which the whole economy was based: agriculture, textiles, fertilizers, chemical industry, plastics, lakes, paints, rubber, yarns and synthetic fibers.

However, in the meantime, target markets have changed dramatically, both domestically and internationally. Basically, amid the reduction in raw material requirements for the yarn and synthetic fiber industry, the Midia complex, which in the meantime became Petromidia SA, has reoriented towards fuel and polymer production and has preserved certain installations.

The first attempt to privatize SC Petromidia SA took place in 1993 when the American company Marc Rich & Co (later Glencore International) attempted to take over after investing 50 million USD in the modernization of some facilities between 1990 and 1993 to whom he received petroleum products. After the breakage of the Petroleum Company (CRP), Petromidia was left without access to deposits and a distribution network, so it is proposed several times in the period 1997-1998 amid accumulation of debt of 120 million USD, a liquidation, but also its privatization.

The second privatization attempt of Petromidia took place in 1997 when the State Property Fund (FPS) discussed with Daewoo, Glencore and Petromidia USA (Windmill's representative). Turkish Akmaya followed in January 1999, signaling the takeover of 65 percent of the refinery's shares for 725 million USD (effective 239 million USD, 226 million USD in investments, and the amount of debt accumulated by the company and taken over buyer of 260 million dollars). Out of debt, about 215 million USD would be rescheduled for a 5-15 year period. But the story is complicated by misunderstandings between the Romanian authorities and the Turkish company, as well as the negotiations with the IMF and the World Bank. These lead to the cancellation of the contract, but also to trials, arrests and allegations of espionage.

In October 2000, the third privatization trial started with Rompetrol Group NV, and in January 2001 the effective transfer of the share package was commenced. At that time, in 1999, the refinery processed about 900,000 tons of raw material and 1.15 million tons in 2000.

The Group has embarked on a comprehensive investment program to upgrade and automate the refinery and production streams, aligned with quality and environmental standards, and increase processing capacity.

At the same time, the polymers production facilities were shut down, closed in 1996 due to the lack of raw material, and facilities to support the activity and new capacities, facilitated for the raw material supply, automated polymer packaging facilities, the first cryogenic terminal the Black Sea (for ethylene supply), a monitoring and control center for Petromdia platforms and many others.

KazMunayGas (KMG) from Kazakhstan bought 75% of Rompetrol Group shares in August 2007 and the remaining 25% in 2009, becoming the sole shareholder in Kazakhstan.

Total investments made by KMG in the period 2007-2017 to support and develop the group's profile activities amount to more than 1.6 billion USD. KazMunayGas has managed to transform the Petromidia refinery into the largest Romanian unit, but also one of the most modern in the Black Sea region. At the present, only 4 refineries are in operation in the country (Petromidia Năvodari and Vega Ploieşti owned by KMG, Petrobrazi Ploieşti, controlled by OMV and Petrotel Ploieşti, owned by Lukoil). The raw material processed by the Petromidia refinery during the period 1979-2017 is approaching 117 million tons, of which around 49 million tons in 2007-2017, when the refinery reached record levels (5.66 million tons in 2017).

Amid the investments of over 400 million USD made between 2008-2012 to upgrade and increase the processing capacity of the Petromidia refinery, the volume of processed raw materials increased from 3.8 million tons in 2007 to 4 million tonnes in 2012, respectively 5.6 million tons in 2017 (5% above the 2016 level).

The daily amount of processed raw material has grown steadily from an average of 10,800 tons in 2007 to 11,000 in 2012 and 16,763 last year respectively. In December last year, the Black Sea shore unit reached a daily quantity of about 19,100 tons of raw material, the highest level it has in its history.

More than 28.5 million tons of finished petroleum products have been obtained by the refinery since 2012 and the volumes are continuously increasing - from 3.6 million tons in 2007 to around 3.9 million in 2012 and respectively, 5.53 million last year.

2018 was the moment of historical records of the Petromidia refinery, both in terms of the volume of processed raw materials and of the production of fuels (gasoline, diesel) or other petroleum products (aircraft fuel). Against the backdrop of internal programs to improve production activities and energy efficiency, the Black Sea shore unit has received the lowest processing cost over the past 10 years.

In the period 2012-2017, the Petromidia refinery managed to improve operational and mechanical availability, as well as a 14% Energy Intensity Index (EII) and 44% reduction in processing costs.

In synergy with the Petromidia refinery, Vega Ploieşti processed around 1.9 million raw materials from 2012-2017, from 305,000 in 2012 to 373,000 tons in 2017. It achieved record historical record last year processed raw materials, respectively bitumen production (96,400 tons) and ecological solvents (41,000 tons).

Vega Ploiesti is currently the oldest processing plant in operation in Romania (1905) and the only domestic bitumen and hexane producer.

Neither in 2018 Petromidia reduced speeds. Therfore, last year, Petromidia registered 11 new business records, with historical levels reached on processed raw materials, petroleum products obtained, gasoline and diesel production, aircraft fuel, white product yields, refining capacity utilization. These include the improvement of the energy efficiency index and the reduction of technological losses. Also this year, Rompetrol Rafinare proposed to exceed the 6 million tons of processed raw materials, which would represent a new historical record.

"Since 2007, KazMunayGas has invested 1.6 billion USD in Petromidia. We are looking to further develop the platform because the Black Sea region needs a strong player on the market. We are investing at all levels because we want to remain one of the most competitive companies nationwide", says Yedil Utekov, General Manager of Rompetrol Rafinare.

"40 years for me passed very quickly. It was like yesterday that I was a 25-year-old who worked on this platform, every day we were developing something, we always thought we did not stop and all the time the activities in Petromidia have developed, all the time happened new things, and that has made the 40 years to go very fast", says Alexandru Nicolcioiu, former director of the Petromidia platform and current CEO Adviser of KMG International.

Read the article here.