In conversation with RUPEC, Alexander Zaitsev, Deputy CEO Gazprom Neft and CEO, Gazpromneft-Catalytic Systems, talks to us about the current status of the company’s new catalyst facility in Omsk, why building a new plant is easier than buying an existing one, and what sort of economic benefit is expected from it.
So, what’s the current status on building the new catalyst facility in Omsk?
We went into active construction on-site in October last year. All on-site pre-commissioning works are now complete, and we’re now focussing on the first phase of construction — the catalyst testing centre and infrastructure facilities. Contracting for all major equipment is now in place.
We plan to complete the modernisation of the catalyst testing centre, and bring this into operation, this year. Concurrently with this, we’re expecting, as a priority, to launch our catalyst laboratory. Construction of the plant’s main facilities is scheduled for the end of 2021.
Does the coronavirus pandemic mean you’re having to adjust your plans for implementing this project?
Construction is ongoing, and all works are being undertaken in full compliance with all safety precautions, government-agency requirements and company recommendations. Overall, the project is going according to plan.
Is your testing centre going to focus on testing your own developments and solutions exclusively, or will third parties also have access to its equipment?
Our Omsk production facility will produce cat-cracking catalysts, hydro-treatment catalysts and hydrocracking catalysts. That’s mainly where the plant will be specialising, with production capacities of 15,000, 4,000, and 2,000, respectively.
Obviously, the testing centre was designed, initially, for these processes, specifically. We’ll be able to undertake catalyst-testing for other processes, as required. And we can talk about dewaxing and oligomerisation catalysts here. We already have solutions for these processes, and these have been put in commercial operation.
We see our business not as just a series of R&D and production solutions, but rather as an “ecosystem”, through which we can offer our clients a facility for the design and development of catalytic systems, and their production, operation and post-operational servicing.
We are planning to work with clients, through the centre, in customising products and expanding the product line, as well as broadening our own R&D.
Developing catalysts is a knowledge-intensive process but, thanks to our cohesive and integrated approach to R&D, we are able to continuously improve our catalytic-systems production technologies.
The testing centre will be equipped with pilot facilities specially acquired abroad. What is their capacity in terms of catalyst loading?
The pilot facilities installed at our centre are designed not just for testing catalysts, but also for synthesising these. We’ll be able to fine-tune all catalyst-production methodologies on a laboratory pilot-testing basis, in fact.
If we’re talking about catalyst testing, then in terms of cracking — we’ve got all the facilities necessary. Russia’s only cat-cracking pilot facility has been in operation in Omsk since 2016 — this means we can test catalysts in an environment as close as possible to industrial — commercial — conditions.
In terms of hydroprocessing, we have an entire range of pilot facilities — with catalyst loading from 1 millilitre to one litre, including multistage multi-reactor systems — which means we can undertake initial testing reasonably fast in “screening” mode in order to select the most promising developments, identify solutions for improving new brands, and so on.
We have acquired five pilot hydro-processing facilities. These are units with fixed-bed reactors, that can operate at high pressure — up to 200 atmospheres. This equipment is appropriate for testing hydro-treating, hydrocracking, dewaxing, and oligomerisation catalysts and, where necessary, a range of other catalytic processes.
You’ve cited the planned production capacity for your catalytic systems at 15,000, 4,000 and 2,000 tonnes, respectively. Is there market demand for these volumes, in your view?
We can cover by far the majority of Russian refineries’ needs through our own facilities. In terms of cat-cracking catalysts — 100%; in terms of hydro-processing catalysts (HPCs) — almost completely. In addition to which, we are also considering the possibility of entering other markets. Although, at the same time, the domestic market remains the priority for us, and we think that, at full production capacity, up to 70% of our output will be absorbed by Russian refineries.
There are other businesses in Russia involved in cat-cracking and hydro-treatment catalyst production, and they too have plans for development. Has this fact complicated any decisions on the ultimate investment in building your own plant?
The catalyst market, as a whole, is quite extensive but it is, at the same time, quite finely segmented. When we first set out on developing this project, we analysed catalyst production in Russia, counting about 25 plants of varying capacity and specialisation — oil refining, petrochemicals and chemicals, catalyst regeneration, experimental production, and so on. Despite this, the industry remains import-dependent in many areas. This is due, more than anything else, to the fact that the majority of these plants were built back in Soviet times. Many of them are simply outdated, technologically. Added to which, many small enterprises can’t allocate funding for the modernisation or R&D necessary to compete with leading Western producers. Which means the current situation with regard to importing catalysts into Russia could be described as critical. In several areas — hydro-treatment and hydrocracking — it’s 100% imports.
We’ve got a good knowledge of the market — we know every facility, and the specifics of how these work. When it came to taking an investment decision, various options were considered, right up to purchasing an operating asset. But we realised that investing in outdated capacity makes little sense — you have to establish your own production facilities, designed in line with the latest technologies, and equipped with the latest equipment. Our plant is going to be the most cutting-edge catalyst production facility in Russia, meaning we’ll be able to compete with western producers, on equal terms.
What organisations are you working with in developing new catalysts?
We’ve got some very strong partners. That means — the Centre of New Chemical Technologies, part of the Boreskov Institute of Catalysis, itself part of the Russian Academy of Sciences, and the country’s leading R&D centre for cat-cracking catalysts. Then there’s the Institute of Catalysis itself, in Novosibirsk — which we’re partnering with on HPCs. Plus — MGU: we’re working with them on oligomerisation catalysts. We’re also collaborating with Samara State Technical University, St Petersburg State Technical University, and other organisations. We’ll be doing a significant part of the work ourselves once the catalyst research centre is launched.
What stage is the catalyst development process at, currently? What stage are you at in terms of catalyst development, currently?
We’ve been working on cat-cracking catalysts for some time: our technologies have proved their effectiveness and reliability. But we’re continuing to work on improving these processes.
As regards hydro-treatment catalysts, we loaded diesel-fuel hydroprocessing systems — developed using our own technology — at the Omsk Refinery in April. Prior to us building our own production line for this kind of catalyst, we produced it at a third-party facility in Russia. This was an incredibly difficult thing to do, since the equipment was not new, meaning that — in order to make sure our formulation for producing a cutting-edge catalyst was followed to the letter — practically all operations had to be undertaken and controlled pretty much by hand. Product quality and parameters had to be checked at every stage — which took considerable time and effort. We’re now expecting the key results as to its effectiveness as soon as late summer—early autumn. Such a short lead-time is down to the uniqueness of the hydrotreatment unit at the Omsk Refinery, which the catalyst is loaded into: it operates at high throughput, using a complex feedstock: and the service life of any catalyst used here is not very long.
What fractions can your hydrotreatment catalysts be used to produce?
We have developed a wide range of branded hydrotreatment catalysts. These are, essentially, targeted at the largest market sector — i.e., for high- and low-pressure hydrotreatment of diesel-fuel. The second sector concerns hydrotreating vacuum gasoil. These catalysts can be used in pre-treating cracking feedstocks, and as part of a package of hydrocracking catalysts. In addition to which, we plan to produce gasoline hydrotreatment catalysts, cat-cracking catalysts, and hydrotreatment catalysts for light factions — gasoline and kerosene.
All catalysts are quite versatile, and are not “tied” to specific oil grades. And we can, where necessary, customise certain brands to meet the requirements of specific refineries.
And what stage are you at in terms of oligomerisation-catalyst development, currently?
The Moscow Refinery has been working on an oligomerisation catalyst, developed by us and produced at a partner site, since 2017. Three batches have been developed during that time, with the fourth and fifth batches due to be loaded this year.
In terms of tonnage, demand for this catalyst on the Russian market isn’t that high, on the whole. Estimated loading, across all units, is no more than 50 tonnes per year. After some adjustments to equipment, we can produce this on lines designed for HPCs — meaning we can meet market demand for this catalyst in full.
Do you plan to get involved in catalyst reactivation at your Omsk plant?
Yes, we can see that the reuse of reactivated spent catalysts on the global market is increasing year by year. This trend has now got as far as Russia, so we’ve made provisions to accommodate that opportunity at our plant. We will be able to reactivate up to 2,000 tonnes of catalysts per year.
Let’s talk about raw materials for production. If we’re talking about the cat-cracking catalyst, then this forms part of a multicomponent system comprising a zeolite component, a binder and a number of additives: the key component being zeolites. Do you have any plans to localise zeolite production?
Without a doubt, yes. Zeolite Y is the key component in any cat-cracking system. So of course we’re going to produce this ourselves. I don’t know of any major, reputable company on the market that would produce a cat-cracking catalyst that wasn’t produced using its own zeolite.
And do you plan to produce a secondary Mordenite Framework Inverted (MFI) zeolite component?
A MFI is more of a secondary component: it is by no means integral to all kinds of cracking catalysts, and is a much smaller component, proportionally. We don’t yet have any plans to produce this, since there are, already, several suppliers of this zeolite — of quite good quality — on the Russian market.
And will you be producing a binder separately?
No, we’ll be buying this in, too. A binder is a kind of clay, or loam — producing this has more to do with the mining business ...we don’t see any reason to get into that business, at the moment. The clay we need can be obtained from Russian producers.
And the kind of aluminium oxide used in binders we plan to produce at our own facility.
What sort of economic benefit are you expecting?
The economic benefit from using our own products relates, first and foremost, to higher catalyst efficiency and, secondly, to reducing the costs of these, vis-à-vis foreign alternatives. Given the volatility of the market, and considerable exchange-rate differentials, we will be delivering an additional benefit through import substitution.
If we’re talking numbers then, by way of an example, moving over to using our cat-cracking catalyst increases the gasoline yield by 1—3%:at the same refining volumes, moreover. If we were to roll this out across all of Russia, the additional economic benefit could be as much as RUB15 billion a year.
Is the company planning to try its hand at producing catalysts for petrochemical processes, going forward — in order to diversify, as it were?
Based on capacity under construction at the moment — that means, primarily, catalysts for oil refining processes. The oligomerisation catalyst could be seen as relating to petrochemical processes, since these units don’t just operate at refineries. On which basis — we’re already into petrochems, to an extent. If we’re talking about major projects, we don’t rule out developing the company’s catalyst business in this area, going forward.
Are you already in talks with potential catalyst buyers?
Yes, of course. We already working on making sure future production is at the right capacity.
We don’t have any concrete agreements in place as yet, because catalyst supplies are handled under a tendering system. But we do see considerable interest from many customers, and will be taking part in tenders once the plant goes into operation.
You’ve already pointed out that up to 70% of your catalysts could be taken up by the Russian market: where will the remaining 30% go?
If we’re talking about international markets then, obviously, to our neighbours — CIS countries, those states with developed refining industries: Azerbaijan, Belarus, Kazakhstan, and others. We’re also interested in markets beyond the CIS — the Middle East, and the Asia—Pacific region.
Have you weighed up the possibilities of entering the Chinese market?
A significant part of the Chinese domestic market is covered by their own products, so it’s not a priority for us, so far.
If we’re talking about Asia then — given the transport leg — are your products still going to be price-competitive?
I wouldn’t say the transport leg is the key driver for our business. We are seeing many catalysts being brought into these markets from the US and Europe — meaning shipments are probably longer-distance, and more expensive. China’s the same — covering its own needs and exporting, including to Europe, for example.
As regards entering export markets — are you prepared to offer your clients financial guarantees?
I should point out that financial guarantees are quite rare in this business. There are examples, but these tend to be the exception. But if there is a need for us to provide guarantees on the international markets — we’re well placed to do that.
What objectives has Gazpromneft-Catalytic Systems set itself this year?
First of all — commissioning the research centre, completing the installation of key equipment, and completing the first phase of modernising the laboratory.
We’ve already loaded a batch of diesel hydrotreatment catalysts, run a full flow at the hydrotreatment unit using a reactivated catalyst, and are planning new loads with the oligomerisation catalyst. Concurrently with this, we are working proactively with future customers and are recruiting personnel for the future plant.
Where are you going to find people to work in a plant, a test centre, and a laboratory — it’s quite some facility, isn’t it, that needs these sorts of unique competencies?
First and foremost, we’re focussing on Omsk-based specialists. We have a single and cohesive training programme covering all Gazprom Neft production facilities, in Omsk. We’re working with Omsk State University and Omsk State Technical University, and we have specialist programmes in place that mean BSc and MSc graduates — as well as postgraduates — can find jobs with us.