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Creating petrochemical opportunities through bottom of the barrel conversion (Middle East)

The history of refining crude oil is rooted in the production of fuels, but forward-looking refiners are branching out into petrochemicals to unlock new value and ensure continued profitable growth. Changes in market dynamics, combined with advanced technologies in efficient management of hydrocarbon molecules, are opening alternative paths to profitability for refiners. Recent projections show that by 2022 the top quartile of refineries by margin will be integrated with petrochemicals.

Globally, the demand for transportation fuels could reach its peak in the coming decade. Middle Eastern refiners are seeing demand growth for fuels soften, particularly for the export market, and demand growth for petrochemicals is increasing. Export fuel markets that historically have been supplied by the Middle East are now building their own refineries. For example, the Jordan Petroleum Refinery Company (JPRC) is undergoing an expansion that will double its capacity from 60 000 to 120 000 bpd to meet local demand and eliminate the need for higher-cost imports. With more regions supplying their own transportation fuels, refiners planning to export to those markets will be forced to adjust accordingly.

While fuels demand is softening, global petrochemical demand is projected to grow. Worldwide middle-class consumer demand for more packaging, plastics and synthetic fabrics is driving this demand growth. To take advantage of this opportunity, many in the industry are turning to petrochemical integration, an adjacent market with strong growth potential and substantially higher margins.

The key to unlocking these opportunities in petrochemicals lies in stepwise investments in new process technology with advanced molecular management. For example, bottom of the barrel conversion with slurry hydrocracking technology to upgrade heavy oil to fuels or intermediates for petrochemicals; vacuum gas oil (VGO) and distillate hydrocracking to produce heavy naphtha for aromatics production and enable world-scale production of paraxylene. An integration case study has been developed to illustrate a potential pathway that profitably transforms an existing refinery into a Refinery of the Future. The study analyses a base case with a product slate that is predominantly fuels, and four additional cases that incrementally increase production of petrochemicals at each step. The series of investments analysed in this study transformed the profitability of the refinery by increasing net cash margin by US$30/bbl, with internal rates of return on each investment step that are at least 14%.

As one of the only companies that incorporates process technology and configuration expertise, Honeywell UOP fully integrates complexes, achieves optimal molecular management and maximises the value of a barrel of crude. Partnering with Honeywell UOP provides refiners with integrated services and solutions for a connected plant to accomplish today’s complex operating goals, enabling maximum asset utilisation and improved reliability. With the right retrofit technology and domain expertise, the Refinery of the Future is now within reach.


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