(COTC) Crude Oil to Chemicals is a topic that has earned momentum in the last decade in its numerous avatars. The primary driver for investments in these massive ventures is their capacity to offer greater value to refiners from a barrel of crude through transforming more to petrochemicals as opposed to fuels. COTC are rigorous form of refinery-petrochemical incorporation that has been accomplished for many years, but vary from in advance schemes in that they take the proportion of chemicals manufactured to an entire new level (see figure).
The case for tighter refinery-petrochemical incorporation
Petrochemicals stands for the fastest growing utilize for crude oil. By sustainability pressures at the industry (especially plastics) will have an effect on future requirement for virgin polymers, markets for petrochemicals on the whole will keep up to expand for the anticipated future, although possibly not at the fast clip of the past.
The rationale for greater refinery-petrochemical incorporation is to make up for the lost requirement for fuels, due decarbonization and electrification efforts, by using converting more of the crude oil into petrochemical feedstocks by the use of technologies some of that are already deployed and others in development. As per a few estimates, increasing the share of chemicals and non-fuel products from a barrel of oil to 60-80% from the traditional 10-15%, has the ability to boost returns to refiners from about $9/bbl to $17/bbl.
Many configurations
The only simplest configuration of a refinery-petrochemical complex consist an aromatics unit for extraction of benzene, toluene and xylenes (BTX) and a fluid catalytic cracker (FCC), along the refinery. Such a configuration normally gives a chemical yield of ~15%, and numerous examples may be found in India. The Kochi refinery of Bharat Petroleum Corporation Ltd. (BPCL) includes a propylene-derivatives complex downstream of the FCC to make oxo-alcohols (n-butanol, isobutanol and 2-ethylhexanol) as well as acrylic acid & its esters. FCC propylene capacities now persist at HMEL, the joint w among Hindustan Petroleum Corporation Ltd. (HPCL) and the Lakshmi Mittal Group, in Punjab; the Nayara refinery at Vadinar; the Mangalore Refinery and Petrochemicals Ltd. (MRPL) refinery at Mangalore; the Chennai Petroleum Corporation Ltd. (CPCL) refinery at Manali; HPCL’s Vishakhapatnam refinery; and Indian Oil Corporation Ltd. (IOC)’s Paradip refinery. In most, the propylene is transformed to polypropylene.
The 2d degree of refining with a chemicals conversion of 15-25%, includes tagging a steam cracker to a refinery, or including a para-xylene (PX) complex, at the same time as a better level of integration (~25-forty% conversion to chemical substances) consists of both. While a regular naphtha cracker running downstream of a refinery methods about 10% of the crude oil for chemicals, tighter integrated schemes together with that practiced by means of Reliance Industries in Jamnagar or by way of Petro Rabigh in Saudi Arabia take the chemical conversion capability to ~20%.
China’s COTCs
COTC, the next level of incorporation, is the highest stage of incorporation and includes manufacturing of chemicals from crude oil, directly or indirectly. Not all COTC plant are the s, same, and vary in technologies, products, and the proportion of chemical conversion, which can be anywhere from 40-80%.
The ExxonMobil COTC venture in Singapore is the oldest and has been efficaciously working for over 10 years by processing very light Malaysian crude oil directly in a steam cracker. The corporation is now taking this concept to its Huizhou venture in China, which includes a $4-bn investment, and will have a capability for 1.2-mtpa of ethylene (and other products).
The first cluster of COTC ventures in China were targeted on aromatics manufacturing and process a mix of heavy and medium crudes. The Hengli Petrochemical Refinery Co. Ltd. Is a forerunner, and an amazing example. Commissioned in 2019, it includes a 20-mtpa refinery and some of petrochemical units: propane & isobutane dehydrogenation; polypropylene manufacturing; and an ‘oil to PX’ complex that consists of 3 reformers with non-stop catalyst regeneration, 2 extraction lines, xylenes isomerization and PX purification. The complex is configured with 42% conversion to chemicals, which consist 4.34-mtpa of PX and 3.9-mtpa of others. Its manufacturing value for PX ranked at the bottom of the cash value curve in 2024. Thanks to these aromatics-focused COTC (and other) ventures, China’s self-sufficiency in PX has now crossed 100%, changing global trade dynamics.
Newer COTC complexes planned for commissioning this year in China are highlighting olefins manufacturing over aromatics. These have been in the mid-quartile of the ethylene cash cost curve in 2024, and at the same time as global-scale they represent a smaller proportion of the a 180-mt annual market for ethylene, in comparison to the COTCs focused on aromatics.
Reconsider within the Middle East
In the Middle East things are shaping up in a different way. Interest in COTC ventures has reduced, given the excessive investment costs, the restricted proximity to develop markets, and the technological demanding situations. The geared up availability of stranded or semi-stranded feedstocks makes for a far greater appealing business case for conventional routes to petrochemicals, instead of convoluted and capex-heavy ones. Late final year, Saudi Aramco and SABIC introduced they had put on hold their COTC venture within the Ras Al Khair place. This facility, introduced in 2022, was designed with petrochemical conversion of 50%.
Having stated that, corporations within the Middle East are viewing COTC routes in a few foreign markets in which they work. In October 2023, Saudi Aramco declared it was planning to collect a 10% stake in Shandong Yulong Petrochemical, which is constructing an olefins-targeted COTC venture in China. Saudi Aramco’s Thermal Crude to Chemical (T2C) technology, that’s olefins-focused, is being deployed at S-Oil’s Shaheen complex in Ulsan, South Korea. It is reported to have an envisioned chemical conversion of up to 70%.
On the point only in few places
While refineries will gradually tap into conventional incorporation techniques into petrochemicals as a mean of de-risking and expanding their portfolio and bring it in alignment with expected mega-trends, the more complex incorporated schemes, together with COTC, will be confined to regions wherein markets are sturdy and anticipated to preserve a boom momentum for the predicted future. The decisions to construct in such areas could be determined by the capital efficiency of these high priced venture. PX-targeted COTC venture have investment charges upward of $10-bn, and the enterprise complexities are huge as they straddle energy and petrochemical markets, every with its own dynamics.
It must also be borne in thoughts that the coming online of numerous huge COTCs in quick succession will swiftly alter the world’s petrochemical balance and ship margins plunging. Hengli’s COTC complex, alone, can manufacture up to 8.4-mt of chemicals – about half of being PX. The olefins-targeted COTCs, with chemical conversion lies between 60-80%, are also large however their capacities constitute a smaller proportion of the general market, and their effect will be a much much less disruptive.
The technological challenges of deep incorporation also are not to be beneath-estimated. COTC calls for significant refinery residue upgrading, and hydrocracking will stay one of the most important approaches. It would need catalysts which could manufacture more light and heavy naphtha, rather than center distillates and diesel.
Simpler alternatives
The excessive capex associated with the complex COTCs makes a case for simpler solutions along with high severity cracking to boost olefin yields. This is an approach many refiners are taking in India and has already led to a considerable boom in manufacturing of propylene and its derivatives. This too is a welcome development.
