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THE ECONOMICS ASSOCIATION OF ZAMBIA . IS INDENI THE BEST POSSIBLE OPTION FOR ZAMBIA FUEL SUPPLY?. P. CHISALE ( PhD, MSc., MEIZ, MZAA, REng .), Senior Lecturer, Thermal Fluids, Department of Mechanical Engineering, School of Engineering, The University of Zambia.

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the economics association of zambia

THE ECONOMICS ASSOCIATION OF ZAMBIA

IS INDENI THE BEST POSSIBLE OPTION FOR ZAMBIA FUEL SUPPLY?

P. CHISALE ( PhD, MSc., MEIZ, MZAA, REng.),

Senior Lecturer, Thermal Fluids,

Department of Mechanical Engineering,

School of Engineering,

The University of Zambia.

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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ORDER OF PRESENTAION

HISTORY OF INDENI PETROLEUM REFINERY COMPANY LIMITED

  • CRUDE SUPPLY AND LOGISTICS CHAIN

PLANT DESIGN CONFIGURATION

  • PRODUCTION HISTORY

IS INDENI THE BEST POSSIBLE OPTION FOR ZAMBIA FUEL SUPPLY?

WAY FORWARD

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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HISTORY OF INDENI PETROLEUM REFINERY COMPANY LIMITED

The Indeni Petroleum Refinery was commissioned in 1973.

It is situated in Ndola, in the Copperbelt Province of Zambia. It was designed by SNAM-PROGETTI, an Italian based company.

The role of the Refinery was to process spiked crude to meet the petroleum product requirement of the Zambian Market and also supply of excess products to markets to the neighboring countries in the region.

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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Ndola

  • Zambia, being a land locked country; the Refinery’s crude is supplied through a 1, 700 km TAZAMA pipeline from Das-es-Salaam in Tanzania to Bwana Mkubwa in Ndola, Zambia.

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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PLANT CRUDE SUPPLY AND LOGISTICS CHAIN

Crude was originally supplied through Zambia National Oil Company (ZNOC), and the refinery performed its traditional specialized role of processing crude and collecting a processing fee.

  • After ZNOC, the Government has been appointing suppliers of crude to the refinery. Between 2002 and 2003 the two shareholders agreed to organize the supply themselves and TOTAL was appointed to supply crude to the Refinery. In 2007, the shareholders agreed that GRZ will also exercise its right to take over the supply of crude to the refinery.
  • Effective January 2007, TP Ltd also took over responsibility of the finished product storage terminal in Ndola and incorporated the responsibilities for delivery logistics of Indeni finished products to the Oil Marketing companies (OMC’s).

The supply logistics chain of the Refinery starts from Dar-es-Salaam in Tanzania, where Crude cargo vessels offload the crude product via dedicated offshore crude lines into the TAZAMA Pipeline Limited storage.

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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Fig. 4. INEDNI Supply and Logistics Chain

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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PLANT DESIGN CONFIGURATION

The Indeni Petroleum Refinery Limited was originally designed as a 20 KBD hydro skimming plant, designed to refine fresh feed blend of 77.5% Iranian light oil and 22.5% Gasoil + Heavy Naphtha.

It was designed to process 1.1 million MT/ Yr of crude. Current operational capacity has been reduced to 850, 000 MT/ Yr due to reconfigured commingled stock to meet the evolving market demand.

The products market demand structure is now mainly more Gasoil and less Petrol as compared to the market demand structure when it was originally designed.

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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The Refinery can process 139 t/h or 1.1 million t/yr. In practice the Zambian market can only absorb around 500,000 t/y of products reducing the crude rate to about 550,000 t/y.

As a result the imported crude is heavily ‘spiked’ with lighter fractions such as naphtha, condensates and gas oil. At the present time about 50% of the crude is spiked with light fractions which have been co-mingled before shipping. The effect of this spiking reduces the maximum crude throughput of the Refinery from 1.1 to 0.85 million metric tons per year.

The reduced crude rate and spiking limits the ability to preheat crude because of the greatly reduced residue production.

Also the lighter fractions load up the top of the crude column whilst leaving the lower column underutilised. In addition it has become progressively more difficult to sell residue products

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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Table 1: Inventory Levels Throughputs

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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PRODUCTION HISTORY

The production of petroleum products at the refinery for January to June 2007 were more than January to June 2006. This production wasas planned but in some cases more than the planned volumes. Historical Consumption and losses was planned at 10%, although performance w as above.

Figure 1. Production

  • After the phase I works of the recapitalization programme which was mainly on reliability issues, average consumption and losses stood at 8.03%.

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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IS INDENI THE BEST POSSIBLE OPTION FOR ZAMBIA FUEL SUPPLY?

  • NOT IN THE CURRENT TECHNICAL STATE OF INDENI AND PRICING SYSTEM.

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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WAY FORWARD

The status of the pipeline needs establishing before a way forward can be prescribed.

The corrosion monitoring and control seems inadequate this has resulted in the pipeline being weak in some areas. Resulting in the line not being able to hold high pressures, hence not being able to transmit higher volumes.

Possibility of a parallel line to allow for flexibility should be evaluated against rehabilitating the current line. The possibility of a parallel supply line may be from a different routing e. g. Angola.

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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Investigations to assess the possibility of increasing tankage capacity so that a buffer capacity is developed which can cushion price fluctuations at the same time this buffer will act as strategic reserves(Done 2009, 2010). This has result only in smooth transition from operation to shutdown and vice-versa and not price and delivery costs.

Viability of possible rehabilitation of the offloading point should be evaluated. A strategy needs to be devised to ensure that the point serves the interest of Zambia and that Zambia has some degree of control in this facility.

Financial strategy will require developing to ensure that financing of maintenance is sustained.

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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Investment in a Hydrotreater and a hydrogen plant. Investments in other sulphur removal steps like Mercaptan oxidation (Merox) to further enhance the capacity to reduce sulphur.

Sustainable production of Unleaded petrol; Installing an Isomeriser to to boost the octane for Light Naphtha which is currently added to this pool straight run. This will ensure that there is sustainable octane above 93. Consideration must be made for use of other additives to boost octane.

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011

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END OF PRESENTATION

Thank you

TAJ-PAMODZI HOTEL, LUSAKA, 24TH FEBRUARY, 2011