The EFRA Project at the LOTOS refinery in Gdańsk aims to increase the yield of valuable products from each oil barrel processed. The project is part of the wider effort to modernize the refinery and will enable the production of higher amounts of products in strong market demand. The project has been financed through a combination of share issues, loans, credit facilities, and internally generated funds. Once completed, the project will increase distillate yields and boost refining margins. The refinery will be able to process heavy residue into fuels and coke without producing heavy fuel oil.
Implementation of the EFRA Project means a higher yield of valuable products from each oil barrel processed by our refinery in Gdańsk. Heavy residues from the refining process will be used more effectively. Thanks to EFRA facilities and modern technologies, LOTOS will join the technological elite of world’s refineries.
EFRA − towards the technological elite
Implementation of the EFRA Project means a higher yield of valuable products from each oil barrel processed by our refinery in Gdańsk. It will be made possible by the employment of modern technologies.
With EFRA, LOTOS will join the technological elite of world’s refineries. Heavy residues from the refining process will be used more effectively.
Another milestone in the refinery modernisation process
EFRA Project is a natural continuation of the wider effort to technologically modernise our refinery, supplementing the crude oil processing configuration created under the 10+ Programme.
New facilities, integrated with the oil processing line operating in the refinery, will enable us to produce higher amounts of products that enjoy strong market demand. Yearly, 900 thousand tonnes of new oil products will be produced, and our oil refining margins will rise by several dozen percent.
Financing prepared down to the last detail
In June 2015, the LOTOS Group closed the financing for EFRA. In order to raise funds for a part of the Project, towards the end of 2014 Grupa LOTOS S.A. carried out a successful share issue on the Warsaw Stock Exchange, raising almost PLN 1bn. The State Treasury acquired 53% of the new shares, while also concluding an assistance agreement with Grupa LOTOS and committing PLN 530m to finance the EFRA Project. Other sources of capital for the Project include loans, credit facilities and internally generated funds of the LOTOS Group. Partial financing was provided by eight financial institutions, including six banks and two insurance companies − PZU SA and PZU Życie SA. They granted LOTOS Asfalt (a LOTOS Group company) a term loan facility of USD 432m and a working capital facility of up to PLN 300m. The credit facility was advanced under the project finance formula until December 2024. When negotiating the financing for EFRA with banks, Grupa LOTOS proved that the Project promised high profitability, guaranteeing the security of timely repayment of future liabilities.
More high quality products
The total cost of the Project is estimated at ca. PLN 2.3bn. When completed, the complex will increase the distillate yields at Grupa LOTOS and, as a consequence, will boost its refining margin by approximately USD 2/bbl. EFRA facilities are expected to produce approximately 900 thousand tonnes of high-margin fuels annually. The Project works are scheduled to end in 2Q2018.
When the Project works are completed and the new units come onstream, the LOTOS refinery will be able to process each tonne of heavy residue into some 700 kg of fuels and 300 kg of coke, without having to produce heavy fuel oil.
Guaranteed market for the new products
For the Project to be a commercial success, markets needed to be found for the output of the refinery’s new units, in particular for coke, a new product. Therefore, in the summer of 2015 LOTOS Asfalt signed a coke sale agreement with Oxbow Energy Solutions B.V. of the Netherlands. Oxbow agreed to buy coke produced by the Delayed Coking Unit, the main component of the process line to be built as part of the EFRA Project. In this way LOTOS Asfalt has ensured that the entire volume of output coke will be sold.
Optimum and flexible offer
The main objective of EFRA is to ensure a more efficient use of heavy residue, which is the heavy end of crude oil now used to make heavy fuel oil or bitumens. The new units constructed under the EFRA Project perfectly supplement the existing oil processing line at the refinery in Gdańsk and will eventually enable a shift in its product mix from low-margin products towards more engine fuels. With EFRA Project completed, the LOTOS refinery will have more flexibility in optimising production, which will strengthen its competitive position, also in the event of movements in the market prices of crude oil and oil products.