Poland’s LOTOS lets contract for new plant at Gdańsk refinery

Grupa LOTOS SA has let a contract to a division of Maire Tecnimont SPA to provide engineering, procurement, and construction (EPC) services for a grassroots hydrocracking plant to expand production of base oils at its 10.5-million tonnes/year refining complex in Gdańsk, Poland.

As part of the September lump-sum turnkey EPC contract, Maire Tecnimont subsidiary KT-Kinetics Technology will deliver the full scope of EPC services for the new hydrocracked base oils (HBO) plant and associated logistic installations to enable production and sale of high-quality Group 2 and Group 3 base oils, the service provider and Grupa LOTOS said.

Scheduled to be fully completed and operational during first-half 2025, the HBO plant will be equipped to produce base oils meeting the automotive sector’s increased demand for low-sulfur, energy-efficient fuels in line with increasingly more stringent international environmental regulations, as well enable the refinery to improve economics of its overall crude processing activities, according to Grupa LOTOS and Maire Tecnimont.

The service provider valued the EPC contract, which was awarded on a lump-sum turnkey basis, at slightly more than €200 million.

In a July 2021 presentation to investors, Grupa LOTOS said the project—at the time, still in its planning phase—would require an overall investment of 1.378 billion zloty, 206 million zloty of which was scheduled to be spent during 2021.

Alongside allowing the refinery to produce high-margin Group 2 and Group 3 base oils, the new HBO plant will contribute to the operator’s goal of efficiently managing residues from the refinery’s mild hydrocracking unit—specifically, hydrowax—as well as contribute to its broader goal of diversifying its production mix to new and nonfuel products, according to Grupa LOTOS’ yearend-2020 annual report to investors.

Prepping for the energy transition

Launch of the HBO plant project follows commissioning of a new hydrogen recovery unit (HRU) at the Gdańsk refinery in December 2020. Entered into commercial operation in second-quarter 2021 and budgeted at an overall investment of 176 million zloty, the HRU has enabled the refinery increase out of LPG by 70,000 tpy, naphtha by 43,000 tpy, light gasoline by 39,000 tpy, and hydrogen by 9,000 tpy, Grupa LOTOS said in a September 2021 presentation to investors.

The new HRU has increased hydrogen production at the Gdańsk refinery—which previously produced about 16.5 tonnes/hr—by 1 tonne/hr to about 17.5 tonnes/hr overall, according to the operator’s 2020 annual report.

Grupa LOTOS also confirmed this summer it is proceeding with plans to advance projects for green and blue hydrogen generation at Gdańsk, as well as joint development with Polski Koncern Naftowy SA (PKN ORLEN) SA and Energa SA of a proposed combined cycle gas-fired turbine (CCGT) plant that, by July 2026, would fully satisfy the refinery’s internal electricity requirements.

Future investments in the projects, however, remain contingent on PKN Orlen’s approved but still pending acquisition of Grupa LOTOS, a definitive timeframe for which has yet to be confirmed.