PT. KHATULISTIWA MANDALA NUSANTARA

K.M.N

REFINERY AND PETROCHEMICAL COMPLEX - PROJECT

PT. K.M.N APT. GADING MEDITERANIA

BLOCK RK-25 BOULEVARD BUKIT GADING RAYA

JAKARTA UTARA INDONESIA

PH : +6221 300 410 48 +6221 300 410 49 FAX : +6221 300 410 49

www.kmn.com

TABLE OF CONTENT I. INTRODUCTION.

II. OBJECTIVES.

III. BASIS.

III.1.1. CRUDE OIL.

III.1.2. PRODUCT SPECIFICATIONS.

III.1.3. BASIS OF PROPOSAL.

IV. REFINERY CONFIGURATION.

V. PROJECT ECONOMICS SUMMARY.

V. MATERIAL BALANCE.

VII. CONCLUSIONS.

VIII. RECOMMENDATIONS.

IX. REFINERY LOCATION.

ATTACHMENTS.

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I. INTRODUCTION Indonesia Faced Tremendous Challenges, Both Internal And External, For The Future Develop-

ment Of Its Refining Industry. The Internal Challenges Include The Additional Of Refining

Capacity, Improvement Of Product Quality And Capital Availability. The External Challenge Is

Mainly The Participation Of Foreign Investment In The Process Of Modernizing Indonesias

Refining Industry, And Indonesias Oil Supply Security In The Future. In The 2010 , The

Demand For Oil Products In Indonesia Is Projected To Grow To 1.696 MMBPD. There Is A

Shortfall Of 631 MBPD Refinery Capacity By 2010, Due To The Current Refinery Capacity Are

1.065 MMBPD. The Indonesian Government Has Taken Steps Towards Deregulation By Pri-

vatizing Oil Refining, As Mention In On The Republic Of Indonesia Act Number 22 Of

2001 On Oil And Gas . The Private Investment Investor Expected To Provide Of The

New Grassroots Refinery In Indonesia , By The Latest Year 2010.

TABLE -1

REGIONAL REFINERY CAPACITY

TABLE 2

DOMESTIC OIL PRODUCTS DEMAND OUTLOOK BY 2010

COUNTRY CAPACITY COUNTRY CAPACITY

JAPAN 4.811 MMBPD INDONESIA 1.065 MMBPD

CHINA 5.402 MMBPD INDIA 2.261 MMBPD

S. KOREA 2.316 MMBPD SINGAPORE 1.255 MMBPD

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2005

2010

MBPD

%

MBPD

% NAPHTHA

GASOLINE

30

290

2.0

19.2

31

339

1.8

20.0

KEROSENE

DIESEL

284

736

18.7

48.7

303

836

17.9

49.3 FUEL OIL 96 6.3 98 5.8

OTHERS 76 5.1 89 5.2 TOTAL 1,512 100 1,696 100

II. OBJECTIVES The Primary Processing Objective Of The Project Is To Produce Maximum Amount Of Middle Distillate ( Jet Fuel And Automotive Diesel ). The Following Processing Targets Also Have Been Included In The Evaluation : Minimum Unleaded Premium Gasoline Maximum Unleaded Regular Gasoline Minimum Or No Fuel Oil Produce 493 KMTA p-Xylene and 96 KMTA Benzene. Produce 358 MW Electric Power and 1937 TPD Asphalt. REGIONAL OIL PRODUCTS DEMAND OUTLOOK

By 2010, Regional Oil Product Demand Is Projected To Grow To 27.3 MMBPD, With Annual Growth Rate Is About 2.5 % Per Annum.The Follo-wing Table 3 Shown Regional Oil Products Demand Outlook By 2010 For LPG, Naphtha, Gasoline, Jet Fuel And Automotive Diesel. III. BASIS III.1.1 CRUDE OIL The Feed To The Refinery Is A Blend Of 150,000 BPSD Of Light Arabian And 150,000 BPSD Of Heavy Ara-bian Crude Oil. The Crude Breakup Is Given In Table 10.

PT. KMN

2005

2010

MBPD

%

MBPD

% NAPHTHA

GASOLINE

30

290

2.0

19.2

31

339

1.8

20.0

KEROSENE

DIESEL

284

736

18.7

48.7

303

836

17.9

49.3 FUEL OIL 96 6.3 98 5.8

OTHERS 76 5.1 89 5.2 TOTAL 1,512 100 1,696 100

III.1. 2 PRODUCT SPECIFICATION The Product Specification Outlined In Table -11 , Are Used For The Final Product Blending. III.1. 3 BASIS OF PROPOSAL RESIDUE UPGRADING OPTIONS ARE AS FOLLOW : The Vacuum Residue Is Sent To The Solvent Deasphalting Unit To Recover Demetalized Oil And Pitch Oil. Demetalized Oil Produced Can Be Mixed With VGO To Feed Hydro-cracker Unit. Pitch Oil Produced Can Be Partly Blended To Make Road Asphalt And The Remaining Portion Can Be Gasified Through POX To Produce Hydrogen For The Refinery And As A Fuel For Gas Turbine To Generate Both Steam And Power. IV. REFINERY CONFIGURATION

A High Conversion Unicracking Unit Has Been Included In The Project. This Unit Will Be Designed To Maximize Middle Distillate Yield In The Refinery. The Heavy Naphtha From The Unicracking Unit And The Crude Unit Will Be Processed In The Naphtha Unionfin-ing / Platforming Units.The Naphtha Hydrotreater Section Consists Of A Stripping And Rerunning Operation To Produce A BTX Heartcut Feed For The Platforming Unit. The Stripping Column Is To Remove As Much Of The C6 And Lighter Paraffins Material Overhead As Possible Without Losing An Appreciable Amount Of C7+ Material. The Rerun Column Bottom Stream Leaves The Complex As A By Product While The Overhead Stream,The Desired BTX Heartcut, Is Directed To The Platforming Unit. The Straight Run Light Distillate Is Treated In A Sweetenig Unit To Remove The Contaminants And Meet International Commercial Jet Fuel Specifications. The Straight Run Heavy Distillate From The Crude Unit Are Processed In The GO HDS To Reduce Its Sulfur Level To 0.05 Wt% Max.The Vacuum Residue Is Sent To The Solvent De-asphalting Unit To Recover A Demetalized Oil And Pitch Oil. Pitch Oil Produced Can Be Partly Blended To Make Road Asphalt And The Remaining Portion Can Be Gasified Through POX To Produce Hydrogen For The Refinery And As A Fuel For Gas Turbine To Generate Both Steam And Power. The De-metallized Oil From Demex Unit Along With The Straight Vacuum Gas Oil Are Processed In The Hydrocracker Unit To Produce Maximum Amount Of Middle Distillate. The Heavy Naphtha Cut From This Unit Is Sent To The Naphtha Hydrotreater Unit, And The Light Naphtha Is Directly Blended Into The Gasoline Pool. The Jet Fuel From Sweetening Along With Hydrocracker Kerosene Are Blended Directly Into The Final Product Pools. Diesel Product From GOHDS Unit Along With HDC Gas Oil Are Blended Directly Into The Re-spective Final Product Pools.

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V. PROJECT ECONOMICS SUMMARY The Economic Parameter Which Used As Calculation Basis As Follows : Project Life Time : 20 Yrs Construction Period : 36 Months Capacity : 1st Year Is 75% On Design Cap. 2nd Year Is 90% On Design Cap. 3rd Year Is 100% On Design Cap. 4) Operating Days Per Year : 330 5) NPV Discount Rate : 10 % 6) Interest Rate : Libor + 1.5 % ( Or 7.5 % Average ) 7) Escalation : The Price Of Crude, Fuels Or Other Product Are Not Es-calated. 8) Debt Equity Ratio : 70/30 9) Depreciation : 20 Yrs ( Straight Line 5.0 % Per Year). 10) Corporate Tax : 35 % 11)

TABLE - 7

ECONOMIC INDICATOR

VI . MATERIAL BALANCE The Material Balance Of The Complex Is Shown In The Table 8. The Refinery Is Produc-ing 171,775 BPD Middle Distillate (Jet Fuel Plus Diesel) Which Is 57.2 Volume % On The Crude Throughput. Motor Gasoline Pro-duction Is Limited To 79,145 BPD, 26.4 % Volume On Crude, With A Split Of 80 % Regular And 20 % Premium. It Is Assumed The Natural Gas Not Available At The Refinery Fence. Therefore, A Limited Amount The Fuel Oil Is Produced For Refinerys Internal Use. In The Absence Of The Natural Gas, Hydrotreated Light Naphtha Is Being Used As Feed For The Hydrogen Plant.

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ECONOMIC INDICATOR UNIT CONFIGURATION ROUTE HCU VRHDS - RFCC 1. CRUDE CAPACITY 2. INVESTMENT COST 3. REFINERY OPR.COST 4. MARGIN / BBL CRUDE MBSD MILLION US $ US $ / BBL $/ BBL

300 8,832 3.50 22 5. IRR ON INVESTMENT 6. PI 7. PAY OUT TIME 8.. NPV

% - YRS MM.US $ 24 2.31 6.47 10.408

TABLE 5

OVERALL REFINERY MATERIAL BALANCE

TABLE 6 - ECONOMICS SUMMARY

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RAW MATERIAL

MTAX 1000

WT %

BPD

VOL % Light Arabian Crude 6,712 49.0% 150,000 50 Heavy Arabian Crude 6,973 51.0% 150,000 50 Total Purchased 13,685 100% 300,000 100 Product Sales : LPG 807 5.9 % 24,600 8.2 Benzene 96 0.7 % 2,100 0.7 P- Xylene 493 3.6 % 10,800 3.6 Sub Total 589 4.3 % 12,900 4.3 Unleaded Regular Gasoline 2,477 18.1 % 45,882 15.3 Unleaded Premium Gasoline 643 4.7 % 11,470 3.8 Sub Total 3,120 22.8 % 57,352 19.1 Jet Fuel 2,874 21.0 % 89,213 29.7 Automotive Diesel 4,051 29.6 % 102,630 34.2 Sub Total 6,925 50.6 % 191,843 63.9 Electric Power 358 MW 684 5.0 % - - Asphalt 500 3.6 % - - Sulfur 233 1.7% - - Sub Total 1,259 9.2 % - - Total Sales 12,700 93.9 % 286,695 95.6 Refinery Fuel 561 4.1 % - - Loss 266 2.0 % - - Total Product 13,685 100 % - -

Remarks

Base Case p-Xylene Price

US $ 1,100 MTD

US$ Million/Year

Sensitivity Case p-Xylene

Price

US $ 550/MTD

US$ Million/Year Product Revenues 1,2485.06 1,2216.63 Variable Costs Crude Oil 9900.00 9900.00 Operating Cost ( Utilities, Catalyst, Hydro-gen and Chemicals ). 445.50 445.50 Subtotal Fixed Cost Insurance 22.95 22.95 Depreciation 257.87 257.87 Subtotal Total Production Cost 1,0626.32 1,0626.32 Net Margin 1,858.75 1,590.31 Margin/Bbl Crude Oil, $/Bbl 12.08 10.34 Total Investment Cost, US$ Million 5,157 5,157 Internal Rate Of Return On Project (IRR ) 22 20

VII. CONCLUSIONS The Preliminary Evaluation Of The Refinery And The Aromatic Complex Project Drew The Following Conclusions : A Combination Of The Unicracking And The Demex Units Provides Maximum Yield Of Fuel, Automotive Diesel, And Unleaded Gasoline Products. A Combination Of The Demex Unit And The Gasification IGCC System Produces Electric Power Approx 358 MW. The Quality Of All Finished White Products Can Easily Meet The Approved Future Specification In The Region. Project Profitability Is Very Sensitive To The Crude Oil Product And Product Prices. Aromatic Complex Has A Considerable Impact On The Overall Profitability Of The Project.

VIII. RECOMMENDATIONS We Propose The Potential Refiner To Undertake The Following Tasks As The Next Steps In The Project Development : Prepare A Market Study To Verify :

The Supply/ Demand Situation Of The Products In The Local Market And In The Region. The Supply / Demand Of The Raw Materials. The Projected Price Of Raw Materials And Products .

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CASE II II. OBJECTIVES The Primary Processing Objective Of The Project Is To Produce Maximum Amount Of Middle Distillate ( Jet Fuel And Automotive Diesel ). The Following Processing Targets Also Have Been Included In The Evaluation : Minimum Unleaded Premium Gasoline Maximum Unleaded Regular Gasoline Minimum Or No Fuel Oil Produce Base Chemicals Benzene And P-Xylene. III. BASIS III.1.1 CRUDE OIL The Feed To The Refinery Is A Blend Of 150,000 BPSD Of Light Arabian And 150,000 BPSD Of Heavy Arabian Crude Oil. The Crude Breakup Is Given In Table 10. III.1. 2 PRODUCT SPECIFICATION The Product Specification Outlined In Table - 11 , Are Used For The Final Product Blending. III.1. 3 BASIS OF PROPOSAL RESIDUE UPGRADING OPTIONS ARE AS FOLLOW : Straight Run Vacuum Gas Oil (VGO) Processing By VGO Hydro-cracker Is Provided To Maximize Automotive Diesel. Vacuum Residue Upgrading Scheme: VRHDS + RFCC Provides High Liquid Yield From Vacuum Resi-due, And Attains A Bottomless Product Pattern Of The Refinery From High Sulfur And Heavy Crude Oil . IV. REFINERY CONFIGURATION A High Conversion Hydrocracker Unit Has Been Included In The Project. This Unit Will Be Designed To Maxi-mize Middle Distillate Yield In The Refinery. The Heavy Naphtha From The Hydrocracker Unit And HT Naph-tha From VRHDS Unit Along With Straight Run Naphtha From Crude Unit Will Be Processed In The Common Naphtha Hydrotreater / Platforming Units. The Naphtha Hydrotreater Section Consists Of A Stripping And Rerunning Operation To Produce A BTX Heartcut Feed For The Platforming Unit. The Stripping Column Is To Remove As Much Of The C6 And Lighter Paraffins Material Overhead As Possible Without Losing An Appre-ciable Amount Of C7+ Material. The Rerun Column Bottom Stream Leaves The Complex As A By Product While The Overhead Stream, The Desired BTX Heartcut, Is Directed To The Platforming Unit. The Straight Run Light Distillate Is Treated In A Sweetenig Unit To Remove The Contaminants And Meet International Commercial Jet Fuel Specifications. The Straight Run Heavy Distillate From The Crude Unit And LCO From RFCC Bottom Are Processed In The GO HDS To Reduce Its Sulfur Level To 0.05 Wt % Max. The Vacuum Resi-due Is Sent To The VRHDS + RFCC To Increase Conversion Of Low Value Heavy Hydrocarbons To Lighter Products. VRHDS, HC And RFCC LPG Along With Straight Run LPG Will Be Merox Treated And Naphtha From VRHDS Is Hydrotreated In The Naphtha Hydrotreater Unit Along With The HC Heavy Naphtha From Hydro-cracker Unit. The VRHDS Bottom, Will Be Processed In The RFCC Unit To Produce Gasoline. The Alkyla-tion Reaction Combines Isobutene With Light Olefins In The Presence Of A Strong Acid Catalyst Will Be Proc-essed In The Alkylation Unit To Produce Iso Octane 2,2,4 Trimethylpentane As A High Octane Blending Com-ponent. The Vacuum Gas Oil From The Vacuum Unit Is Hydrocracked In A High Conversion Hydrocracker Unit. The Heavy Naphtha Cut From This Unit Is Sent To The Naphtha Hydrotreater Unit, And The Light Naphtha Is Directly Blended Into The Gasoline Pool. The Jet Fuel From Sweetening Along With HC Kerosene From Hydrocracker Are Blended Directly Into The Final Product Pools. Diesel Product From GOHDS Unit Along With HC Gas Oil Plus HT Gas Oil From VRHDS Are Blended Directly Into The Respective Final Product Pools.

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V. PROJECT ECONOMICS SUMMARY The Economic Parameter Which Used As Calculation Basis As Follows : Project Life Time : 20 Yrs Construction Period : 36 Months Capacity : 1st Year Is 75% On Design Cap. 2nd Year Is 90% On Design Cap. 3rd Year Is 100% On Design Cap. 4) Operating Days Per Year : 330 5) NPV Discount Rate : 10 % 6) Interest Rate : Libor + 1.5 % ( Or 7.5 % Average ) 7) Escalation : The Price Of Crude, Fuels Or Other Product Are Not Es-calated. 8) Debt Equity Ratio : 70/30 9) Depreciation : 20 Yrs ( Straight Line 5.0 % Per Year). 10) Corporate Tax : 35 % 11)

TABLE - 7

ECONOMIC INDICATOR

VI . MATERIAL BALANCE The Material Balance Of The Complex Is Shown In The Table 8. The Refinery Is Produc-ing 171,775 BPD Middle Distillate (Jet Fuel Plus Diesel) Which Is 57.2 Volume % On The Crude Throughput. Motor Gasoline Pro-duction Is Limited To 79,145 BPD, 26.4 % Volume On Crude, With A Split Of 80 % Regular And 20 % Premium. It Is Assumed The Natural Gas Not Available At The Refinery Fence. Therefore, A Limited Amount The Fuel Oil Is Produced For Refinerys Internal Use. In The Absence Of The Natural Gas, Hydrotreated Light Naphtha Is Being Used As Feed For The Hydrogen Plant.

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ECONOMIC INDICATOR UNIT CONFIGURATION ROUTE HCU VRHDS - RFCC 1. CRUDE CAPACITY 2. INVESTMENT COST 3. REFINERY OPR.COST 4. MARGIN / BBL CRUDE MBSD MILLION US $ US $ / BBL $/ BBL

300 8,832 3.50 11.44 5. IRR ON INVESTMENT 6. PI 7. PAY OUT TIME 8.. NPV

% - YRS MM.US $ 22 2.09 6.82 5,065

TABLE 8 OVERALL REFINERY MATERIAL BALANCE TABLE 9

ECONOMICS SUMMARY

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RAW MATERIAL MTAX 1000 WT % BPD VOL % Light Arabian Crude 6,712 49.0% 150,000 50 Heavy Arabian Crude 6,973 51.0% 150,000 50 Total Purchased 13,685 100% 300,000 100 Product Sales : LPG 807 5.9 % 24,600 8.2 Benzene 96 0.7 % 2,100 0.7 P- Xylene 493 3.6 % 10,800 3.6 Sub Total 589 4.3 % 12,900 4.3 Unleaded Regular Gasoline 2,482 18.1 % 63,316 21.1 Unleaded Premium Gasoline 620 4.6 % 15,829 5.3 Sub Total 3,102 22.7 % 79,145 26.4 Jet Fuel 2,874 21.0 % 65,230 21.7 Automotive Diesel 4,775 34.9 % 106,545 35.5 Sub Total 7,649 55.9 % 171,775 57.2 Sulfur 233 1.7% - - Sub Total 233 1.7 % - - Total Sales 12,380 90.5 % 288,420 96.1 Refinery Fuel 977 7.1 % Loss 328 2.4 % Total Product 13,685 100 %

Remarks

Base Case

p-Xylene Price US $ 1,100 MTD US$ Million/Year

Sensitivity Case p-Xylene Price US $ 550/MTD

US$ Million/Year

Product Revenues 1,2287.61 1,2019.17 Variable Costs

Crude Oil 9900.00 9900.00 Operating Cost ( Utilities, Catalyst,

Hydrogen and Chemicals ). 346.50 346.50

Subtotal Fixed Cost Insurance 22.95 22.95

Depreciation 257.87 257.87 Subtotal

Total Production Cost 1,0527.32 1,0527.32 Net Margin 1,760.29 1,491.85

Margin/Bbl Crude Oil, $/Bbl 11.44 9.70 Total Investment Cost,

US$ Million

5,157

8,832 Internal Rate Of Return On Project

(IRR )

22

19

TABLE 10 CRUDE OIL CHARACTERISTICS Crude Oil Arab Light Arab Heavy Throughput 150,000 BPSD 150,000 BPSD Origin Saudi Arabia Saudi Arabia Crude Assay Source HPI HPI Gravity, degrees API 34.4 28.2 Total Sulfur, wt % 1.87 2.91 TBP Cut, 0C Wt% on Crude Wt % on Crude Ethane - 0.01 0.11 Propane - 0.21 0.59 Butane - 1.07 1.32 Light Naphtha C5 93 C 5.48 4.51 H.Naphtha 93 180 C 15.11 10.69 L. Distillate 180-230 C 9.37 7.03 H. Distillate 230-345 C 20.44 16.53 Vac.GO 345-538 C 29.09 24.43 Vac. Residue 538 C + 19.22 34.79 Total - 100.00 100.00

TABLE 11 PRODUCT SPECIFICATIONS

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Specification Unleaded Regular Gasoline

Unleaded Premium Gasoline

Jet Fuel Automo-tive

Diesel

Low Sul-fur Fuel

Oil Spec.Grav. @ 15 C 0.783

Max 0.783 Max

0.775 -0.840 0.82-0.87 Report

Sulfur, wt % 0.1 Max 0.1 Max 0.3 Max 0.05 Max 1.0 Max

Mercaptant Sulfur wt ppm

30 Max

RON 90 Min 95 Min

RVP,Kg/cm2 0.6 Max 0.6 Max

ASTM EP 0 C 220 Max 22 Max 300 Max

Benzene Content Vol% 3 Max

3 Max

Smoke Point,mm 20 Min

Aromatic , Vol % 20 Max

Naphthalen, Vol %

3.0 Max

Flash Point C 38 Min 54 Min 70 Min

Freeze Point, C -47

Cetane Number 51 Min

Viscosity, cSt at 37.8 C

2.0 5.8

Viscosity,cSt at 50.0 C

380 Max

VII. CONCLUSIONS

The Preliminary Evaluation Of The Refinery And The Aromatic Complex Project Drew The Following Conclusions : A Combination Of The Hydrocracker And The VRHDS + RFCC Units Provides Maxmum Yield Of Jet Fuel, Automotive Diesel And Unleaded Gasoline . The Quality Of All Finished White Products Can Easily Meet The App-roved Fu-ture Specification In The Region. Project Profitability Is Very Sensitive To The Crude Oil And Product Prices. Aromatic Complex Has A Considerable Impact On The Overall Profi-tability Of The Project.

VIII. RECOMMENDATIONS We Propose The Potential Refiner To Undertake The Following Tasks As The Next Steps In The Project Development : Prepare A Market Study To Verify :

The Supply/ Demand Situation Of The Products In The Local Market And In The Region. The Supply / Demand Of The Raw Materials. The Projected Price Of Raw Materials And Products .

Select An EPC Contractor For The Feasibility Study. Prepare A Detailed Feasibility Study Jointly Between Process Licenser And The EPC Contractor. IX. REFINERY LOCATION The Refinery Shall Be Located At District Of Tanjung Sau Bintan Regency, Riau Island Province. Meetings Have Been Held With The Governing Body Of Batam And The Regent Of Bintan Island And The Proposal For The Refinery Was Presented And Accepted By These Principles. Construction Land Area Considered In This Study For The Refinery Is Approximately 1000 Ha. The Excess Land Could Be Used For Future Expansion To The Refinery.

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THE DESIGNER

. M.SJARIFUDDIN Refining and Petrochemical Planning Consultant For Arindo Ultimate Export Ori-ented Refinery And Aromatic Complex Project. He Has More Then 27 Years Of Ex-perience In The Indonesian State Oil Company Pertamina. M.Sjarifuddin Has Been 3 Years As General Foreman Waste Water Treatment Plant For PT Newmont Nusa Tenggara, The American Copper Mine Industry In Sumbawa West Nusa Tenggara Indonesia. He Hold A Chemical Engineer From Faculty Of Technical Science Gadjah Mada University Of Yogyakarta Indonesia.

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