Israel's Oil Refineries Limited Plans $670 Million Hydrocracking Unit at Haifa Refinery

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Researched by Industrial Info Resources (Sugar Land, Texas)--Oil Refineries Limited (TLV:ORL) (ORL) (Haifa, Israel), Israel's largest oil refiner, announced that the firm's board of directors has consented to setting up a hydrocracking unit at the Haifa refinery at a total investment of $670 million. The unit will primarily produce diesel and kerosene and will have a production capacity of 25,000 barrels per day (BBL/d). The unit is expected to begin operation in 2011.

The hydrocracker will be set up as part of a strategic plan adopted by ORL in November 2007 and includes an investment of $37 million that was approved by the board at that time in order to advance the project. The board also instructed the firm's management to secure project financing through the Export Credit Agency to acquire major equipment components from international suppliers. ORL will also seek additional credit from various sources for the project and is reported to have secured part of the required financing in December 2007.

Upon commissioning, the unit will enable the Haifa refinery to produce higher value-added products from each barrel of oil while adhering to stringent environmental protection standards. The addition will increase the complexity of the refinery, which currently has a Nelson complexity index of 7.4. The hydrocracker will also cause the refinery to become more flexible in terms of adaptability to different raw materials and ability to manufacture a diverse range of products in response to shifts in market demands.

The board of directors' approval of the hydrocracking project comes in spite of the global financial turmoil and promotes the project as a step toward generating cleaner and more environmentally friendly products, while boosting Israel's economy by creating several employment opportunities. In early 2008, ORL upgraded the refinery to produce diesel compliant with Euro-V environmental standards. Earlier this year, ORL announced plans to implement efficiency measures in various areas including manufacturing, purchasing, logistics and contractual work in response to the changing conditions in the Israeli and global crude oil markets.

The Haifa refinery is the largest in Israel and has a refining capacity of 160,000 BBL/d of crude oil with a maximum refining capacity of 180,000 BBL/d of crude oil. According to data from the Energy Information Administration (Washington, D.C.), Israel had a total refining capacity of 200,000 BBL/d of crude oil in 2007.

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