Petrofac Extends Modernizing at Lithuania's Largest Refinery

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Work to modernize the only crude oil refinery in the Baltic States is continuing following the award of a 200 million-euro (US$216 million) engineering, procurement and construction (EPC) contract to energy services major, Petrofac (Saint Hellier, Jersey).

At the Mažeikiai Refinery in northwest Lithuania, Petrofac will continue modernisation work that it started in 2021, when it was taken on to add a new residual hydrocracking unit (RHCU) for the facility. Construction of that unit is underway, and the new contract is for a new offsite battery limit (OSBL) EPC for the RHCU, which will include the installation of a new amine regeneration unit and stabilization tower, interconnecting pipework and tie-ins to the existing refinery units, with associated systems and modifications.

"This project represents a major milestone in the ongoing largest ever investment by Polish capital in Lithuania," said Michal Rudnicki, general director of ORLEN Lietuva. "The investment in the construction of new heavy residue conversion unit puts a solid pillar for further operation of refining in Mažeikiai as well as improving the energy security of the entire region."

As the only crude oil refinery in the Baltic States, oil products are exported to neighboring countries and internationally. However, the refinery has been less competitive due to outdated processes and low-margin products. It has also been under pressure to improve its environmental impact under European Union (EU) rules. In late 2021, its parent company, Polish energy major PKN Orlen (Plock), committed more than 640 million euro (US$690 million) to modernizing the refinery, the largest capex project carried out by the ORLEN Group in Lithuania. The goal is to enhance the profitability of the refinery and contribute to strengthening energy security of the region. Completion is slated for the end of 2024, and the company has predicted that it will bump the refinery's earnings by up to 68 million euro (US$73 million) per year. The new hydrocracker and associated plant will boost the yield of high-margin products from 72% to 84% and meet cleaner fuel requirements by eliminating the production of high-sulfur heavy fuel oils.

Industrial Info is tracking 17 projects at the Mazeikiai Refinery, worth around US$660 million in investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the report. Lithuania is a key energy growth market according to Daniel Obajtek, president of PKN ORLEN. "We are forging stronger ties by opening to new cooperation opportunities. The current unsettling times present not only a challenge but also a big opportunity for further growth. We must make the most of it. This is why we are investing in a strong energy sector, based on state-of-the-art solutions and clean generation sources."

As well as the major refinery investment, the company is looking at constructing a 57-megawatt (MW) onshore windfarm near the Mažeikiai refinery and taking part in the country's upcoming auction for the development of two offshore windfarms with a capacity of 700-MW each in the Lithuanian part of the Baltic Sea.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).