Modernization of Ferghana Refinery LLC

As you know, the Ferghana Refinery is undergoing a large-scale modernization, renewal and reform of production. Ferghana Refinery LLC is the largest industrial enterprise in Central Asia. For more than 60 years, the company has been producing products necessary for the national economy.

To date, one of the main goals of the plant modernization project is to improve the quality of petroleum products produced at the plant to the level of international standards, including motor fuel to the level of Euro 5 class and lubricating oils to the level of API group II+/III, as well as to achieve a processing depth of at least 93%.

The basis for the implementation of the project:

The project is being implemented on the basis of Resolutions of the Cabinet of Ministers of the Republic of Uzbekistan No. 67 dated February 7, 2020 and No. 751 dated December 14, 2021. A number of tasks have been completed and are being carried out.

The purpose of the project:

Providing domestic consumers of the republic with high-quality petroleum products and developing the export potential of the enterprise through the effective use and modernization of production facilities.

Processing of 2 million tons of crude oil per year, while receiving the following petroleum products:

• 560 thousand tons of automobile gasoline AI-92 and above EURO-5;
• 198 thousand tons of Jet A-1 jet fuel, of which 25 thousand tons of TC-1 jet fuel;
• 538 thousand tons of EURO-5 diesel fuel;
• 175 thousand tons of base and engine oils according to API group II+III;
• 290 thousand tons of construction and road construction bitumen;
• 64 thousand tons of liquefied gas;
• 25 thousand tons of other types of petroleum products;
• increase in the depth of processing of raw materials by at least 93%;
• optimization of the water and steam supply system in order to reduce energy consumption;
• improvement of the production and environmental situation;
• automation of the control and accounting system for raw materials, manufactured products and energy resources.

It is also planned to build 4 new technological units:

• Hydrocracking unit;
• Hydrogen production unit;
• Pressure swing adsorption unit (PSA);
• Production of chemically treated water and a steam boiler unit.

The total cost of the project is 399.9 million US dollars, including 99.9 million US dollars of own funds. Loans from international and local financial institutions in the amount of US$ 300 million are also used, as well as long-term loans provided by foreign banks and financial institutions to jointly finance investment projects.

At the same time, the total amount allocated to finance the investment project in 2023 is 124.3 million US dollars.

At the request of investors, a technical consultant from KBR (USA) was involved. The final report prepared by KBR was submitted on June 19, 2023. Since May 17, 2022, the law firm "CENTIL" has been involved in the provision of legal services.

In October 2023 and January 16-17, 2024, representatives of JSC “Russian Technological Club” (“Русский технологический клуб”) visited the plant to participate in the support of the construction and installation of new installations and buildings. After the survey, a report was submitted.

On October 9, 2023, a delegation of specialists from investors visited the plant. They got acquainted with the progress of construction and installation works and shared positive conclusions about the results achieved.

The project implementation period covers the period from 2020 to 2025. It is planned to complete the construction of a hydrogen production plant, a CCA plant, a steam boiler plant and a chemical water treatment plant. At the end of the project, 194 new jobs will be created.

The payback period of the project is estimated at 7.2 years. The projected financing for 2024 is USD50.0 million, provided by foreign creditors.

The pre-project documentation for this project was developed in accordance with Resolution No. 67 of the Cabinet of Ministers of the Republic of Uzbekistan dated February 7, 2020. All documentation was examined by the Center for Comprehensive Expertise of Projects and Import Contracts, Ministry of Economic Development and Poverty Reduction of the Republic of Uzbekistan, and received a positive conclusion. The technical and economic basis of the project was approved on December 14, 2021 on the basis of Decision No. 751 of the Cabinet of Ministers of the Republic of Uzbekistan.

Construction and installation works:

within the framework of the project jointly with “ONHP” LLC and “Uzliti Engineering” LLC. Projects for the construction of new technological installations and reconstruction of existing technological facilities are ready by 88.73%. The preparation of the construction site has been completed 100% and transferred to the general contractor. The progress of construction and installation works is 44.5%, the construction of temporary buildings and structures is 100% completed.

The total number of technological equipment produced and supplied is 52%, including long-term production equipment by 92.46%. The equipment for the production of hydrogen and water vapor, as well as equipment for short-cycle adsorption, is 100% supplied.

The extension of the project's implementation period until 2025 was determined by the government's decision of July 13, 2023. This decision is due to changes in the geopolitical situation in the world, the complication of logistics routes, delays in the production and transportation of equipment, as well as difficulties in purchasing production raw materials. All these factors have an impact on the production time, which led to the need to adjust plans and extend the project implementation period until 2025.

Within the framework of the project, 88.73% of design work, 52% of work on the supply of technological equipment, including 92.46% of long-term production equipment (ODSI), and 44.5% of construction and installation work were completed.

In 2023, the following works were carried out within the framework of the project:

• 100% of the equipment and materials for the steam boiler house and chemical water treatment facilities have been supplied. Construction and installation works at these facilities have been completed, and commissioning is currently underway;
• construction and installation of a new outdoor gas pipeline with a total length of 12 km has been completed;
• design work on 36 new reservoirs has been completed. All materials for the construction of tanks have been delivered to the construction site. The construction of 19 reservoirs has been completed;
• 100% of the equipment and devices for hydrogen production and short-cycle adsorption (SCA) plants have been supplied. Construction and installation works are in full swing;
• reconstruction of the equipment for the production of commercial oils has been carried out. Packaging equipment for new 20 and 200-liter containers has been purchased, installation work has been completed;
• the mobilization of employees, equipment and equipment of the general contractor is increasing;
• an industrial safety examination was carried out for two new and all reconstructed technological devices;
• engagement of an independent technical consultant. KBR was engaged as an independent technical consultant;
• 255 units of new state-of-the-art level and flow measurement equipment were supplied for technological installations, new and existing oil and petroleum product storage tanks. Work has begun on the installation of measuring instruments;
• more than 20 new laboratory devices have been purchased;
• construction work has been completed; - acceleration of
• work on the development of a working draft is in progress and has been ongoing since May 2021;
• the delivery of materials to the construction site has begun, and the main part of the equipment has already been delivered to the construction sites;
• the execution of general construction works has begun and is in the process;
• in the process of mastering the production of new import-substituting products, including Jet A-1 aviation kerosene, EURO-4 diesel oil, as well as 7 different types of modern engine oils belonging to the I-st group.

The works planned for 2024 include:

• commissioning of hydrogen production plants, short-cycle adsorption (CCA) and steam boiler;
• launch of a new flare installation;
• commissioning of 2 new oil packaging machines;
• reconstruction of the air supply unit (for KIP and A);
• commissioning of 36 new tanks, with an automatic metering system for petroleum products ;
• completion of the construction of the central laboratory, and 100% purchase of laboratory equipment;
• completion of the construction of the central control room building;
• achieving 100% of the implementation of the work project for the reconstruction and construction of new installations, completion of reconstruction work on 5 existing installations;
• bringing up to 80% of the construction of a new modern 9-storey administrative building;
• achieving 80% completion of the construction of a new modern canteen designed to serve 1,000 people to feed the plant's employees;
• completion of construction and installation works on water blocks No. 1 and 1a;
• completion of construction and installation of the hardware building No. 501.

According to the instructions of the President of the Republic of Uzbekistan, starting from 2025, it is planned to completely abandon the use of AI-80 gasoline. As part of this decision, work has already begun at the Ferghana Refinery on the development of a project to convert the L 35-11/300 catalytic reforming unit to a low-temperature isomerization process using a SI-2 catalyst.

Also, one of the reasons for pride is the successful completion of the construction and installation of steam boilers. On February 29 of this year, a visit of the state commission took place before the launch of the steam boiler house. The positive opinion expressed by the commission confirms the high quality of the work performed and the professionalism of the performers.

At the moment, funds in the amount of 350.6 million US dollars have been raised within the framework of the project. Of this amount, 250.3 million US dollars were received in the form of a long-term loan from foreign investors, 100.3 million US dollars of own funds, the amount of disbursed funds is 253.3 million US dollars.