New technologies for market competitiveness

December 9, 2014

Introduction and efficient use of new technologies are NIS' development priorities in all business areas, from production and refining to human resources. The results of implementing new technologies include an increase in the volume of oil and gas production, refining, sales and distribution, reduction of production costs and product quality improvement. Several years ago NIS established the Science and Technological Centre (NTC) oriented to technological development of production, which puts NIS in a more advantageous position than its competitors. The existence of NTC, which is in the position of using the knowledge base and long-standing experience of colleagues in Gazprom Neft, ensures that NIS is synonymous with “modern”, “efficient” and “high technology”. This work principle is applied in all organisational units of the Company. EXPLORATION AND PRODUCTION One of the latest investments in Exploration and Production is the construction of the Amine Unit as part of the production complex of the Oil and Gas Preparation and Transport Unit in Elemir. The operation of the Amine Unit will enable reducing the quantity of CO₂ in the gas produced by NIS to the level of three per cent, which is compliant with technical requirements for its use in the domestic gas distribution network in Serbia. It is in this way that NIS will have an opportunity to increase the amounts of natural gas delivered to the Serbian market and, by extension, profit from this type of business. In order to separate CO₂ and other impurities from natural gas, HiPACT technology (High Pressure Acid gas Capture Technology) will be used; it is one of the ecologically safest and most efficient ones among the existing technologies and has not been used in the Balkans before. Savings in thermal and electrical energy and consumables may reach 25 per cent compared to the technologies used before. CO₂ separated as part of the technological process will be disposed in previously prepared Company wells, which will prevent its release to the atmosphere. The CO₂ injection wells, which are expected to produce the reservoir energy maintenance effect, are located near Rusanda Oil and Gas Gathering Station, not far away from Melenci in the municipality of Zrenjanin. The volume of investment in the construction of the Amine Unit and infrastructure facilities is approximately 30 million Euros. Production Automation The ATPMS (Automated Technological Process Management System) project started being implemented in 2010. Its primary objectives include efficient and effective production process management, increasing the produced oil and gas measurement accuracy, production costs and theft possibility reduction, ecological safety improvement, all being achieved from a single place in the Central Engineering and Technical Centre (CETC) in Exploration and Production. SERVICES With regard to the implementation of new technologies in Services, the procurement of new drilling equipment is certainly essential. The new drilling rig K-1, which was purchased in China last year, started operating at the oilfield Turija Sever in February this year. This new rig, worth around seven million Euros, keeps up with the latest technological trends. It features an integrated design of mechanical, electric and digital systems and an advanced, proven technology of safe wellbore drilling operations, convenient and adequate transport and the ability to reach the top HSE standards. The procurement of another drilling rig produced by the same manufacturer is underway. Equipment modernisation in Services also has positive effects in terms of environmental protection. Four NIS' drilling rigs have additional equipment for the purification of well fluid (mud) produced by NOV – Brandt (National Oilwell Varco). This prevents soil pollution in full, i.e. eliminates the occurrence of waste pits for the disposal of mud (fluid used in the drilling process). This drilling system meets the strictest ecological safety standards and involves continual discharge of waste mud tanks and disposal in the designated landfill. It is, therefore, a closed system providing for maximum soil protection against pollution and meeting the strictest environmental protection standards. ENERGY Concerning Energy, one must definitely start from the construction of small cogeneration plants with the electric capacity up to 2МW. The principle of cogeneration module operation involves transforming natural gas in electrical and thermal energy. The electrical energy generated in this manner is delivered to external consumers, i.e. to the national electricity market, while the thermal energy is used for own consumption. So far, the cogeneration plants include GTS Sirakovo (1 МW), GS1 Velebit (2 MW), GTS Kikinda Gornje (1 MW), GTS Turija Sever (1 MW), GS Boka (0.3 MW), and GGS Srbobran (2 MW). Two small power plants at the gas reservoir in Srbobran have recently been put into operation. Modules in Srbobran included, NIS has seven power plants with the total capacity of 6.2 МW. By the end of the year, five more units with the capacity of 4.3 МW will be put into operation. The total amount of investments in cogeneration modules will then exceed 15 million Euros. This project has been implemented as part of the small cogeneration capacity development programme, cogeneration being a segment of the long-term corporate strategy aimed at increasing operational efficiency on the account of the rational use of the existing gas resources.

Cogeneration modules operate by transforming natural gas in electrical and thermal energy. The total amount of investments in cogeneration modules will exceed 15 million Euros.
The fact that the electrical energy generated by cogeneration in a previous period equals the approximate consumption of electrical energy in Novi Sad and Belgrade Business Centres in the period of 2.5 years shows the extent to which the project has had a positive effect on operational efficiency. Compressed natural gas A plant for natural gas preparation and compression has been constructed at the Palić oil and gas field. This is a significant step for our Company in terms of producing energy carriers out of its own resources, given the fact that the CNG production technology is among new energy technologies and is aimed at producing alternative fuels such as Euro 6. CNG started being delivered to the market in early July this year, immediately after quality and quantity verification, technical acceptance and operation approval. Two trailers with the total capacity of approximately eight tons are delivered daily. A retail facility is being prepared in Novi Sad for the production of compressed natural gas. Novi Sad 10 petrol station is going to be the first NIS facility to start the retail sales of CNG, which is planned for the beginning of 2015. CNG is only just beginning to be used in Serbia. REFINING IN REFINERIES Constant technological development in NIS' refining has practically been confirmed on a daily basis during 2014, too. Investments in Refining in the first nine months of this year amounted to nearly 60 million Euros. During the September overhaul alone, dozens investment projects were implemented. A robust investment chain made up of sturdy technological development links has been raising NIS refining in Pančevo, both in terms of top quality Euro 5 petroleum products, total operational efficiency, rational energy consumption and efficient resolution of decade-long ecological problems, to the level of the most modern global refineries. The mosaic of this year's investments and technical and technological improvements must also include the investment related to the Implementation of Water-Mazut Emulsion Combustion in Atmospheric and Vacuum Distillation Furnaces. When heavy fuel oil is used as an energy carrier in these furnaces, the consumption of water vapour is less by around 15 tons on a daily basis. Monthly financial savings amount to 12 thousand Euros minimum. When using heavy fuel oil for combustion in these furnaces and simultaneously adding up to 14 per cent water, the emission of Nitric Oxide in the atmosphere is reduced by over 20 per cent, which is a significant achievement in the area of environmental pollution. This investment is joined by the Installation of Urea Dosage System in Boiler Furnaces in POR Energy Plant. By adding 40-per cent water solution of urea during the process of heavy fuel oil combustion in boiler furnaces at the Energy Plant, Pančevo Oil Refinery has produced excellent results in the area of environmental pollution, so the emission of Nitric Oxides in the atmosphere has been reduced by over 60 per cent. The newly built condensate polishing unit, having the condensate processing capacity of 280 cubic metres per hour has been operational since early June this year. It was soon followed by the Demineralised Water Production Unit with the capacity of 200 metres per hours. Aided by this state-of-the-art technology, the only one of its kind in Serbia, top quality water vapour is produced at the Refinery in Pančevo and then used in the production process. Modernisation of the overall transfer of petroleum products from the Refinery has been invested into for several years now, which has resulted in modern loading terminals for tank trucks, rail wagons and vessels on the Danube. Owing to the recent completion of the third stage of loading terminal modernisation, totally worth nearly one million Euros, the latest loading method – bottom loading – has become the predominant method of loading light petroleum products at the POR. Two thirds of all loading spots have been equipped for loading petrol, diesel, jet fuel and toluene into tank trucks in this manner. Five islands at the refinery loading terminal now have the total of 15 loading arms for bottom tank truck loading, which completely eliminates the release of pollutants into the atmosphere. In addition to an indisputable ecological breakthrough, tank truck loading is now twice as fast, which is a considerable economic benefit.
Investments in Refining in the first nine months of this year amounted to nearly 60 million Euros.
There is permanent modernisation in Refining as new development links are constantly added. Investments related to the implementation of the closed sampling system and the closed drainage system are in their final stage, also featuring ecological and economic components. SALES AND DISTRIBUTION Petrol stations are often referred to as the façade of a petroleum company. In order to ensure that each customer is welcomed in the best possible way, Sales and Distribution has been investing major funds in educating its employees. To that end, there are two training centres in Belgrade and Novi Sad functioning as part of the Training and Development Sector aimed at training and further developing employees. Petrol station automation NIS petrol stations are modernised by introducing the electronic management system POS (Point of Sale), BOS (Back Office System), DOMS controller (automatic operation of fuel dispensers) and TMS (Tank Management System), as well as by converting petrol stations into automatically operated stations via the Orpheus information system. Ecology In compliance with strict ecological regulations, petrol stations have been equipped with waste water purification separators, while fuel tanks have a double shell for the protection of groundwater and soil. Warehouse modernisation Today's market demands top quality products, which is why petroleum products must be produced in conformance with the European standard and also stored and transported in line with the European Union requirements. To that end, the Modernisation of Petroleum Product and Liquefied Petroleum Gas Warehouses and Cylinder Filling Plants project has been implemented in Sales and Distribution. It has included the locations selected by NIS management as strategically important: petroleum product warehouses Novi Sad, Smederevo and Niš, then liquefied petroleum gas warehouses Subotica, Zrenjanin, Novi Sad, Belgrade-Ovča, Niš and Čačak, as well as cylinder filling plants Novi Sad and Belgrade-Ovča. The modernisation project involves the application of the latest technical solutions in the area of petroleum product and LPG storage, reconstruction of river, railway and road tank farms, storage space infrastructure, as well as fire protection and environmental protection systems. This is merely a portion of the new technologies applied by our Company in its operations. In the path of its development, it will certainly be open to further business modernisation in order to be able to meet ambitious business objectives and thus successfully maintain the position of the regional leader.