How Energy Transition and Product Diversification Planning Affect Revamp Projects?

The energy transition represents a significant market shift, characterized by unknown prices of feedstocks, fluctuating product prices, and evolving regulations. This transition necessitates innovative approaches to asset management, particularly through revamping existing assets. This strategy not only reduces initial investments but also aligns with the shift towards sustainable business practices.
Axens provides a comprehensive overview of how revamping can be a cost-effective solution for the energy transition. Key points include:
 

Challenges in the EU Downstream Industry
The EU downstream industry faces several challenges, including high costs, intense competition, multiple EU regulations, reduced margins, and loss of competitiveness. Revamping assets to target new markets can minimize costs and address these challenges. By repurposing existing infrastructure, companies can adapt to market changes and regulatory pressures while minimizing investment costs.
 

Axens' Revamping Solution
Axens offers a step-by-step approach, from preliminary studies to detailed engineering and start-up. This approach ensures that every aspect of the revamping is carefully evaluated at the right time, optimizing costs and finding the best fit for each site. The process involves a comprehensive offer accompanying customers from the very first thoughts to start-up and operation. This method helps in finding the best fit for each site, gaining time in executing the project, and optimizing the costs associated with developing the revamping.
 

Feasibility Studies for Sustainability
Detailed feasibility studies compare scenarios on CAPEX vs. OPEX, evaluate site integration, and assess synergies between refineries. This helps in defining priorities and identifying quick wins for decarbonization. For example, a European refiner evaluating future transformation options for two of its refineries conducted a feasibility study to compare three scenarios for transforming the refineries. The study aimed to ensure high-quality diesel and jet fuel production while minimizing investment costs.
 

Case Study
Another example includes the transformation of small teapot refineries in Shangdong, which are not competitive against bigger, newer, and integrated sites. By repurposing their sites, these refineries can avoid closure and capitalize on available feedstocks to produce higher-margin sustainable aviation fuel (SAF). This innovative approach is driven by the need to adapt to market changes and regulatory pressures while minimizing investment costs.
 

Repurposing and Innovation
The concept of repurposing existing sites or processes in refineries for new applications related to the energy transition is a key strategy. This approach not only reduces initial investments but also aligns with the shift towards sustainable business practices. By maximizing the reuse of existing infrastructure, companies can achieve significant CAPEX reduction and timeline savings.
BCG provide additional insights into the broader implications of the energy transition. BCG emphasizes the need for a comprehensive strategy that integrates financial, technological, economic, and societal considerations. This includes scaling up new low-carbon technologies, such as carbon capture, hydrogen, and large-scale renewables.

 
Conclusion
The energy transition and product diversification planning significantly impact revamp projects by necessitating innovative approaches to asset management. By repurposing existing assets, companies can reduce initial investments, adapt to market changes, and comply with evolving regulations. Strategic partnerships, detailed feasibility studies, and comprehensive planning are essential to successfully navigate this transition and capitalize on new business opportunities.