Refinery Updates June 2004
INDUSTRY ANALYSIS
1. AMERICAS
U.S.
No New California Refineries despite Soaring Gas Prices
The laws of economics are pretty clear on this: If the price of something goes through the roof, suppliers scramble like mad to make more of it. The price falls.
Yet that doesn't seem to apply to California's overheated gasoline market, where prices hit a record $2.37 a gallon the first week of June.
Despite a relentless increase in fuel consumption, the oil industry hasn't built a new refinery in California in 35 years and probably never will again. Nor is it likely to invest in significant expansions of existing facilities, even though prices in California are 30 cents a gallon above the U.S. average.
Even as demand grows, industry executives say expanding or building refineries is almost impossible in California, thanks to red tape, strict environmental laws and rampant opposition. That makes a new refinery a major risk -- a $2 billion, 10-year undertaking, depending on how long it takes to get the permits, said Bob Slaughter, president of the National Petrochemical & Refiners Association.
"Refineries are large industrial complexes -- putting one of those anywhere can be a challenge," said David Harrington, a spokesman for Shell Oil Products US. "These are hugely expensive investments. You need to look at those investments and say, 'How long is it going to take for me to get my return, and what's the market going to look like?'"
Some say the process is so lengthy that a new refinery could be rendered obsolete -- or at least unprofitable -- relatively quickly. Alternate energy sources like hydrogen fuel cells might be years off, but fuel-efficient hybrid vehicles are gaining market share now.
"When you look at . . . fuel cells, high-mileage cars, what if that demand (for gas) is declining instead of increasing?" said Drew Laughlin, a Houston consultant who has advised the California Energy Commission. "You don't see a strong business opportunity."
But some think the industry is exaggerating the financial and bureaucratic obstacles to new construction.
"You always have a NIMBY (Not in My Back Yard) problem . . . but there's plenty of places in California to build without suffering the NIMBY problem," said state Sen. Joe Dunn, D-Santa Ana, who will chair a round of legislative hearings on gas prices starting this month.
Others say oil companies are perfectly happy with tight supplies in California and elsewhere.
"Increasing capacity and output to gain market share . . . is now frowned upon," according to a study of the U.S. refining industry released last year by the RAND Corp. think tank.
Gordon Schremp, a fuels analyst at the California Energy Commission, said a big new refinery in California would hurt the industry.
"You would oversupply this market the day the refinery opened. Prices would collapse," he said.
Some experts say a more likely scenario is for someone to build a mega-refinery in a country like China, with its booming demand and lax regulatory climate, and dedicate a portion of the plant to serve California. But even that would represent an iffy proposition for the state; by the time the refinery is built, China's insatiable appetite for fuel might leave little or no supply for California, according to Laughlin.
The refinery situation is key to future gas prices. While the latest run-up in gas prices has been caused in no small part by a spike in the worldwide price of crude oil, Laughlin and others said California are suffering from a major, fundamental shortage of refining capacity -- a problem that will put upward pressure on prices long after the price of crude subsides.
"We're going to see prices stay at this level, or maybe go higher," said economist Severin Borenstein, director of the University of California Energy Institute.
Just eight years ago, California was a net exporter of fuel, producing enough for its own needs while helping serve other Western states. But California hasn't built a refinery since 1969 and has seen 20 facilities close since the 1980s. By tweaking their equipment, the remaining 13 refineries have been able to increase production in dribs and drabs, but they're losing ground to overwhelming increases in demand.
Yet the imports are showing up grudgingly. The allure of high prices isn't bringing a gusher of new supplies to California.
That's due largely to California's exacting clean-air fuel specifications. Blending gas for California is complicated. It requires costly modifications to a refinery. The U.S. government's mandate requiring ethanol in California gas has worsened things in the past year because it complicates the chemistry involved in meeting the state's standards.
All told, only a handful of out-of-state and overseas refineries make fuel for California, and the list isn't growing in spite of the state's high prices.
California's geographical isolation is another problem. There are no fuel pipelines bringing supplies into the state; everything must come by tanker.
Even if more refiners were willing to ship gas to California, a shortage of import and storage facilities is discouraging shipments.
"I've seen cargo sitting outside Long Beach," unable to dock because of inadequate port facilities, said Chris Mennis, an independent energy trader.
Fixing the problem is easier said than done. An Energy Commission study of the permit process for fuel-storage tanks revealed "bottlenecks, redundancies and unnecessarily burdensome regulatory processes."
Red tape isn't limited to California. When Saudi Arabia's oil minister offered in April to build two mega-refineries in the United States, he was essentially warned off by U.S. officials.
McSlarrow was quoted as saying. "Let us know how you did it."
A group called Arizona Clean Fuels has been working for five years to get permits for what would be the first new refinery in the United States since a Louisiana plant opened in 1976. It hasn't been easy. To sidestep environmental issues, the group moved the plant location from Phoenix to a remote site near Yuma, Ariz., but is still running into roadblocks and delays. It's likely it will be another five years -- if ever -- before the plant opens.
House Passes Bill to Promote Refinery Expansion
House Republicans pushed through legislation June 16 that supporters said would speed construction of new refineries to ease tight gasoline supplies. Opponents said the bill would reduce environmental protection and do little to stem high fuel costs.
The legislation was approved by a vote of 239-192 as House Republican leaders sought to dramatize the congressional impasse over energy legislation by bringing up for votes a series of energy-related bills.
Democrats said the effort was all for show since none of the bills has a chance of being approved by the Senate.
The refinery legislation would make the Energy Department the key agency dealing with refinery permits for plants proposed in designated development zones where there is high unemployment or where a refinery had been closed. It also would require that permit decisions be made within six months after applications are received.
Rep. Joe Barton, R-Texas, the bill's sponsor, argued that the measure does not waive or roll back existing requirements for environmental protection or siting of a facility. But he said it would spur construction of new refineries by cutting through the approval process.
But some Democrats argued that the bill would allow the Energy Department, whose primary role is to support the energy industry, to override the Environmental Protection Agency and state officials charged with enforcing clean air standards.
It would make the energy secretary "an environmental czar" who could override state environmental agencies and local officials, Rep. John Dingell, D-Mich., complained. He said GOP leaders were pushing the bill through without its ramifications ever having been examined in a hearing.
The bill was sharply criticized by environmentalists and state officials in charge of enforcing air quality standards.
"It pre-empts state and local environmental agencies" enforcing pollution controls on refineries, said William Becker, executive director of two associations that represent state and local air pollution control agencies. "The bill will obstruct state and local efforts to achieve and maintain clean, healthful air."
Becker said that under the law the Energy Department no longer would have to require refinery operators to install the best available technology to deal with smokestack pollution.
Supporters of the bill said there has not been a new refinery built in the country since 1976 and the number of refineries has declined dramatically as smaller facilities have been shut down.
Refinery capacity today is about 16.8 million barrels a day, compared with 18.6 million barrels a day in 1981, according to the National Petrochemical and Refiners Association.
But industry leaders say there are many reasons that refineries haven't been built beyond problems with permitting and environmental requirements. Refineries, for example, have had a history of meager profit margins, making it difficult to attract capital.
Refinery profits have soared along with high gasoline prices this year, but there's no assurance of stable profits in the future to attract the estimated $3 billion needed to build a new, large refinery, industry experts said.
U.S. to Review Oil Refinery Capacity
U.S. Energy Secretary Spencer Abraham asked an oil industry panel June 22 to assess nationwide refining capacity and crude oil stocks to see if steps can be taken to boost U.S. energy supplies.
"There is no question that one of the significant energy challenges we face is insufficient refinery capacity," Abraham said at a meeting of the National Petroleum Council.
The council, made up of oil and natural gas industry executives, is a federal advisory committee to the U.S. energy secretary.
In addition to studying U.S. refining capacity, Abraham also asked the council to study current assumptions about adequate U.S. crude oil inventories. The industry now uses a threshold of 270 million barrels to determine whether supplies are adequate or not, but Abraham questioned whether that assumption is "still appropriate."
"It's obvious that inventory levels are one of the things the market watches very closely, and they play a role in setting prices," Abraham said.
Shell to Cut Martinez Refinery Output
Shell Oil Co. will trim crude oil processing at its Martinez refinery by nearly 10 percent in July for maintenance, the Los Angeles Times reported June 21, citing internal documents it had obtained.
The published report also said production at Shell's Bakersfield refinery, which is scheduled to close Oct. 1, will be scaled back in July and August, a move that some fear could keep gasoline prices high by reducing supplies in the heart of the summer driving season.
The Bakersfield refinery makes about 2 percent of the state's gasoline and 6 percent of its diesel fuel, the report said.
Shell officials said such maintenance work is not unusual during the summer months. The report said most of the Martinez refinery will remain at full capacity even during the work.
State Could Run Refinery Shell Intends to Close
The state needs about 55 million gallons of fuel each year for its fleet of cars, trucks and other equipment, while Shell Oil Co. wants to get rid of a Bakersfield refinery producing about 643 million gallons of gas and diesel fuel annually.
Consumer activist Jamie Court sees a way to kill two birds with one stone: The state should buy the refinery and process its own fuel, saving jobs and money and possibly turning a profit by selling excess production to local governments.
Court, president of the Foundation for Taxpayer & Consumer Rights, says the marriage is a solution to high oil prices and budgetary woes, but others say it's a harebrained idea.
"It would not be politically palatable for the state to buy, own and operate a refinery," said Department of Energy spokeswoman Claudia Chandler. "To buy a refinery, maintain it and keep it up to specifications is beyond the purview of what state government does."
Joe Sparano, president of the Western States Petroleum Association, said the state would be welcome in the market, but he doubts it has the needed expertise or inclination.
Running a refinery is no picnic, he said. Even if the state contracted with experienced management, it still would be on the hook for environmental liabilities and the possibility that the investment could lose taxpayer money, Sparano warned.
"I don't believe our state is set up to do that," Sparano said. "It's not the nature of their business."
Tim Hamilton, a petroleum consultant based in Washington State, disagrees.
"This is not unprecedented," Hamilton said, citing Hawaii and Canada as government entities that once ran their own refineries. The state could buy the refinery for little or nothing, he said, and supply crude oil to the plant using "in-kind" royalties it receives from drilling that takes place on public land.
The refinery's foibles, as described by Shell spokesman David Harrington, could scare off buyers.
Patched together from three older facilities, the refinery is spread out, making it more expensive to run. Its inland location limits it to a single source of crude from the San Joaquin Valley.
State Attorney General Bill Lockyer, also interested in keeping the refinery open, has hired a consultant to look for buyers.
Motiva Enterprises LLC Expands and Enhances Base Oil Plant at Port Arthur Refinery
Motiva Enterprises LLC, a petroleum refining and marketing company owned by affiliates of Shell Oil Company and by Saudi Refining, Inc., will further expand the base oil plant at its Port Arthur, Texas refinery, which was announced today by John F. Boles, Motiva president and CEO. The facility currently produces Group II and Group II+ base oils, which are used in the manufacture of finished lubricants.
Motiva will construct a third lube hydroprocessing unit that will upgrade heavy gasoil into high quality Group II base oil, using Motiva's patented unit design. Construction will begin in the third quarter of this year and should be completed in January 2006. The expansion will boost Motiva's annual production by 5 million barrels per year of high quality Group II and Group II+ base oils.
"We are extremely pleased that Motiva has chosen to expand its investment in Port Arthur," said Tom Purves, refinery manager. "This investment will enable Motiva to expand production of the high quality base oils that are needed by the lubricants industry."
Project manager, Lowell Redlich, who also managed Motiva's 1998 and 2000 lube projects, noted, "Motiva is celebrating 100 years of lube refining at Port Arthur this year and it is heartening to see Motiva investing to further extend Port Arthur's position as the preeminent high quality base oil producer in North America".
Brian Smith, Motiva's Director - Base Oils, said, "Our Group II / II+ base oils are the cost advantaged solution to meeting evolving finished lubricant standards. This expansion demonstrates our commitment to meet customers' growing needs for these high quality products."
Headquartered in Houston, TX, Motiva Enterprises LLC, is a petroleum refining and marketing company owned by affiliates of Shell Oil Company and by Saudi Refining, Inc. Motiva's marketing operations support a network of nearly 11,000 Shell- and Texaco-branded gasoline stations in the Eastern and Southern United States. Company assets include three refineries located in Norco, LA; Convent, LA and Port Arthur, TX, capable of refining approximately 500,000 barrels per day (bpd), and ownership or partial interests in 47 product terminals.
Chevron Texaco Refinery Having Problems
Yet another California refinery is reported to have maintenance problems that could have an impact on gasoline production.
So far, the hydrogen unit problem at ChevronTexaco's 273,000 barrel per day refinery in El Segundo has only affected jet fuel and diesel fuel production, although it could force a hydrocracker production cutback if repairs take longer than a few days, and that would reduce gasoline output. The company's price for jet and diesel fuels jumped a few cents June 28.
There is no word from the company on how long repairs might take. Other refineries experiencing problems that affect production include Valero's plant in Benicia, Shell's Martinez refinery, and ConocoPhillips' facility in Martinez. In addition, a ConocoPhillips refinery in Washington State is undergoing emergency repairs.
State Assembly Member 'Fueled' Over Refinery's Closing
State Assembly member, Christine Kehoe from San Diego, is trying to force Shell Oil to keep a California refinery open in order to help push gas prices down.
However, Shell Oil stands by its reasons for closing the company's Bakersfield refinery.
Shell spokeswoman, Holly Cransman, told the State Assembly Natural Resources Committee, low supplies of crude oil and poor profits are forcing the closure.
"In the last five years, the return has been less than 1 percent in Bakersfield. It lost more than $50 million," Cransman said.
But, company insiders said that Shell is making millions every month at the refinery, and a state geologist noted that nearby oil fields in Kern County are among the most productive in the United States.
Kehoe introduced Resolution 245 -- which calls for Shell to keep the refinery open until Dec. 31 -- to the Natural Resources Committee.
"We would like to see the Bakersfield operation stay open and supply gasoline to the California market for decades to come," Kehoe said.
Shell wants to close the refinery late this summer for maintenance and then shut it down permanently in October.
According to Resolution 245, the delay in closing would give the state time to find a buyer for the refinery. The state Attorney General's Office has already hired a consulting firm to assess to help find buyers for the Shell refinery.
The Natural Resources Committee passed the resolution and now that plan goes on to the State Assembly.
Shell said it has four viable buyers for the plant. But Kehoe hopes the resolution passes to make sure there is enough time to complete a purchase and keep the refinery open.
EPA Not
Enforcing Oil Refinery Emissions, Report Says
Federal regulators are
bungling the job of making sure that the nation's oil refineries -- among the
country's biggest polluters -- reduce their emissions as promised.
The Environmental Protection Agency's own inspector general released a report June 25 that says the EPA's pollution cops aren't adequately monitoring the air and water at the 42 refineries that are under court order to reduce emissions. The IG also said enforcement officials delayed the refiners' attempts to clean up the air because the EPA was several months late on 98 percent of its paperwork.
Finally, the IG discovered that the EPA appears to have no goals or strategic plan to make sure the refineries clean up.
"In fact, the agency reports to Congress and the public projected emission reductions that they assume will occur . . . but haven't verified that the refineries comply or that the reductions actually take place," Inspector General Nikki Tinsley said in an e-mail to Knight Ridder.
Tinsley's report evaluates an eight-year effort by the EPA to reduce pollution problems at the nation's 145 refineries. In 1996, the agency concluded that of the 29 major industries in America, refineries had the worst record on violating pollution law. They were among the biggest emitters of cancer-causing, smog-inducing and acid-rain-forming chemicals.
Since the enforcement effort began, the EPA has convinced 11 refining companies, which produce nearly 40 percent of the nation's gasoline, to sign consent decrees filed in court saying they will reduce emissions and install new equipment to reduce air pollution. As part of the agreement, the EPA said it would reduce fines for past violations. Negotiations are under way with an unspecified number of other firms that produce another 40 percent of U.S. gasoline.
The IG said winning concessions from refineries was proper, but investigators faulted the EPA for not following up and determining whether emissions were dropping.
The EPA "must resolve planning issues and delays and begin to measure outcomes to ensure timely emissions reductions and to optimally protect human health and the environment, especially for people living in the vicinity of refineries," the IG's report said.
EPA enforcement officials asked the inspector general to keep the 77-page report secret, saying it was riddled with inaccuracies. The EPA's enforcement office produced a 68-page rebuttal to the report.
"The refinery initiative is one of the finest enforcement initiatives that the agency has undertaken, and success speaks for itself," said Adam Kushner, the EPA's assistant enforcement chief for air pollution. Kushner was unable to immediately produce data showing a decline in emissions.
Environmental groups, experts in environmental enforcement and a prominent senator charged that the report demonstrated an ongoing problem -- that the Bush administration goes easy on polluters.
"The picture that's emerging is much worse than we might have even imagined," said Dan Esty, the director of Yale University's environmental law program, who was a top EPA political appointee under the president's father, former President George Bush. "It shows a complete lack of focus for an environmental-protection regime."
Frank O'Donnell, the director of the Clean Air Trust, a Washington-area environmental lobby, said, the "EPA has issued lots of upbeat press releases but the reality is that they're bungling the actual enforcement of the law. That means continued pollution for local communities."
The National Petrochemical and Refinery Association, the trade group for refiners, had no immediate comment.
Neodesha Pegs Closed Refinery Pollution Damages at $1 billion
A southeast Kansas town has estimated its damages from pollution at $1 billion in its lawsuits against BP PLC.
But an attorney for the city of Neodesha said Friday the figure, provided at the oil company's request, could change dramatically with further research.
"That is the best estimate we have at this time," said Kansas City-based attorney John M. Edgar. "Obviously this is a very complex case involving pollution from different types of chemicals. ... We've got a lot of work to do to assess the damage impact from those chemicals."
That could take a year or more, he said.
Kansas law only allows lawsuits to be filed for less than or more than $75,000, but defendants may request an estimate of damages.
Standard Oil opened the refinery in Neodesha, 92 miles southeast of Wichita, in 1897. It closed in 1970, leaving behind a groundwater plume contaminated with benzene -- known to cause cancer -- and other chemicals.
The city's lawsuit, filed March 29 in Wilson County (Kan.) District Court, focuses on cleanup efforts at the site, which it says are inadequate, and the harm the pollution has done to property values and city revenues.
City officials and BP maintain there is no connection between the old refinery site and residents' health problems, and the suit does not address individual's health concerns.
State and federal health officials have said the groundwater pollution does not affect the town's drinking water supply and has not leached into the atmosphere.
BP spokesman Ron Rybarczyk declined to comment on the lawsuit.
DOMINICA /CARIBBEAN
Pledges for Oil Refinery in Dominica Fail to Come Through
Pledges to build a $2.4 billion oil refinery have fallen through after a company that proposed the idea failed to meet several deadlines, a government official said June 16.
A U.S.-based company, Global Resources Corp., proposed the refinery last year, and the Caribbean country's government had anticipating it would be built in the eastern village of Castle Bruce. But the company has missed deadlines to present financial information and more specifics, Tourism and Enterprise Development Charles Savarin said.
"We are awaiting a further response from Global Resources so we can make a final determination," Savarin said, brushing aside a suggestion by one political enemy that he resign due to the lack of results.
Critics say the government was misled.
Banana farmers concerned about the possible environmental effects of the refinery contacted New York-based Natural Resources Defense Council earlier this year to investigate Global Resources Corp.
"We did some researching and Web searches, and we couldn't find anything, which is sort of odd," said Jacob Scherr, director of the council's international program.
Scherr said his colleagues repeatedly called Global Resources Corp. and were only able to reach an answering machine; no one ever returned messages. They visited the address listed in Oakton, Va., which was a town house where they were told the real headquarters was in Reston, Va. — an address that didn't exist, Scherr said.
Scherr said when he visited Dominica to discuss the matter, "everyone was talking about this project as if it was going to happen tomorrow. And to us, it just seemed very far-fetched."
Repeated calls to the company by The Associated Press were not returned.
Former Attorney General Bernard Wiltshire called for Savarin's resignation earlier this week, saying he should have ordered checks on the company.
But Savarin dismissed the suggestion, saying the government would still consider proposals for the project. He said no money ever changed hands.
Banana farmers still are angry about the delay of a government irrigation project due to the proposed refinery, which was to be built on land owned by the government and farmers. The former British colony's economy, based on fading agriculture and modest tourism, has suffered in recent years.
Seeing no movement on the refinery, Savarin said the government has gone ahead with construction of a $3 million irrigation system for banana farmers on land previously set aside for the refinery.
MEXICO
Mexico Oil Refinery, Pemex, Deploys SPECTRUM(R) Integrity(TM)
Aprisma Management Technologies, Inc., a Gores Technology Group Company, today announced that Pemex Refinacion Subdireccion de Produccion, Mexico's largest oil refinery plant, has deployed Aprisma's SPECTRUM® Integrity(TM) to manage its multi-vendor, multi- technology local area network. The network supports 3,000 employees in six refineries and the central headquarters. Pemex Refinacion Subdireccion de Produccion chose SPECTRUM as the core solution to manage nearly 100 servers from Compaq, Dell, HP, and Sun running Informix, Oracle, and SQL server databases, along with e-mail and web services. Routers and switches from 3Com, Cisco, Enterasys, and Riverstone support LAN and WAN connectivity and security.
Enrique Carbonell, Network Manager, explained, "SPECTRUM is the answer to many issues and has helped us reduce our time to find and fix network problems from over an hour to less than 15 minutes. Due to the variety of vendors in our network, we spent a lot of time and money configuring and monitoring devices using element management software from each vendor. We simply had too many screens to watch. With SPECTRUM, we have a unified network and server infrastructure, and can seamlessly monitor all devices and report any performance degradations or failures across our Frame Relay, Gigabit Ethernet, and ATM OC12 network."
Pemex Refinacion processes crude oil from its own wells throughout Mexico. The oil is refined into gasoline, diesel, and other fuels that is sold to petroleum companies and gas stations and ultimately consumed by Mexican citizens. To uphold its service level agreements (SLAs) with the petroleum companies, Pemex Refinacion Subdireccion de Produccion's central NOC must ensure around-the-clock network availability, performance, and security. SPECTRUM's intelligent fault isolation and root cause analysis has guaranteed the integrity and availability of the network on more than one occasion, isolating problems down to specific device ports that service providers were not even able to pinpoint.
"We are very satisfied with the support and training we've gotten from Aprisma," Carbonell added. "After completing their training courses in New Hampshire, we returned and were able to immediately AutoDiscover our entire network and keep it running without any issues. SPECTRUM enables us to rapidly deploy new access control lists, community strings, and configuration settings in our infrastructure to protect against security threats. We also like the fact that SPECTRUM can import management information (MIBs) from any vendor automatically."
Carbonell concluded, "Aprisma has truly enabled us to manage what matters. Any IT organization would appreciate how SPECTRUM is easy to use and delivers actionable information through its graphical interface, OneClick(TM). We're able to keep our network at peak efficiency in less time and with less effort than ever before."
Within the next year, Pemex Refinacion Subdireccisn de Produccion plans to expand the use of VLAN and VPN technology, while leveraging 802.1x authentication for enhanced network security. SPECTRUM 7.0 will scale with Pemex's expansion, and will also be integrated with Tivoli's desktop management.
Petroleos Mexicanos is the largest company in Mexico and, according to the Petroleum Intelligence Weekly, in 2002 it was the eighth largest oil and gas company in the world and the third largest producer of crude oil in the world. Petroleos Mexicanos was established by Mexican Congress, effective July 20, 1938, as a result of the nationalization of the foreign-owned oil companies which were operating in Mexico. During fiscal year 2003, Pemex reported total sales (including the special tax on production and services, IEPS) of $625.4 billion pesos (U.S. $55.7 billion), compared to $514.8 billion pesos in 2002. This represents an increase of 21% in annual terms. Pemex Refinacion is the company's subsidiary in charge of producing gasoline and other products derived from crude oil and gas for Mexico's citizens via the operation of six refineries (Tula, Salamanca, Cadereyta, Madero, Minatitlan, and Salina Cruz). In 2003, crude oil processing increased 3.2%, or 40 Mbd, as compared to 2002. Accordingly, production of refined products increased 5% to 1,555 Mbd. In particular, in 2003 gasoline and diesel production increased 11.7% and 15.3% respectively.
2. ASIA
AUSTRALIA
ExxonMobil Oil Plant Future Undecided
The future of ExxonMobil's (XOM) remaining Australian oil refinery operations remains undecided with the oil giant yet to commit to a major capital upgrade needed to meet the government's tough new fuel standards by 2006, the Age reports June 16.
The newspaper said ExxonMobil has confirmed it will make a decision on the upgrade within a month. While it was hopeful of securing the future of the 135,000 barrels-a-day Altona plant, it told the Age an upgrade "was not a done deal."
An upgrade of the nation's second biggest refinery is likely to cost several hundred million dollars, the report said. Last year ExxonMobil mothballed a second Australian plant, the 78,000 barrels-a-day Port Stanvac refinery, blaming intense competition from much bigger and lower-cost operations in Singapore.
Australia's other oil refiners, BP (BP), Royal Dutch/Shell (RD) and Caltex (CTX.AU) have already detailed plans to meet the new fuel standards by 2006.
BATAAN
Petron Inks $100-M Loan for Refinery Upgrade
On June 21, Petron Corp., the country’s largest oil retailer signed a $100-million five-year term loan with Singapore-based bank Norddeutsche Landesbank Girozentrale to finance construction of two facilities designed to upgrade its refineries in Bataan.
The additional facilities are Clean Air Act compliant.
The loan facility will be used to put up Petron’s major projects Gasoil Hydrotreater (GOHT) an a LVN Isomerization Unit (Isom). This will increase production of its CAA-compliant diesel and gasoline refineries.
The five-year term loan, which has a 30-month grace period, carries an average tenor of four years. Citibank/Citigroup Global Markets Asia, ING Bank N.V. and SAMBA Financial Group arranged the facility. It has an interest margin of 120 basis points over the three and six-month LIBOR, considered as one of the lowest in the market.
According to Petron chairman and CEO Nicasio I. Alcantara said the loan facility would finance strategic investments and "underscore our commitment to produce clean fuels". These are Euro IV standards, which is the European standard on environmental fuel specifications. This is considered to be more stringent than the fuel standards in most of the United States and Asia.
"Once the facilities are on-stream, it will give the country a reliable source of fuels that meet CAA specifications," Alcantara said in a statement.
In the meantime the loan facility gives the company convenient terms, at this time. Petron vice president Antonio G. Pelayo said it would also set a new benchmark for the local market. "Our loan only reflects the banking community’s confidence in Petron’s viability and growth prospects," he said.
The Monetary Board of the Central Bank of the Philippines has approved the $100-million loan.
"We were told that our loan has the lowest cost in the market thus far and this only reflects the banking community’s confidence in Petron’s viability and growth prospects," Pelayo said.
For the first quarter of 2004, Petron posted a net income of R786-million or a 77 percent jump from the R445-million income over the same period last year. For the full-year of 2003, the company registered a net income of R3.1 billion. In the same year, Petron had more than a third of the total market.
For the two projects, construction already started in the last quarter of 2003. The units will make Petron the only company capable of locally- producing CAA fuels to meet all of its requirements.
Since the CAA law took effect, Petron said it has been introducing compliant fuels even before the prescribed timetable. In fact it has launched its Low-Sulfur (0.05 percent) DieselMax in October 2003 before the deadline this January.
In the meantime The Department of Energy and other government agencies has approved Petron’s CAA projects.
Late last year, the Board of Investments approved Petron’s application for incentives for the two projects. The combined investment of the two projects was the biggest approved for incentives in 2003.
CHINA
Sinochem to Acquire South Korean Firm
China National Chemicals Import Export (Sinochem), China's largest chemicals trader, is in the process of taking over Inchon Oil Refinery, a bankrupt South Korean company.
Sinochem and Inchon entered into a preliminary agreement, or a memorandum of understanding, in late May, said sources from Inchon, South Korea's fifth largest oil refinery.
Sinochem was picked over three South Korean bidders, and the deal will be worth approximately US$556 million, sources said.
The South Korean bidders were Paul Oil, Ko Pec and STX, which owns STX Shipbuilding.
It is also said Sinochem has offered a down payment to Inchon and will sign a final agreement in a few months, probably in August.
"The deal is still under negotiation," said Wang Zongshao, who is in charge of mergers and acquisitions at Sinochem.
"And our application to the National Development and Reform Commission is also in process," he said.
Overseas investment that exceeds US$1 million has to be approved by the commission.
Wang also confirmed Sinochem has given a certain amount in down payment, but he refused to reveal the amount.
"We will announce the deal after it is finally signed," he said. "Now we are not going to say too much."
Analysts say the deal is very likely to obtain approval, as the country is experiencing a raw materials shortage and is pushing a "go-global" campaign for large State-owned firms.
China's economy grew at the brisk pace of 9.7 per cent in the first quarter, driving increased demand for fuel and raw materials.
Even if growth slows down in the remainder of the year because of the government cooling-down measures, China still has a big appetite for oil products.
Sinochem is following the nation's biggest oil and petrochemicals companies, including PetroChina and China Petroleum and Chemical Corp, in buying assets overseas to help meet demand.
Inchon Oil has the capacity to process 275,000 barrels of crude oil into chemicals a day.
Its annual capacity is 14 million tons, some 2 million less than China's largest oil refinery Zhenhai Refining and Chemical Co.
Inchon Oil, the smallest of South Korea's five oil refiners, has been in court receivership since defaulting on loans in 2001.
Analysts also say the move is part of Sinochem's ongoing efforts to diversify its business scope in recent years.
The company was a pure trader, which monopolized oil trade in China for 40 years until 1993.
Squeezed by newcomers in the trade sector, the firm is gearing up to tap the up and downstream industries including oil exploration, refinery and sales.
The purchase is a concrete step towards the company's ambition of covering a whole oil business chain.
The company's license for sales of refined oil products is still pending.
Currently, only China Petroleum and Chemical Corp, PetroChina and a few non-State companies are allowed to sell refined oil products.
As a large and diversified player, Sinochem witnessed steady profit rises in the past months.
Sinochem International Co Ltd, its listed arm in Shanghai, posted a net profit of 126.6 million yuan (US$15.31 million) in the first quarter, up about 94 per cent year on year.
Its main business profit rose to 256 million yuan (US$30.9 billion), increasing 57.6 million yuan (US$6.96 billion) compared to the same period the previous year.
INDIA
ONGC to Double Capacity at Tatipaka Refinery at Rs 20 Cr
Oil and Natural Gas Corporation (ONGC) is doubling the operating capacity of its mini refinery at Tatipaka in Andhra Pradesh, at a cost of Rs 20 crore.
The company’s board had approved the proposal in April, whereby the capacity of the refinery would be increased from 0.1 million metric tonne per annum (MMTPA) to 0.2 MMTPA.
The company has already begun the basic engineering and tendering jobs on a fast track mode.
Asset manager of Rajahmundry C Lal said that the crude for the refinery is sourced from the marginal oil and gas fields off the AP coast. About 50 per cent of the products are consumed by ONGC locally, while the rest is sold to other public sector units -- Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation Ltd (BPCL), he added.
The refinery produces diesel, naphtha and kerosene. Naphtha is currently being sourced by HPCL for supply to fertilizer companies. Diesel is partly consumed by ONGC’s own drilling rigs in Rajahmundry and Karaikal assets to HPCL, IOC and BPCL. Kerosene is supplied to HPCL and IOC for public distribution scheme (PDS) supply.
The mini refinery was commissioned in 2001 and the initial investment of Rs 26 crore was paid back by the refinery in 15 months of its operation, said Mr Lal.
He added that the capacity of the refinery is low as the oil production from the surrounding wells is low.
Tatipaka Refinery, first of its kind in the country which can be relocated, was conceptualized as there were problems in evacuating the oil produced for this remote location of Krishnapally.
The crude explored was initially sent to HPCL’s Vizag refinery to start with, which was located 250 km away. Following a fire at the Vizag refinery, the company decided to start its own refinery and hence decided to set up a mini refinery for generating fuel from oil produced for drilling operations.
IOC to Utilize Full Capacity of Haldia
The West Bengal government has asked the Indian Oil Corporation to ensure full capacity utilization of the Haldia refinery.
"IOC may set up another refinery at Paradeep. But we insist that the Navaratna company must ensure full capacity utilization of Haldia refinery and its further expansion as the corporation has proposed earlier," a senior state government official said June15.
The official said the IOC had also proposed to set up a condensed refinery and a styrene-butadine unit, also in Haldia.
"Though these discussions were held in the light of the IOC's proposed participation in the Haldia Petrochemicals, the Corporation could always go ahead with these projects without linking those with the HPL," he pointed out.
He said the Gas Authority of India Limited (GAIL) had also given a proposal for setting up of a styrene-butadine unit in Haldia.
To a question, he said the debt restructuring of the state's most prestigious project HPL was expected to be completed by this month.
"While GAIL has sought some time for clearance from the Public Investment Board for injecting Rs 332 crore into the mega project, the Chatterjee Group has decided to make an advance payment of Rs 200 crore out of its restructuring contribution of Rs 268 crore," he said.
Of the Rs 200 crore, he said, the Chatterjee Group was expected to pay up Rs 143 crore immediately and Rs 57 crore later. The Chatterjee Group had already applied to the SEBI for floating of IPO later this year.
HPCL to Get Equity Stake in IOC Panipat Refinery
Hindustan Petroleum Corporation Ltd (HPCL) will get an equity stake in Indian Oil Corporation's 6-million-ton Panipat refinery. The deal is part of a collaboration agreement signed by the two companies on July 28, which includes joint participation in exploration and production, refining, petrochemical projects and consultancy services.
A senior IOC official said the agreement has a "unique structure" comparable with the equity oil contracts where HPCL will invest capital and share refinery products while Indian Oil will operate the refinery. Details of the agreement are being worked out. The agreement does not extend to other IOC refinery projects, he said.
The two companies will also investigate exploration and production opportunities in India and abroad. "The idea is to mitigate risks through pooling of resources and sharing of infrastructure," he said.
Both companies informed the stock exchanges about the agreement. The stock exchange notice described the memorandum of understanding as a "joint collaboration in various areas of mutual interests".
Essar Power Plans to Up Cap to 2000 MW
Essar Power Ltd is planning to set up a plant each in Andhra Pradesh and Gujarat to increase its installed capacity to 2000 MW in the next four-five years, a senior company official said.
The company is planning to purchase a 1200 MW power plant in Scotland and relocate it to Jamnagar in Gujarat and set up a 250- 300 MW plant at its hi-grade pellets plant in Andhra Pradesh.
These will be done over a period of 4-5 years and by then our installed capacity would be around 2000 MW, the official said.
Essar Power is the first IPP to be set up by Essar Group at Hazira with an installed capacity of 515 MW.
The official said now that Essar Oil is set to complete its refinery project in 18-24 months, we are studying various options to use residual oil from the refinery project. One option being considered is to use it as a fuel for generating power.
The company is exploring the possibility of setting up a power plant exclusively for this purpose in Gujarat, adjacent to its refinery project.
Meanwhile, it is also carrying out a technical and financial feasibility study, likely to be completed in two months, on the possible relocation of plant from Scotland.
Sulfur Free Gas from Mathura Refinery
The Indian Oil Corporation is working on war-footing to produce sulfur free diesel at its Mathura Refinery through the commissioning of its Diesel Hydro Desulphurisation Treator (DHDT) Unit.
It would not only improve the quality of diesel but boost the octane number also.
After the commissioning of 1.8 MMTPA Diesel Hydrotreater Unit (DHDT) under execution now, all high speed diesel (HSD) products from Mathura Refinery will conform to Bharat Stage-III standards.
Confirming commitment to further boost an eco-friendly environment in and around the refinery, executive Director of the Mathura Refinery, B M Bansal, said June 4 that the process for the Motor Spirit Quality Upgradation Project (MSQUP) has started.
The unit will help eliminate benzene and sulfur from gasoline, making it more conducive to improving the environment. All of the gasoline produced from Mathura Refinery would conform to BS-III standards after the commissioning of MSQUP, he said.
Since its inception, Mathura Refinery has been adopting effective measures to become a model for the blending of technological advancement with environmental protection.
It was first in the country to conduct a Scientific Environmental Impact Study by the Varadrajan Committee far ahead of its commissioning. It was the first refinery in India that not only started with two sulfur recovery units along with a standby unit but also installed tall chimneys for better dispersion of pollutants.
Use of internal fuel oil derived from low sulfur crude from Bombay High and Nigerian crude, replacement of the chlorofluoro carbon system to help halt depletion of the ozone layer, use of a vapor absorption system for air conditioning in control rooms, use of sulfur free natural gas in boilers and furnaces in place of liquefied fuel and implementation of various energy conservation schemes to reduce emission of greenhouse gases like CO2, are some other measures that the refinery has taken for further improving the environment, Bansal stated.
Bansal also said the refinery has been supplying 'Green fuels' including unleaded petrol (since 1995) and a very low sulfur diesel (since 1996).
''It is our firm belief that in business philosophy economic development has to move in tandem with ecological balance in order to sustain development,'' he added.
JAPAN
Japan Energy, Cosmo, Idemitsu Halt Refinery Shipments
Japan Energy Corp., Idemitsu Kosan Co., Cosmo Oil Co. and Kyushu Oil Co. said they stopped shipping fuel from their refineries while Typhoon Dianmu approached the Japanese main island of Honshu.
Japan Energy, a unit of Nippon Mining Holdings Inc., halted delivery by sea of fuel products to and from its Mizushima refinery in Okayama Prefecture, spokesman Takada Masanori said in a telephone interview. The refinery is not affected and Japan Energy has no plan to halt processing, he said.
``Idemitsu has stopped shipping from two of its four refineries,'' Tomoki Ohira, a company spokesman said. Idemitsu, Japan's second largest refiner, halted shipments of fuel products from its 120,000 barrel-a-day Tokuyama refinery in Yamaguchi prefecture and its 160,000 barrel-a-day Aichi refinery, he said. Ohira does not know when shipments will restart.
Idemitsu usually ships fuel products from its refineries everyday, he said.
Cosmo Oil stopped shipments of fuel products from three refineries, Tatsuya Yano, a company spokesman said. The Sakaide plant Kagawa Prefecture, Sakai plant in Osaka City and Yokkaichi refinery in Mie Prefecture were still operating, he said.
Kyushu Oil Co. said it suspended shipments from its refinery in Oita Prefecture on Kyushu, Japan's southern main island. The 155,000 barrel-a-day capacity plant was still operating, said Yoshihiro Hotani, a spokesman at Tokyo-based Kyushu Oil.
A Nippon Oil Corp. spokesman, who asked not to be identified, said he couldn't say whether the typhoon would affect operations at the company's refinery in the area.
NEW GUINEA
InterOil Receives First Crude Oil Shipment to South Pacific Refinery
The first shipment of crude oil for InterOil Corp.'s refinery has arrived at its marine terminal located in Papua New Guinea.
The Canadian company's refinery project has transformed the South Pacific country from an importer of refined products into a net exporter of refined products. InterOil is also working to develop an exploration program in the country.
InterOil's North American headquarters is in The Woodlands.
The refinery has the capability of 32,500 barrels per day of sweet crude.
The majority of the refinery's product is secured by contracts with Shell Overseas Holdings Ltd. Currently, BP Singapore is the exclusive agent for all crude oil supplied to the refinery.
3. EUROPE / AFRICA / MIDDLE EAST
ITALY
Honeywell Completes $5 Million Automation and Re-instrumentation Project for SARPOM Pipeline
Honeywell (NYSE:HON) announced June 30 it has successfully completed a $5 million automation project for Italian oil company Societa per Azioni Raffineria Padana Olii Minerali (SARPOM) on time and within budget. The engineering procurement and construction contract called for the automation and re-instrumentation of the company's nine crude oil and finished-product pipelines by March 2004. SARPOM is a joint venture between ExxonMobil and ERG. Its finished products include gasoline, diesel oil, heavy and light fuel oil, jet fuel and virgin naphtha.
"Honeywell's Experion(TM) Process Knowledge System (PKS) will help us to achieve the pipeline project objective -- improving the safety and reliability of operation in compliance with current requirements and pipeline automation progress in protecting the environment," said Paolo Tagliaretti, SARPOM Project Manager. "Having Honeywell as our single interface for the entire project will prove beneficial to us now and in the years ahead."
Honeywell was responsible for the engineering, design, management, implementation, procurement and construction of SARPOM's entire pipeline automation system. In addition to boosting production capacity, reliability and quality, Experion will help SARPOM comply with new environmental protection laws by improving the detection of and response to pipeline leaks.
The project included a variety of Honeywell technologies, including three global user stations, Honeywell ST3000 Smart Transmitters, Fail Safe Controllers (FSC(R)) and safety systems. SARPOM opted for Honeywell's FSC systems because they are easily integrated with the company's existing Honeywell systems and because TUV, a leader in independent testing and assessment services, approved them for use in safety applications.
SARPOM operates a complex network of pipelines comprising 470 km of pipes in varying sizes ranging from six to 20 inches. The Honeywell pipeline automation project affects the Quiliano crude oil pipeline; the Arluno, Chivasso, Malpensa Airport, Vado Ligure and Turbigo finished-product pipelines; among other smaller pipelines.
The Quiliano crude oil pipeline moves eight million cubic meters of crude oil per year, which makes up the total refinery feedstock. The finished-product pipelines move six million cubic meters of refined products, equaling 80 percent of refinery output.
SARPOM's refinery in San Martino di Trecate (close to Novara) has operated since 1952. The refinery covers an area larger than one million square meters and produces 250,000 barrels per day. It has a balanced oil capacity of nine million tons per year and a real capacity of 6.7 million tons per year. The Vado Ligure sea terminal in Savona supplies the refinery's crude oil through a 20-inch, 150-km pipeline via a depot in Quiliano.
Honeywell International is a $23 billion diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; specialty chemicals; fibers; and electronic and advanced materials. Based in Morris Township, N.J., Honeywell's shares are traded on the New York, London, Chicago and Pacific Stock Exchanges. It is one of the 30 stocks that make up the Dow Jones Industrial Average and is also a component of the Standard & Poor's 500 Index.
WALES
Texaco's Pembroke Refinery Processes First Doba Crude
ChevronTexaco Corp. subsidiary Texaco Ltd. reported it has successfully processed its first shipment of Doba crude at its Pembroke refinery in southwest Wales, following completion of a $12.8 million plant reconfiguration.
The heavy, acidic Doba crude is similar to North Sea crude that Pembroke currently refines, but Doba has a higher calcium content—250 ppm.
To enable Pembroke to refine Doba crude, which comes from Bolobo, Miandoum, and Kome oil fields in southern Chad, Texaco coated pipe interiors with a chemical inhibitor that provides a protective film, which is regularly monitored. With BakerPetrolite chemical company, Texaco also devised a process to treat the calcium in the refinery's desalter.
RUSSIA
LUKOIL Gives up Idea to Construct Refinery in Moscow Region.
LUKOIL has given up the idea to construct refinery in Moscow Region, LUKOIL President Vagit Alekperov told Vedomosti.
As informed earlier, LUKOIL and Moscow Region agreed in Sept. of 2003 to construct a refinery. The feasibility study was to be made out by LUKOIL over this year.
However V. Alekperov said the company has tested the project and considered it economically non-effective. There is no deficit of refining as it is. We have structural deficit for certain types of oil product which could be eliminated by reconstructing projection facilities.
At present LUKOIL has four refineries in Russia, including Permnefteorgsintez, LUKOIL-Volgogradneftepererabotka, LUKOIL-Ukhtaneftepererabotka and LUKOIL-Nizhegorodnefteorgsintez.
KENYA
State Urged to Save Oil Refinery
The Kenyan government was urged June 17 to save the Changamwe Oil Refinery from closure.
Local MPs, speaking under the umbrella of the Coast Parliamentary Group, said the closure would adversely affect the region's economy.
The lobby's secretary general, Mr Lucas Maitha, said it would be unwise to shut down the refinery, in which huge amounts of money had been spent.
The refinery needs more than Sh12 billion for upgrading to meet the prevailing international standards.
Leaded fuel is being phased out globally as required by an international treaty, to which Kenya is a signatory.
Sub-Saharan Africa remains the only region where leaded gasoline is still widely used.
The Government owns 50 per cent of the refinery's total shares, while the rest are held by BP Shell and Caltex.
Yesterday, Maitha said the 53-year-old refinery employed hundreds of people and shutting it down would lead to massive job losses.
"It will be in the best interests of Kenyans to upgrade the refinery so as to keep it afloat."
The refinery's closure would add to the problems affecting the Coast people, who have for long been sidelined by various governments since independence.
Evaluating Upgrade at Kenya Refinery
Stakeholders of the Mombasa-based Kenya Petroleum Refinery Limited (KPRL) have launched a six-month consultative process to determine the exact value of investments needed to upgrade the refinery and prevent it from closure.
The latest decision, which seeks to end speculations over the uncertainties surrounding the future role of the refinery, was reached during the company's board meeting held in Nairobi on June 17.
Mr Justus Kageenu, KPRL chairman said in a statement that after critical evaluation of the various options set before them by the UK-based KBC Process Technologies consultancy firm, the board has decided to settle on an option involving substantial investment in upgrading the refinery to produce low sulfur and unleaded fuel.
The consultation process, scheduled to end later this year will also reconcile the estimated costs of the earmarked investment proposed by the Ministry of Energy and the British consultancy firm's technical evaluation report.
The decision comes shortly after the government directed stakeholders of the refinery to either inject Sh12 billion or close down the facility by December 2005, saying the initial investment of Sh100 million was not enough to make the refinery a competitive outfit.
"The KPRL Board recognizes that the future role of the refinery has been subject to much discussion and speculation in the past and present," said Kageenu.
"The board has launched this second phase of decision making process and embarked on a more detailed economic evaluation of the investment needed to allow a clear decision to be made." Kageenu said due to the complex environment in which KPRL operates, it would take six months to complete the process upon which the board would be in a position to take a decision on the way forward.
"The Board recognizes the value of KPRL to the country over the past years and the importance of the outcome not only for the company but also for the country, and intends to take the appropriate decision at the earliest possible opportunity," said Kageenu. Among other options suggested by the consultancy firm included the conversion of refinery into an oil product import facility.
Kageenu said the company has plans to borrow the proposed funds from commercial banks and repay from its own cash flows.
He said Kenya would be better off with an upgraded refinery.
NIGERIA
IOC to Set up Refinery in Nigeria
Indian Oil Corporation (IOC), will set up its first overseas oil refinery in Nigeria as part of its drive to expand globally.
IOC has been invited by the Edo State of Nigeria to set up a grassroots refinery. "Our board has approved signing of a Memorandum of Understanding with the Governor of Edo for the project," IOC Director (Business Development) Mr Naresh K Nayyar, told PTI here.
The capacity of the refinery and the investments have not yet been firmed up. We propose to take up the project as a joint venture with Edo State, he said.
However, IOC has conditioned building the refinery on the fiscal regime provided by Edo, which produces Escravos and Forcados crude grades. "We want stake in an oil field so that the refinery gets steady feed of crude oil for processing."
IOC, which has also bid for revamping the existing refineries in Nigeria, wants to enter auto fuel retailing business too, he said.
Oil-rich Nigeria has four refineries with a total capacity of 4,45,000 barrels per day (22.5 million tons) but output of petroleum products is restricted to just 25 per cent of the capacity as the machines are old.
The west African nation has a total demand for 257,000 barrel per day (12.9 million tons) of petroleum products and the new refinery is proposed to feed Edo, one of Nigeria's largest oil consuming states, and exports to Europe.
SOUTH AFRICA
Sapref Has Cleaner Fuels Plan
The cleaner fuels project of the Southern African Petroleum Refinery (Sapref) will generate R100 million for empowerment companies and create 500 temporary jobs.
The project, in which all petroleum refineries in the country are participating at an estimated cost of R15 billion, involves the removal of lead and the reduction of sulfur in petrol and diesel to meet the government's new fuel specifications by 2006. Requirements to further reduce sulfur levels and to diminish benzene content are expected by 2010.
The government initiated the project because airborne lead, which is added to petrol to increase its octane rating, is known to have an effect on the brain, particularly in children, and sulfur dioxide emissions cause respiratory problems.
At an event to launch the project, Richard Parkes, Sapref's managing director, said that up to 500 jobs would be created during the 18-month construction period.
"Of the R700 million to be spent on Sapref's large increase in octane [Lion] project, 40 percent of the equipment and services will be sourced from South African suppliers, and of this about 40 percent, or R100 million, will be sourced from black economic empowerment companies," he said.
"Due to the nature of the project, large equipment will need to be imported."
The Lion project, which will not increase Sapref's capacity, will include the construction of an isomerization unit to efficiently increase the octane level of the petrol. An additional reactor will be installed in the platformer, the main octane generating unit in the refinery, and a new hydrogen purification unit will be added to the hydrogen system to increase Sapref's capacity to further desulfurize petrol and diesel.
A number of environmental features have been built into the design. As a result, there will be no increase in sulfur dioxide emissions, nitrogen oxide emissions or effluent.
Sapref will not replace lead with other octane-boosting additives, as other refineries are doing, but will instead achieve the high octane requirements through the further refining of petrol components.
Due to the energy intensive nature of the process to further refine petrol components, there will be a 5 percent increase in carbon dioxide emissions.
Sapref, situated in the south Durban basin, obtained approval from the KwaZulu-Natal department of agriculture and environmental affairs for the construction of the plant in May. The project will be commissioned in October next year to meet the government's deadline of January 2006.
The Sapref refinery, a joint venture between Shell South Africa Energy and BP Southern Africa, is the largest crude oil refinery in southern Africa, with 35 percent of the country's refining capacity.
Activists Take One Share to Shell AGM
One share in Royal Dutch/Shell bought for £0.25 (R2.80) has enabled two environmental activists from South Africa, Desmond D'Sa and Ardiel Soeker, to attend the oil multinational's annual meeting (AGM) in London June 28, where they joined a delegation spotlighting the group's environmental record.
D'Sa is from an organization called groundWork, while Soeker is from the South Durban Community Environmental Alliance. The two bodies had joined a network of environmental groups, headed by Friends of the Earth, to draw attention to the environmental plight of communities adjacent to Shell's operations around the world, said spokesperson Ferrial Adam.
Last week Friends of the Earth launched a report accusing Shell, already under scrutiny for overstating its oil reserves, of polluting communities, damaging wildlife habitats and failing to live up to its promise of environmental and social responsibility.
D'Sa and Soeker wish to ask directors why they have not honored a commitment made at last year's meeting to clean up the Sapref refinery in Durban.
They intend to complain about Sapref's "antiquated and leaking pipelines" and wish to question Shell's apparent double standards of providing cleaner facilities in northern countries like Denmark, while providing dirtier facilities in South Africa.
They also want to know why the refinery is not dealing with its environmental issues, instead trying to "greenwash with feel-good projects such as new playgrounds and scholarships".
Paddy Milner, a director of Shell South Africa, admitted that the pipelines at the refinery were old.
ISRAEL
Blast Hits Haifa Refinery
A small explosion hit the oil refinery compound of Haifa's industrial zone June 16.
Eleven people were lightly injured in the incident, which police said was not terror-related. Police added that there was no fear that hazardous chemicals were involved, or that any had been released in the blast.
Israel Police spokesman Raanan Stolobiski said the fire had been extinguished.
The explosion was apparently caused by a mechanical malfunction in a recently installed oven in the refinery.
Environmental groups have long cited the refineries and chemical plants in the city's industrial zone as a potential hazard, and urged that they be moved far from Haifa.
The plants have been the site of a number of industrial accidents and large fires in recent years.
Granite Hacarmel May Bid for Pi Glilot, Ashdod Oil Refinery
Amiaz Sagis, CEO of Granite Hacarmel Investments (TASE: GRNT) said he believes his company would bid in the tenders for both the Pi Glilot facilities and the Ashdod oil refinery.
These assets, amounting to hundreds of millions of shekels, will be the main energy economy acquisitions in the coming years, and consequently have great strategic importance.
Sagis said, “The Granite Hacarmel board still has not rendered a decision in the matter, but I believe that if and when the tenders are published, we’ll compete in them, due to the strategic importance of control of the Ashdod refinery and the Pi Glilot fuel distribution facilities.”
Granite Hacarmel is the parent company of Sonol (fuel) and Supergas (gas), and also has activity in desalination, real estate, and paint (Tambour). Control of the Pi Glilot facility and the Ashdod refinery will confer a significant advantage in fuel industry competition.
Last week the Ministries of Finance and National Infrastructures decided to split Oil Refineries, and sell the Ashdod refinery separately. Projected proceeds are in excess of $100 million. The Haife refinery is slated for a stock exchange issue.