oct 04 update

The U.S. Environmental Protection Agency has alleged that the refinery discharged more than twice as much lead and cadmium from its hazardous waste incinerator during a test in March than is permitted by the Clean Air Act.

The agency has the option of issuing a compliance order, fining the company or bringing a lawsuit against BP Products.

BP Products is a division of the London-based petroleum company BP PLC.

Citgo to Spend $320 Million on Refinery Pollution Curbs

Citgo Petroleum Corp. will pay a $3.6 million fine in a settlement with the U.S. Justice Department and also spend $320 million to cut air pollution from six of its refineries, the government said.

The settlement is expected to cut harmful air emissions by more than 30,000 tons per year from the refineries, which represent nearly five percent of total U.S. refining capacity, the Justice Department and the Environmental Protection Agency said in a joint statement.

The biggest part of the settlement requires Citgo to spend $320 million on state-of-the-art technology to cut emissions of nitrogen oxide and sulfur dioxide.

At each refinery, Citgo will launch programs to cut excess emissions associated with flaring of hazardous gases, cut emissions from its sulfur recovery plants with new controls to treat hazardous benzene wastes, and upgrade its leak detection practices.

The settlement should cut Citgo's annual emissions of nitrogen oxide (NOx) by more than 7,184 tons and sulfur dioxide (SO2) by more than 23,250 tons, the government said.

Citgo is the international refining arm of Venezuelan state oil company Petroleos de Venezuela S.A.

The proposed settlement was filed in federal court in Texas, and is subject to public comment and court approval.

The affected Citgo refineries are located in Lemont, Ill., Lake Charles, La., Corpus Christi, Texas, Paulsboro, N.J. and Savannah, Ga. Citgo will also spend $5 million on other environmental projects at its Corpus Christi, Texas refinery, the government said.

Similar settlements with refiners have "reduced emissions of air pollutants by 200,000 tons per year at 48 refineries in 24 states that collectively account for more than 40 percent of domestic refining capacity," said Thomas Skinner, EPA's acting assistant administrator for enforcement.

Over the past three years, the U.S. government has reached similar settlements with Chevron, Motiva Enterprises, Equilon (Shell) and Shell Deer Park Refining, Marathon Ashland Petroleum, Koch Petroleum Group, BP Exploration & Oil, Conoco, Costal Eagle Point Oil Company, CHS Inc. (Cenex), Lion Oil, Ergon Refining and Navajo Refining Co.

BOC to Construct $100 Million Hydrogen, Utilities Complex to Supply BP and Sunoco

The BOC Group PLC, Murray Hill, NJ, plans to build a $100-million hydrogen and utilities complex to supply as much as120 MMscfd of hydrogen to BP PLC and Sunoco Inc. oil refineries in Toledo, Ohio and other potential customers in the area.

The facility will be located at the Sunoco refinery, which also will receive steam from the complex.

LindeBOC Process Plants, Tulsa, will provide engineering and construction services. Construction is scheduled to start next month and to complete in fourth quarter 2005.

The complex will enable the refineries to meet requirements for ultra-low sulfur gasoline and diesel fuels meeting the US Environmental Protection Agency's Tier 2 clean fuels regulation.

Tesoro Installs New $20 Million Scrubber at Mandan Refinery

A $20 million scrubber has been installed at the state's only oil refinery here to reduce sulfur dioxide and other pollution.

The new scrubber was completed on Oct. 22, after two years of design and construction. It is the latest of some $60 million worth of upgrades at the refinery over the past couple of years.

The Environmental Protection Agency had required the company to install the scrubber by the end of the year, said Ron Day, Tesoro's environmental health and safety manager.

Public Hearing Set for ND Tribal Report on New Refinery

Plans by the Three Affiliated Tribes to build a small refinery on the reservation near Makoti took another step through the lengthy permitting process.

The first version of an Environmental Impact Statement, called a draft scoping report, is complete and available to the public.

A public hearing on the report is to be held Nov. 9 at the Four Bears Casino and Lodge in New Town.

The Bureau of Indian Affairs prepared the report.

The tribe wants the BIA to transfer 470 acres of reservation land in Ward County from fee to trust status. It bought the land as a refinery location, primarily because the Canadian Pacific Railroad crosses it.

Reservation fee land is privately owned. This land in particular is subject to county property taxes of about $3 an acre a year, said Donald Siebert, Ward County tax director.

If the land is converted to trust land, it's held in trust for the reservation by the Department of Interior and is no longer subject to county property taxes, Siebert said.

The Ward County Commission protested the transfer out of concern that construction of a refinery would impact county roads without a tax base to support repairs.

The county would not get tax revenue from the refinery, which is expected to cost about $100 million and employ about 68 operators and hundreds during construction.

In the draft scoping report, the BIA said it is looking at three alternatives.

The first is to change the land from fee to trust status and approve the refinery. The tribe describes it as a state-of-the-art clean fuels project, capable of refining about 10,000 barrels a day, which is small by industry standards.

The tribe wants about 190 acres for the refinery and plans to grow feed for its bison project on the remaining 280 acres.

In its second alternative, the BIA said it would consider changing the land status, but only for agricultural purposes and not for a refinery.

A third alternative is to take no action.

The scoping report identifies a number of key issues for the final environmental impact study.

Those include everything from the refinery's impact on air, ground and surface water, wetlands, animals and cultural resources.

The BIA also will look at whether it should approve trust status for land that may become contaminated.

CANADA

Imperial Oil’s Srathcona Refinery Refit will Cost $250 Million

Imperial Oil will spend about $250 million to convert its Strathcona refinery so it can produce ultra-low-sulfur diesel fuel.

The company's largest refinery will use up half the money that Imperial is spending to bring all four of its Canadian plants, including two in Ontario and one in Nova Scotia, in line with federal sulfur content laws by June 1, 2006.

About 400 additional workers will be hired during peak construction at the Strathcona project, but it will have little effect on the permanent workforce, spokesman Pius Rolheizer said.

Pre-construction work is already underway on the 18-month project, he added.

Strathcona County Mayor Vern Hartwell said although they knew this was coming, it is still great news for the county.

"We like to have progressive industry in the county, and Imperial Oil has always been that way."

When Imperial completed a required $140-million conversion to low-sulfur gasoline last October, it reduced emissions from the stacks, and promised to do the same with the diesel plant, Hartwell said.

Rolheizer said there will be no noticeable increase in emissions or noise when the diesel refit is complete.

The diesel retrofit is more expensive than the gasoline project because the technology is more complicated, he said.

Diesel accounts for about 30 per cent of production at the refinery, which turns 187,000 barrels of crude a day into a host of products, including jet fuel, lubricants and motor oil.

Rolheizer couldn't say if extracting more sulfur would present a marketing problem for the company. Currently, Imperial sells the sulfur extracted at Strathcona to Agrium's fertilizer plants in Redwater and Fort Saskatchewan, but it's a fickle market with more companies jumping in all the time.

Imperial senior vice-president Brian Fischer said it will take more than 1,500 people almost two years to convert the four refineries.

"But at the end of the day, Imperial Oil will be producing ultra-low-sulfur diesel which, in combination with 2007 model vehicle engines, will reduce smog-causing nitrogen oxides and particulate matter emissions from diesel-powered vehicles by almost 90 per cent," he said in a press release.

Federal regulations require the sulfur content in diesel fuel for cars and trucks to be down to 15 parts per million by June 1, 2006.

Fischer said the company will meet the new standard in time for the introduction of 2007 model vehicles whose engines can burn ultra-low-sulfur diesel.

Imperial said it has already reduced the sulfur content of its gasoline by more than 90 per cent, to 30 parts per million, by spending more than $600 million to retrofit its four refineries.

Last month Imperial said it was moving its corporate headquarters from Toronto to Calgary because its major growth plans focus on Alberta's oilsands and natural gas from the Arctic.

Imperial owns 25 per cent of the Syncrude Canada joint venture, currently undergoing a massive expansion, and is developing a project near Cold Lake that will be producing heavy oil later this decade.

Work also began this summer on the company's $5-billion to $8-billion Kearl Lake open-pit oilsands mine near Fort McMurray, which eventually will produce 200,000 barrels of synthetic crude per day.

Imperial has been studying whether to build a bitumen upgrader at Strathcona, but Rolheizer said no decision has been made.

"We're still looking at a range of options.

"We file applications on the project next year, and we expect a decision will be made by then."

Suncor and Syncrude have upgraders at their mine sites, while Shell's upgrader is adjacent to its refinery near Fort Saskatchewan.

Imperial's Strathcona neighbor, Petro-Canada, last year delayed indefinitely plans to convert to heavy oil.

Imperial is also leading a consortium to build a $7-billion pipeline to ship Arctic natural gas to southern markets.

Imperial Oil to Invest $500 Million and Produce Ultralow-Sulfur Diesel at Four Canadian Refineries

Imperial Oil Ltd., Toronto, will invest $500 million (Can.) during the next 2 years at its four refineries in Canada to produce ultralow-sulfur diesel fuel for on-road vehicles. New 2007 model diesel vehicles will have engines designed for ultralow-sulfur diesel.

Work to reduce sulfur levels by almost 95%—to 15 ppm by June 1, 2006—has begun at Imperial's Strathcona refinery in Alberta, its Sarnia and Nanticoke refineries in Ontario, and its Dartmouth refinery in Nova Scotia.

Imperial Oil already has reduced the sulfur content of its gasoline by more than 90%, to 30 ppm, it said.

Third Quarter Earnings of $337 Million at Suncor Energy Help Support Growth Plans

On October 28 Suncor Energy Inc. reported third quarter net earnings of $337 million ($0.74 per common share), compared to $291 million ($0.63 per common share) recorded in the third quarter of 2003. Excluding the effects of unrealized foreign exchange gains on the company's U.S. dollar denominated long-term debt, 2004 third quarter net earnings were $273 million ($0.60 per common share). Cash flow from operations was $585 million in the third quarter, compared to $584 million in the same quarter of 2003.

The positive impact of higher crude oil and natural gas production and higher benchmark commodity prices in the quarter was largely offset by higher oil sands royalties, crude oil hedging losses and a stronger Canadian dollar.

Expansion of Suncor's oil sands operations to increase production to a capacity of 260,000 bpd remains on budget and on schedule for completion in late 2005. The upgrader component of this expansion project is 75% complete.

Construction of Firebag Stage 2, which is planned to provide bitumen supplies to future upgrader expansions, is 40% complete with steaming planned to start in late 2005. It too is on schedule and on budget.

As Suncor increases production, the company continues with plans to invest in its refining operations to increase capacity to process oil sands sour blends while meeting new environmental legislation in Canada and the United States. In August, Suncor began construction on a US$300 million capital project upgrade of its Denver facility to meet clean fuels regulations and to modify the refinery to handle 10,000 to 15,000 bpd of oil sands sour crude.

CHILE

Technip Awarded Contract for Refinery Hydrotreating Unit in Chile

Technip, in consortium with Ingeníeria y Construcción Sigdo Koppers, has been awarded a contract worth approximately 21 million euros (75% Technip) by Enap Refinerias SA (subsidiary of the Chilean state oil company Enap) for a new hydrotreating unit to be located at its Bio Bio Refinery at Talcahuano, Chile.

The 12,000 BPSD (barrels per stream day) hydrotreating unit, based on Axens technology, will produce low-sulfur diesel, in compliance with the new Chilean regulations, limiting sulfur emissions to 50 parts per million (ppm) in the metropolitan area of Santiago, the country's capital.

The lump sum turnkey contract includes detail engineering, procurement, construction, pre-commissioning, commissioning and startup, to be handled by Technip's engineering centers in Rome and in Bogota. This fast-track project (20 months) is slated to be completed in early July 2006.

This new award confirms the mutually beneficial collaboration between Technip and Enap, which, over the past two years, has included contracts for the supply of subsea flexible flowlines as well as the design and construction of a hydrogen plant.

JAMAICA

$2 Billion Oil Refinery Proposed for Luana, Jamaica

Jamaica is about to sign an outline agreement with a group of American financiers for the development of a major oil refinery and petrochemical facility, which, if it happens, could see an investment of up to US$2 billion, the project's promoter and local officials confirmed.

"The financing is in place if we decided to go ahead," said George Lewson, the project's promoter and chairman of KM&L Industries, the vehicle to carry the development.

"But until things are definite I wouldn't want to go into details," Lewson told the Sunday Observer on October 8 from his base in Danbury, Connecticut.

Phillip Paulwell, the minister with responsibility for energy, also confirmed the potential project, but he too declined to elaborate on its specifics.

But according to the information available to the Sunday Observer, the idea is to develop a refinery of between 250,000 and 500,000 barrels per day on lands at Luana on the St Elizabeth/Westmoreland border. A second phase of the project would be the addition of petrochemical operations.

The 3,000-acre Luana property is owned by the Petroleum Corporation of Jamaica (PCJ), through which the government plans to execute the deal and whose CEO, Dr Raymond Wright, is scheduled to sign the heads of agreement later this month. The government would contribute land as equity and would be assured of a minimum 7.5 per cent stake in the project over the life of the facility.

According to industry analysts, the idea of such a project in Jamaica to exclusively supply the US market, which is the plan, is likely to hold attraction to US investors because of declining refining capacity in the US Gulf region.

The proposal would be for Jamaica to declare the refinery and the associated petrochemical facility a stand-alone freezone, freeing it from most local costs and taxes. However, it would be expected to provide hundreds of skilled jobs for Jamaicans.

According to Sunday Observer sources the heads of agreement will require that KM&L, within six months of its signing, produce an environment impact assessment for public review as well a preliminary engineering report and proof that it has financing in place for the project.

KM&L would also have to ensure that it has in place contracts for the start of construction of the refinery by the end of June 2006. The government is hoping to fast-track the project so that the Luana estate could be put to other uses if this falls through.

A potentially sticky issue for this project, Jamaican sources concede, could be the response of tourism interests and environmentalists. Jamaica's south coast, where the Luana property is located, is earmarked for future tourism development. A big petrochemical facility in the area could be worrisome for tourism planners.

BRAZIL

Petrobras Studies $3.5 Billion Refinery; Renting Capacity

Petroleo Brasileiro SA, Brazil's state- controlled oil company, may build a $3.5 billion refinery and rent capacity from a rival to meet demand for fuels and chemicals as the economy grows at its fastest pace in eight years.

Petrobras expects to decide by December whether to build a plant to produce naphtha, gasoline and other fuels and petrochemicals, outside of Rio de Janeiro, where it has its headquarters, said Paulo Roberto Costa, head of Petrobras' fuels and distribution arm.

"We are interested in increasing our refining capacity,'' Costa said. ``We may reach the point where we cannot expand our existing facilities any more."

Petrobras needs to find ways to refine more fuel as production increases from offshore fields and fuel demand grows, with the economy, which grew 5.7 percent in second quarter compared with the same period a year earlier, the fastest pace since 1996. Fuel consumption is expected to grow as much as 3.5 percent in the second half of the year, Costa said, exceeding the company's original estimate of 2.4 percent growth.

If fuel consumption continues to grow at that rate, Costa said, consumption will outstrip Petrobras' ability to expand existing capacity. That would force the company to start building new refining facilities before 2007, its planned start-date for construction of a new petrochemical complex.

The company, Latin America's largest publicly traded company, also plans to complete an agreement with Cia. Brasileira de Petroleo Ipiranga, Brazil's second-largest refiner, to process up to 6,000 barrels of crude oil a day at Ipiranga's refinery Rio Grande do Sul state, Costa told reporters at an oil and gas conference in Rio de Janeiro.

2. ASIA

AUSTRALIA

Brisbane Refinery Steps toward $145 Million 'Green' Oil Project

Oil companies are taking the first steps towards more environmentally friendly oil.

Caltex has announced it is building a $145 million clean fuels facility, to reduce benzene levels in petrol, at its Brisbane bayside refinery.

State Development Minister Tony McGrady says the demand for improved environmental standards is high.

"Community expectations rise all the time," he said.

"The bottom line is that today we're at the start of $145 million project which is going to mean that the fuel that we use here in Brisbane, and indeed Queensland, is as clean as anything in the world.

"It's going to improve the environment of Brisbane, it'll reduce the greenhouse gases."

$150 Million Cleaner Fuel Upgrade on the Way from Australia’s Caltex

Cleaner fuel would come on line in just over a year following a $150 million upgrade at Caltex's oil refinery in southern Sydney, the NSW government said October 28.

Planning and Natural Resources Minister Craig Knowles said the Kurnell refinery would produce petrol lower in benzene and diesel which had a reduced sulfur content.

Mr Knowles, marking the start of construction for the upgrade, said benzene and sulfur were contributors to air pollution and smog.

The minister said the fuel from the upgraded refinery would have to meet new commonwealth standards which would be in place at the bowser by January 1, 2006.

"This upgrade will ensure the fuel meets those standards and will also concrete the Caltex Kurnell refinery as one of the leading cleaner fuel producers in the region," he said in a statement.

The introduction of cleaner petrol in 2006 would immediately reduce benzene emissions equivalent to that of 800,000 cars.

And when the sulfur-reduced diesel was introduced, it would be equivalent to removing the sulfur emissions of 10,000 vehicles.

Mr Knowles said the Caltex Kurnell refinery was now the second largest in the country.

INDIA

India’s Essar Oil to Ink Deal with Government

Essar Oil will soon sign a contract for Ratna and R-Series oil fields in Mumbai offshore with all ministries concerned for clearing the award of the fields to the firm.

The Negotiating Team of Secretaries (NTS), in its meeting on October 4, cleared all the hurdles for Essar Oil-led consortium to take over development of the field adjacent to the gigantic Mumbai High oil and gas fields, official sources said.

Recording no objections of ministries of Finance, Law and Petroleum in the matter, the NTS asked the Mumbai-based firm to give an undertaking that it will not sell off its stake in the field, a condition the company has already agreed to.

"The contract would be signed once Essar Oil resubmits the undertaking," sources said.

Ratna and R-series fields, which are estimated to hold recoverable reserves of 100 million barrels of oil, were awarded to the Ruias-owned Essar in 1995 but a contract for beginning oil production could not be signed due to doubts about the firm's ability to finance development of the fields.

Essar Oil has agreed to the government condition of not assigning or transferring its participating interest or exiting the contract until development plan is achieved or for a period of three years, whichever is later.

It will also furnish a bank guarantee in the first year based on the annual expenditure it committed in its bid.

Essar Oil has 50 per cent interest in the fields while state-owned ONGC has 40 per cent. The remaining is with Premier Oil Plc of UK.

Essar, which had earlier withdrawn all charges on Ratna and R-series oil fields that were created for raising funds for its Vadinar refinery, has also agreed to government condition that it would not divert crude oil from the fields to its refinery in Gujarat and all the crude produced would be routed to BPCL.

Sources said the Finance Ministry earlier wanted the fields to be reverted to ONGC but changed track mid-way and gave no objection to NTS for their award to Essar.

The NTS, however, asked the consortium members to pay ONGC for maintenance and upkeep of the oil fields since 1995.

Ratna and R-Series oil fields are a series of discovered fields situated south of Mumbai High basin with a proven in-place reserve of around 500 million barrels of oil and recoverable reserves in excess of 100 million barrels of oil and 2 billion cubic meters of gas.

Essar's share of investment in developing the field is anticipated at $149.09 million.

India’s IOC Refinery Shutdown Spills over Three Months

Indian Oil Corporation opted for a ‘‘maintenance shutdown’’ on July 2 in the hope that it would restart the Mathura refinery on August 16. But a snag in the changed furnace pipes forced the refinery to take its longest shutdown and has dented IOC’s bottomline by about Rs 157 crore.

The refinery was restarted for five days in August but had to be shut down because deposits collected in the tubes of the vacuum distillation furnace thereby restricting the flow of hot crude oil for further heating and distillation into products such as diesel, petrol, kerosene and LPG.

The refinery is not expected to be back in full swing until October 15, say sources, but IOC officials claim it would be up and running earlier bypassing the problem area. ‘‘It’s not due to negligence. Equipment can malfunction,’’ said IOC chairman M.S. Ramachandran. ‘‘We have attended to the faults and the refinery would be on stream from October 3-4.’’

Though the outage did not affect supplies to consumers, sources say the 40-day delay has led to a net refining margin loss of Rs 88 crore. That is because the 1,60,000-barrels per day Mathura refinery yields the highest net refining margin of $3 per barrel.

In addition, IOC would have to pay Rs 69 crore as demurrages for the VLCC (very large crude carriers) that had to wait beyond the mandatory 36 hours to discharge Nigerian crude for Mathura.

IOC officials said that collectively the waiting period was about 50 days with an average daily demurrage of $30,000. The shutdown forced IOC to postpone the receipt of crude oil from Iraq.

Blast Rocks IOC’s Gujarat Refinery’s Fluid Catalytic Cracker

The Indian Oil Corporation's Gujarat Refinery, which claims to have one of the best safety records in the industry, reverberated with a major blast at its Fluid Catalytic Cracker (FCC) plant on October 29, leaving 13 workers injured.

The blast, which took place at 3.30 am caused a fire, which was reportedly put out only after about four hours of fire-fighting. There was no immediate explanation from the IOC management for the blast that was heard nearly 7 km away.

Insiders said the control unit of the reactor totally smashed. The injured included seven IOC employees and six contract laborers, who were engaged in restarting the FCC plant which was closed down for maintenance since October 10 and was restarted on October 28.

Vadodara commissioner of police Sudhir Sinha said the police are recording statements of eyewitnesses and the injured persons.

"However, our investigation will be largely based on the findings of IOC's technical committee," Sinha said.

IOC officials said it was likely that an undetected air pocket had caused the blast. On condition of anonymity an official told TOI that the investigators will also have to look at the quality of the newly-installed plates in the reactor.

Sources said some of the officials had inspected the FCC plant before it was restarted and felt that it was too early to restart it.

They had felt that the entire process of shutting down and maintenance had not been completed satisfactorily.

They added that more than damage to the main column of the reactor, IOC engineers are assessing the damage to the various links connected to the reactor. Gujarat Refinery's executive director BN Bankapur told TOI the cause will be known after an internal inquiry is completed "in the next two days or so". A team of experts from New Delhi is also expected to come down.

The FCC plant produces about two million tonnes of LPG and petrol annually by using reduced crude oil (RCO), which is residue crude oil left after petrol, kerosene and diesel have been produced.

SOUTH KOREA

Sinochem's Takeover of Oil Refinery in Inchon yet to be Finalized

The USD 546.2 mln acquisition of South Korea's fifth largest oil refinery in Inchon by China's state-owned oil and chemical trading company, the Sinochem Corporation, has yet to be finalized, and still awaits the approval of the State Council, China's cabinet.

According to reports, Sinochem completed the deal after being given the go-ahead from the South Korean authorities recently. However, a senior official with Sinochem close to the transaction told Interfax that the takeover first required the permission of the State Council because "the funds involved were fairly large."

"The official approval of the deal might be acquired by the end of the year," the official, who wished to remain anonymous, estimated.

As Interfax previously reported, Sinochem signed a memorandum of understanding (MoU) to acquire the refinery, which was declared bankrupt in 2001, in late May this year.

Founded in 1969, the Inchon Refinery had a daily processing capacity of 275,000 barrels and supplied 180 gas stations in South Korea before it filed for bankruptcy. The refinery still has USD 6.97 bln in debts.

Sinochem has promised not to relocate the plant and its production facilities overseas.

Sinochem, which has been expanding the scope of its business from oil and chemical trading to energy development, agricultural material supply and chemical production, has recently been investing a great deal to secure overseas energy interests.

The company has acquired oilfield assets in Tunisia and Ecuador and has reached a cooperative MoU with the Petroleum Authority of Thailand on oil, gas, petrochemical and power plant development.

Sinochem renewed its business license in late April and expanded its registered capital from RMB 300 mln (USD 36.23 mln) to RMB 3 bln (USD 362.3 mln) as was required by law after the expansion of its business scope.

The company, accounting for 60% of the total import of fertilizer into China, was also responsible for importing around a quarter of all crude and refined oil products coming into the country.

THAILAND

Thai Cabinet OKs PTT's Plan To Buyout Rayong Refinery

On October 26 Thailand's Cabinet approved PTT PCL's (PTT.TH) plan to buy out Rayong Refinery Co. from a unit of Royal Dutch/Shell Group (RD).

Thailand's state-owned oil and gas conglomerate currently owns a 36% stake in Rayong Refinery.

"The Cabinet has given the nod for PTT to restructure debts and capital of Shell's refinery. The move will allow PTT to wholly own Rayong Refinery," said PTT President Prasert Bunsumpum.

The buyout plan is expected to be completed around mid-November, he added.

PTT had said in August that it would buy an additional 242.67 million shares in Rayong Refinery from Shell International Holding Ltd. for $5 million.

The company didn't say how it will finance the buyout.

Shell had said earlier its divestment in Rayong Refinery is part of its ongoing program to upgrade its business portfolio.

Rayong Refinery has been facing serious financial difficulties since the 1997-98 Asian financial crisis. Its refinery started operations a year before the crisis occurred.

Rayong Refinery has a paid-up capital of THB37.92 billion and a production capacity of around 150,000 barrels a day.

Rayong Refinery's debt and capital restructuring plan includes a debt buyback at a 15% discount that will reduce Rayong Refinery's debt to $1.14 billion from THB$1.34 billion, PTT has said.

Under Rayong Refinery's debt restructuring plan, PTT will provide additional financial support worth up to $250 million, in the form of subordinated debt or equity, to Rayong Refinery.

Rayong Refinery will also obtain long-term loans worth $650 million to replace its existing loan.

3. EUROPE / AFRICA / MIDDLE EAST

BULGARIA

Russia’s Lukoil Wants to Increase Stake in Bulgarian Refinery

Russian oil major Lukoil said October 29 it wanted to increase its 58.4% stake in Bulgaria’s main oil refinery of Lukoil Neftochim Burgas AD (NEFT).

Lukoil’s European arm Lukoil Europe Holdings B.V. has asked Bulgaria’s Financial Supervision Commission to approve a tender offer for purchasing Lukoil Neftochim Burgas shares from the other stockholders of the company, the Investor .bg Financial New Portal reported.

Lukoil said it would announce the tender price at the Stock Exchange once the Commission clears its offer.

Other major shareholders in Lukoil Neftochim Burgas include British Virgin Islands-based Power Trade Ltd with 12.7% of the stock and Cyprus-based Rienco Investment Ltd with 24.71%.

Lukoil Neftochim Burgas nine-month net profit dropped by 85.2% to leva BGN7.2 million from BGN48.72 million in the same period a year ago.

POLAND

Nafta Polska Reprieves Glimar Refinery Threatened by Financing Fears

President of Nafta Polska, Krzysztof Żyndul, has confirmed that the threat of bankruptcy hanging over the Glimar refinery has been eliminated.

"After verifying the business plan of the investment in the Gorlice-based company, we came back to the initial plan, which is merging the firm into Grupa Lotos [the second largest domestic refinery]," explained Żyndul. The investment has so far cost zł.341 million and financing was halted a few days ago after one of the advisory companies expressed doubts about the feasibility of the project. Żyndul added that the plan needed to be restructured. "While preparing the project, its authors envisaged that the company would be allowed to use numerous benefits, which have recently been annulled," said the Nafta Polska chief.

SLOVAKIA

Slovakia’s Slovnaft Refinery Hikes Fuel Prices to Record Highs

The Slovnaft refinery, Slovakia's dominant fuel retailer, raised gasoline prices by SKK 0.3 per liter, while the price of diesel fuel increased by SKK 0.7 to 37.30 per liter, reports the CTK news agency.

As a result of the price hike, a liter of the best-selling Super 95 will reach SKK 37.20. The firm attributes the increase to rising oil prices on world markets.

The Slovnaft refinery is part of the Hungarian oil giant MOL. Slovnaft owns over 300 gasoline stations in Slovakia, along with 40 stations in the Czech Republic.

RUSSIA

LukOil to Invest $300 Million In Modernization Of Odesa Petroleum Refinery

Russia's LukOil open joint-stock company intends to invest USD 300 million in modernization of the company named LukOil Odesa Petroleum Refinery before 2009.

LukOil's President Vagit Alekperov announced this at a press conference in Odesa on October 22.

"This is the second stage of modernization of the Odesa factory, which involves shifting production to deep processing of petroleum products and production of goods under the EURO-4 standard, which means ecologically clean fuel: aviation gasoline, aviation kerosene, etc.," Alekperov said.

According to him, the first stage of modernization of the Odesa petroleum refinery has been completed at the cost of USD 20 million and it involved introduction of new equipment and establishment of ecologically clean production.

Alekperov said that LukOil's total investments in the Odesa petroleum refinery have now reached USD 90 million.

A meeting of LukOil's board of directors also took place on Friday. The main aspects of the plan, budget, and investment program of the LukOil Group for 2005 were approved at the meeting.

Companies belonging to the LukOil group acquired 98.4% of the shares in the enterprise via competition in March 1999.

The refinery produces the A-80, A-92, A-95, and A-98 brands of gasoline as well as diesel fuel, fuel oil, bitumen, and fuel for jet engines.

The refinery is capable of processing 3.6 million tons of crude oil per year.

The Odesa petroleum refinery processed 908,700 tons of crude oil and produced 93,400 tons of aviation gasoline, 250,200 tons of diesel fuel, and 444,000 tons of fuel oil during the first five months of this year.

The refinery increased crude-oil processing by 13.7% to 2.831 million tons in 2003, compared with 2002.

The company named Luk-Syntez Oil Limited owns 92.7% of the shares in the Odesa petroleum refinery. The remaining shares are held by several corporate entities.

RAJASTHAN

India’s HPLC Threatens to Shift Bathinda Refinery to Rajasthan

Hindustan Petroleum Corporation Ltd (HPCL) on October 14 threatened to shift the Bathinda refinery to Rajasthan if the Punjab Government failed to fulfill its promise of extending sales tax exemptions and other concessions.

HPCL Chairman M P Lal disclosed that the company was still hopeful that the state government would keep its promise of offering fiscal incentives. Otherwise, the corporation would be forced to review the project.

‘‘We are reviewing the Punjab refinery proposal and if the state government does not give us the fiscal incentives, including sales tax exemption, we may look at putting up the refinery in neighboring states like Rajasthan,’’ he said.

The border areas of Punjab and the cotton belt of Bathinda-Muktsar region were expected to get a major industrial boost had the project been implemented.

Though former Prime Minister Atal Bihari Vajpayee had laid the foundation of this mega project with much fanfare in November 1998, the project has been mired in one or the other controversy.

When contacted, Punjab Finance Minister Surinder Singla said: ‘‘We want the refinery, but would not like to give any sales tax exemptions.

It would be tantamount to a loss of over Rs 15,000 crore to the state government in the next 15 years, as we will have to forego sales tax worth Rs 1000 crore to Rs 1500 crore annually on petroleum products.’’

The experts in the petroleum sector have, however, claimed that with the implementation of VAT by next year, the state will not be able to maintain the projected sales collection on petroleum products.

Further, Finance Minister P. Chidambaram has already announced that he would not allow the public sector companies to ‘‘force the state government to offer them sales tax or other exemptions.’’

Mr Singla said: ‘‘I am meeting the Finance Minister on October 18 in this regard, and hope that the HPCL will not shift this prestigious project.’’

The officials in the Petroleum Ministry and HPCL said in view of the stubborn attitude of the state government and the fact that in Rajasthan, major crude oil reserves have been found, the HPCL would take a decision after working out the economics of various options.

A senior official of the HPCL said, ‘‘since HPCL does not have any refinery in the northern region, we are quite serious to set up the refinery, but we cannot ignore the financial implications.’’

He lamented that the Bathinda refinery project had been dragging for the past many years despite the fact that the corporation had already invested over Rs 300 crore in the project estimated to cost over Rs 10,000 crore.

It is pertinent to note that Union Petroleum Minister Mani Shankar Aiyar had also informed the Lok Sabha during the Budget session that project activities of the Bathinda refinery project had been under suspension since April 2003 due to delay in clearance of the financial package by the state government.

Frustrated over the deadlock, the HPCL has now decided to invest Rs 2,000 crore in the Indian Oil Corporation's (IOC) Panipat refinery for buying a capacity of three million tonnes to meet its requirements in the northern region.

IOC is expanding the Panipat refinery from six million tonnes to 12 million tonnes with an investment of around Rs 4,000 crore.

HPCL is keen to buy half of the additional capacity to ensure uninterrupted supply of petroleum products for its northern market, said Mr Lal.

HPCL Keen to Set up Refinery in Rajasthan

Hindustan Petroleum Corporation Limited (HPCL) has evinced interest in setting up a refinery in Rajasthan where major crude oil reserves have been discovered in recent months.

Highly placed sources said the company has approached the state Government for deliberations on its plans to set up a refinery of six to eight million tonne capacity in the state.

If the plans come through, HPCL is expected to make an investment of over Rs 40 billion (Rs 4,000 crore) on setting up of this refinery.

Sources said that the state Government has asked HPCL to send the draft of the memorandum of understanding (MoU) before holding discussions with the company on the project as it (state Government) wants to seek the advice of the law department on the draft before offering rebates or concessions.

HPCL had earlier asked the state Government to hold discussions on making available the necessary resources for setting up the refinery. However, the state Government, prior to holding any kind of dialogue, wants the company to enter into an MoU so that the refinery plan can be firmed up fully, sources said.

Sources in HPCL said the company wants to shift the Bathinda refinery to Rajasthan as the Punjab Government has so far failed to fulfill its promise of extending sales tax exemptions and other concessions to the company.

Former Prime Minister Atal Bihari Vajpayee had laid the foundation of this mega project in November 1998, but the project has since then been mired in one controversy or the other.

TURKMENISTAN

Canadian Thermo Design Eng. Ltd. to Build Gas Refinery in Turkmenistan

The state concern Turkmenneft and Canadian Thermo Design Engineering Ltd signed a US$42 million contract October 20 to build a gas refinery at the Yashyldepe gas field on a “turn-key” basis, the Ashgabat correspondent of Turkmenistan.ru reports.

The refinery’s annual capacity will be 1 bln cub. meters of gas. It will have installations on gas desulfurization, on condensate gas production amounting to 200,000 tons and on liquefied gas production amounting to 50,000 tons a year. The work is expected to begin in October 2004 and finish in May 2006.

Speaking at the contract signing ceremony, president of the Canadian company Jim Montgomery underlined a complex nature of Turkmenistan’s oil and gas sector development, in which the great importance is attached to liquefied gas production.

At present, production capacities allow Turkmenistan to produce some 500,000 tons of liquefied gas a year, and this figure is expected to rise to 1 mln tons in the coming 5 years, considering an increase in demand for this type of fuel from Afghanistan, Iran and Pakistan.

As President Saparmurat Niyazov emphasized, Thermo Design Engineering Ltd has quite successful record of work in the republic. Taking into account the new contract, a total cost of all signed and implemented contracts by the company has got closer to US$110 mln.

ALGERIA

13 Firms Get Approval for Construction of Private Refineries in Nigeria

Thirteen companies have so far received Federal Government approval to commence construction of private refineries, more than two years after they were initially granted preliminary licenses.

Director of the Department of Petroleum Resources (DPR), Mr. Mac Ofurhie, who made this known October 28 in Lagos, faulted the report of the House of Representatives Committee on Petroleum Resources concerning the process of awards of oil blocks by the department.

Ofurhie said that the 13 firms, which he did not name, were the ones that met the June 2004 extended deadline to meet guidelines for approval to construct.

"We issued licenses to 18 companies two years ago. They were supposed by June this year, to have been ready to start construction. Out of the 18, only about 13 have been issued license to start construction, that is, the second phase," said Ofurhie.

The remaining five firms, according to the DPR boss, will have to await Federal Government's decision whether to extend the deadline or not.

"There is no indication that we will extend it for now. They are already late but it could be reconsidered in future," he said.

The Petroleum Resources Ministry had in June 2002 given 18 firms preliminary licenses. The companies include Akwa Ibom Refining and Petrochemicals Limited, Tonwei Refinery, Ilaje Refinery and Petrochemicals, NSP Refineries, Oil Services Ltd, and Ode-Aye Refinery Ltd.

Others are Orient Petroleum Resources Ltd and Owena Oil and Gas Ltd., Southwest Refineries and Petrochemicals Company, Starex Petroleum Refinery Ltd, The Chasewood Consortium, Total Support Refineries and Union Atlantic Petroleum Ltd.

The private refineries were to compliment the existing ailing four state-owned refineries, which despite having a combine production capacity of 445,000 barrels per day (bpd), remain unable to meet the nation's petroleum products demand.

Analysts have contended that increasing local production of fuel remained the only solution to the frequent hike in fuel prices.

MOROCCO

Morocco’s Mohammedia Samir Refinery Buying New Power Plant

The Moroccan refinery "Samir" company and the French CEGELEC Group signed, on October 13 in Skhirat, 20 km south of Rabat, a contract on the building of an electric plant at the Mohammedia-based refinery.

The 17.8 million Euros contract will help enhance the power supply to the Samir refinery and provide energy to the future expansion of the refinery, a Samir communiqués said.

The power plant will be operational in twelve months and has been designed to meet all security requirements and energy sparing. It will secure the refinery a reliable and viable power supply with a performing electronic system.

NIGERIA

Orient Petroleum Issues Tender Documents for 55,000 B/D Refinery

Orient Petroleum Resources Limited (OPRL) has issued detailed tender documents to pre-qualified international engineering companies, for the Engineering, Procurement, Fabrication, Installation and Commissioning (EPIC) contract for its 55,000 barrels per day petroleum refinery.

A statement released by the company disclosed that the issue of tender documents follows careful screening of 22 companies that responded to its invitation to tender in August 2004.

The pre-qualified bidders include companies from the United States, Canada, Italy, China, Romania, Israel and India.

The date and time, specified by Orient Petroleum, for delivery of tenders is not later than the 29th October, 2004 setting the stage for award of the contract for the construction of the refinery by December 2004.

It would be recalled that in May 2002, the Federal Government of Nigeria granted to Orient Petroleum Resources Limited (Orient) a license to establish a private petroleum refinery of 55,000 barrels per day (b/d) capacity in Anambra State.

Having been granted this initial license, OPRL completed the major processes of site acquisition, environmental impact assessment and detailed project definition of the refinery in August, 2003. The company also disclosed that out of the process options presented by its consultants, Orient selected a phased development of a grassroots refinery.

OPRL then applied formally to the Federal Government for approval to construct the refinery in September, 2003.

In response to OPRL's application, the Federal Government granted the second license, approval to construct the Orient Petroleum Refinery, in February, 2004.

The Phase one of the refinery is based on processing 10,000 b/d of Brass River crude oil, primarily for the production of gasoline, jet fuel and diesel fuel; and 11,200 b/d of Venezuelan heavy crude, primarily for the production of road grade asphalt.

The Phase one conceptual design was developed with pre-investment allowances in certain units and major equipment to allow for the Phase 2 and Phase 3 expansions.

Orient anticipates that the refinery will be developed in three phases.

The Phase 1 refinery will be constructed on a fast track basis to provide for early production of fuel and asphalt production. An early start-up of the Phase one refinery will provide initial production of these critical products, provide early cash flow to Orient, and allow for an orderly, phased development of product markets and distribution.

It is expected that the Phase two and Phase three construction phases will bring the refinery its final design capacity, and add major processing units for increasing the yield and quality of fuel products.

SOUTH AFRICA

Shell in Equity Talks to Sell Part of its South Africa Sapref Stake

The Royal Dutch/Shell Group, Europe's second-largest oil and gas producer, said it was in talks to sell a quarter of its 50 percent stake in South Africa's biggest oil refinery, the SA Petroleum Refineries (Sapref), to black investors.

The Durban-based refinery is a joint venture with British Petroleum (BP). It had a capacity of 180 000 barrels a day, the SA Petroleum Industry Association said in its annual report.

"The discussions are at a very advanced stage," said Benny Mokaba, the chairman of Shell's local unit.

Oil companies operating locally have agreed to sell a quarter of their business to black investors by 2010 as part of the government's plan to redress racial imbalances.

BP agreed in 2001 to sell a quarter of its South African business to the Mineworkers Investment Company, the fund management arm of the National Union of Mineworkers.

"They have a share in our whole business, from the refinery to the fuel tank in the car," said Keith Bryer, a spokesperson for BP.

PetroSA Eyes Oil Blocks and Refinery Contracts in Egypt, Algeria and Angola

PetroSA planned to explore oil blocks and to seek oil refinery contracts in Algeria, Egypt and Angola, Sipho Mkhize, the chief executive of the state-owned oil company, said October 13.

"We are looking at participating in bidding rounds in Egypt," Mkhize said. Officials from PetroSA would visit Angola next month and Algeria at the end of the year to "look at opportunities".

The company wanted to "invest more in Nigeria to increase production rates".

PetroSA, already active in Nigeria and Gabon, runs the world's biggest refinery for converting natural gas into fuel at Mossel Bay and operates offshore oil fields.

Next year, South Africa will co-host the 18th World Petroleum Congress with Algeria, Angola, Libya and Nigeria in the hope of attracting more foreign investment in Africa's oil industry.

The Cape Town-based company expected decisions from the government and the central bank by month-end on whether it would be allowed to exercise rights to exploration blocks in Equatorial Guinea, Mkhize said.

"We are a state-owned company, so the government wants to determine if the project is viable," Mkhize said. "Exchange controls mean we need the Reserve Bank's permission to invest outside the country."

Algeria planned to open bids for 10 exploration blocks on October 20, said Kamel Eddine Chikhi, a managing director of associations at Sonatrach.

YEMEN

BOC to Construct $100 Million Hydrogen, Utilities Complex to Supply BP and Sunoco

The facility will be located at the Sunoco refinery, which also will receive steam from the complex.

LindeBOC Process Plants, Tulsa, will provide engineering and construction services. Construction is scheduled to start next month and to complete in fourth quarter 2005.

The complex will enable the refineries to meet requirements for ultra-low sulfur gasoline and diesel fuels meeting the US Environmental Protection Agency's Tier 2 clean fuels regulation.

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