Honeywell recently secured a $5.3-million contract to modernize the Shell Martinez refinery’s Flexicoker unit by installing a new process control system, and providing engineering and construction services. The automation project will enable the refinery to upgrade existing controls and maintain plant operations.

Honeywell reports that its automation system includes robust and secure distributed control capabilities to maximize operational efficiency. This open technology reportedly provides sophisticated capabilities, such as multivariable control, batch control, plant-wide history and information management in one unified system, which gives operators real-time access to data they need to make the right business decisions. Honeywell’s project engineering and construction services will further support plant workers, fostering a consistent and reliable operating environment.

'Honeywell is happy to provide Shell with new process control technologies that will give them peace of mind around their operations,' says Jack Bolick, Honeywell Process Solutions’ president. 'With Honeywell's technology, Shell is sure to enjoy greater operational agility and continued plant safety and security in the years to come.'

Southern California Takes Steps toward Regulating Refinery Flares

Southern California air quality regulators took the first steps September 3 toward regulating pollution from refinery flares - plumes of flame seen at the top of tall stacks in refineries and other facilities.

The South Coast Air Quality Management District's governing board ordered its staff to develop a proposed rule for reducing emissions from the flames used to relieve pressure and prevent fires or explosions.

The governing board intends to vote on the proposal once it is complete.

Refineries have voluntarily worked to reduce emissions from flares for several years, district executive officer Barry Wallerstein said in a statement.

A study found that emissions of sulfur oxides from the flares have gone from 7.2 tons per day in 2000 to 2 tons per day in 2003 - about the same as the total amount produced each day by diesel tractor trailers.

Sulfur oxides contribute to the creation of fine particulate pollution, which has been linked to respiratory problems and premature deaths.

The district has 27 flares in eight refineries, a sulfur recovery plant and a hydrogen production facility, all in Los Angeles County.

The district covers Orange County and parts of Los Angeles, San Bernardino and Riverside counties.

Yuma Refinery Gets ADEQ OK

A proposal to build the first petroleum refinery in the United States in nearly 30 years has a go-ahead from the Arizona Department of Environmental Quality.

The agency has determined that the refinery, proposed for south-central Yuma County, would not violate federal clean-air standards. The refinery is expected to operate 24 hours a day, seven days a week, and produce 150,000 barrels of fuel per day.

The draft permit is one of many hurdles Arizona Clean Fuels LLC must clear before the refinery can become reality. Company officials are seeking rezoning and a special-use permit from Yuma County.

Shell Issues Update on Bakersfield Refinery Sales Process

Shell Oil Products US has released an update on the status of the potential sale of its Bakersfield Refinery. Shell announced last month that it would continue to operate the plant until March 31, 2005 so as to allow the sales process to fully mature. Future updates will be posted on the Internet at http://www.shellbakersfieldrefinery.com .

"We have received numerous inquiries on the status of the sales process," said Lynn Laverty Elsenhans, President of Shell Oil Products US. "We believe that the issuance of updates will provide insight into our efforts and will allow anyone who is interested in this process to receive timely and accurate information."

The sales process is ongoing, and Shell is actively engaged in discussions with several companies regarding their interest in the plant. Although there is a need to maintain a high level of confidentiality in the process, there are key issues and milestones that can be shared.

As of September 22, Shell has received inquiries or actively solicited bids in the sale of the refinery from more than 70 parties. Over 20 companies have signed confidentiality agreements, allowing them to formally enter the sales process. These companies have been provided extensive data regarding the refinery assets and operations along with a draft purchase agreement outlining the terms and conditions that Shell proposes for a sale. Those companies requesting a presentation have had an opportunity to meet with management representatives who provided information on the plant. Companies have also had the opportunity to submit questions to Shell, and Shell has provided further information responsive to the questions.

A number of companies in the sales process have provided Shell with a bid stating the price they would pay for the refinery and any additional terms and conditions they would propose. Shell is presently evaluating these proposals and will develop a short list of companies from which we will seek additional information or clarification. In fairness to those companies that have been involved in the sales process to date, this process is now closed to new entrants.

Shell expects that negotiations with potential buyers will continue into the fourth quarter of 2004. If agreement on a sale were reached, an announcement would be made at that time. Should no purchase agreement result, Shell will announce that the sales process has been unsuccessful, and the refinery closure plan will continue as announced. If a sale occurs, actual transfer of ownership would most likely occur during the first quarter of 2005, subject to approval by appropriate regulatory authorities.

While we cannot comment on any specific terms and conditions proposed by any party, we believe the terms and conditions proposed by Shell reflect market realities. As with any commercial transaction, certain terms and conditions are subject to negotiation between the prospective buyer and seller.

Shell has proposed that the refinery be sold as an operating facility, including all process units, land, and related equipment. In addition, Shell would lease the products terminal located adjacent to the refinery and associated tanks to the purchaser of the refinery under a long-term agreement, which would give the refinery purchaser full control of the terminal as long as the refinery produces gasoline and diesel. In this way, should the refinery cease to operate, Shell could still provide fuel to consumers in the Bakersfield area. The lease arrangement assures that either a refinery buyer or Shell would operate the terminal and provide the businesses and residents of the San Joaquin Valley with fuel.

The refinery is currently served by Shell-owned and third party-owned pipelines. As is common in many refinery sales, these pipelines are not included in the proposed sale. Shell has offered to transport crude and products on certain of its lines under competitive terms, and Shell has committed to work with buyers to increase or offer alternate pipeline capacity in certain corridors should the buyer's crude supply program require.

Jacobs Receives Sulfur Work at Suncor's Denver Refinery

Jacobs Engineering Group Inc. (NYSE:JEC) announced September 21 that a subsidiary company received a contract from Suncor Energy (U.S.A.) Inc. to provide detail design and procurement for a grassroots tail gas treating unit and sulfur recovery unit revamp at Suncor’s refinery in Denver, Colo.

Officials did not disclose the contract value for the work, which is part of Suncor’s clean fuels program. Jacobs is already providing engineering, procurement, construction management, and maintenance services for other aspects of the program.

In making the announcement, Jacobs Group Vice President Phil Stassi stated, “We are very pleased to receive this award from Suncor. We have a dominant world market share for clean fuels and sulphur work, providing Suncor an excellent match. We will deliver value to this project by sharing lessons learned from designing and building over 250 plants around the globe.”

Jacobs, with over 35,000 employees and revenues approaching USD5.0 billion, provides technical, professional, and construction services globally.

Shell Deer Park Refinery Set to Implement Environmental Mandates

In an effort to meet federal environmental mandates and recover from a less than flattering pollution report, the Shell Deer Park Refinery is planning several upgrades in the plant's production unit estimated to exceed $250 million.

Soon after the U.S. Environmental Protection Agency announced earlier in the year that Houston-area plants caused some of the worst ground-level ozone pollution in the country, Harris County hit Shell DP with a lawsuit seeking fines for pollution violations.

The suit, which is still pending, alleges the Deer Park plant "emitted substances into the air in such concentration and duration as to adversely affect human health and welfare," the lawsuit says.

The refinery ranked fourth out of 121 plants in eight counties surrounding Houston for illegal pollution releases in 2003. The Texas Commission on Environmental Quality reports Shell DP had 27 accidental releases last year including instances when surrounding highways had to be shut down and nearby communities were asked to shelter-in-place.

The first of several projects Shell DP has in its planning stages is to obtain an ultra-low sulfur diesel production unit, costing approximately $103 million.

"While the project will meet governmental targets to reduce sulfur in diesel gasoline, it also will potentially offer a good payout to the refinery," said Shell's Manager of Major Projects, Barry Day, to the Deer Park Broadcaster.

The ultra-low sulfur diesel project, now in the engineering and design stage, will take several years to complete.

Officials at Shell DP had no comment on the pending county lawsuit. Each alleged violation, that includes opening burnings, exceeding emission limitations and impeding nearby residents of enjoying their property, could cost $25,000 each. Shell DP and other area refineries are making changes to their facilities to meet certain standards developed by the EPA to protect the public from exposure to harmful amounts of pollutants.

A major project the refinery is planning is to develop a Refinery Reinstrumentation Program at $135 million.

The program allows the instrumentation and controls on half of the units in the refinery will be upgraded, making Shell Deer Park the first refinery in the Shell system and one of the first U.S. refineries to use new, state-of-the-art Fieldbus technology on major refining units, Shell DP reports. Fieldbus allows the refinery to implement predictive maintenance, which focuses on maintenance where it is needed most.

"By making these infrastructure improvements, we will reduce off-spec incidents and the occasional flaring of material due to the previous out-of-date controls causing unit upsets or shutdowns," Day said.

The Deer Park plant is also installing an additional pollution control device at $15 million that will monitor nitrogen oxide emissions which is one of the most prevalent smog-producing byproducts.

Arizona Agency Proposes Permit for Oil Refinery

The Arizona Department of Environmental Quality (ADEQ) has proposed a draft permit for a proposed oil refinery that would be located 40 miles east of Yuma, near the community of Tacna.

The refinery, proposed by Arizona Clean Fuels LLC, would be located on a site of about 1,450 acres and could produce about 150,000 barrels per day of motor fuels, including approximately 85,000 barrels per day of gasoline, 35,000 barrels per day of diesel fuel and 30,000 barrels per day of jet fuel.

If the project is constructed, the proposed permit would ensure that emissions from the proposed refinery, on a per unit of product basis, would be significantly less than the actual emissions from any other existing petroleum refinery in the United States.

This would be achieved by using new technology and work practice standards, ADEQ said in a written release.

ADEQ will hold a series of public meetings to inform the public about the details of the draft permit for the proposed refinery. The first meeting will be held Tuesday, Oct. 5, in Wellton, the second Oct. 6 in Phoenix, and the third public meeting will be in Yuma Oct. 7.

The public comment period will close Nov. 29.

U.S. Filter Hearing Gets Postponement

There was a cautious sigh of relief at the Sept. 14 meeting of the Wells-McComas Citizens Improvement Association when the subject of the hotly contested company U.S. Filter came up.

"We managed to postpone the hearing on U.S. Filter's special permit," said association president Fred Thiess, addressing about 40 residents who attended the meeting. "But the fight is not over. And it's going to be a long one." Residents of Briarwood Estates and the surrounding Wells-McComas community have been battling with U.S. Filter's bid to build an oil storage and refinery - as defined by Baltimore County - on a 3-acre plot on Fischer Road.

On July 28, the county suspended the U.S. Filter's permits pending a public hearing after it came to light that the company would be refining oil as well as storing it along with antifreeze and other chemicals.

On Sept. 7, Baltimore County councilmen John Olszewski Sr. (7th District), Joseph Bartenfelder (6th District) and Kenneth N. Oliver (4th District) introduced Bill 98-04.

The bill, voted on by the Baltimore County Council on Oct. 4, seeks to clarify the language used to define an oil refinery and to establish that such a facility requires a special permit to operate in a heavy manufacturing zone.

Baltimore County had contended that U.S. Filter needed a special permit to build a refinery next to residential property in Wells-McComas.

The company did not inform the county that it intended to "bake or boil the oil," said Tim Kotroco, director of the county's Department of Permits and Development Management, when the permit requirement was made in July.

If the bill passes, the category of oil refinery will include, the bill states, "any facility for the recovery, processing and recycling of oil."

Olszewski was unavailable for further comment.

"They want to change the rules in the middle of the game," said Michael Powell, an attorney for U.S. Filter. "[U.S. Filter is] clearly not an oil refinery."

Like the Wells-McComas association, U.S. Filter plans to see the fight through.

Powell hinted that if the county does not rule in favor of the company, there would be a job loss to the state: "[U.S. Filter] is prepared to leave Maryland. That's 47 jobs the state will no longer have."

At the community meeting, Thiess all but pleaded with the crowd to show up for the permit hearing - after a judge granted the group's attorney a one-month extension - on Oct. 22 in Towson.

Koch Subsidiary may Have Found Solution to Refinery Emissions

It's called flaring and it looks spectacular -- a giant orange flame shooting into the sky as refineries reduce internal pressures by burning off hydrocarbons.

In reality, it's not good. Not good for the refinery, which is torching valuable, salable product and definitely not good for the air, which is getting a load of sulfur dioxide, oxides of nitrogen and volatile organic compounds.

Flint Hills Resources, a subsidiary of Wichita-based Koch Industries, thinks flaring can be substantially reduced.

The company, which owns refineries in Corpus Christi, Texas; Pine Bend, Minn., and North Pole, Alaska, and a chemical plant in Joliet, Ill., recently began a project in cooperation with the Environmental Protection Agency to develop engineering, monitoring and recycling systems that eliminate the need to flare.

"What we're doing is developing a way to improve the process so that gases are recovered," Koch spokeswoman Katie Stavinoha said. "They can then be used as energy or sold as product."

Flint Hills Resources has already implemented a policy that has substantially improved flaring performance at its refineries. Time in flare has been reduced from an average of 110.1 minutes per day in 2000 to 10.2 minutes per day in 2003. That accomplishment reduced emissions by 800 tons and won the company a Clear Air Award from the EPA this year.

Flint Hills Resources is in the process of initiating similar reforms at its chemical plant, which was purchased this year, and expects to have a flare-reduction process in place by next year.

The new initiative with EPA will involve making engineering and operating changes that reduce flaring and adding pollution controls when flaring is unavoidable.

It will also involve continuous monitoring of startups, shutdowns and malfunctions -- when flaring is most likely to be necessary.

Koch and EPA will share what they learn during the project with other refiners, state governments and the public.

During the project, which will be completed over the next 30 months, EPA will review proposals and suggest improvements. During the final evaluation, the EPA will determine whether the policy proposed by Flint Hills Resources is an appropriate approach to controlling shutdowns, startups and malfunctions. Hilton Kelley, a clean air activist associated with the Refinery Reform Campaign, a national organization lobbying for clean air regulation and restrictions on refinery emissions, said Koch's example is one he hopes the industry will embrace.

"Any time you reduce flaring, you reduce pollution," he said. "Unfortunately, many refiners use it as a way of correcting mistakes. They just send "upsets" to the flare and burn it off. What Koch is doing is definitely a good thing."

Stavinoha said the initiative is one that will, in the long run, make money for Koch.

"We're talking about capturing product that used to be burned up," she said. "That translates to more product to sell, which improves profitability."

Cleanup of Former Queens Refinery Raises a Stink

The cleanup of a former petroleum refinery and soda bottling plant on Queens' East River waterfront is raising a stink -- literally.

Residents of the Hunters Point section of Long Island City, along with students and parents of a nearby elementary school, say a powerful stench of gasoline has loomed over the neighborhood since school opened two weeks ago. Some say the odor is so strong they haven't opened their windows in weeks, while school staffers and parents say they and their children have headaches and breathing problems.

"It's been coming in through the fresh air exchange into the school, and you can smell it in the classrooms," said Rose Walsh, president of PS 78's PTA. "It's triggered migraines in me, my son...A lot of the parents."

According to the state Department of Environmental Conservation, the smell is emanating from a 21-acre work site at 46-00 5th Street, one block from PS 78. Manhattan-based Rockrose Development Corp. plans to transform the property into a $1.2 billion, 3,200-unit residential complex with small parks, waterfront access and sweeping views of the Manhattan skyline. The project is the latest phase of a public-private initiative to transform Hunters Point's aging industrial base into modern housing, and is expected to open in late 2006.

For now, however, bulldozers and crews at the site are grappling with its toxic legacy. Most recently owned by PepsiCo as a bottling plant, the land had earlier been the site of one of New York City's first petroleum refineries, operated by Standard Oil. Environmental investigations have found high levels of petroleum, lead, mercury and arsenic in the soil, while the groundwater below is tainted with oil and cancer-causing benzene.

In October, 2003, state-run Queens West Development Corp., along with Rockrose Development and its contractors, signed a voluntary agreement to excavate the contaminated soil and replace it with a 2-1/2 foot layer of clean fill. The work has stirred up decades-old petroleum products, said Rockrose spokesman Bob Rumerman.

Deborah Wetzel, a spokeswoman for Queens West Development Corp., said the vapors are not dangerous. But Mary Piotrowski, whose City Lights apartment overlooks the work site, said she keeps her balcony door closed to keep the gasoline smell at bay from her son, Cole, 1 1/2. "I try to keep the doors closed, but it comes through the cracks in the doors and the windows. It's really depressing."

DEC officials met with the site managers and ordered a review of their procedures. Excavation stopped September 24, Rumerman said, and will not resume until odor-controlling equipment is brought in.

Workers are trying to increase usage of an odor-absorbing foam, he said.

2. ASIA

INDIA

Expansion for IOC Haldia Refinery

Indian Oil Corporation (IOC) will be pumping Rs 360 crore into Haldia refinery during the current financial year to upgrade the quality of its petrol.

The step has become essential in order to meet the Euro III emission norms, which prescribe that petrol sold to vehicles should have a benzene content of less than 1 per cent. While the Euro III norms have already been introduced in the metropolitan cities, they will become applicable in other towns from next year.

Sources say IOC’s board of directors has also cleared an Rs 1600-crore proposal to set up a new hydro-cracker unit at the refinery but this will not be taken up immediately.

Once the new hydro-cracker comes up, the capacity of the refinery will go up from 6 million tonnes at present to 7.5 million tonnes. It will also result in higher profitability for the refinery as the hydro-cracker will enable the company to get more high-value products such as petrol and diesel from the same quantity of crude.

However, since there is an excess of petroleum products currently in the region, IOC will go slow with the project and time it in a manner that will match the demand for petroleum products. The high cost of getting crude to Haldia is another problem that comes in the way of any major expansion of the refinery. This is expected to be solved with the Paradip-Haldia pipeline that the oil major plans to lay.

The single-point mooring (SPM) to be set up in the deep sea off the Paradip coast will enable very large crude carriers (VLCCs) to dock and offload crude.

Since freight charges of VLCCs are about half the amount of smaller ships, this will enable a huge saving on transport costs. This will also happen because the SPM would be used for both Haldia and the proposed Paradip refinery. Large consignments will be imported at the same time.

At present, IOC has to export products from the Haldia refinery so that the excess output of the Assam refineries — which cannot be exported out of the landlocked state — is absorbed within the country.

Since there is a surplus of diesel, the fuel is being exported by barges to Bangladesh. IOC director (refineries), Jaspal Singh, told The Telegraph that bitumen was also being exported as local demand had fallen during the monsoon season, when highway construction work slows down.

He said that IOC expects to export around 50,000 tonnes of bitumen from the Haldia refinery during the current fiscal. This would be worth around $2 million.

IOC to Close Panipat Refinery in Oct

State-run Indian Oil Corp will close down its 120,000 bpd Panipat refinery for planned maintenance in October, a company official said on September 1.

"Along with the maintenance, we will use the 10 days shutdown to hook up the existing units with new units being built," said Jaspal Singh, the firm's refineries director.

He said the company was on track to double the Panipat refinery's capacity by April next year.

Edo, Indian Firm Sign Refinery Deal

Edo State Government and an Indian oil firm, India Oil Corporation signed a Memorandum Of Understanding (MOU) for the building of an oil refinery in the state.

The MOU, signed by the Edo State Governor, Chief Lucky Igbinedion and the Head of the India Oil Corporation delegation, Mr P.K Chakpoboti, in the State executive chambers was witnessed by the representatives of the Group Managing Director (GMD) of Nigeria National Petroleum Corporation, Mr. Funsho Kupolokun.

The state government and the Indian firm both agreed to immediately commence work on the project which they both described as a Joint Venture partnership in answer to the call by the Federal government for the deregulation of the downstream sector of the economy.

Speaking on the occasion, Governor Lucky Igbinedion said the proposed refinery would serve as a link between the state and other areas and would be an all-encompassing project that would boost the state's position and value on the oil sector chart.

The India Oil Corporation is India's largest commercial oil enterprise and is one of the top twenty oil companies in the world.

ONGC Embarks on Exploration Program

Oil and Natural Gas Corporation (ONGC) has embarked on a massive program for exploration of both onshore and offshore underground reserves of oil during the next few years.

ONGC Chairman Subir Raha said the corporation had already set up several teams comprising senior officers, who would embark to explore the underground reserves of oil and natural gas amounting to six billion tonnes, after a few months.

He said while there will be 36 teams of ONGC geologists who would explore the prospect of oil and natural gas underground, four other teams will do the job in several offshore basins.

He said the company had already floated tenders for chartering 12 new vessels andwould use its own ship Sagar Samriddhi for the off-shore oil exploration.

The entire process might cost the corporation to the tune of Rs 3500 crore annually for the next few years, he said. ''So far we have invested a little more than Rs 7000 crore in both on and offshore exploration of oil in different parts of the country particularly in Gujarat, Maharashtra, Orissa, West Bengal and Assam,'' he added.

From the present indication that India had huge reserves of oil of around 1.2 million tonnes, they had also decided to explore at least half of it within the next three to four years.

Referring to the ONGC's efforts to seek joint venture partners for deep water exploration, the Chairman said though they had received a number of inquiries from the Australian and the UK-based companies, any final settlement was yet to come.

About the progress of the proposed turnkey contracts for the development of coal bed methane, the ONGC Chairman said a number of leading foreign concerns including those from Australia had shown active interest in their drilling activities, which required specialized expertise.

Regarding the company's bidding for revamping a Sudan-based refinery near Khartoum, Raha said the talks to augment the three million capacity refinery was at final stages and hoped that the one billion dollar order might be signed soon following which they would undertake to lay the underground oil pipeline connecting the refinery with the Khartoum port.

Incidentally the ONGC has also decided to participate in the setting up of a 700 MW power plant in Tripura to help overcome the decade-long power shortage not only in the state bit the entire north east.

To another query, he said that the proposed oil and natural gas exploration in and around Sunderban Delta in West Bengal might start early next year.

MRPL Refinery to Run at 119% Capacity

State-run Mangalore Refinery and Petrochemcials Ltd will operate its refinery at 119 percent of its capacity or more after the unit restarts on Oct. 3, Chairman Subir Raha said on September 29.

All units of the refinery, which has the capacity to process 9.69 million tonnes a year, have been shut down for maintenance since Sept. 12, he said.

He said the company, a subsidiary of ONGC, would spend Rs 500 crore to upgrade petrol quality to abide by strict emission norms by 2007.

NEW ZEALAND

Milestone Reached in Massive Marsden Point Refinery Upgrade

The $180 million ‘Future Fuels’ upgrade of the Marsden Point Refinery reached a critical milestone September 19 with the arrival of a single shipment containing 32,000 cubic meters of plant equipment at Marsden Point.

Media were invited to North Port at Marsden Point on September 20th, to see the unloading of the equipment, to be briefed on the biggest upgrade of the Refinery in over 25 years and to tour the construction site.

The General Manager of the New Zealand Refining Company, Thomas Zengerly, described the delivery of the 1,850 tonnes of equipment on a single shipment as a “logistical masterpiece”.

Zengerly said a new road has been built specifically for the transportation of the heavy equipment from the port to the Refinery site and a heavy lift crane has been installed at the Refinery for the erection of the new process plants.

The ‘Future Fuels’ upgrade will allow the Refinery to meet Government’s new specifications for cleaner fuel from 2006, including reducing the benzene content in petrol from three to one per cent and the sulfur content in diesel from 500 to 50 parts per million.

Zengerly said the upgrade represented a massive investment in the production of top-quality petroleum-based products in New Zealand and would confirm Marsden Point as one of the world’s most efficient and modern refineries.

He said the project would also provide a significant boost to the Northland economy.

“This project is one of the biggest single industrial projects currently underway in New Zealand, with more than 300 additional people working on the Marsden Point site during the construction phase of the project,” he said.

The upgraded Refinery will be fully operational by 1 October 2005.

PHILIPPINES

Philippine Labor Officials Working to Prevent Strike at Shell refinery

Labor officials are trying to prevent a strike at the Pilipinas Shell refinery in Batangas province, which produces 80 percent of the firm’s petroleum products in the Philippines.

Shell is one of the largest oil firms in the country and provides about 33 percent of the Philippines’ oil consumption needs.

“We assumed jurisdiction on Sept. 17 because it will affect national interest as the firm is involved in a critical industry,” said acting Labor Secretary Manuel Imson.

He added that the union is questioning the labor department’s assumption of jurisdiction order.

The deadlock in the negotiations came after management took the position that it wanted a moratorium on increases, a position being opposed by the union.

THAILAND

Thai PTT Mulls Consolidating Petchem, Refinery Operations

PTT PCL (PTT.TH), Thailand's largest oil and gas conglomerate, is considering the consolidation of its petrochemical and refinery businesses in a move to strengthen its competitiveness, the company's top executive said September 21.

"We're moving toward consolidation. Details will become clear next year," Prasert Bunsumpun, PTT's president, told reporters.

Prasert said the first step is to consolidate its petrochemical units National Petrochemical PCL (NPC.TH) and Thai Olefins PCL (TOC.TH), as well as to merge its refinery affiliates, Rayong Refinery Co. and Star Petroleum Refining Co.

Later, the consolidation would involve other petrochemical companies or other refineries, he added.

Once the consolidation is complete, PTT's key business will focus on exploration & production, petrochemicals, and refining.

PTT, which owns 38% of National Petrochemical and holds a 45% stake in Thai Olefins, is reviewing the possibility of a merger between its two units, so that the two companies won't compete against each other for future investments. Both companies produce olefins.

In August, PTT announced it will join hands with Thai Olefins to buy out shares in Bangkok Polyethylene at an estimated cost of up to 3.4 billion baht ($1=THB41.3). The transaction is in line with PTT's long-term strategy of expanding its petrochemical business.

Prasert said on September 20 he expected PTT to reach an initial agreement soon with the Thai unit of ChevronTexaco Corp. (CVX) on the proposed merger between PTT's refinery affiliates, Rayong Refinery Co. and Star Petroleum Refining Co.

The Thai unit of ChevronTexaco holds a 64% stake in Star Petroleum Refining.

PTT's board recently approved the purchase of a 64% stake in Rayong Refinery from a unit of Royal Dutch/Shell Group (RD). The move increases PTT's holding in Rayong Refinery to 100%.

Prasert said the consolidation will help reduce operating costs, create synergies, improve economies of scale as well as strengthen PTT's competitiveness in the region.

Prasert expects the market capitalization of PTT Group to reach nearly THB900 billion after its refinery unit Thai Oil PCL (TOP.TH) lists on the stock exchange in October. The market capitalization of its group currently is worth around THB800 billion.

"We could possibly see the market capitalization of PTT Group reach THB1 trillion in 2005," Prasert said.

Prasert said the company will finalize plans by the end of the year on the prospect of buying a stake in debt-ridden Thai Petrochemical Industry PCL (TPI.TH).

Finance Minister Somkid Jatusripitak has suggested that PTT could buy a 30% stake in TPI, which is undergoing debt restructuring worth $2.95 billion.

"We have to consider a return on investment and our available cash before moving ahead in any investment," Prasert said.

Improved Earnings, Expansion Plans Help Thai Oil

Thai Oil's financial status improved substantially from 2002 onwards, thanks to strong local oil demand and higher global oil prices. Its gross refinery margin has surged to $6.47 a barrel, from $2.61 a barrel in 2002, said Kitti at Macquarie Securities.

Its earnings before interest, tax, depreciation and amortization in the first half of this year stood at THB11.22 billion, compared with THB4.90 billion in the same period a year ago. Meanwhile, its net profit in the first six months totaled THB6.63 billion, versus THB1.89 billion in the same period last year.

To attract investors, the company plans to pay a dividend on its fourth quarter earnings, with a payout ratio of at least 25% of its bottom line.

The company has managed to stand firm after weathering financial difficulties following the 1997-98 Asian financial crisis. Its long-term debt has fallen to THB39.36 billion as of end-June, compared with THB64.75 billion in 2001.

Thai Oil will use the proceeds from the offering and its cash-flow to finance future expansion. Between now and the end of 2006, the company plans to spend more than $470 million to expand its refinery, oil-related facilities, power plant and petrochemical businesses.

It will invest about $100 million to boost its refining capacity by 50,000 barrels a day to 270,000 barrels a day by the fourth quarter of 2006. After the expansion, Thai Oil will account for 27% of the country's total refining capacity, from the current of 21%.

Thai Oil will also spend about $90 million to buy out its affiliates Thai Paraxylene Ltd. and Thai Lube Base Ltd. At present, it owns 20% of Thai Paraxylene and 13% of Thai Lube Base.

"The integration of revenue from these two companies will help support us when refinery margins shift on a downward trend," said Piti Yimprasert, Thai Oil's managing director.

TAIWAN

Chinese Petroleum Seeks Partners for Refinery Project

Chinese Petroleum Corp., Taiwan's state-owned oil refiner, may seek partners as early as next month for a NT$367 billion ($10.8 billion) oil refinery and petrochemicals project.

The company expects to complete a final assessment of the project this month, President Chen Pao-lang told reporters in Taipei. Chinese Petroleum wants partners to fund more than 50 percent of the proposed oil and chemical plant, he said, without naming any potential partners.

The company plans to build a petrochemicals complex and oil refinery in Yunlin county on Taiwan's west coast to tap rising demand for fuels and chemicals used to make plastics. The project also may help the company compete with Formosa Plastics Group, Taiwan's only other oil refiner, which has newer plants and is also adding additional capacity.

Chinese Petroleum may build a refinery that can process 300,000 barrels of crude oil a day, the company said. The project may also include a chemical unit with capacity to process naphtha into 1.2 million metric tons of ethylene a year. The plant would include 27 units to produce chemicals for plastics and textiles.

Chinese Petroleum wants to boost petrochemicals sales because the domestic market for oil products is saturated, Chen said.

Formosa Petrochemical, a unit of Formosa Plastics, has two naphtha crackers with a combined annual capacity of 1.6 million tons of ethylene, and is building a third that will produce 1.2 million tons of ethylene each year.

Chinese Petroleum also plans to spend NT$42.6 billion building a plant in southern Kaohsiung county that will produce 1 million tons of ethylene a year when completed in 2011, to replace an existing unit.

A naphtha cracker processes naphtha into petrochemicals including ethylene, a raw material used in making plastics. Naphtha is distilled from crude oil.

3. EUROPE / AFRICA / MIDDLE EAST

GERMANY

German Refinery Ramps Up

Miro, Germany's largest oil refinery, has improved the level of its gasoline and heating oil production, following a fire at the facility on Jul. 23, according to a spokesperson for Royal Dutch/Shell, one of the plant's owners

However, the plant's heating oil and gasoline production both remain below normal levels, the spokesperson added.

The Miro refinery has a total installed refining capacity of 300,000 b/d. The facility had been operating at approximately 15% less than its usual capacity due to the fire. The Shell source declined to specify when the plant would return to full capacity, but said that a series of checks still needed to be completed on the plant.

The refinery, which is located in the city of Karlsruhe, is 32.25% owned by Shell, 25% by Exxon Mobil, 24% by Ruhr Oel and 18.75% by ConocoPhillips. Ruhr Oel is a joint venture of BP and Russia's Alfa. Around 60% of the plant's crude oil feedstock is high sulfur crude.

LITHUANIA

Lukoil Interested in Mazeikiai Refinery

Russian oil major Lukoil is interested in acquiring the Yukos-owned Mazeikiai oil refinery if it is sold, Lukoil President Vagit Alekperov told the press.

"If this asset is offered for sale, then we will look at it," Alekperov said.

He said Lukoil is interested in the refinery since the company's retail network in the Baltics is quite extensive and the territory's refining capacity would be organically integrated into the sales scheme.

"There are specific problems concerning the Mazeikiai refinery, in particular, oil deliveries to the refinery are already partly limited due to increased capacity of the Baltic Pipeline System," Alekperov said.

Therefore, "the same problems could appear as with Ventspils Nafta," Alekperov said. The Latvian terminal is experiencing large problems due to limited supplies of crude from Russia because of the appearance of alternative routes for transporting oil to Europe.

"Talks are continuing on privatizing Poland's Gdansk oil refinery, but so far there haven't been any significant gains since the Polish government hasn't made any suggestions on what form privatization will take," Alekperov said.

"We confirm our interest in acquiring this asset, understanding clearly that we can develop and load capacity," Alekperov said.

Lukoil held talks with the Lithuanian government on acquiring Mazeikiai refinery for a long time, however the talks were not successful after Mazeikiu nafta, which is owned by Yukos, bought the refinery.

THE NETHERLANDS

Koch Supply & Trading to Reconfigure, Expand Rotterdam Refinery

Koch Supply & Trading LLC plans to reconfigure its refinery at the Vopak Europoort terminal in Rotterdam to process primarily crude oil and to expand its production capacity. The facility currently processes mostly gas condensates such as naphtha, jet kerosene, gas oil, and residuals.

The company will invest $15 million to increase processing capacity to 80,000 b/d from 65,000 b/d. Reconfiguration is expected to be completed in mid-2005.

The Europoort terminal is a key products hub in Europe having pipeline connections enabling direct transfer of jet fuel to major airports such as Amsterdam and Frankfurt.

Koch is a subsidiary of Koch Industries Inc., Wichita, Kan.

RUSSIA

YUKOS Denies Plans to Sell Refinery

Russian oil major YUKOS denied on September 8 reports it planned to sell its Lithuanian refinery Mazeikiu Nafta to help cover its huge back tax bill.

"We have no plans to sell our strategic assets, including Mazeikiu," YUKOS' spokesman Alexander Shadrin said.

Vedomosti business daily reported that YUKOS plans to sell Mazeikiu, which also includes a 200,000 barrels-per-day crude oil export terminal in Butinge on the Baltic Sea, to raise more cash toward covering back taxes.

Vedomosti quoted sources as saying that YUKOS was in talks to sell its 53.6 percent stake in the complex and several Russian companies had already expressed interest in buying it.

One source said Mazeikiu Nafta assets were not under arrest as YUKOS does not own them directly.

YUKOS missed last month's deadline to pay $3.4 billion in back taxes for 2000 saying it had managed to raise only $2 billion.

On September 7, the Tax Ministry also started to collect $2.72 billion from YUKOS' bank accounts out of its total claim of $4.1 billion for 2001 back taxes.

YUKOS' tax woes are part of a broader campaign seen by many analysts as orchestrated by the Kremlin to punish the company's politically ambitious founder Mikhail Khodorkovsky, now on trial on fraud and tax evasion charges.

Mazeikiu turned profitable last year after being taken over by YUKOS in 2002. It refined more than 3.9 million tonnes of crude and other feedstock in the first six months of the year, or more than 154,500 barrels per day. It is over 1 million tonnes more than in the same year-ago period.

Yukos Suspends Crude Supplies to Refinery

Russian oil giant, Yukos Oil (YUSA.FSE), has decided to halt its crude supplies to the Baltic refinery, Mazeikiu Nafta, until the end of this year.

NIGERIA Russia's Interfax news agency quoted a spokesman for Yukos Oil September 20 at the company would halt its crude supplies to the Lithuania-based refinery. The spokesman said that the current production program of the refinery would be met by the company. Russia's Prime-Tass news agency said that the refinery, which is 53.7% owned by Yukos Oil, planned to refine 8 million metric tons of oil and export 10 million tons of petroleum products in 2004. Earlier, Yukos Oil confirmed that the company was suspending its rail shipments to China National Petroleum Corporation (CNPC). The decision is likely to reduce the overall exports by Russia's largest oil exporter by about 100,000 barrels per day. Yukos Oil, which is facing tax liabilities of over $7 billion for past years, denied the allegations that the company's decision to halt shipments to CNPC was politically motivated.

Korean President to Sign Refinery Agreements in Moscow

Agreements on participation by South Korean companies in the construction of oil refineries in Tatarstan and Khabarovsk territory are to be signed during an upcoming visit to Moscow by South Korean President No Mu-hyon, a source in the Korean Information and Communications Ministry said.

"During the visit by the Korean president it is planned to sign these agreements, in accordance with which a number of South Korean companies will participate in these projects," the source said.

Big Tartarstan Refinery Contract likely To Be Sealed during Presidential Visit

This article was contributed by the Korea Plant Industries Association on the occasion of President Roh Moo-hyun's visit to Russia.

The plant industry has emerged as a kingpin of Korea-Russia economic cooperation, taking advantage of the way these two countries complement each other in the area of resource development and their geographic proximity.

Russia is endowed with plentiful natural resources while Korea has abundant expertise and experience in overseas plant construction.

President Roh Moo-Hyun's visit to Russia offers another opportunity for the Northeast Asian neighbors to cement trade, industry and business ties.

During the presidential visit, LG International Corp. will sign a deal to participate in a $2.7 billion refinery project in Tatarstan.

In addition, Samsung Corp. and Daewoo International Corp. are pushing ahead with projects to participate in the refinery and power plant sectors, respectively.

The important plant projects that are being realized now in Russia are the fruit of Korea's sincere and vigorous efforts to develop national infrastructure in support of bilateral economic cooperation.

For example, the LG International project resulted from a feasibility study supported by the Korea Plant Industries Association (www.kopia.or.kr) and the Korean government.

The feasibility study initiative reflects Korea's policy to pursue win-win economic cooperation with promising partners and to facilitate the overseas business of capable Korean plant industries.

Since 2001, Korean financial support for feasibility studies has reached a combined $4.7 million involving 42 projects, according to KOPIA.

Applications for financial support, up to $450,000 per feasibility study, can be initiated by either Korean or foreign parties as well as jointly.

KOPIA expects more Russian projects to take advantage of its feasibility study funding program in the near future.

Another successful KOPIA initiative to nurture mutually beneficial relationships with potential partners is the Visit Korean Plant Industry Program, which invites plant-related CEOs in the private and public sector to Korea to see for themselves what Korean plant industries have to offer.

Following the success of the first visit program last year, the Visit Korean Plant Industry Program 2004 will be held Oct. 27-30 in Seoul in conjunction with the Plant Technology & Equipment 2004 exhibition.

Designed to identify new opportunities through plant cooperation between Korea and foreign partners, the program is fully supported by the Ministry of Commerce, Industry & Energy.

The Korea Plant Industry Association was organized in 2003 to create synergy effects through cooperation among the individual expertise and experience that Korea's engineering, heavy industry and general trading companies possess in consideration of the plant industry's requirements for technologies in a wide variety of specialized fields from engineering, production and installation of equipment and materials to construction.

KOPIA also supports plant construction and contractors through close coordination and consultation with Korea Export-Import Bank, Korea Export Insurance Corp. and resource development firms like Korea Electric Power Co., Korea Gas Corp. and Korea National Oil Corp.

The association serves 47 regular and special members by being an external window for the domestic plant industry, developing small and medium plants, supporting exports and mapping out a long-term development vision for Korea's plant industry.

NIGERIA

Refining Capacity Dwindles at Warri and Kaduna

Following technical faults and lack of raw materials, the Warri and Kaduna refineries operated marginally last month leaving only Port Harcourt refinery which processed an average of 81,767 barrels of crude oil per day (bbls/d) out of a total installed capacity of 445,000 bbls/d for the three refineries.

The Warri refinery was said to be out of service as a result of repair work that is being carried out on the damaged foundation of its compressor 10-KM-11 which was earlier reported. Meanwhile, Vanguard gathered from the Department of Petroleum Resources (DPR), Nigeria's oil and gas regulatory and monitoring body, that the repair work is nearing completion.

In addition, the contractor that is handling the ChevronTexaco line used to supply the plant Venezuelan crude oil, was said to complete the job soon. The Kaduna refinery according to DPR, was not operational due to lack of supply of Arabian light crude oil and feed for some parts of the plant. The Port Harcourt refinery which was functional, operated at just 38.9 percent of the installed capacity.

Therefore, it is expected that with this development, government has to depend heavily on importation of petroleum products to meet local consumption and demand. Furthermore, the Nigerian National Petroleum Corporation said plans are afoot to privatize the refineries to inject private sector managerial expertise into them.

The Department monitored products supply within the period and noted that PMS (petrol) supply within the period averaged 23.42 million liters about 64.8 percent of estimated national daily demand put at 36.2 million liters. This indicates a shortfall of about 13 million liters.

The Department noted that in the course of monitoring of products' prices, filling stations and depots' it discovered that there was price differential in prices of petrol sold by major and independent marketers. In Lagos State and the Federal Capital Territory (FCT) the price of PMS in both the major and independent marketers' filling stations was almost the same said DPR.

It was gathered that with the high price of crude oil in the international market, petroleum products will continue to be high because global price of crude affects local price of products due to deregulation of the downstream sector.

The Department sealed 10 filling stations out of 863 inspected within the period for contravening specified guidelines. It said that three of the sealed stations were in Port Harcourt while seven were sealed in Warri, Delta State. The NNPC depots were said to be in working order as loading activities were carried out at the depots during the period.

The Department stated that sealed petrol stations will remain shut down until it meets the requirements it contravened.

Chinese National Oil Firm Seek Stake in Refinery, Oil Blocs

Chinese National Oil Company September 2 expressed readiness to participate in the operation of Nigeria's refineries as well as new oil blocs in the on-shore or deep off-shore areas.

The company's expression of interest was put across when a 7-man trade delegation led by Mr. Sun Wensheng, Minister of Land Resources paid a courtesy visit to Special Assistant to the President on Petroleum Matters, Alhaji Jaffaru Parki and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Funsho Kupolokun in Abuja.

Wensheng said the company would be happy to be given opportunity to participate in the development of the oil blocs and in taking up stakes in the nation's refineries being privatized.

"We are happy with the reform in the oil and gas sectors and we are interested in entering co-operative ventures with NNPC because of the prevailing transparent and forthright disposition in the company", he said.

He said the delegation had earlier met with President Olusegun Obasanjo, where both countries expressed the need for cooperation even on a wider scale, in areas that would bring benefits to both countries.

Kupolokun invited the Chinese to take advantage of the existing opportunities in the upstream oil and gas and downstream sectors, and invest in Nigeria's lucrative oil industry.

He asked the visitors to consider taking part in bidding for new oil blocs January 15, 2005 "which will put on tender a number of oil blocs ranging from onshore, shallow wells, to offshore and deep offshore."

Kupolokun also pointed to the exciting business opportunity that awaits investors in the Nigeria-Sao-Tome Joint Development Zone (FDZ).

He said the series of reforms taking place in the oil sector were directed at achieving overall development of the industry, by reaching 4.1 million barrels per day production capacity, 36 million barrels in recoverable reserve and stamping out gas flaring by 2006.

He specifically asked the Chinese oil company to take up a large yard in Nigeria where it could construct locally a floating oil production vessel (FPSO) for deep offshore exploration.

Parki in his contribution urged the Chinese to get involved in developing the marginal field.

First Bank, 5 Others to Finance $100m Refinery in Nigeria

The recent involvement of local banks in the energy sector has taken another leap, as a consortium of six banks led by First Bank Nigeria Plc, is putting together a financing package for the construction of a private oil refinery expected to cost $100 million (N13.3 billion).

Other banks in the consortium are Intercontinental Bank, Standard Trust Bank, Diamond Bank, First Atlantic Bank and Zenith International Bank.

The consortium is charged with the task of raising loans for funding the project as well as packaging the equity financing for the construction of the refinery owned by an indigenous company, Total Support Refineries and will be sited in Calabar, Cross River State.

Mr. Taiwo Okeowo, Head, Corporate Finance of First Bank said that 60 percent of the total financial package for the 12,000 barrels per day (bpd) capacity refinery, will be raised through debt financing while the remaining 40 percent will be through equity financing.

Okeowo said the United States Export-Import Bank (Exim-Bank) will provide guarantee for the offshore portion of the loan package, up to 85 percent, through the New York-based Commerze Bank.

All the financial packages are expected to be in place before the end of October this year.

The Total Support refinery whose ground breaking ceremony was performed on September 13, signaled the eventual take off of a private refinery in Nigeria, more than two years after the Federal Government first granted preliminary licenses to 18 companies.

The refinery, located within the Calabar Export Free Zone, is also the first out of the five companies that have so far received approval from the government to construct.

Speaking at the formal launch of the refinery, the Director, Department of Petroleum Resources (DPR), Mr. Mac Ofurhie, said the project developers must ensure that the design and construction of the plant followed the Federal Government's laid down guidelines on local content in the oil and gas industry, while the DPR must be involved in the engineering, procurement, construction and installation (EPCI) process.

Ofurhie said in line with the condition attached to the private refinery scheme, the promoters would also need to apply for license to operate at the end of construction and installation.

Also speaking at the occasion, the President of the Total Support Group, Mr. Ubani Nkaginieme, said crude oil feed stock for the refinery will be sourced from either ExxonMobil's Qua Iboe Crude Oil Terminal or from indigenous oil producer, MoniPulo. The two oil producing firms have their operations some few kilometers away from the refinery.

He said the refinery, expected to be on stream in 2006, will initially take crude oil supply through the use of two self-propelled barges with installed capacity for 24,000 barrels each.

Nkaginieme said unlike other refineries which utilize about 30 per cent of its gas output for power supply requirements, the private refinery will utilize 80 per cent of its gas for power supply requirement.

On the level of emission expected from the refinery, the company president said it will be three per cent less than that of any refinery. He added that the refinery is designed to be the most environmentally-friendly.

He also said the refinery was planned to be an export refinery, but that since Nigeria imports about 70 percent of its fuel supply needs, the refinery will be producing for local market.

"The refinery will operate on the hydro re-formative technology. We will not use the fluid cracking technology because ours is a small refinery. Only refineries which have 60,000 barrels per day installed capacity can use the cracking system because it is quite expensive," he said.

In line with the downstream deregulation policy of the Federal Government, the Petroleum Resources Ministry had in June 2002 short-listed 18 firms out of the 31 that filed applications for preliminary licenses. The other companies included Ilaje refinery and Petrochemicals, NSP Refineries, Oil Services Ltd, Ode-Aye Refinery Ltd, Orient Petroleum Resources Ltd and Owena Oil and Gas Ltd.

Others are Southwest Refineries and Petrochemicals Company, Starex Petroleum Refinery Ltd., The Chasewood Consortium, Tonwei Refinery and Union Atlantic Petroleum Ltd.

While these companies are expected to be ready to commence operation within the next two years of being granted the preliminary licenses, the ministry has, however, declined to withdraw the licenses as stipulated by the guidelines. The ministry said it noted the hurdles facing implementation of the deregulation policy.

The private refineries are to compliment the four ailing state-owned refineries, which have combined installed capacity of 445,000 bpd and to relieve the pressure on importation of petroleum products, where the Nigerian National Petroleum Corporation (NNPC) said it was incurring about a N500 million loss daily.

TSR to Build $100m Refinery in Calabar; Multinationals Rule out Refining in Nigeria

TOTAL Support Refineries (TSR), one of the 21 refineries licensed by the Federal Government in 2001, has concluded arrangements to begin construction of a $100million (N13.4billion), 12,000 barrels per day capacity modular refinery in Calabar.

This development follows an approval to build granted by the Department of Petroleum Resources (DPR).

It was also gathered that the multinational oil exploration and production companies operating in Nigeria may have ruled out the possibility of refining crude oil produced in the country locally, for reasons yet to be advanced.

At the ground breaking ceremony for the TSR in Calabar recently, it was gathered that the refinery which is scheduled to be completed in 24 months shall be funded through 60 per cent debt financing and 40 per cent equity financing.

It is expected that the US EXIM Bank will guarantee 85 per cent of the debt financing through some local banks led by First Bank of Nigeria, Zenith Bank, Intercontinental Bank, First Atlantic Bank, and Diamond Bank Nigeria Limited. Essentially, the US EXIM Bank is expected to finance all aspects of the debt financing package emanating from the USA and all aspects of the financial package are expected to be in place before the end of October this year.

Governor Donald Duke of Cross Rivers State, while performing the ground breaking ceremony for commencement of construction said it was painful to note that Nigeria exports huge amounts of crude oil yet, imports petroleum products.

He recalled that while in Holland with President Olusegun Obasanjo on invitation of the immediate past managing director of the Shell group, he was made to understand that the company's total output worldwide was two million barrels per day and that its operations in Nigeria accounts for about 1.1million barrels per day.

Governor Duke pointed out that the Shell boss expressed gratitude for the massive goodwill the company had enjoyed from the Nigerian government and asked the President how the company can reciprocate the gesture. The governor said he then proposed that the company should refine 50 per cent of its output in Nigeria, but that the Shell helmsman had retorted saying it wasn't going to happen.

The governor commended the initiative behind the establishment of the refinery, adding that he was giving it his support because he had been given the assurance that it will be one of the most environmentally friendly in the world. Investigations also indicate that other multinational oil and gas exploration and production companies in the country may have also ruled out the possibility of refining crude oil locally.

However, it would be recalled that only recently, the government served notice that all exploration and production companies shall be required to refine at least 60 per cent of their output locally by 2006.

Chinese, Libyan Investors Eye Kaduna Refinery

The transfer of management of the Kaduna refinery to foreign strategic investors has got underway as the Nigerian National Petroleum Corporation (NNPC) is now negotiating with Chinese and Libyan investors who have shown interest in the plant.

However, with domestic production of petroleum products still at its lowest, the NNPC placed orders for the importation of 45 cargoes of fuel for the fourth quarter (October-December) this year.

Checks revealed that after oil majors producing crude oil in the country namely Shell, ChevronTexaco and ExxonMobil, declined Federal Government's offer to take up core stakes in the four local refineries, the NNPC was given a mandate to secure investors from outside the country.

Sources said a Memorandum of Understanding (MOU) had already been drawn up establishing a management pact between the NNPC and the Chinese state oil firm, SINOPEC, on NNPC downstream businesses.

A source said that if everything went according to plan, the MOU was expected to be signed the last week of September. They added that proposals have been received equally from operators in the UK, Russia, Algeria and Norway for the three other refineries in Port Harcourt and Warri.

Government has in the past two years been attempting to sell 51 percent shares in the four ailing refineries, which are barely meeting 10 percent of the nation's petroleum products demand.

Its desire to have the multinationals take over the plants failed to materialize after the oil majors rejected the offer. Even tenders received late last year from interested companies, were cancelled.

Speaking on the development, NNPC Group Managing Director, Engineer Funsho Kupolokun who although refused to confirm directly which investors the corporation was holding talks with, however, said the country is about to start witnessing the influx of foreign investors into the downstream oil sector.

"The current management of the NNPC knew that following the deregulation of the downstream sector, the corporation will face stiff competition from both local and foreign investors. That is why we launched the transformation project recently," said Kupolokun.

He added that contrary to public fears on the deregulation policy, more jobs will be created in the sector as more investors come in.

Following a court ruling , the NNPC and marketers jerked up fuel prices to meet import parity, with the pump price petrol raised to between N52 and N55 per liter up from N43.90.

The increase has since generated tension in the country, with various civil rights groups calling for mass protest. Nigeria, Africa's largest crude oil producer, relies heavily on importation to meet domestic fuel demand. Checks revealed that the NNPC awarded contracts to eight multinational oil trading companies to import a total of 45 cargoes of fuel for distribution during the fourth quarter of this year. The contracts, which translates into importation of 1.81 billion liters of fuel, were awarded to multinational trading companies namely Shell, ChevronTexaco, British Petroleum (BP), Addax, Vitol, Trafigura, Glencore, Calson, and Acadia. The contracts, which translates into importation of 1.81 billion litres of fuel, were awarded to multinational trading companies namely Shell, ChevronTexaco, British Petroleum (BP), Addax, Vitol, Trafigura, Glencore, Calson, and Acadia.

The number of cargoes were less by one compared to 46 cargoes ordered for the third quarter. The contracts were awarded at the cost price of $500 per metric tone at premium of plus $49.50 per metric tone, which could take the total cost of the contracts to about $741.8 million (N98.7 billion).

Shell, ChevronTexaco got three cargoes each, US-based Vitol, Calson, and Trafigura, seven cargoes each while, Swiss oil trader, Addax, British Petroleum and Glencore, all of which got four cargoes each. The awards for the first time in recent years, left out Nigerian local oil traders.

Indications that Nigerian companies would not benefit from the contracts had emerged earlier when the NNPC demanded that bidders must have an annual turnover of $5 billion. "The latest awards are to companies that will deliver no matter the cost," said an official of the Pipelines and Products Marketing Company (PPMC).

Local oil traders under the umbrella of the Crude Oil and Petroleum Traders Association of Nigeria (COPTAN), had decried the NNPC guidelines for the fuel import contracts. The group said while they appreciated the corporation's intention to weed out middle-men and agents in the import business, it however, argued that the guidelines worked against genuine Nigerian oil trading firms.

SOUTH AFRICA

Sapref Oil Refinery Taken to Task over Leak

The Department of Environmental Affairs has given Sapref an order to hand in a written report about an oil leak which occurred south of the city on September 7.

Initially the company said about five tons had leaked into the water at its single buoy mooring. But the department said less than one ton of light Arabic oil had been spilled and had washed up on a nearby beach. Its anti-pollution vessel, Kuswag, "remained on high alert" although no significant environmental damage was immediately apparent.

Sapref, a joint venture oil refinery between Shell Oil and BP Oil, was told to give an account of why the leak had occurred, what steps had been taken to inform the public of any possible harm or damage and what remedial measures were intended.

The department said it had given Sapref two weeks to compile a more detailed report before deciding what steps would be taken against the company.

KUWAIT

Production Halted for 2 Days at Kuwaiti Refinery

An electrical outage halted production September 27 at one of Kuwait's three oil refineries with the facility unlikely to resume operation for two days, officials said.

"The Shuaiba refinery, which has a capacity of 200,000 barrels per day (bpd), should be operational in two days," Kuwait Petroleum Company's director Sami al-Rashid was quoted as saying by the Kuna official news agency. The halt of production at Shuaiba "has no effect on oil exports."

The 900,000 bpd production capacity of three refineries is less than half of the country's OPEC quota of 2.08 million bpd.

The outage also briefly hit Kuwait's other two refineries, where operations were quickly returning to normal, said Rashid. While a large quantity of oil was burned in the incident, the pollution was within acceptable limits, he added, without mentioning victims.

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