dec 05 update

The oil giant is now set to initiate measures that will get steam flowing to individual process units at the refinery, the company confirmed December 8.

The refinery has been shut down since before Hurricane Rita made landfall in late September. BP took advantage of the shutdown to conduct a refinery-wide overhaul.

The move was made largely to meet the terms of a settlement BP has with the Occupational Safety and Health Administration in the March 23 explosions, which killed 15 people and injured more than 170.

Along with a $21 million fine, BP must make mechanical and process safety management changes within the refinery.

That process included a massive retooling of the refinery’s steam system.

In the refinery, steam is used to provide the heat for key process units and to help flare systems burn cleaner.

During the steam system startup, BP took the unusual step of clearing out most of its work force.

Company spokesman Neil Geary confirmed that with the exception of personnel needed to restart the system and security staff, BP’s workers and contractors were basically given time off.

A few outside of those needed for the steam system work were called in to work on other projects.

With steam flowing again, the next phase will be prepping some gasoline-producing units — roughly 10 — for startup.

Initial maintenance work will be conducted as steam is reintroduced to individual units. When BP begins the startup process for its gasoline-producing units, areas near the units will be restricted to essential personnel, Geary said.

$1 Billion Expansion of Conoco-Phillips Refinery in Roxana

The proposed new oil pipeline from Canada to Patoka will mean a $1 billion expansion of the Conoco-Phillips refinery in Roxana.

Melissa Erker says the Houston-based company wants to add a second crude oil processor at the refinery. She says it could open by 2009 and have the capacity to refine as many as 55,000 barrels of crude oil a day.

Erker says an official announcement should come early next year, including more details about how many jobs the Metro East refinery would add.

The new Canada to Patoka Pipeline would run just east of the refinery. Conoco-Phillips is considering expansions at the company's other refineries.

Connacher Oil and Gas Limited Hints at Buying Montana Refining Co

The future ownership of the Montana Refining Co. in Great Falls could be decided by early next year.

A Canadian company, Connacher Oil and Gas Limited, has said it hopes to complete a possible deal by early 2006.

A news release from the Calgary-based company described the sale discussions with the Holly Corp. as "advanced" and the purchase price could include up to a million shares of Connacher.

Shares in the company, traded on the Toronto Stock Exchange, closed at $3.70 Tuesday, up 12.46 percent.

Holly, based in Dallas, has said the Canadian company approached it about buying the Great Falls refinery. The two companies have an agreement to talk about the sale that runs through January, although it could be extended.

Both companies said no offer for the refinery has been made.

"If an offer does come to us, we will consider whether it's a good deal for the shareholders or not," said Steve McDonnell, a Holly vice president and chief operating officer.

Numerous calls to Richard Gusella, Connacher's president and chief executive, were not returned Tuesday.

The Montana Refining Co. is believed to be the smallest full-service oil refinery in the United States with production capacity of about 8,000 barrels of oil per day.

The refinery, which has operated in Great Falls for more than 80 years, employs about 100 workers.

In its news release, Connacher, primarily an exploration company, didn't say why it was seeking to buy the refinery.

Connacher owns a sizable number of leases in the Great Divide oil-sands area of northeast Alberta. In its news release, the Canadian company hinted that buying the Great Falls refinery could help it finance development of its Alberta oil leases.

ConocoPhillips Wood River Refinery to get $1 Bln New Coking Unit

ConocoPhillips plans to invest more than $1 billion to increase the processing

capacity at its Wood River Refinery, the largest in the company and the

10th-largest in the United States.

The Houston-based company will build a new coking unit that each day will

process up to 55,000 barrels of sour crude oil, much of which is expected to

come from the oil sands of west Alberta via the 1,870-mile Keystone pipeline

planned by TransCanada Corp.

The Wood River Refinery is one of the larger employers in the Metro East area,

with about 780 workers.

The ConocoPhillips expansion will be welcome news in the Wood

River-Roxana-Hartford area, which lost hundreds of jobs in the closings of two

other refineries in the last two decades.

The additional investment in Roxana is part of a plan announced last month by

ConocoPhillips to spend $4.3 billion to expand U.S. refining capacity.

The coker will make the Wood River Refinery "a really powerful machine," said

Jim Mulva, the company's chairman and chief executive.

Spokeswoman Melissa Erker said details of the expansion remain to be worked out.

Erker said many U.S. refiners want to increase capacity in the wake of fuel

shortages after refineries in Louisiana and Texas were shut down by hurricanes

Katrina and Rita earlier this year. ConocoPhillips was planning an expansion

long before those problems, she said.

"We're obviously excited about expansion," Erker said, but final approval and

project details may be unavailable until mid-February.

The expansion will mean increased employment and should secure the future of

the refinery for decades, said Floyd Fessler, assistant business representative

for Operating Engineers Local 399, which represents 350 to 400 ConocoPhillips employees. It is one of nine unions that represent workers at the facility.

"We look forward to having a long-term relationship with the company," he said.

Fessler said ConocoPhillips already has extensively modernized the facility.

"Although it's an older refinery, it has been completely updated," he said.

The new second coker unit would roughly triple the refinery's capacity to

process heavier, lower-grade crude oils, which are less expensive to buy but

more difficult to refine than lighter, or "sweeter," crudes.

Calgary-based TransCanada announced in last February that it was considering building a pipeline that could carry up to 400,000 barrels of crude oil a day to Wood River and Patoka, Ill., from Hardisty, Alberta.

In early November, ConocoPhillips signed a memorandum of understanding with

TransCanada to ship crude oil on the proposed Keystone pipeline. The agreement also gives ConocoPhillips the right to acquire up to 50 percent ownership of the pipeline.

ConocoPhillips has made significant investments in extraction of crude oil from

the Alberta oil sands.

Tribal Officials Says Makoti 15,000b/d Refinery Plans Being Held Up by Environmental Impact Statement Reviews

Three Affiliated Tribes Chairman Tex Hall says plans for an oil refinery are being held up by federal reviews.

Hall said the Bureau of Indian Affairs, the Environmental Protection Agency’s Region 8 office in Denver, and the U.S. Fish and Wildlife Service are working on the reviews for an environmental impact statement. Tribal officials are not questioning the need for one, but they believe the process is taking too long, he said.

Tribal Treasurer Frank Whitecalfe said the latest word from the EPA is that the environmental impact statement will be completed in February 2007. Hall said the tribe was told earlier that it would be finished in December this year; then that date was moved back to December 2006.

“We’d really like to bring it up to September or October of 2006,” Whitecalfe said. “If we get it to that point, we’re comfortable that things will work. But if we start talking another year…”

Carol Campbell, a deputy assistant regional administrator for EPA’s regional office in Denver, said the agency is doing everything possible to expedite the project. One problem has been incomplete information from tribal contractors, she said.

After the preliminary environmental impact statement is completed, the agency will issue a draft, to be followed by a public comment period before the final statement.

“Everything has timeframes with it and they’re standardized,” Campbell said. “There’s not a whole lot we can do to cut it and we don’t want to. You don’t want to cut the public process.”

She said the final environmental impact statement is scheduled to be published in the Federal Register in September 2006 and construction could start in February 2007.

The proposed Clean Fuels Petroleum Refinery on the Fort Berthold Reservation may be the first refinery owned by an Indian tribe and built on an Indian reservation. The EPA is reviewing another refinery project in Yuma, AZ, but it is not located on tribal land, Campbell said.

The Makoti refinery is being planned as a 15,000-barrel-a-day plant and could be expanded up to 30,000 barrels a day, Whitecalfe said.

Once operational, it would provide in the neighborhood of 70 jobs, Whitecalfe said.

"We’re really concerned about the rising fuel costs like everybody in the country,” Hall said. “The president and Congress are all focused on building more refineries.”

Whitecalfe and Hall said a groundwater study is being conducted at the proposed refinery site. A group called the Environmental Awareness Committee of Fort Berthold has raised questions about air and water quality.

“To me, the public does not need to be concerned about the federal agencies doing their job – they’re really grilling us on this with three different agencies’ reviews, Hall said. “We’re just concerned that with three agencies doing this, that takes three times as long getting the review done.

BP to Invest $1 Billion in Texas City Refinery Following Explosion

BP Products North America Inc. Dec. 9 released its final incident investigation report on the March 23 Texas City, Tex., refinery explosion and fire. The company said it plans to invest about $1 billion to improve and maintain the site over the next 5 years.

While many of the actions recommended by investigators are under way, some actions have been completed. Among the work, the company will install modern process-control systems on major units, transition to a more powerful maintenance management system, improve worker training, and remove blowdown stacks, the report said.

BP said that the investigation team "found no evidence of anyone consciously or intentionally taking actions or decisions that put others at risk." However, "the team found many areas where procedures, policies, and expected behaviors were not met."

According to the report, BP found that the "underlying reasons for the behaviors and actions displayed during the incident are complex" and that it was "evident that they had been many years in the making. . ."

Critical factors that led to the explosion were identified in an interim report published May 17. The final report also identifies the following underlying causes:

"Over the years, the working environment had eroded to one characterized by resistance to change, and lacking of trust, motivation, and a sense of purpose. Coupled with unclear expectations around supervisory and management behaviors this meant that rules were not consistently followed, rigor was lacking, and individuals felt disempowered from suggesting or initiating improvements.

"Process safety, operations performance and systematic risk reduction priorities had not been set and consistently reinforced by management.

"Many changes in a complex organization had led to the lack of clear accountabilities and poor communication, which together resulted in confusion in the workforce over roles and responsibilities.

"A poor level of hazard awareness and understanding of process safety on the site resulted in people accepting levels of risk that are considerably higher than comparable installations. One consequence was that temporary office trailers were placed within 150 ft of a blowdown stack, which vented heavier than air hydrocarbons to the atmosphere without questioning the established industry practice.

"Given the poor vertical communication and performance management process, there was neither adequate early warning system of problems, nor any independent means of understanding the deteriorating standards in the plant."

Boom in Overseas Refinery Projects Puts U.S. Behind

A surge in oil refinery investment is under way overseas, which could make the United States more reliant on imports of refined products like gasoline and heating oil in coming years, according to a published report.

The Wall Street Journal, citing a study by Wood Mackenzie, a consulting firm based in Edinburgh, Scotland, reported that 100 projects representing as much as 12 million barrels per day (bpd) of added refining capacity could be online by the end of the decade. But most of that capacity is outside the United States, according to the newspaper.

Among the nations looking to increase refining capacity is Saudi Arabia, which the paper reports is looking to build a 400,000 barrels refinery for the export market, as well as moving to expand and upgrade its 400,000 bpd refinery in Rabigh, on its Red Sea coast.

Meanwhile, U.S. oil companies continue to hold back on building refineries despite the increases seen in 2005 in prices for gasoline, heating oil and jet fuel. While regulatory issues are one barrier, oil companies generally see better returns on investment in oil exploration rather than refinery capacity.

The newspaper reports industry executives still describe today's juicy refining profits as temporary. "We don't expect current margins to last long term," Jim Nokes, executive vice president of refining and marketing for ConocoPhillips, told analysts in November, according to the report.

While no new refineries are planned, the American Petroleum Institute has said that its members plan increases in capacity at existing refineries equal to 1 million to 1.3 million barrels of capacity a day in the coming years.

But the newspaper, quoting PFC Energy, a Washington, D.C., consulting firm, says those plans work out to an annual gain of about 300,000 bpd during the next several years, while U.S. demand for products such as gasoline and jet fuel is expected to grow by as much as 200,000 to 400,000 bpd annually during the same period.

The newspaper reports that potentially could keep pressure on gasoline prices and increase the import of refined product.

Murphy Oil Wants County Land for Buffer, Possible Expansion for Superior Refinery

Murphy Oil wants to enlarge the buffer around its Superior refinery by purchasing 66 acres of county-owned property.

The Douglas County Land and Development Committee voted to put the land, valued at $150,000, up for public bids.

The committee will open bids on Feb. 28. The county board will vote on selling the property after that.

"We can't sell it directly to them," committee chairman Keith Allen said. "Hopefully they will be the only bidder and it will be pretty clean, but if there is another bidder we will have to make a decision then."

While Murphy wants the county property northeast of the refinery primarily as a buffer, it's possible the company may expand the refinery in the future.

"There's talk of expanding the refining capacity in this country," Superior refinery manager David Podratz said. "We have no concrete plans right now, but we're always looking at things. And if we ever do expand, having that additional buffer zone will be handy."

The refinery has a capacity of about 35,000 barrels a day. It employs 154 workers.

Podratz said that if Murphy buys the property, it will leave the land unfenced and open to current uses, including archery deer hunting.

"If we're successful in obtaining the property, you won't see any changes out there in the immediate future," he said.

Douglas County Board Chairman Douglas Finn said selling the property to Murphy would be a good deal for the county.

CENTRAL AMERICA

Regional Leaders to Approve Mexican Plan to Build 300,000b/d Central American Oil Refinery

Leaders from Central America on December 13 were discussing Mexico's plan to build a multibillion dollar oil refinery in their region, but they were expected to let a private company decide which country should host the project.

Mexican President Vicente Fox was hosting the one-day energy summit with his counterparts from Guatemala, El Salvador, Honduras, Costa Rica, Panama and the Dominican Republic. Representatives from Colombia, Nicaragua and Belize were also participating.

The leaders planned to sign a declaration at the end of the summit calling for the construction of the oil refinery, as well as a plant for liquefied natural gas, a hydroelectric dam and a gas pipeline stretching from Mexico to Panama. An overhaul of the region's electric power grid is also included.

The plan could cost as much as US$9 billion and would be the most important regional development project since the Panama Canal, according to the Mexican government.

It will likely take four years to fully implement.

"This new, vital and strategic initiative will make our economies more competitive while benefiting our societies," Fox said in a speech during the summit.

Expected to be capable of processing up to 300,000 barrels of crude oil a day, the refinery could cost US$4 billion. It would be financed by the governments of Mexico and Central America, as well as by private companies, according to the statement the leaders are expected to sign.

Presenting the plan to the presidents, Mexican Energy Secretary Fernando Canales said the refinery would guarantee a steady stream of cleaner-burning fuel, which governments and private distributors throughout the region could purchase in bulk, reducing prices at the pump.

Mexican authorities have listed Guatemala, Costa Rica and Panama as likely sites for the refinery, but a firm chosen by the Inter-American Development Bank will make the final decision, according to the declaration.

Central America, which relies on imported fuel for nearly all of its energy needs, has been stung by high oil prices and desperately seeks new energy sources.

Mexican Foreign Secretary Luis Ernesto Derbez said that studies necessary for implementation of much of the energy plan will not be ready until the middle of next year, at the earliest.

Leaders were expected to call for another summit in May to kick off the project.

BRAZIL

The 200,000 bpd, $2.5 Bln Joint Project Pernambuco Refinery to be Online by 2011

Venezuelan and Brazilian Presidents Hugo Chávez and Luiz Inacio Lula da Silva, respectively, on December 16 laid the foundation stone of a joint oil refinery in the Brazilian state of Pernambuco.

The 200,000 bpd, USD 2.5 billion refinery is a joint project where state oil firms Petróleos de Venezuela (Pdvsa) and Brazilian Petrobras have a 50 percent stake each, Efe reported.

Sources in the two countries claimed that Chávez and Lula met on December 16 in northeastern Porto de Suape locality, in the state of Pernambuco, to lay the foundation stone of the refining plant, which is expected to generate some 230,000 direct jobs during its four-year construction phase.

The Pernambuco refinery is a long-awaited project that was finally agreed upon last August during the summit of the South American Community of Nations held in Brasilia.

The plant is to produce diesel and liquefied petroleum gas to meet growing demand in northeast Brazil by 2011 and reduce imports.

COLOMBIA

Ecopetrol Launches Tender for Cartagena Refinery Expansion to Increase Processing Capacity to 140,000b/d

Colombia's state oil company Ecopetrol has launched the prequalification process to select the winner of an EPC contract to modernize and expand its Cartagena refinery, the company said in a statement on December 6.

The prequalification process will continue until January 20, 2006.

The project is designed to increase the processing capacity of the refinery to 140,000 barrels of crude a day from 75,000b/d currently, according to Ecopetrol.

The increased production from the refinery will be distributed mainly on the domestic market and on international markets such as the Caribbean and the US, Ecopetrol said.

Investors will first be prequalified based on their ability to complete the project and construction experience in similar large-scale projects.

Following the prequalification, the second phase of pre-selection will begin in which Ecopetrol will evaluate the legal, technical, operative and financial abilities of the potential investors, Ecopetrol said.

Bids will be received by June 2006 and the contract awarded by July, according to Ecopetrol's timetable published on its website. Construction is scheduled to wrap up in 2010.

The refinery is in the Mamonal industrial zone, west of the city of Cartagena on the northern Caribbean coast of Colombia. The refinery has access to the Atlantic Ocean and the interior of the country through the Canal del Dique and oil pipelines.

The refinery, one of Ecopetrol's four such facilities, was built in 1956 and currently exports about 42,800b/d, representing 18% of Ecopetrol's total exports.

2. ASIA

CHINA

Kuwait, China Sign Deal on $5 Billion Oil Refinery Project in Guangdong

Kuwait says it has signed a deal for the construction of an oil refinery in China at an estimated cost of $US5 billion.

Kuwait's energy ministry says the refining and petrochemicals complex is to be built in the southern province of Guangdong.

The plant is expected to process crude oil from Kuwait, and is planned to be onstream in 2010.

The memorandum of understanding for the project has been signed by Kuwait's energy minister, Sheikh Ahmad Fahd al-Sabah, and visiting Chinese executive vice governor, Zhong Yangsheng.

PetroChina, Sinopec Planning Guangxi Oil Refineries of 8 and 10 Mln Tons Capacity

PetroChina Co Ltd and China Petroleum & Chemical Corp (Sinopec) both plan to invest about 12 bln yuan to each build an oil refinery in the southern autonomous region of Guangxi, the 21st Century Business Herald reported, citing an official with the Guangxi branch of the National Development and Reform Commission (NDRC).

The official told the newspaper that Sinopec plans to build an oil refinery in the city of Beihai with an annual capacity of 8 mln tons, and PetroChina is eyeing a refinery in the city of Qinzhou with an annual capacity of 10 mln tons.

'The two refineries are awaiting NDRC's approval,' said the official.

The newspaper also quoted an industry source as saying the two domestic oil majors aim to compete in southern China, one of the largest domestic oil markets which is underserved by existing refineries.

According to a report by the State Development Research Center, demand for refined oil last year in the southern province of Guangdong topped 20 mln tons and totaled about 16 mln tons in other southern and southwestern provinces of Hainan, Guangxi, Yunnan and Guizhou.

Sinopec is responsible for the oil supply in those provinces, but its total oil refinery capacity in southern China is only 16 mln tons, resulting in a large gap between supply and demand.

PetroChina is also weak in oil supply in southern China where it has no large oil refineries, said the newspaper.

It said if the two planned refineries are approved by the NDRC, they will both start construction next year.

Chinese Partner for Sino-Kuwait Refinery Project in Guangdong Province still Undecided

Despite several reports to the contrary, the Chinese partner in the Sino-Kuwait refinery project in Guangdong Province has not yet been determined, an official in the provincial government told said December 13.

PetroChina was named as the Chinese partner in a number of foreign media reports, while domestic newspapers suggested it would be Sinopec. However, nothing has yet been decided and talks are still continuing, said the official, surnamed Wei, with the Industry Department of the Guangdong Provincial Development and Reform Commission.

"The MoU signed on December 5 is the first stage," Wei said. "There must be a Chinese state-owned oil company [involved in] the project, but the negotiations are still ongoing and everything will finally lie with the Chinese central government."

The Kuwait Oil Ministry announced in a written statement that Kuwait and China had signed a memorandum of understanding for the construction of a refinery and integrated petrochemical plant in Guangdong, with investment from the two sides of up to USD 5 bln.

The refinery is expected to have a daily crude processing capacity of between 200,000 to 400,000 barrels, said the Kuwait Minister of Energy, Sheikh Ahmad Al Fahed Al Sabah.

Al Fahed said that the two parties would start investigating all the financial and technical details related to the project.

According to Chinese and Kuwaiti media reports, the two sides would probably complete feasibility studies and acquire the necessary government approvals in 2006, and construction would last about four years. In addition, both China and Kuwait have agreed to invite leading international companies to take part in the project.

Hamzah Bakhash, a spokesman for the Kuwait Petroleum Corporation (KPC), told reporters on the sidelines of a conference in Beijing in November that the Kuwait state oil company was close to coming to an agreement with China's Sinopec, the country's largest oil refiner, on an oil refinery in Guangdong Province. The refinery would process 300,000 barrels of Kuwaiti crude a day, he said.

Bakhash also revealed then that they were inviting BP or Shell to participate in the joint venture.

KPC has already signed memoranda of understanding with BP and Shell in March, looking at partnership opportunities in countries including China.

KPC also established its Beijing representative office at the end of March, aiming to establish long-term crude supply agreements, set up oil refineries and expand oil product sales in China. The company said that it expected to double crude exports to China to 400,000 barrels per day from the current level of 200,000 barrels.

Kuwait has a proven crude reserve of 96.8 bln barrels, accounting for around 10% of the world's total. It plans to expand its daily crude output from 2.6 mln barrels to 4 mln barrels by 2020. Its crude exports total 1.5 mln barrels per day.

Neither Sinopec nor PetroChina were available for comment on the issue. Kuwait company representatives in both Beijing and Kuwait were also unwilling to discuss the details of the project.

PetroChina Expands 100,000b/d Refinery for Russian Crude in Liaoyang City

PetroChina is doubling the capacity of a refinery in northeast China geared to processing Russian crude, counting on new supply via a major pipeline project that is still far from certain, a company official said on December 22.

Liaoyang Petrochemical Corp, in the land-locked Liaoyang city, has started building a 100,000 barrel-per-day (bpd) crude unit that would boost its capacity to 200,000 bpd when completed in late 2006, the PetroChina official told Reuters.

But the expanded plant may not run at full capacity if crude from China's neighbor to the north does not materialize.

"If the Russian oil comes later than expected, Liaoyang may have to mothball the old crude unit, which is aged anyway," said the official from Beijing.

The upgrade, which also includes a 1.2 million tonne-per-year diesel hydrotreating facility, is the second refinery project the top Chinese oil and gas firm has launched to process Russian crude via a planned but controversial Siberian pipeline.

As domestic crude reserves dwindle, energy-hungry China has set its eyes on resource-rich Russia and Kazakhstan for future oil supply. PetroChina has raised capacity at its refining hub Dalian, the largest port in the rustbelt northeast China, to 400,000 bpd to take Russian oil.

The Liaoyang plant runs Chinese crude from the nearby Liaohe Oilfield. If the Siberian crude falls short or behind schedule, the land-locked plant would have to pay a high price for imported seaborne crude.

The new unit is being built to take advantage of a new 1.6 million bpd pipeline that state-owned Russian monopoly Transneft plans to build in two stages, with the first leg reaching near the Chinese border in 2008. Officials said this summer that construction was due to begin this December.

It is still unclear where the $11.5 billion line will terminate, with Japan pushing for an extension to the Pacific coast while China wants it to head south into the country's industrial north. Russia has indicated that both are possible.

No date has been set for the second stage.

Chinese refiners also face daunting logistical problems if they win the tussle, as they would need to add rail or pipeline capacity to carry Russian oil deeper into the country.

The massive ex-Siberian pipeline has already enraged environmental activists who object to the route around Lake Baikal that holds a fifth of the world's fresh water.

Chinese oil firms plan to build or expand more than a dozen refineries by 2010, adding more than 2 million bpd capacity, or nearly a third of the country's current capacity, to fuel robust demand from the world's No. 2 energy consumer.

Sinopec Zhenhai Refinery to Run at Record 365,00b/d in January

China's largest oil refinery Zhenhai Refining & Chemical Co. Ltd plans to process crude at a record level of 365,000 barrels per day (bpd) in January to meet rising Lunar New Year oil demand, company officials said on Thursday.

The rate would be 6 percent higher than December's estimate of 344,000 bpd, they said.

"It's because of the New Year demand," said one official from the eastern Chinese city of Ningbo, where the 400,000-bpd plant is located.

INDIA

IOC Commissions 4th Hydrocracker Unit at Panipat Refinery

Indian Oil Corporation Ltd (IndianOil) has successfully commissioned the hydrocracker unit at its Panipat Refinery, reports Business Line.

This is part of the ongoing refinery expansion project of IndianOil to double capacity from 6 to 12 million tonnes per annum. The company said that this is the fourth hydrocracker unit of IndianOil, the other three are operating at Gujarat, Panipat and Mathura refineries. The unit, with 1,700,000 tonnes per annum capacity, is designed for 97 per cent conversion of heavy oil into high value distillates, enabling maximised production of middle distillates in high demand.

The hydrocracker is the third major unit of the Panipat Refinery expansion project to go on stream after the successful commissioning of the hydrogen generation unit in November and diesel hydro-treatment unit.

According to the company, commissioning activities of other major units of Rs 4,300-crore refinery expansion project are in full swing.

PHILIPPINES

Aramco Eyes $5 Bln Refinery in Mindanao

Saudi Aramco is planning a feasibility study for a new oil refinery on the southern island of Mindanao in the Philippines, House of Representatives Speaker Jose de Venecia said.

De Venecia said Saudi Aramco President Abdullah Saleh Jummah informed him that he asked officials at Petron and Aramco to do the study. The statement was posted on the House of Representatives' Web site.

Saudi Arabia's state oil giant holds a 40 per cent stake in Petron, the Philippines' largest oil refinery with a total capacity of 180,000 barrels per day (bpd).

De Venecia said the proposed plant could export its output to China and the US.

De Venecia, Philippine National Oil Company (PNOC) President Eduardo Manalac and some legislators from Mindanao visited the Aramco headquarters in Saudi Arabia on December 5.

Manalac said the study would take some time to complete and the refinery would take about three years to build at a cost of up to $5 billion. If the company decided to build the refinery, it would be its second in the Philippines.

Petron's existing plant and the 110,000-bpd refinery owned by Pilipinas Shell Petroleum, a member of the Royal Dutch Shell group are both located on Luzon Island in the northern part of country.

Some areas in the resource-rich Mindanao have lagged in development due to fighting between troops and Muslim separatists. Communist rebels are also waging an insurgency in the area.

SOUTH KOREA

SK Bid for Inchon Oil Refinery Approved

South Korea's antitrust regulator has unconditionally approved SK Corp.'s bid to acquire bankrupt refiner Inchon Oil Refinery Co.

"We have concluded that [SK] will not be able to control market prices even after the acquisition," said a spokesman for the Fair Trade Commission (FTC).

The FTC had taken a cautious attitude toward SK's application since it would raise the firm's market share to 40%, and the combined share of the nation's top three refiners—SK, GS Caltex, and S-Oil Corp.—to around 86%.

The approval came nearly 3 months after SK submitted an application to the FTC in September for the acquisition of Inchon Oil for a total of 1.6 trillion won ($1.5 billion).

In October, SK reduced its bid for Inchon Oil by 160 billion won to about 3.04 trillion won, industry sources said.

The acquisition will boost SK Corp.'s refining capacity to 1.11 million b/d from the current 840,000 b/d.

Inchon Oil went bankrupt in 2001 and was placed in court receivership in 2003. In September 2004, Sinochem's bid of 635.1 billion won was accepted but quickly opposed by Citigroup Inc., Inchon's largest creditor, which said the price was too low.

3. EUROPE / AFRICA / MIDDLE EAST

PORTUGAL

$4.7 Bln, 250,000b/d Oil Refinery to be Built in Portugal by 2010

The Portuguese government signed an agreement on December 9 with London-based Argus Resources to build an oil refinery that will be the largest in the Iberian Peninsula when completed, the local media reported.

The project will be built at the Sines oil terminal, located on the Atlantic coast 90 km south of Lisbon, according to a memorandum of understanding signed between the Economy Ministry and Argus Resources Ltd., reports cited Economy Minister Manuel Pinho as saying.

The refinery, to be completed by 2010, is expected to cost 4.7 billion U.S. dollars and have a production capacity of 250,000 barrels per day. More than half of the output will be exported, mainly to the United States, Pinho said.

"There is a need for increased capacity (of oil) in the United States," said Patrick Monteiro de Barros, a spokesman for Argus.

The plant is expected to add 1.5 billion euros per year to Portugal's exports and create some 800 direct jobs, Pinho said.

UNITED KINGDOM

ConocoPhillips Failures Led to April 2001 Refinery Blast

Serious management failures at the oil giant ConocoPhillips led to a "potentially catastrophic" explosion at a North Lincolnshire refinery, a report said December 2.

The blast devastated the plant and could have caused loss of life on a massive scale.

Four years since a fireball tore through the refinery at South Killingholme – and after the company was hit with heavy fines – the Health and Safety Executive has completed its report into the incident. It said it could easily have been on the scale of the 1974 Flixborough disaster, when 28 people died in an explosion at a chemical plant.

Nearby homes were damaged in the blast, and debris from the explosion was found between 550 yards and three miles away. The fires raged on for several hours.

The report reveals management failures were such that the incident became "inevitable". Inspectors said: "While the refinery was in principle committed to health and safety management, in practice the company was unable to manage all risks and senior managers failed to appreciate the potential consequences of small non-compliances. Active monitoring of their systems should have flagged up failures across a range of activities.

ANGOLA

Angola May Start Work on $3.75 bln, 200,000b/d Oil Refinery in 2006

Construction of Angola's new flagship oil refinery could start next year with state oil firm Sonangol upbeat about finding investors to fund the $3.75 billion project, state-run Jornal de Angola said on December 7.

Work on the Sonaref refinery, with a capacity to process 200,000 barrels per day, had stalled with Sonangol struggling to find financial backing.

But a strategy to link a stake in the refinery to a new licensing round in deepwater acreage had paid dividends and the plant, to be built in the port city of Lobito, should be up and running by 2010, the newspaper reported.

"We have had some difficulty in obtaining investors, but since we introduced a connection between the Sonaref project and the concessions (of oil exploration) in Blocks 15, 17 and 18 as a condition, we have registered an increase in interest," Syanga Abilio, Sonangol's administrator and vice president, told the newspaper.

"We expect the refinery to be operational from 2009 or 2010," he added.

A spokeswoman for the firm confirmed that there had been a turnaround in investor interest and that the refinery project had attracted more potential backers than was necessary, but no further details were immediately available.

The refinery, to be built by South Korea's Samsung, would produce enough oil to satisfy the local market. An existing refinery just north of the capital Luanda has a capacity of just 40,000 barrels per day and is insufficient to meet the country's growing demand for fuel, the newspaper said.

Sonangol has said the refinery development is a major priority for the government and that it will maximize the value to Sonangol of Angola's crude. It also says this will represent a new stage in the growth of Angola's oil industry.

Angola is sub-Saharan Africa's second largest crude producer after Nigeria. It churns out around 1.3 million barrels of oil per day and this is expected to rise to two million barrels per day as a number of new developments come onstream.

KENYA

Mombasa Refinery Upgrade Design Awarded to Foster Wheeler

Kenya Petroleum Refineries Ltd. (KPRL) has awarded a contract to Foster Wheeler Energy Ltd. to prepare the "basis of design" for an upgrade of its 85,500 b/cd hydroskimming refinery and for a products import terminal at Mombasa, Kenya.

The refinery, with two trains, has catalytic reforming capacity of 8,100 b/cd and catalytic hydrotreating capacity of 36,000 b/cd. The upgrade will allow production of products meeting specifications required under the Dakar Declaration whereby Kenya must begin using unleaded gasoline and low-sulfur diesel by January 2006. It is expected to satisfy Kenya's future demand for products, including domestic consumption beyond 2015 and LPG for export.

The contract calls for Foster Wheeler to produce a technical definition and duty specifications for the licensed units, a project execution plan, and cost estimate for the upgrade.

KPRL shareholders are the Kenya government 50%, Royal Dutch Shell PLC 17.1%, BP PLC. 17.1%, and ChevronTexaco Global Energy Inc. 15.8%.

Separately, Foster Wheeler's South African operation is conducting front end engineering and design for KPRL for an LPG terminal option, centralizing LPG import, storage, and distribution, and a feasibility study for refined petroleum products import. Work under this contract is scheduled to be complete by year end.

ZAMBIA

Zambia to Explore Possibility of Leasing Oil Refinery

Zambia is to explore possibility of leasing its sole petroleum refinery to private investors, Zambia Daily Mail reported.

Situmbeko Musokotwane, secretary of the treasury, was quoted as saying that the move aims at encouraging new private investment into Indeni petroleum refinery in the northern Zambia to improve its efficiency.

The refinery has been dogged by frequent breakdowns leading to fuel shortages in the southern African inland country.

Musokotwane said the government will instead focus its attention to managing fuel strategic reserves as opposed to running the refinery.

The government is carrying out a legal and technical review on Indeni to recommend options on the future of the plant, he said.

Energy and Water Development Minister Felix Mutati was quoted as saying that the review will enable the government to know what needs to be done to go forward and whether as a government they need to continue with its current share structure.

He said by the end of next March the government will have made decision on the share, in which the government and Total have equal shares of 50 percent.

Zambian consumes 600,000 liters oil and 900,000 liters diesel per day and all its crude oil is imported via Tanzania's Dar es Salaam port.

RUSSIA

Russia’s Planned Pacific Coast Refinery Could Have Capacity of 400,000 b/d

The head of the Russian Federal Energy Agency, Sergei Oganesyan, said on December 5, that a planned Pacific Coast refinery could have a capacity of 20 million tons (400,000 barrels per day), making it Russia’s largest.

“It would be good to see a 20 million tonner,” the Interfax agency quoted Oganesyan as saying, although he admitted that the location for the refinery is still being disputed. Oganesyan said his agency supported a plan to build the refinery at Nakhodka on the Pacific coast. But state pipeline monopoly Transneft, which is about to start building a huge pipeline from Eastern Siberian oilfields to Perevoznaya Bay, has chosen a different location.

Prime Minister Mikhail Fradkov has put his weight behind Transneft’s route, but Natural Resources Minister Yuri Trutnev has described the Perevoznaya plan as “absolute nonsense.” His view, that Perevoznaya is unsuitable on practical and ecological grounds, is strongly backed by green groups which say Transneft’s plan would ruin a pristine bay in an environmentally unique area.

Transneft’s chairman Simon Vainshtok said last month that his firm had submitted a proposal to build a refinery at Perevoznaya, although he gave no details. Transneft plans to build the 1.6 million-barrels-per-day pipeline in two stages, with the first leg reaching a point close to the Chinese border in 2008 and the second leg completing the route. The first leg also includes the building of a terminal at Perevoznaya.

But analysts, cited by the Reuters agency, say it might never reach the coast, because, when the first stage is finished, Transneft might find it more economical to simply re-route to China, where a booming industrial sector would welcome an artery of oil.

Omsk Refinery Engineers Meet with Union Oil Products to Discuss Paraxylol Production Complex Reconstruction

Representatives of Omsk Oil Refinery have just returned from the U.S. where they had a meeting with Union Oil Products. In the U.S. Company's headquarters located in Chicago suburbs they discussed all aspects of the base project to reconstruct section 700 of the paraxylol production complex 'Aromatika.' Process review of the base project is scheduled for April-May 2006 and will be conducted in the European branch of the US Company.

ABU DHABI

Abu Dhabi Plans $3bn and up to 300,000b/d Oil Refinery in Fujairah

Abu Dhabi, the Middle East's fourth-largest oil producer, may build its third and biggest refinery to boost exports of fuel products to Asia and other regions, the United Arab Emirates oil minister said December 11.

The refinery, to be built in the emirate of Fujairah on the Gulf of Oman coast, could produce 300,000 barrels of fuel products a day (bpd), Mohamed bin Dhaen al-Hamli said. Building the refinery could cost about $3bn, based on the construction costs of plants already being built in the Persian Gulf.

Oman is building a 116,000 barrel-a-day plant in Sohar for $1.2bn. The plant will “mainly be for export and, if the local market requires it, why not,” al-Hamli said on Saturday in Kuwait City, where he's attending the Organization of Petroleum Exporting Countries' sixth ministerial meeting this year. A refinery study will be finished by May, al-Hamli said.

Opec producers including Saudi Arabia, Qatar and Kuwait are planning to build at least 10 new refineries in an effort to boost global capacity by 2.4mn barrels of oil a day by 2011, to help stem an increase in crude prices that have doubled in the last two years.

The group's output increased by 12% in the same period.

“For Middle East producers building new export refineries is about maximizing the value of their crude,'' Alan Gelder, a consultant for Wood MacKenzie, an Edinburgh-based energy consulting firm, said recently in an interview in Dubai.

The widening margin for refining heavier “sour” crude, which is unsuitable for European and US plants, into transportation fuels makes building new plants in the Persian Gulf more profitable than selling low-grade oil overseas, Gelder said.

Fujairah is one of only two members of the United Arab Emirates federation that have a coastline outside the Persian Gulf, which allows shippers to reduce charges for sailing through the Straits of Hormuz. Abu Dhabi is the federation's largest member.

The refinery, which would process crude oil into fuels such as unleaded gasoline and diesel, could cost state-owned Abu Dhabi Refining Co as much as $4bn to build, the Khaleej Times reported on October 18.

US and Japanese companies have expressed an interest in investing in the proposal, Dow Jones Newswires reported on October 20, citing an unidentified company official.

IRAQ

Iraqis Shutter 140,000b/d Refinery in Beiji after Threats of Attack

Iraq has shut down its largest oil refinery in the northern town of Beiji after insurgents threatened to kill drivers and blow up trucks that distribute its oil products across Iraq, a senior Iraqi oil official said December 29.

"The refinery has suspended its operations because drivers of trucks have received death threats from terrorists," Oil Ministry Spokesman Assem Jihad told Dow Jones Newswires.

The 140,000 barrels-a-day refinery is located 250 kilometers (155 miles) north of Baghdad and has suspended production since Dec. 24.

The closure will impact Iraq and Baghdad in particular, which has been feeling the pinch from a shortage of refined fuel, much of which is already imported because of the country's diminished refining capacity. A number of demonstrations have already been held around Iraq because of a December 19 increase in gas prices.

KUWAIT

Kuwait May Build 400,000b/d Oil Refinery in Louisiana to Boost U.S. Capacity

Louisiana is among three U.S. states interested in being the site of a joint venture refinery with Kuwait amid concern about a shortage of capacity to process crude into gasoline and other fuels, Kuwait's oil minister said.

Kuwait, the Middle East's fourth-largest oil producer, is seeking a ``mid-sized'' U.S. partner like Marathon Oil Corp. to build a refinery in the U.S. with as much as 400,000 barrels a day of output, Sheikh Ahmad Fahd al-Sabah said December 11. Texas and New Mexico may also be interested, Sheikh Ahmad, 42, said.

``We are very keen to build a refinery in the U.S., but environmental restrictions and other regulations make it difficult,'' Sheikh Ahmad said in Kuwait City, where he's hosting OPEC's sixth ministerial meeting this year.

A lack of construction in the U.S. and Europe during the last 30 years has left refineries with little margin for error and susceptible to breakdowns. Worldwide, refineries ran at 95 percent of capacity last year, up from 80 percent in 1984, according to the International Monetary Fund.

Expanding a U.S. refinery may cost as much as $10,000 per barrel of capacity, according to Dan Robinson, president of Placid Refining Co., operator of a refinery in Port Allen, Louisiana. That means that Kuwait's refinery project may cost as much as $4 billion.

Strict environmental rules and the high cost of investment have kept oil companies based in the U.S. and Europe from building refineries near their biggest markets.

Kuwait was in talks in September with the Bush administration to build a refinery in the U.S., seeking to construct the nation's first new plant in three decades as gasoline and diesel prices surged to record amounts.

The Persian Gulf emirate was seeking White House assistance in gaining the necessary permits, Sheikh Ahmad said in a Sept. 18 interview in Vienna. Kuwait hosted OPEC's sixth ministerial meeting which started December 12.

Gasoline prices soared above $3 a gallon on average in the U.S. after Hurricane Katrina struck the U.S. Gulf Coast, cutting oil production and closing oil refineries that counted for 10 percent of the country's capacity.

The growth at existing facilities has been less than half the pace of demand, according to the U.S. Energy Department. Saudi Arabian oil minister Ali al-Naimi said in Dallas in April 2004 that his nation stood ready to finance and build new refineries in the U.S. No companies took up the offer for new plants.

A U.S. refinery venture owned by Saudi Aramco and Royal Dutch Shell Plc are studying a plan to double the size of the existing 275,000 barrel-a-day plant in Port Arthur, Texas, an expansion that would be the biggest in the U.S. in at least 25 years.

The last new refinery built in the U.S. was Marathon Oil's Garyville, Louisiana, plant, which opened in 1976.

SYRIA

Syria Signs Memorandum with CNPC to Build $1.2bln, 140,000b/d Refinery in Deir ez-Zour

Syria has signed a $1.2 billion refinery deal with China and is in talks with Russia about a $2.4 billion plant, Syria's deputy prime minister said on December 1, as money flows in despite a U.N. assassination probe.

Deputy Prime Minister Abdullah al-Dardari told reporters during a visit to London that oil producer Syria was likely to bring in $6 billion in private investment this year, with foreign direct investment accounting for 30 percent of that.

He also said Syria was in talks with French oil firm Total about building a refinery.

Total denied there were any such negotiations.

"We have no discussions with Syria," a spokeswoman said.

According to Syria, foreign firms are still keen to do business there despite a United Nations investigation into whether Syria was involved in the killing of former Lebanese Prime Minister Rafik al-Hariri in Beirut in February.

Dardari said Syria had signed a memorandum of understanding with China's state oil firm CNPC to build a 140,000 barrels per day plant in Deir ez-Zour, eastern Syria.

"It might be licensed before the end of the year, it might be licensed after it," he added.

Discussions with Russia centred on a proposed $2.4 billion petrochemical and refining complex, he said.

Reuters reported has that CNPC and India's state Oil and Natural Gas Corp. were teaming up to bid for Petro-Canada's $1 billion stake in its Syrian oil and gas venture with Royal Dutch Shell.

Petro-Canada said in September it might sell its 38 percent stake in the Al Furat venture.

China and India, big importers of oil to fuel their booming economies, are normally rivals for overseas oil assets.

Syria has oil production capacity of about 400,000 barrels per day, according to industry sources, with exports of about 250,000 bpd including refined oil products like heating oil.

Russia to Build $2.7 Bln, Oil Refinery in Syria for 2010 Startup

The Syrian government and the Russian Investment Company have signed a preliminary agreement on the building of an oil-refining and petrochemical complex in Syria. The value of the project is 2.7 billion dollars, reliable business circles reported on December 28. The complex is planned to be put in operation in 2010.

The oil refinery and the petrochemical plant will be built in the Deir Ezzor Province, 458 kilometres northeast of Damascus. Its capacity will be 140,000 barrels of crude oil a day.

This is not the first major contract signed by Syria and Russia. Earlier, on December 5, the Stroitransgaz Company signed a contract with the state-owned Syrian Gas Company for the building of a gas-processing complex, which will include a factory, auxiliary production capacities and pipelines connecting the complex with gas fields.

The gas-processing complex will be situated 70 kilometers away from the city of Palmyra, near which Syria’s largest deposits of hydrocarbons are located. Its capacity will be 2.2 billion cubic meters of purified gas, 23,000 tons of liquefied propane-butane and 233,000 tons of gas condensate. The complex will be built in 22 months.

The contract worth 200 million dollars was signed on the results of an international tender, held by the Syrian Gas Company in spring 2005. Stroitransgaz won the tender, because it had a number of financial, technical and organizing advantages over its rivals. Specifically, the customers paid attention to its unique experience of drilling gas wells and building gas pipelines, as well as other facilities for the storage and transportation of gas.

UAE

Emirates National Oil Co. to spend $500 Mln to Upgrade Jebel Ali Refinery

Emirates National Oil Co. of Dubai in the United Arab Emirates will spend $500 million to upgrade its Jebel Ali refinery.

The 120,000 barrel-per-day condensate refinery, which uses a very light petroleum feedstock, will get a 70,000 barrel-per-day hydrotreater and a 36,000 barrel-per-day catalytic reformer.

Foster Wheeler will handle engineering for the project, which is set to be completed by 2007.

Dubai Islamic Bank will arrange an Islamic loan for the project, the company said.

"ENOC's decision to opt for Sukuk Al Ijarah reflects the growing importance of Islamic funding in the marketplace," a UAE official said. "I would like to express our delight that ENOC found an Islamic solution as opposed to conventional capital raising methods."

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