march 05 update

Exxon Mobil Corp., the world's biggest oil refiner, and rivals such as Saudi Aramco and Total SA plan at least $11 billion of refinery additions as worldwide demand pushes gasoline prices to a record.

The projects include a $4.3 billion refinery and chemical plant on Saudi Arabia's Red Sea coast by Saudi Aramco and Sumitomo Chemical Co. Exxon Mobil, Aramco and China Petroleum & Chemical Corp., China's largest refiner, are spending $3.5 billion to triple the size of an oil refinery and build a chemical plant in Fujian province

The expansion, following two decades of reduced spending because of low prices that cut profits, reflects surging demand that is raising the cost of gasoline, diesel, jet fuel and heating oil. Gasoline futures, which are based on wholesale prices, rose 3.8 percent last week to $1.5755 a gallon in New York, the highest since they began trading in 1984.

Refining ``was for so long a poor business,'' said Mark Baxter, director of the Maguire Energy Institute at Southern Methodist University in Dallas who was an engineer at Marathon Oil Corp. for 28 years. ``There's a dire need for expansion,'' he said in an interview recently.

The $11 billion of new refinery projects, announced by oil companies during the past 10 months, will be spread out over the next six years. They are in addition to continuing spending on repairs and expansions, which was $11.9 billion last year among the seven largest publicly traded oil companies.

No publicly traded company has announced plans to build a new refinery in the U.S., which has 20 percent of global refining capacity, according to data from the Paris-based International Energy Agency. The U.S. is followed by Russia with 6.6 percent, Japan with 5.8 percent, China with 5.5 percent, and then South Korea, Italy, Germany and India.

Global demand for gasoline, diesel and other fuels derived from oil is expected to jump 69 percent by 2025 to 142 million barrels a day, according to the U.S. Energy Department in Washington. Refining capacity will probably increase just 56 percent during that time to 131 million barrels a day.

``The oil industry has not committed to expanding refining capacity'' in recent years,'' Ann Kohler, an energy-industry analyst at Independent Research Group in New York said in a March 16 interview. ``The world is now running at full capacity.''

Worldwide demand for petroleum-based fuels has surged 20 percent in the past decade, outpacing the 12 percent rise in refining capacity, according to data compiled by the International Energy Agency.

The disparity between fuel demand and fuel-making capacity ``is expected to persist, continuing to create dislocations between crude and products markets, as well as contributing to higher oil prices,'' the Organization of Petroleum Exporting Countries, source of 40 percent of the world's crude oil, said in a statement after its March 16 meeting in Isfahan, Iran.

Profit from processing oil into fuels rose faster than income from producing and selling crude and natural gas last year for Irving, Texas-based Exxon and its six biggest competitors. Refining profits surged 93 percent to $28.6 billion for those companies last year, compared with a 25 percent increase in profit from oil and natural-gas sales.

The other six companies are Royal Dutch/Shell Group of London and The Hague, Europe's second-largest oil company; London- based BP Plc, the world's second-largest publicly traded oil company; San Ramon, California-based ChevronTexaco Corp., the second-largest U.S. oil company; Paris-based Total, Europe's largest refiner; Eni SpA of Rome, Europe's fourth-biggest oil producer; and ConocoPhillips of Houston, the largest U.S. refiner.

Oil and gas sales continue to comprise the lion's share of oil company profits. Last year's 34 percent surge in crude-oil prices helped boost net income for the world's 10 largest publicly traded oil companies by 43 percent to $110 billion, more than the economic output of Singapore, a hub for Asian oil trading, or OPEC-member Venezuela.

The margin on refining crude oil into gasoline and other fuels in the U.S. has averaged $6.875 a barrel since the beginning of 2003, up 41 percent from the previous five-year period, based on benchmark crude and fuel futures in New York.

Most of the new refineries built during the next two decades will be located in Asia, South America and the Middle East, the U.S. Energy Department said in its annual outlook released in February.

China, which had the fastest-growing economy and fuel needs in the world last year, has doubled its refining capacity in a decade, according to International Energy Agency figures.

``Until now, refineries have been built primarily in consuming nations, but I believe we will see a portion of this new refining capacity being located in producing countries,'' Aramco Chief Executive Abdallah Jum'ah said in a Feb. 15 speech at a Houston energy conference.

Saudi Arabia, source of 11 percent of global oil supplies, has 2.2 percent of the world's refining capacity, according to figures from the Energy Department in Washington.

Dhahran-based Aramco, owned by the Saudi government, on Jan. 13 said it is considering investing in a $1.17 billion refinery with Beijing-based China Petroleum & Chemical, also known as Sinopec, in Shandong province. The plant would process 200,000 barrels of crude a day starting in 2007, according to the Sinopec Web site.

That followed Aramco's May 2004 announcement of the $4.3 billion plan to expand a refinery and build a chemical plant at Rabigh on the Red Sea with Tokyo-based Sumitomo Chemical.

Marathon Ashland Petroleum LLC, the largest refiner in the U.S. Midwest, is studying $1.15 billion in projects to increase the amount of gasoline it can make at plants in Detroit and Cattletsburg, Kentucky, President Gary Heminger said during a presentation in March to investors in Boston.

The Findlay, Ohio-based company's majority owner, Marathon Oil, may build refineries in Russia to make diesel, Steven Hinchman, senior vice president of worldwide production, said at Feb. 24 presentation to analysts in New York.

Total on Feb. 17 said it is spending 500 million euros ($653 million) to increase production of fuel components at its 70-year- old Normandy plant, France's oldest and largest refinery.

Exxon Mobil, the most profitable U.S. company in four of the past five years, agreed in August to participate in the $3.5 billion venture in China's Fujian province. Its partners are China Petroleum & Chemical and Saudi Aramco, the world's largest oil exporter, spokeswoman Prem Nair said in a March 1 interview.

1. AMERICAS

U.S.

Ergon Invests $30 Million in W.Va. Refinery

A refinery owner in the Northern Panhandle is attributing recent changes made to West Virginia's workers' compensation system for a decision to reinvest in the plant.

Leslie Lampton, chairman of Ergon Inc., said his company will invest $30 million in its Newell refinery by next summer to bring its diesel production in line with new federal environmental rules. The head of the Jackson, Miss.-based company credited the new law for the decision.

The U.S. Environmental Protection Agency rule requires refiners to lower the amount of sulfur in diesel fuel for truck and bus engines from the current level of 500 parts per million down to less than 15 parts per million by June 2006.

Governor Manchin said the March 4 announcement is proof that his legislative agenda is helping the state's businesses.

Pasadena Refinery to Receive ConocoPhillips Sulfur Technology

ConocoPhillips Co. announced March 4 that its proprietary S Zorb* Sulfur Removal Technology (SRT) is to be installed at the Pasadena Refining System Inc. (PRSI) refinery in Pasadena, Texas.

The technology removes sulfur from gasoline streams through the use of a novel, re-generable sorbent -- S Zorb SRT -- which was developed to help oil companies comply with the Environmental Protection Agency's Tier 2 sulfur regulatory levels.

First required in 2004, gasoline sold in the U.S. is to have sulfur content levels phased down to no higher than 30 parts per million on average.

The addition of the new S Zorb unit will enable the PRSI refinery to cost-effectively achieve this compliance, as well as future low-sulfur mandates, said Eric Bluth, PRSI vice president of refining.

"We are pleased to be moving forward with the S Zorb project. This innovative technology fits well with our plan to meet low sulfur gasoline specifications and improve the operating flexibility of the refinery," Bluth said.

The installation of the 40,000 barrel-per-day S Zorb gasoline desulfurization unit is slated for completion during first quarter 2005 with start-up targeted for late 2006. It is being designed for a flexible slate of feedstocks, ConocoPhillips (NYSE: COP) said.

PRSI is the first U.S. refinery to commit to build an S Zorb SRT outside of ConocoPhillips' own refining system, currently the largest in the U.S. and fifth-largest worldwide.

Other S Zorb units located at ConocoPhillips refineries in Borger, Texas, and Ferndale, Wash., have been operating since 2001 and 2003 respectively. The company has a third S Zorb unit under construction at its Lake Charles refinery in Westlake, La., with start-up scheduled for later this year.

PRSI recently purchased the 117,000 barrels per day Pasadena facility from Crown Central Petroleum.

Suncor Keeps an Eye on Citgo Refinery

Suncor Energy Inc. is ready evaluate of Venezuela's Chicago-area refinery, as that country's state-owned oil firm looks at an asset selloff in the United States

Venezuelan President Hugo Chavez says Petroleos de Venezuela SA subsidiary Citgo Petroleum Corp. is already in talks with "global companies" about selling parts of its chain of refineries in the United States, with Oil Minister Rafael Ramirez earlier saying that any sale would likely center on plants that do not process any Venezuelan crude.

That description applies to just one of Citgo's facilities: its 167,000-barrel-a-day refinery in the Chicago area, which currently has to buy Canadian crude.

Suncor, while declining to say whether it is involved in talks with Citgo, said the Illinois facility is in its "economic orbit" and fits its description of the type of asset it seeks to acquire in the next five years as it builds refining capacity to match rising output from its oil-sands operations.

"That, or anything like that, that's on our screen," Mike Ashar, Suncor's executive vice-president for refining and marketing in the United States, said in an interview. "It would fit the criteria for potential of integration, but I want to emphasize that it's far from being the only plant."

He said any acquisition would have to have a pipeline connection to Fort McMurray; be able to process heavier grades of crude oil or be able to be converted to do so in short order; and have a capacity that will accommodate a large portion of the 200,000 extra barrels of daily production the company aims to have by the start of the next decade.

Citgo's Chicago refinery satisfies all three criteria, he said.

Meanwhile, Mr. Chavez on March 9 authorized France's Total SA oil company to move ahead with a project that will double its production in Venezuela to 400,000 barrels a day, in a project worth €5-billion ($8-billion).

Shell’s Bakersfield Refinery Granted Air Pollution Variances

The buyer of the Bakersfield Shell refinery has been granted a series of air pollution variances, clearing the way for the sale to close the week of March13.

An Air Pollution Control District hearing board approved the variances March 11.

The plant produces 2 percent of California's gasoline and 6 percent of its diesel.

A subsidiary of Flying J asked for an extra year to make improvements that Shell did not make because it was planning to shut down the refinery. Shell considered the plant old and inefficient and said its Kern County crude oil fields were drying up.

Still, the company, whose officials aim to double gasoline production at the refinery, will be under pressure to keep the plant's air emissions low even as it seeks greater output.

"Our regulations would allow the Bakersfield refinery to expand, but there would be very, very strict requirements," said Dave Warner, the air district's director of permit services.

The Ogden, Utah-based company wants to add two major processing units to nearly double the Bakersfield plant's current gasoline output of 630,000 gallons a day and increase its daily production of 840,000 gallons of diesel.

Experts say such an expansion could take two years to complete.

"We know we have to comply with the rules, and we're doing the engineering to ensure that we can," said Fred Greener, executive vice president of Flying J subsidiary Big West Oil. "We're certainly going to go ahead with our plans (to expand) as quick as we can get it done."

PRSI to Install SRT at Pasadena Refinery

Pasadena Refining System Inc. (PRSI), which recently purchased a 117,000 b/d refinery in Pasadena, Tex., from Crown Central Petroleum, plans to install ConocoPhillips's S Zorb sulfur removal technology (SRT) at the facility during the first quarter. Projected start-up of the unit is targeted for late 2006.

S Zorb technology removes sulfur from gasoline streams using a regenerable sorbent. The process design package for the 40,000 b/d S Zorb gasoline desulfurization unit in Pasadena is being designed for a flexible slate of feedstocks, ConocoPhillips said.

PRSI, a wholly owned subsidiary of Astra Holding USA Inc., is the first US refinery to commit to building an S Zorb SRT outside of ConocoPhillips' own refining system.

The technology will help PRSI comply with the Environmental Protection Agency's Tier 2 sulfur regulatory levels that require gasoline sold in the US to contain no more than 30 PPM of sulfur. It also will minimize refinery octane pool losses and hydrogen consumption normally associated with gasoline desulfurization.

BP Carson Refinery to Pay $106 million in Air Quality Agency Settlement

Settling two massive lawsuits over thousands of alleged air quality violations, the BP Carson refinery will pay a record $25 million fine plus $81 million for fees, plant upgrades and community health projects, air quality officials announced March 17.

"This settlement is truly unprecedented and historic," said Barry Wallerstein, executive officer of the South Coast Air Quality Management District.

The package of the fine and the other BP payments for a total of $106 million is believed to be the biggest penalty ever paid in the United States by a single site for air quality transgressions. The total includes $25 million for one overhaul project that BP committed to last year, before the legal settlement.

While both BP and the AQMD talked about moving forward cooperatively, the landmark settlement brings to a close a bitter confrontation between the agency and the oil giant.

Two complaints brought by the AQMD against BP -- one started in March 2003 and one two months ago -- sought nearly $600 million in proposed penalties for what the AQMD said were errors and knowing lapses in emission control and record-keeping going back to 1994.

The first complaint arose after AQMD inspectors were barred from entering the Carson refinery in 2002 and had to return with sheriff's deputies and an inspection warrant to gain entry -- the first and only time AQMD inspectors have had to do that anywhere.

Because of this case, AQMD officials said they will take another look at a more-than-decade-old program by which refineries like BP do a great deal of self-inspection in a kind of honor system.

The settlement will spell major upgrades for equipment at the facility that lies adjacent the San Diego (405) Freeway. BP took over the plant in a merger with former operator Arco in 2000.

The refinery must draw up plans for $20 million worth of on-site "supplemental environmental projects," including one to significantly reduce the amount of flaring of excess gas product. A collection and treatment system will be used instead of the flares.

BP had agreed to spend another $25 million to revamp the plant's "sour water" facility, which extracts hydrogen sulfide from the fuel product. The unit has been responsible for releases that have bothered, in particular, several schools in the Wilmington and Carson area in recent years.

The settlement agreement notes that BP admits no fault, wrongdoing or liability in regard to any of the allegations in the case.

The case is a result of differing interpretations of the regulations, a BP spokesman said, not because of any actual violation of legal limits on pollution emissions.

"We believe the emissions at our facility met and continued to meet the district's requirements," said BP spokesman Phil Cochrane. "At no time do we believe that there were any threats to the community and the environment."

The AQMD has said not only were there violations of record-keeping statutes for example, there were actual emissions and leaks of smog-forming pollutants related to violations of air quality regulations.

While some of those emissions contributed to regional pollution, others were like the release of hydrogen sulfide gas that forced schools in the vicinity to "shelter in place," temporarily keeping children inside and closing windows and doors.

BP feels those were nuisance bad odors, which it has apologized for to the community, but not cases of toxic releases that would harm anyone.

The AQMD said there were reported cases of headaches, dizziness, nausea, sore throats and coughing in several of the school incidents.

The new sour-water system, expected to be completed in 2006, should prevent those releases from occurring again, said AQMD prosecutor Joe Panasiti.

A major part of the AQMD's first complaint against BP focused on the facility's storage tanks, which have floating roofs and are monitored as part of a self-inspection program, where refineries are supposed to report leaks and other problems to the district.

AQMD inspectors found that BP had not been reporting such incidents.

The case will make the AQMD take another look at its self-inspection program for refineries. Wallerstein said next month he will bring his board some suggestions for "mid-course corrections" to that program.

Meanwhile, a federal criminal case related to the alleged violations is still in the works, AQMD prosecutors said.

In addition to the $25 million cash penalty paid to the AQMD, BP will also pay the agency $6 million in additional emission fees.

Part of the settlement requires the refinery to spend $3 million a year for 10 years on health projects such as an "asthma van" or other means of caring for respiratory illness in the community. A panel of AQMD board members, refinery officials, and Joe Calhoun, a former state Air Resources Board member, will decide which projects to fund.

EPA to Decide on Proposed Yuma Refinery Permit

Federal environmental regulators on March 21 are expected to publicly announce their decision on a draft air permit for a controversial proposed oil refinery for Yuma County.

At issue is a proposed $2.5 billion refinery, the first to be built in the United States in nearly three decades, on vacant desert land 40 miles east of Yuma near Tacna.

The draft air permit, written by the Arizona Department of Environmental Quality, sets the maximum allowable emissions limits and pollution control requirements for the proposed refinery.

The Environmental Protection Agency is expected to conclude their 45-day review process and notify both ADEQ and the public on March 21 their opinion of the draft permit.

For Arizona Clean Fuels, the Phoenix-based company that wants to build the refinery, getting the permit is important to make their company more attractive to big investors and move the project forward, said ACF spokesman Ian Calkins.

"It's a big milestone for the project. It's what we've been working to achieve for the past five years," Calkins said.

ACF initially applied for an air permit in 1999, intending to build the refinery in Mobile, a small town in Maricopa County. The company wanted considerably looser emission standards, which ADEQ Director Steve Owens has said his agency would not approve.

ACF withdrew their application and reapplied in 2004 to operate in Yuma County. After several revisions of the permit, ADEQ set maximum allowable emissions standards at 1,891 tons of pollutants per year.

Calkins said he is confident the permit will be approved. If it is issued, the company will seek approval on about two dozen other federal, state and local permits ACF needs to build and operate the refinery.

Those opposing the refinery said they will consider appealing the decision and may take legal action if the EPA approves the draft air permit and ADEQ issues the permit to ACF.

Erin Horner, spokeswoman for Yuma Citizens for Clean Air, said: "We will continue to try and help the public understand that this is not a safe kind of business to bring to our community. There are other businesses that are much better and more advantageous to Yuma."

The proposed refinery has divided many in the community, sparking petitions, meetings and debates.

Before ACF can move forward with their plans, an environmental impact statement, to be written by the Bureau of Land Management, is expected to be produced and completed in late 2005.

The impact statement will address the economic, social, and environmental impacts of the proposed refinery.

Thus far, the only available information about the planned refinery has come from ACF, the draft air permit and the technical support documents accompanying the draft air permit.

Shell Oil Hands over Bakersfield Refinery to Flying J

The Shell Oil Corp. has handed over ownership of its Bakersfield refinery to a privately held oil company based in Utah that operates truck stops.

Flying J Inc. purchased the refinery in February and plans an expansion that would nearly double its gasoline output of 630,000 gallons a day and increase diesel production, currently at 840,000 gallons a day. The plant produces 2 percent of gasoline and 6 percent of diesel in California.

Shell and Flying J officials signed paperwork the week of March 13 that completed the sale.

Shell had intended to close the plant in October but opted for a sale after public officials expressed concerns over losing a fuel source.

Flying J cleared a final hurdle when it received a variance from the San Joaquin Valley Air Pollution Control District, giving the company until June 2006 to comply with emission rules, some of which take effect this June.

Flying J, which is based in Ogden, Utah, owns a small refinery in that state. It is the nation's largest supplier of diesel fuel.

Delek Group Buys Texas Refinery for an Estimated $78 Million

Yitzhak Tshuva continues to expand business activity overseas. Delek Group (TASE:DLEKG) has signed an agreement to buy an oil refinery and crude oil pipeline in Texas.

Delek announced March 14 that a 100% owned subsidiary Delek US Holdings, through three of its own subsidiaries, signed an agreement to buy the La Gloria oil refinery and a 104 kilometer pipeline. The Texas refinery has a production capacity of 54,000 barrels of oil a day, or 2.5 million. This is equivalent to about a fifth of Israel's entire production capacity.

Delek US president Uzi Yemin said the purchase of the oil refinery dovetailed with the company's existing activity, the operation of 400 fuel stations and convenience stores in the South-Western US, most of them under the Mapco brand, with an annual turnover of $1 billion.

The investment is estimated at $78 million, including stocks. The exact price will be set on the day the deal closes, in accordance with the price of oil on that day. The deal is conditional on further due diligence, and on receipt of the appropriate approvals from the relevant US authorities.

The deal is expected to close on April 29.

Carson, CA Refinery Pays $31 Million in Fines and Fees to Settle Emissions Violations Lawsuit

The South Coast Air Quality Management District (AQMD) and BP West Coast Products LLC have agreed to settle a lawsuit filed by the AQMD against BP and its predecessor, Atlantic Richfield Company (ARCO), regarding past air quality rule violations at the company’s Carson, Calif., refinery. Under the terms of the settlement, BP will pay the agency $25 million in cash penalties and $6 million in past emissions fees.

"This historic settlement resolves the significant and numerous violations found at the Carson refinery. The substantial penalty and other terms are consistent with the AQMD’s intent to vigorously pursue compliance with all of its regulations and procedures," said Dr. William Burke, AQMD’s Governing Board Chairman.

AQMD filed its initial complaint in March 2003. A second complaint was filed in January 2005. The settlement resolves all issues in the two complaints, including claims of inadequate inspection and maintenance of large above-ground storage tanks, failure to adequately perform flare data collection, inconsistencies in refinery record-keeping, and numerous air emission releases into the surrounding community from the refinery during recent years.

The $25 million in cash penalties is the largest such settlement with AQMD to date.

As part of a commitment BP gave to the AQMD last year, BP is undertaking a program to upgrade the refinery’s existing sour water system. This equipment was the source of odor allegations in the March 2003 complaint. These improvements, expected to be completed in 2006, are designed to prevent future releases.

Lyondell Refinery Attracts Interest from Petrobras, PDVSA

Petroleo Brasileiro and Petroleos de Venezuela have offered to buy or rent Lyondell Chemical Corp.'s stake in a Houston oil refinery.

Petrobras, Brazil's state-run oil company, and PDVSA, Venezuela's state-run oil company, want to use the facility to refine heavy crude extracted from Petrobras' Marlim field in the Campos basin off Brazil's southeast coast and sell it in the U.S. market.

PDVSA's U.S. subsidiary, Citgo Petroleum, already owns a 41 percent stake in the facility through a joint venture with Lyondell (NYSE: LYO). Reuters added that the refinery can process 268,000 barrels per day of oil and is one of the few facilities in the United States capable of working with Brazil's heavy oil, meaning it would not need additional investment.

If the bid is successful, the facility would represent Petrobras's first effort at refining on U.S. soil.

Fatal Explosion at Texas Refinery Might Have Been Sparked by Car Ignition

Investigators said March 30 it appears likely some sort of spark combined with hydrocarbon liquid and vapor to set off the fiery refinery explosion that killed 15 people and injured more than 100 others last week.

Investigators are considering the possibility a car's ignition caused the blast in the plant's isomerization unit, which boosts octane levels in gasoline, U.S. Chemical Safety and Hazard Investigation Board spokesman Daniel Horowitz said.

"Witness evidence points to possible ignition sources on the ground," CSB manager Bill Hoyle said in a statement. "At this time, the exact ignition source remains unknown."

Investigators have not been able to enter the isomerization unit because the dome of a benzene storage tank at an adjoining refinery tank farm was damaged and may be leaking hazardous vapors. Once they can get in they will be better able to determine how the explosion started, Horowitz said.

Witnesses have told investigators there was a hydrocarbon liquid and vapor release that fell to the ground moments before the powerful explosion, which shot flames, ash and blackened metal into the sky and was felt miles away.

The isomerization unit at the plant, which processes 433,000 barrels of crude oil a day and 3 percent of the nation's gasoline, converts the chemicals pentane and hexane, both highly flammable, into isopentane and isohexane.

BP PLC spokesman Hugh Depland said the benzene vapors from the damaged tank were only detected in a "very small area within the facility" and workers plan to seal the tank with a temporary foam cap.

"Our primary priority is to make sure that whoever has to go in that area can do so safely," he said.

Longview Oil Refinery Might Reopen

A refinery in Longview, Texas that closed about 12 years ago might have a chance at reopening.

Gregg County commissioners on March 30 approved an agreement that allows a company the option after 12 months to purchase the property for $262,000 and reopen the refinery that previously was called Longview Refining and, before that, Crystal Oil Refinery.

Gregg County Refining has a year to inspect the property and decide whether it wants to purchase the land and reopen the plant or move the refining equipment overseas to a less developed country. The company is paying $10,000 for the option to purchase the property, and if it decides to buy it, that amount would be applied toward the property's total price.

John Bolster, of the Linebarger Goggan Blair & Sampson law firm and a consultant for the county, told commissioners Wednesday that Gregg County Refining initially had expressed an interest in moving the refinery overseas, but because of a shortage of refineries across the country, the company is considering reopening the Longview refinery.

CANADA

Suncor Begins Maintenance Shutdown of Sarnia Refinery

Suncor Energy Products Inc. shut down portions of its Sarnia refinery March 17 for a month-long planned maintenance operation, the company said.

The shutdown will reduce operations at the refinery to three-quarters of its normal capacity.

The work may result in increased flaring, noise and traffic, Suncor said, though "necessary precautions have been taken to ensure these disruptions are kept to a minimum."

Suncor Energy is a wholly-owned subsidiary of Calgary-based oilsands giant and refiner and seller of gasoline Suncor Energy Inc. (TSX.SU).

Suncor stock gained 10 cents to $46.45 March 16 on the Toronto Stock Exchange.

BRAZIL

Skanska to Expand Refinery in Brazil for USD $153 Million

Skanska has secured an order worth approximately USD 153 M (SEK 1 billion) to build a delayed coking unit at the Petrobras Reduc oil refinery in Brazil. The contract will be included in the order bookings for the first quarter of 2005. The customer is the Brazilian oil company, Petrobras.

The assignment is to construct a new delayed coking unit at Petrobras Reduc, one of Brazil's largest oil refineries, which is located at Duque de Caxias, close to Rio de Janeiro.

In addition to construction and installation work, the scope of the project includes partial purchasing and supply of materials, commissioning and post start-up assistance.

The project, which is to be started immediately, is scheduled for completion within 700 days, with start-up of the plant during 2007.

The delayed coking unit is part of Petrobras' program to gradually increase the capacity of the Reduc refinery and to meet the demand for coke from the steel industry.

The project will be implemented exclusively by Skanska Latin America, which is focused on construction of infrastructure, energy facilities and energy distribution networks. This Group company reported sales equivalent to SEK 2.8 billion in 2004, with approximately 8,000 employees.

Skanska Latin America has extensive experience from similar projects and is currently completing a refinery expansion project for Refap in southern Brazil.

VIRGIN ISLANDS

Technip Awarded Contract for Refinery Hydrotreating Unit in the US Virgin Islands

Technip (NYSE:TKP) has been awarded, by Hovensa, a lump sum turnkey contract for a new hydrotreating unit to be located at its refinery in St. Croix, US Virgin Islands. The 495,000 barrels per stream day St. Croix Refinery is one of the world's largest refineries.

The 50,000 barrels per stream day low sulfur FCC (Fluid Catalytic Cracker) gasoline hydrotreater, based on ExxonMobil Research and Engineering Company's SCANfining(TM) process technology will produce low-sulfur gasoline in compliance with the new gasoline regulation in the USA.

Technip's engineering center in Rome (Italy) will carry out the contract, which covers the front-end and detail engineering, procurement and supply of equipment and materials, construction, pre-commissioning, commissioning and assistance to start-up. The project is slated to be completed in November 2006.

For Technip, this new award is a step towards further strengthening its presence in the Caribbean, after the successful completion of the vast modernization of the ISLA Refinery in Curacao (Netherlands Antilles).

Hovensa is a joint Venture owned in equal parts by subsidiaries of PDVSA (the State-owned Venezuelan oil company) and Amerada Hess, a leading US oil company.

VENEZUELA

India Offers Venezuela Refinery Stake, Eyes Oilfield

India will offer Venezuela equity in a refining firm and take a stake in a Venezuelan oilfield to cement growing ties between Asia's third largest consumer and the World's No. 5 exporter, top officials said on March 5.

State-run Oil and Natural Gas Corp. (ONGC), which is bidding for foreign oil assets to secure energy supplies, is likely to take a 49 percent stake in the San Cristobal oilfield, Petroleum Minister Mani Shankar Aiyar said.

In return, Petroleos de Venezuela would be offered equity in ONGC's refining subsidiary, Mangalore Refinery and Petrochemicals Ltd, Aiyar told reporters after meeting Venezuelan Foreign Minister Ali Rodriguez.

India's sole private refiner, Reliance Industries started importing Venezuelan crude in recent years but state-run firms have not processed oil from the OPEC member.

Aiyar said India's strong ties with Venezuela will help Indian firms penetrate the Latin American region.

India, which imports 70 percent of its crude needs, consumed 2.46 million barrels per day (bpd) in 2004 and is forecast to use 2.53 million bpd this year, estimates from the International Energy Agency show.

The country is likely to import 85 percent of its needs in the next two decades as its economy grows 7-8 percent a year, encouraging Indian firms to bid for foreign oil projects.

ONGC is competing with Chinese companies in the race for foreign petroleum assets.

In January, China signed energy accords with Venezuela that aimed to make the largest oil consumer in Asia a major player in the oil and gas industry.

Venezuela ships more than half its daily output to the United States in a decades-old energy relationship.

ONGC's overseas subsidiary, ONGC Videsh, has stakes in oil and gas projects in Myanmar, Sudan, Russia, Libya and Australia and recently signed a $40 billion deal to import LNG from Iran.

Lukoil Considers Building Refinery in Venezuela

On Wednesday, March 2, Vagit Alekperov, CEO of Russia’s oil giant Lukoil, said that his company may build a refinery in Venezuela and is considering supplying Venezuela’s own U.S. refineries with Russian crude that can be processed into oil products and sold through Lukoil’s distribution network in the United States.

Alekperov also said that Venezuelan state oil firm PDVSA has large assets in the United States, known as Citgo. “They have refineries in the U.S. We have the distribution network. We are holding negotiations to deliver our crude to these refineries and to receive oil products for further sale [through Lukoil’s gas station network],” said Alekperov. The Russian oil giant has 2,700 gas stations in the United States.

Speaking of other projects Lukoil’s CEO said that there are no other plans to build refineries either in the U.S. or in “third countries”. He did say that Lukoil may team up with state-owned Rosneft Oil Company to bid for new deposits in Russia’s north at a state auction later this year.

2. ASIA

BANGLADESH

Saudi Firm Offers to set up Bangladesh Refinery

A Saudi Arabian group has offered to set up an oil plant in Chittagong with an investment of $2 billion, making it the largest foreign investor in Bangladesh's petroleum sector, Xinhua reports.

Yasin S. Indarkiri, chairman of the Hi-Tech International Group (HTIG), spent three days discussing the investment proposal.

The HTIG chairman met with Mahmudur Rahman, executive chairman of the Board of Investment, and Minister for State for Energy Mosharraf Hossain on March 12.

The Saudi Arabian petroleum oil refinery company plans to build the refinery with 200,000 barrels per day capacity.

The proposed refinery is expected to annually produce nine million tonnes refined petroleum products such as LPG (liquefied petroleum gas), gasoline, kerosene, ATF (Aviation Turbine Fuel), gas oil and furnace oil.

The Riyadh-based HTIG, chartered by the Saudi Arabian government, has interest in various sectors like telecommunications, hospital management, gas and petroleum networks, roads and highways, mechanical works, general contracting and wholesale and retail sales of fuels.

At present, the Eastern Refinery Limited, the only state-run petroleum refinery company, processes crude oil and produces a dozen finished products in Bangladesh with an estimated annual capacity to refine 1.5 million tonnes of crude.

Bangladesh has an estimated annual demand of three million tonnes of fuel with diesel accounting for 45 percent of the domestic requirement.

Bangladesh imports crude oil from the Middle East, with the major share coming from Saudi Arabia and the United Arab Emirates.

INDIA

M.P. Govt Clears Hurdles in Setting up Bina Refinery

The Madhya Pradesh Government has removed all impediments in the setting up of Bina Refinery in Sagar district, the State Assembly was informed here on March 1.

The refinery with an annual capacity of 60 lakh tonne is being established with the assistance of Oman.

In a statement, the Chief Minister Mr Babulal Gaur said that the Rs 7,500 crore refinery had been granted a deferment of Rs 250 crore annual commercial tax on the sale of its product. This will remove all the impediments coming in the way of its establishment, Mr Gaur said.

Mr Gaur said the deferment of Rs 250 crore would be started after the establishment of the plant by 2009-10. The deferment facility shall continue for 15 years and the refinery would return the dues annually after the commencement of 16th year.

ONGC to Set Up Rs 4000 cr refinery

State-owned Oil and Natural Gas Corp is planning to set up a Rs 4,000 crore refinery in Barmer in Rajasthan, the site of recent oil discoveries by Cairn Energy of UK.

"We are talking to Cairn Energy to jointly set up the refinery," ONGC Chairman and Managing Director Subir Raha told PTI in an interview.

The refinery is planned to have an initial capacity of 5 million tonnes per annum and would process the heavy crude oil find of Cairn Energy in Block RJ-ON-90/1 in Rajasthan.

Raha said equity holding in the refinery project was being discussed with Cairn. Cairn Energy has so far discovered 1084.1 million barrel (or 156.2 million tonnes) of in-place reserves of which 286.45 million barrel (or 41.87 million tonnes) are recoverable. The present discoveries would produce up to 3 million tonnes per annum but the output would rise with new finds being made.

ONGC holds 30 per cent interest in Cairn's two oil fields in the block.

"Talks (with Cairn) are in progress and investment plans will be firmed up soon," he said. Raha said ONGC was also studying the possibility of raising the capacity of its subsidiary Mangalore Refinery and Petrochemicals Ltd to 30 million tonnes.

"MRPL is running at 12 million tonnes currently and its capacity is planned to be raised to 15 million tonnes by 2007 through debottlenecking. Further, we are studying the prospect to double the capacity to 30 million tonnes," he said.

New Essar Refinery Capacity at 16 MT

Essar Oil Ltd has scaled up the capacity of its upcoming oil refinery at Vadinar (Jamnagar) in Gujarat to 16 million tonnes and plans to commission it by April next year, a senior company executive said.

"Refinery work is in full swing and the plant is scheduled for commissioning in April 2006," he said.

Essar had earlier planned the refinery to have an annual capacity of up to 12 million tonnes. The refinery would now have a single Crude Distillation Unit (CDU) of 16 million tonnes per annum capacity.

"The CDU would be commissioned in April but the refinery would operate at about 60,000 barrels per day (3 million tonnes) capacity for first six months, the time needed to put on stream the secondary units. By the end of the year, the refinery would be operating at its full capacity of 320,000 barrels per day (16 million tonnes)," he said.

Essar Oil will be the second private sector firm after Reliance Industries to set up a refinery, an arena till now dominated by the public sector firms.

The official said the commissioning of the refinery would coincide with the company completing the first phase of its retail network. "We hope to have about 1500 petrol stations by the middle of next year."

Saudi Arabia, India Plan to Set up Oil Refinery

Saudi Arabia and India are considering a proposal to set up an oil refinery in India as part of a joint initiative to boost their bilateral relations in the energy sector. This was the major outcome of a meeting March 29 between Minister of Petroleum and Mineral Resources Ali Al-Naimi and his Indian counterpart Mani Shankar Aiyar aimed at boosting trade and investment opportunities in the oil, gas and mineral sectors.

The new joint venture will import crude oil from the Kingdom and supply refined products to India’s burgeoning market in the oil and gas sector. New Delhi and Riyadh have shown keen interest in boosting cooperation in the oil sector. Companies such as HPCL are looking at partnering with Saudi Aramco and setting up refineries in both Saudi Arabia and India. The two companies are also exploring joint marketing activities in India.

India has many joint ventures with Saudi Arabia, including those in the petrochemical sector. The latest to come on stream this year will be Saudi-Indian Petrochemicals located in Yanbu. It has an installed production capacity of 100,000 tons of regular paraffin and 800,000 tons of alkyl benzene annually.

Following their meeting, Al-Naimi highlighted existing Saudi-Indian relations and hoped that they would be further enhanced in the next few years. The Saudi minister said India is the fourth biggest petroleum consuming countries in Asia, adding that India’s demand for oil would increase in the future. Currently, that country imports 60 percent of its petroleum requirements, or about 430,000 barrels per day, from Saudi Arabia.

Petroleum Refinery in India’s Cuddalore District Planned

An Rs.3480 crore petroleum refinery project, with 60 lakh tonnes per annum capacity, will be built in Cuddalore district of Tamil Nadu, which will ultimately become a mother unit for several downstream petrochemical industries in the state.

Nagarjuna Oil Corporation Ltd (NOCL), a joint venture of Tamil Nadu Industries Development Corporation (TIDCO) and the Nagarjuna Group, when commissioned by October 2007, would be the first project to receive the structured assistance in terms of the new industrial policy announced by the government in 2003, Industries Minister, Nainar Nagenthran, told the state assembly March 30.

Moving the demands for grants relating to his ministry, he said this was the single largest private sector investment in the state. Construction would begin next month.

Nagenthran said the Union Government had communicated in principle approval for setting up of a Special Economic Zone at suburban Ennore. A company by the name of Ennore SEZ Company Ltd (ESCO) had been formed to implement the project. TIDCO had appointed consultants to prepare the project information memorandum for selection of project developers. The selected project developers might become the co-promoters in the ESCO.

He said TIDCO had also engaged consultants to carry out a market survey and preliminary feasibility study for setting up a SEZ in Krishnagiri district.

ONGC's Tatipaka Refinery on Target

Oil and Natural Gas Corporation's Tatipaka mini-refinery at Rajahmundry achieved the MoU target of 80,000 tonnes in respect of value-added products (VAP) for 2004-05 on February 9 and achieved the performance target of 90,000 tonnes of VAP products for 2004-05 on March 24.

The mini refinery is credited with heralding the downstream saga of ONGC and it has achieved all its targets since its commissioning three years ago. The unit fulfils the entire HSD (high sulfur diesel) requirements of both Rajahmundry and Karaikal assets. Tatipaka refinery produces HSD of Euro-III standards. The first turnaround of the refinery was completed successfully in February 2004 with in-house expertise.

PHILIPPINES

Shell May Shut Philippine Refinery, Citing Poor Profitability

Royal Dutch/Shell Group, Europe's second-largest oil company, may shut its refinery in the Philippines as the facility doesn't meet profitability standards, an official at the company's Manila-based unit said.

Shell can't sell shares in the unit in an initial public offering as it is yet to decide whether to close the refinery, said Rudy Naguit, vice president for finance at Pilipinas Shell Petroleum Corp., the nation's second-largest refiner.

Caltex Philippines Inc., a unit of ChevronTexaco Corp., closed its refinery in 2003 and converted the facility into a depot as it was cheaper to buy finished oil products from countries in the Middle East and other nations.

``The conditions that made Caltex close its refinery two years ago are still there,'' Naguit said. ``Government must decide if the refinery is still a critical industry. Incentives will help make the business viable.''

Pilipinas Shell and rivals are required under Philippine law to sell at least 10 percent of their shares to the public. The company got an indefinite extension after missing a mandated February 2001 deadline and, in April 2003, it again scrapped a planned IPO because of a slump in the local stock market.

INDONESIA

Iran Signs Initial Accord to Build $3 Bln Refinery in Indonesia

Iran signed an initial agreement to build a $3 billion refinery in Indonesia, Purnomo Yusgiantoro, Indonesia's oil minister, said in Jakarta March 18.

National Iranian Oil Co. and PT Pertamina, Indonesia's state oil company, will build the refinery and the Iranian company will take a 30 percent stake, Purnomo told reporters in Jakarta. Iran and Indonesia haven't decided where the refinery will be located, Purnomo said.

Indonesia must import about one-fifth of its oil products each year because its 1.083 million barrels a day of refining capacity isn't enough to meet domestic demand.

VIETNAM

Russian-Invested Oil Refinery to Start in Vietnam

A Russian-invested oil refinery project capitalized at half a billion USD is expected to get off the ground in central Vietnam this June, local newspaper Saigon Times reported March 4.

The project in the province of Phu Yen will start as scheduled if Vietnam’s government approves the feasibility study next month, the report quoted Nguyen Thanh Quang, secretary of the provincial Party Committee, as saying.

In the feasibility study, the refinery is envisaged to boast a total annual crude oil processing capacity of 3 million tons and 4 million tons thereafter.

The provincial government has agreed to allocate 40 hectares of land to build the refinery in Hoa Tam commune, one of the three locations the Vietnam Nuclear Energy Research Institute surveyed in a major plan to build the country’s first nuclear power station.

The land is also adjacent to Vung Ro Port, where gasoline and other oil products went to other parts of the central region and highlands before 1975. With a water depth of 21 meters, the port is 50 km from Van Phong Bay by road and only 20 km by sea. The local government also plans to build an international transshipment port near Van Phong Bay.

The investors will be required to sell refined oil products to Vietnam’s distributors, instead of building its own distribution system, added Mr. Quang.

3. EUROPE / AFRICA / MIDDLE EAST

FRANCE

Total Normandy Refinery gets Hydrocracker

Total SA is investing 500 million euros to add a distillate hydrocracker with capacity of about 48,000 b/d and a steam methane reformer to its 343,000-b/cd Normandy refinery at Gonfreville l'Orcher, near Le Havre, France.

The refinery will continue to operate throughout the construction, which is scheduled for completion in mid-2006.

The hydrocracker will convert heavy fractions into very low-sulfur distillates, enabling the refinery to produce high-quality bases for lubricants and specialty fluids and to reduce its output of heavy fuel oil.

French engineering firm Technip Coflexip Group is overseeing construction of the two units, and Sofresid SA, Montigny le Bretonneux, France, is providing oversight for pipe works and reservoirs.

LITHUANIA

Russia to Refuse Yukos Access to Lithuania Refinery

The Russian authorities are planning to prevent Yukos, the troubled oil group, from piping crude to its refinery in Lithuania in a move that puts pressure on both Yukos and Lithuania.

The action coincides with western concerns that Russia is using its position as an energy supplier to boost its influence over countries of the former Soviet Union.

It also coincides with tensions between Moscow and the Baltic states about Russia's planned commemoration of the 60th anniversary of the end of the Second World War.

Transneft, the Russian state-owned pipeline monopoly, has refused to give Yukos access to export pipelines in its preliminary schedule for the three months starting in April. If this schedule comes into force, Yukos will be unable to pump oil to Mazeikiu, the only refinery in the Baltic States and the region's largest industrial enterprise.

Mazeikiu, controlled jointly by Yukos and the Lithuanian government, normally relies on Yukos for more than half its crude, with the rest coming from other Russian producers. These producers could increase shipments, but Yukos fears the Kremlin will discourage other suppliers.

They say the Russian authorities want to continue their assault on Yukos, which is trying to remain in business despite the enforced sale of Yuganskneftegaz, its biggest asset.

Mazeikiu, in which Yukos holds 54 per cent, said March 20 that it saw no reason to change plans to increase output in 2005 to a record 9m tonnes. It is understood that if the refinery cannot secure adequate pipeline supplies, it can ship by rail. But Yukos executives say it may be impossible to maintain full production on this basis.

POLAND

Polish President Won't Testify on Refinery Sale Secret Talks

Polish President Aleksander Kwasniewski said he won't testify before a parliamentary commission investigating secret talks on plans to sell the nation's refineries.

Kwasniewski was to meet March 8 with the commission, which is probing the publication of secret service notes about a secret meeting between the country's richest man, Jan Kulczyk, and a former Russian spy. Kulczyk said he had the support of the ``top guy,'' suggesting the president, in the sale of the No. 2 refinery. Kwasniewski said the probe has led ``to political wrangling'' before elections and refused to take part in it.

ALGERIA

Algeria’s Biggest Refinery Reopens 2 Days after Fire

On March 20 Algeria’s biggest oil refinery resumed production two days after a fire, the Algerian ministry of energy and mining said. ‘‘The gradual resumption of operations at the refinery began yesterday,’’ the ministry said in a statement on March 20. The closure ‘‘had no impact on the supply of the local market, nor on the commitments to foreign clients, as there was stocks equivalent to two months’’ of sales.

The refinery, located in Skikda on the coast of eastern Algeria, was shut down on March 17 at 2:30 pm, after a fire in the cooling tower, said owner Naftec Spa, a unit of the state- owned group Sonatrach. It took firefighters one hour to put out the fire, it said. There were no casualties.

The Skikda refinery processes more than 300,000 barrels of crude oil a day, accounting for 68% of the North African nation’s refining capacity. About 80% of the fuels produced in Skikda are exported, mainly to Europe and the U.S.

Algeria is a member of the Organization of Petroleum Exporting Countries. Its crude oil production stands at 1.3 million barrels a day, ranking third in Africa, behind fellow Opec members Nigeria and Libya.

China's CNPC Wins $400M Bid for Algeria Refinery

China's National Petroleum Corphas (0135.HK) has won a bid to build a $400 million refinery in Skikda, eastern Algeria, an official from Algeria's state oil company Sonatrach (SON.YY) announced March 30.

Abderrahman Boufennara, heading up the bidding round, said the new refinery would produce 5 million metric tons of condensate annually. Scheduled to be on stream in less than three years, the refinery will also have an annual capacity for 110,000 tons of butane gas, around 4 million tons of naphtha, 850,000 tons of gasoline and up to 680,000 tons of jet fuel.

At the bidding ceremony, Sonatrach Chairman Mohammed Meziane said the project underlines his company's eagerness to expand the country's petrochemicals industry.

Algeria is currently producing 16 million tons of condensate annually.

The new refinery will be based at the site of Algeria's existing Skikda refinery.

GHANA

Ghana Negotiating for New Oil Refinery at Takoradi

The management of Arabian Gulf Oil Limited (AGOL) is negotiating with the Government of Ghana to establish a multi-billion dollar export oriented refinery with a capacity of 200,000 barrels a day at Takoradi.

The Project would consist of an Import and Export Terminal and all other facilities and infrastructure required to support the refinery. Peter R. Buckley, Senior Advisor and Executive Officer of AGOL; announced this when he led a delegation from the Company to pay a courtesy call on President John Agyekum Kufuor on March 8.

Buckley did not give details of the negotiations and the amount to be invested but said this would be AGOL's second 100 per cent funded refinery covering both Debt and Equity but would appreciate the involvement of some Ghanaian private sector investments. He said Ghana was identified as the epicenter for investments in West Africa especially in the oil sector for exportation to other parts of the globe.

The Senior Advisor said about 3,000 workers would be recruited to construct the refinery, adding that about 500 staff out of which 450 would be Ghanaians would be engaged to work at refinery after they had been trained.

Buckley said about 20,000 jobs were expected to be created with the establishment of other recreational, health, educational and other facilities in the project area.

Ghana Blaze Shuts Down Tema Refinery

Oil facilities were damaged at Ghana's Port of Tema Mar. 25 when a Greek fishing vessel caught fire, killing 13 crew members and destroying a pipeline linked to the nation's sole refinery.

Ghana's Energy Minister Mike Ocquaye ordered the state-owned Tema Oil Refinery (TOR) closed to prevent further losses after the fire damaged the crude oil pipeline carrying imports to the facility, about 20 km east of the port.

Officials at the 45,000 b/d refinery, which processes all of Ghana's imported crude, announced that fuel deliveries could continue for several weeks despite the destruction of the fuel pipeline.

According to the US Energy Information Administration, TOR primarily processes Bonny Light/Brass River crudes from Nigeria. EIA said Ghana consumed about 40,490 b/d of oil products in 2002.

KENYA

Kenya Refinery Seeks Adviser for Sh14 Billion Plant Upgrade

Mombasa-based Kenya Petroleum Refineries Limited (KPRL) will seek the services of a financial adviser to source for the US$200 million (Sh14 billion) it needs to upgrade its facilities.

The adviser is, on behalf of KRPL, expected to come up with a comprehensive financing proposal to be presented to international moneylenders.

"A financial adviser will be appointed within one month to package a proposal to be presented to international money lenders for possible sourcing of the required funds," said KRPL chairman, Justus Kageenu.

He said that the Foster Wheeler report, which was presented to the KPRL board on February 25, 2005, had laid good ground for such an initiative.

The Foster Wheeler study found KPRL a viable facility that could be made to produce environment friendly petrol and low sulfur diesel with some modernization.

Last year, the KPRL board appointed Foster Wheeler to assess the technical and commercial viability of the refinery in the wake of the global push towards the elimination of lead and sulfur from fuels.

A World Bank-funded study, undertaken last year, recommended upgrading of the facility to enable it to produce environment-friendly products or its closure and ultimate conversion into an oil import facility.

The Mombasa-based plant currently produces diesel with a sulfur content of one per cent (10,000 ppm). Experts say the plant lacks de-sulfurization facilities that most refineries have acquired in order to reduce the sulfur content in the fuel.

Diesel produced by KPRL contains 200 times more sulfur than the European standard of 0.005 per cent.

Besides, KPRL cannot produce unleaded petrol although African countries have committed to phasing out leaded fuel by December this year.

Kageenu said a large fraction of the $200 million required to upgrade the plant is expected to be sourced internationally with the shareholders bridging the difference.

Kenya Petroleum Refineries Limited is 50 per cent owned by the Government with the remaining stake divided among BP, Shell and ChevronTexaco.

Kageenu said upgrading of the plant would increase the production of liquefied petroleum gas (LPG) from the current annual average of 23,000 tonnes to 115,000 tonnes as a result of increased throughput and new processes.

KPRL’s modernization will entail increasing the plant’s storage capacity and construction of new import-export LPG facilities.

Phase one of the project will involve construction of an LPG storage facility with a capacity of 6,000 tonnes at the Kipevu jetty in Mombasa at a cost of $20 million.

The modernization of KPRL will on the other hand entail installation of thermal conversion equipment to enable the refinery produce more white valuables such as petrol and diesel per barrel of crude oil.

The exercise will also involve installation of a fuel oil cracker to convert the current surplus fuel oil to more valuable white products such as petrol and diesel. The upgrading is expected to take into account the ability of the plant to move in tandem with the tightening of standards globally as well as demand for refined products in Kenya and the region.

Oil industry sources, however, expressed surprise at the new development saying Foster Wheeler never consulted them in the course of study.

SOUTH AFRICA

Alstom Installs Switchboards for Caltex Refinery

Alstom Switchgear recently completed installation and commissioning of two 6,6 kV SBV4 switchboards at the new 6,6 kV main intake substation supplying power to Caltex Oil SA’s refinery in Cape Town.

The new substation provides for additional power supply to the refinery, mainly to cater for anticipated future expansion of the facility. The power supply has been increased from 22 MVA to 33 MVA.

One of the switchboards supplied by ALSTOM Switchgear is a nine-panel SBV4 unit, while the other is a seven-panel unit equipped with joggle chambers linked to two current-limiter panels. All the circuit breakers are 1250 A rated, with a fault level of 31,5 kA.

RUSSIA

Alliance Oil Company Invests $500 Mln to Modernize Refinery

The Alliance oil company (AOC) will invest 500 million US dollars to modernize the Khabarovsk oil refinery (KOR) with the attraction of the financial resources of the South Korean Samsung Company, AOC President Musa Bazhayev announced on March 31.

According to the AOC chief, the South Korean company will complete the modernization of the oil refinery in a turn-key project within three years. "The efficiency of oil processing is currently about 60 percent. It will be more than 85 percent after the refinery facilities are modernized," Bazhayev emphasized.

The AOC chief said, "The excise tax revenue component of petroleum products" will grow following an increase in the output of high-octane grades of petrol. Payments to the Territorial budget will increase from the current 273 million rubles up to 600 million. Besides, the Territory will get new jobs, because "local firms will be invited" to engage in some modernization process operations.

IRAQ

Iraq Plans to Build New $2 Billion Refinery

An Iraqi oil ministry delegation has headed to Amman to hold meetings with 17 major international energy firms on building a new refinery either in Mosul to the north or the southern port city of Basra.

"The delegation, led by Deputy Oil Minister Ahmad al-Shama, left Baghdad March 21 to meet the representatives of 17 American, British French, Japanese, Canadian, Italian, Chinese and Dutch energy firms," said oil ministry spokesman Asim Jihad.

Iraq wants "to build in the next three years a new oil refinery with a capacity of 250,000-300,000 barrels per day (bpd) at an estimated cost of $2 billion".

The ministry wants to build the refinery on a Build-Operate-Transfer contract in order to avoid putting further burdens on Iraq's tattered economy, Jihad said.

A new refinery would enable the ministry to solve the problem of domestic fuel shortages and allow it to renovate the aging Baiji refinery to the north and Dura refinery in southern Baghdad, which are in poor shape, Jihad said.

In mid-February, the oil ministry estimated its exports from the port of Basra at 1.5 million bpd and the country's overall production at two million bpd.

But the industry has been crippled by rotting infrastructure, attacks and smuggling.

The ministry estimated in February its losses at between $7 billion and $8 billion due to resistance attacks since the fall of Saddam Hussein's government in April 2003.

Iraq, with the second largest oil reserves in the world, relies on its lucrative oil resources to keep its economy afloat.

In January 2004, Oil and Gas Journal estimated Iraq's refining capacity at the country's largest refinery in Baiji at 587,500 bpd.

The total fell well short of Baiji's original production capacity of 700,000 bpd, due to the deterioration of equipment over the past three decades when Iraq's resources were drained by war and trade sanctions.

McIlvaine Company,

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