april 06 update

Exxon Mobil Corp. Chairman and Chief Executive Rex Tillerson said March 21 creeping refinery capacity expansion would keep up with growing U.S. demand for refined products without the need to build a new refinery.

A new refinery has not been built in the United States since 1976.

Last year, President George W. Bush encouraged companies to build new oil refineries on old military bases to meet growing demand for gasoline and diesel, but so far none have planned to do so.

"We don't have any plans for a greenfield refinery in the U.S., primarily because we don't think there is a need for one," Tillerson told reporters at the National Petrochemical and Refiners Association annual meeting in Salt Lake City, Utah.

Tillerson said U.S. refiners should be able to maintain the average annual 2 percent expansion in crude oil refining capacity to keep up with demand.

U.S. markets will also rely on imports, he said.

"We've been able to add 2 percent per year for the past 10 years and we would expect to continue to make those capacity additions," Tillerson said.

"We still have a lot of potential for expansion in existing sites," he added.

A day earlier, the U.S. Energy Information Administration said U.S. fuel production capacity is expected to grow at a about that rate in the remaining years of the decade as companies invest in expansion.

EIA analyst Joanne Shore said an additional 1.7 million barrels per day of capacity was expected between 2005 and 2010 and that the burst of refining capacity could allow the United States to "keep up with demand growth for a while."

Shore also said that historically refinery expansions tend to exceed the capacity additions originally planned.

In the past year, U.S. refining companies have revealed plant expansion plans totaling more than a million barrels per day, adding to expansion projects already on the books, according to a Reuters survey.

Experts have said, however, the planned expansions will not be enough to keep pace with demand growth, leaving the United States increasingly dependent on fuel imports.

Chevron seeks to Expand Pascagoula Refinery, Boost Output by Half Million Barrels by 2010

Chevron Corp. said its oil and natural gas production would rise by 600,000 barrels per day by 2010 -- slightly below some analysts' expectations -- and it announced plans for a possible major expansion of a Mississippi refinery.

Chevron CEO David O'Reilly also estimated that Gulf of Mexico production snags related to last summer's hurricanes would trim $500 million from the company's bottom line in 2006, compared with a reduction of $1.4 billion in 2005.

Chevron, the second-largest U.S. petroleum producer, told Wall Street analysts concerned about the company's growth that daily output would rise from 2.5 million barrels per day of oil equivalent in 2005 to 3.1 million barrels per day by 2010. By 2008, daily output would be about 2.9 million barrels per day.

"We as a company are doing a lot about supply," O'Reilly said in response to a reporter's question about the criticism the industry has faced from Congress over soaring gasoline prices and tight supplies.

However, part of Chevron's growth will come from production and reserves that it gained through its recent $18 billion acquisition of Unocal Corp.

Oppenheimer & Co. oil analyst Fadel Gheit said "the outlook is significantly better than the recent past," calling Chevron's production growth forecast of 3 percent per year through the end of the decade "very decent."

Gheit said there were still some questions about the timing of the growth.

Chevron executive vice president Mike Wirth said the company is "evaluating expanding" its Pascagoula, Mississippi, refinery to become "the second-largest in the United States."

The Pascagoula refinery, which was shut down for six weeks in the aftermath of Hurricane Katrina, currently processes an average 325,000 barrels of crude oil a day, making it the country's eighth largest, according to Energy Department statistics.

While Chevron previously announced plans to add 25,000 barrels per day of processing capacity at the Pascagoula plant, the company said it was studying the possibility of adding a total of 200,000 barrels per day.

"The opportunity for us to invest in the refining side of our business is better than it has been in some time," Wirth said. At the same time, Wirth said the company has "been pretty careful not to make a mad dash to process more crude."

The largest U.S. refinery is Exxon Mobil Corp.'s 557,000-barrel-per day plant in Baytown, Texas. The second largest, at the moment, is Exxon's Baton Rouge plant, which refines 493,500 barrels per day.

Chevron forecast that its reserves of oil and gas would rise from roughly 12 billion barrels in 2005 to close to 14 billion barrels by 2008.

Chevron pinned its growth on large projects in the Caspian and West African and Asia-Pacific regions, with lower growth coming from the Asia-Pacific, North America and Latin America.

Chevron said it would spend between $15 billion and $16 billion a year in 2007 and 2008, with about a third of that amount disbursed on drilling. The company previously said it would increase its capital spending by 35 percent in 2006 to $14.8 billion, though about $1 billion of that amount comes from rising costs.

George Kirkland, the company's vice president for exploration and production, said the company was making "strong progress" on its drilling program and that Chevron was "specifically focused on reducing decline rates" of wells.

In January Chevron reported a profit of $14.1 billion for 2005, the company's best annual performance in its 126-year history.

Still, analysts do have concerns about the pace of the company's growth. Citigroup analyst Doug Leggate said in a report that the Chevron's reserve replacement has been "sub-par" for the past two years when growth from asset purchases is not included. Leggate said he was looking for daily production to grow to 3.3 million barrels per day by the end of 2009.

Tesoro Corp will Upgrade Coker with No Plans to Expand Martinez Refinery

Tesoro Corp. said March 8 that it does not plan to expand its Martinez gasoline refinery or reconfigure it to handle a heavier grade of crude oil, despite the claims of a local environmental group.

The San Antonio company has applied for permits to replace a key piece of the plant's equipment, as directed by Bay Area air quality regulators. But that upgrade, estimated to cost $275 million, is not part of any larger effort to revamp the plant, said Alan Savage, the refinery's environmental manager.

"There is no project to expand the refinery," he said.

The company says it will upgrade its coker, which holds solid residue left when crude oil is refined into gasoline. The Bay Area Air Quality Management District ordered the change after the refinery pumped black plumes of soot into the air for 19 days last year. The district also hit Tesoro with a $1.1 million fine.

The coker project came under fire recently from Communities for a Better Environment, a watchdog group that focuses on refineries.

The group filed objections with Contra Costa County's community development department, arguing the coker project was just one piece of a larger overhaul of the plant. In documents cited by the group, Tesoro representatives described the coker upgrade as part of potential refinery-wide project that would "allow a wider array of crude oil feed stocks and provide additional environmental benefits."

The documents, however, were dated last year and noted that the larger effort had not yet been approved by Tesoro's board. Savage said that the refinery-wide project had been considered and rejected.

The environmental group also criticized Tesoro for asking the community development department to excuse it from requiring a land-use permit for the project, potentially avoiding greater public scrutiny.

"Their request to omit public notification completely violates the principals of environmental justice," said Carla Perez, one of the group's community organizers.

A development department planner said March 8 that no decision had been made on the coker application. Savage said about 90 percent of the plant's repair or upgrade projects don't require land use permits.

Total Considers $920 million Coker Project for Texas Refinery

Total Petrochemicals USA (TOT) is considering installing a conversion unit that will allow its Port Arthur, Texas refinery to process cheaper heavy crude oil, a spokesman said March 16.

The $920 million project to install a coking unit could be online as early as 2009, said spokesman Rick Hagar.

The project would require 18 months of engineering and design, and an additional 18 months of construction, Hagar said.

When the coker comes on line, the refinery would likely change its slate of crude oils to oil produced by Total in Venezuela, Hagar said. Crude processing capacity at the refinery is 180,000 barrels a day; the remaining 60,000 barrels a day is condensate processing capacity.

Total's plant is one of three Port Arthur refineries. Valero Energy Corp. (VLO) is currently expanding its 255,000 barrel a day refinery, and plans to see the capacity increase by late 2006. The third Port Arthur refiner, Motiva Enterprises, LLC is considering doubling the size of its 250,000 barrel a day refinery. Motiva is a joint venture between Royal Dutch Shell Plc (RDSB.LN) and the Saudi Arabian Oil Co. (SOI.YY).

All three projects are part of a wave of expansions at refineries across the U.S., which could bring over 1 million additional barrels of refining capacity on line by 2010.

Meeting on Proposed Illinois Refinery Held March 24

A meeting with Texas businessmen and members of the Calhoun and Greene county boards was set for March 24 to discuss the proposed construction of an oil refinery in either one or both of the counties. The meeting, was open to the public.

Who the businessmen are and details of the proposal are sketchy, but the business’ representative, Michelle Richard, said the Calhoun operation would require 2,000 acres and would employ about 1,000 people.

Tepen said Richard told the Calhoun board members that the company she represents wants to explore the possibility of building an oil refinery on the Mississippi River in the northern end of Calhoun County near the Pike County line. It would require at least 1,000 acres along the Mississippi River and an additional 1,000 acres that would serve as a buffer zone.

The company, which she said owns a refinery in Arizona similar to the one it is proposing to build in Illinois, reportedly would create 1,000 direct jobs and up to 5,000 jobs overall.

Richard invited the Calhoun County commissioners to attend the Greene County Board meeting. She said that officials of the unnamed Texas company will present a similar proposal for an oil refinery in Greene County.

Neither county has received written documentation or information from the Texas company.

"All I know is they want to come talk to us," Greene County Board Chairman Joe Nord said. "I have heard through the grapevine that the area they are looking at in Greene County is north of Eldred and that some people have already been approached about it."

Tepen and Nord said they were not sure whether the proposal is for a refinery in each county or one refinery in whichever county accepts and supports construction of a refinery.

Maggie Carson, spokeswoman for the Illinois Environmental Protection Agency, said the agency is not aware of any proposal for construction of an oil refinery in the Calhoun and Greene counties area.

"However, that is not unusual at this stage," Carson said. "Big companies work to win the hearts and minds of the local people first in such instances before bringing IEPA into the discussions."

The last oil refinery built in the United States was in 1976 in Garyville, La. The long hiatus is partially due to reluctance by oil companies to expand due to strict environmental regulations, low profit margins in the refining industry and public concern over their possible environmental impact.

"Environmental regulations requiring certain standards can be met in most instances," Carson said. "Big companies know it’s doable if they are willing to put the necessary resources toward meeting a state’s regulations. Every company would look at environmental regulation standards and the cost of implementation as part of their planning process before tendering a proposal."

BP seen Delaying Texas City Refinery Restart by a Week

BP Plc. (BP) will delay the restart of gasoline production at its Texas City, Texas, refinery by one week to mid-April, a person familiar with the refinery told Dow Jones Newswires late March 30.

"Our plan was to have gasoline flowing the first week of April, it's going to be mid-April now," the person said, speaking on a condition of anonymity.

The mammoth 460,000-barrel-a-day refinery has been shuttered since it closed ahead of Hurricane Rita in September. The plant has been the site of several accidents, including a blast one year ago, labeled the deadliest in the industry in over a decade. The closure allowed BP to conduct a wide-ranging safety review of the plant.

One of the plant's alkylation units and sulfur recovery units have been in circulation for several days, the person said.

BP plans to start putting coal-feed into the units this weekend, and resume gasoline production by the first week in April.

The first set of units includes the refinery's largest 130,000 b/d catalytic cracking unit, a coking unit, reformer, and several other units.

The refinery is being started in three separate tiers, comprised of 155,000 b/d of production, each, the person said. If the current schedule is maintained, the entire refinery will be restarted by year-end.

After the restart, BP plans to add two units - a continuous catalytic reformer and a coking unit - to the refinery, the person said.

Mississippi Legislature Fails to Agree on Chevron’s Choice of Pascagoula as New Refinery Site

As the 2006 state legislative session was set to end March 30, Senate Finance Chairman Tommy Robertson dropped a bombshell, announcing that Chevron was considering Pascagoula as the site for a new multi-billion dollar refinery and that the state needed to consider borrowing $22 million to help.

The Senate suspended its rules stating that the deadline for state borrowing bills had passed so lawmakers could consider borrowing to widen Mississippi 611 to accommodate traffic for the refinery.

But House leaders were caught unawares - learning of the potential refinery and the state borrowing proposal from a reporter. They appeared pretty miffed. It sounded uncertain whether they would agree to consider the borrowing this late.

"I haven't heard a word about this, not even a rumor," House Speaker Billy McCoy said. "But I'm not really surprised. The governor doesn't usually share information with me. At this time of the year, rules suspensions come mighty stingily.

Robertson said: "This is $4.8 billion they're looking at investing - that's bigger than the entire state budget for Mississippi. This (road project) had already been approved for 2010. This would allow (the Mississippi Department of Transportation) to move it up. Since 1963, Chevron has never asked us for any money. They asked us one time for a change in 16th Section land rules for a land swap, and asked that the fuel they store in tanks out there be exempt from the inventory tax. That's it."

But now the project appears stalled since the House and Senate failed to agree March 30.

Both chambers extended the session until April 5 to consider the road proposal, tourism incentives and local development projects, although lawmakers say they could leave town before.

The session is scheduled to end April 2.

Senate Finance Committee Chairman Tommy Robertson, R-Moss Point, said he is "90 percent" sure Chevron will build a $4.8 billion refinery off Mississippi 611.

"They're fixing to invest more than our entire (state) budget is," he said. Lawmakers are close to finalizing a $4.5 billion budget for the upcoming year.

The mostly two-lane road cannot handle increased traffic to the Chevron refinery, and plans are to widen Mississippi 611 to five lanes and add an interchange at U.S. 90.

House leaders say the company has not committed to Mississippi.

Chevron, which processes 330,000 barrels a day at its crude oil refinery, hopes to expand and become the United States' second largest refinery. It's also seeking federal approval to add a liquefied natural gas terminal just south of the plant.

Construction would add thousands of additional workers a day on the road.

Although neither expansion project has been approved, Steve Renfroe, Chevron Mississippi public affairs manager, said he'd hate to see the road widening and the refinery's construction butt heads.

"If the crude expansion project goes through, it would be a big deal and it is something we'd want to carefully coordinate with MDOT," he said.

Southern District Transportation Commissioner Wayne Brown said construction could begin in the fall if the measure clears the Legislature.

"If the Gulf Coast ever needed economic development, it does now," he said.

Without approval of the project now, Robertson warns of a special session.

Compretta said that's not a problem. "We can do it in one day," he said.

Renfroe said Chevron would like the road project completed in 2007, so plant construction can begin in 2008. During an expansion project begun in 1980, Renfroe said, 5,000 extra workers used the road for three years.

Renfroe said the $4.8 billion figure for the crude oil expansion "is not our number" but he would not give a corrected figure or other project specifics.

Senate President Pro Tem Travis Little, R-Corinth, said the construction phase would employ 6,000 workers and the facility would employ 1,500 once it opened.

The work would bring the plant's capacity to 530,000 barrels daily, just below the 557,000 barrels a day of Exxon Mobil's Baytown, Texas, refinery. The Chevron in Pascagoula ranks eighth in the country.

But Louie Miller, Mississippi Sierra Club chapter director, said Chevron ought to open its own pockets.

"Why are the taxpayers having to pick up the tab for a corporation that is making record profits? There's no reason why they shouldn't pay for it themselves," he said.

Blake Wilson, president of the Mississippi Economic Council, said luring businesses is too competitive to ask corporations to shell out for infrastructure.

CHS Laurel Refinery Gets State Approval for $325 Million Plan

A $325 million coker project at the CHS refinery in Laurel got the green light from the state of Montana the last week of March.

With no appeals filed by the March 27 deadline, the air quality permit from the Montana Department of Environmental Quality became final and went in the mail March 28.

Work will begin right away, said Greg Brown, the refinery's environmental, health and safety manager.

The coker project, along with other modifications, is the biggest in the refinery's history and will make the plant more competitive with the valley's two other oil refineries, ConocoPhillips and ExxonMobil, both of which have cokers, Brown said.

The CHS coker will allow it to make more gasoline and diesel by processing a portion of its asphalt stream without increasing the amount of crude oil refined, Brown said. The refinery will continue to make smaller amounts of asphalt.

The coker project follows an $87.5 million project completed last year to reduce sulfur in diesel as required by federal regulations.

CHS Inc. is owned by farmers, ranchers and cooperatives in the Midwest and West.

In addition to the coker unit, CHS will add a sulfur recovery plant, a new flare and a new heater along with modifying existing units and shutting down others.

While the project will increase sulfur dioxide emissions and other pollutants from present levels, the increases will be below historic pollution levels and within refinerywide limits set in 2000, said Debbie Skibicki, a DEQ environmental engineer who wrote the permit.

CHS will reduce pollution from other sources to help offset increases from the new sources, Brown said.

Overall, however, the refinery has added updated pollution controls as the plant has expanded, Brown said.

"We've reduced sulfur dioxide emissions by greater than 90 percent in 12 years," he said. "We feel that's a pretty good story to tell. We feel it's the right direction."

In 2005, CHS for the first time came in under the 1,000-ton mark for sulfur dioxide by emitting 646 tons for 19.2 million barrels of oil refined, according to DEQ information. In 1993, the refinery emitted a high of 8,966 tons of sulfur dioxide and refined 14.6 million barrels of oil.

With the coker, the refinery expects to emit less than 750 tons of sulfur dioxide annually, Brown said.

The coker also will produce about 800 tons of coke a day. Brown said the company has not yet decided where the coke will go but will build a rail loading facility. "We won't be storing any coke on site," Brown said.

CANADA

North West Upgrading’s says 231,000 bpd Oil Sands Upgrader Refinery Project worth Rising Cost

Like most major infrastructure megaprojects associated with the oilsands, costs are soaring for North West Upgrading's plan to build an independent upgrader refinery northeast of Edmonton.

But backers of the project still believe the need for local, so-called merchant upgrading capacity to process rapidly growing amounts of heavy oil from Alberta will outweigh the higher price tag.

Calgary-based North West president Rob Pearce says costs for the three-phase, 231,000 barrels-per-day operation have "gone up significantly" from first estimates of $4.8 billion.

"The original estimate was prepared approximately 18 months ago and so it's a combination of material costs going up, equipment costs going up and labor costs that are higher than we'd anticipated," Pearce said. "Everything is just that more expensive than what we were anticipating," he said, while declining to specifically say how much more the project will cost.

Cost overruns for major oilsands mines and refineries are nothing new. Suncor Energy, Shell Canada and the Syncrude Canada joint venture all saw bills for their latest projects soar billions of dollars from initial cost estimates.

North West expects to help control rising costs by building next door to Edmonton instead of hundreds of kilometers to the north in the Fort McMurray region. But the same shortages for virtually everything from laborers to steel and other materials will apply.

During the next decade, five major upgrader complexes could be built just northeast of Edmonton. Companies have been lured by the proximity to a larger workforce and pre-existing infrastructure.

Husky to Expand Lloydminster Refinery in $2.3 Billion Project

Husky Energy Inc. is planning a $2.3 billion project that will nearly double the capacity of its Lloydminster. Sask. heavy oil upgrader to 150,000 barrels per day, the big integrated oil company said March 20.

Husky will spend about $90 million on engineering and licensor work prior to initiating construction, the company announced after markets closed.

The expansion calls for capacity at the Lloydminster upgrader to increase from 80,000 barrels per day to handle higher volumes of heavy oil, including from Husky's Tucker oilsands project at Cold Lake, Alta., 250 kilometres northwest of Lloydminster, a community along the Alberta-Saskatchewan border.

Engineering work is expected to be completed in 15 to 18 months at which time Husky will proceed with the appropriate approvals for the project.

"The expansion is a key part of Husky's continuous strategic investment and leverages our existing upgrader and pipeline infrastructure in the Lloydminster region," John Lau, Husky's president and chief executive, said in a statement.

The Calgary company is one of Canada's five major integrated oil companies, which produce and refine oil and sell petroleum products at a gasoline station network. The others are Imperial Oil, Petro-Canada, Shell Canada and Suncor Energy, all based in Calgary.

Husky produces natural gas and heavy oil in Western Canada, is developing the Whiterose oil and gas project off Newfoundland and sells fuel through Husky branded stations, mostly in Western Canada.

The company, which is controlled by Hong Kong billionaire Li Ka-shing, also operates in southeast Asia.

Husky's Tucker oilsands project will use steam to stimulate production from the underground reservoir this summer and production is expected by the end of the year.

Peak output from Tucker is projected at more than 30,000 barrels a day within 18 to 24 months after first oil is produced, the company said.

BRAZIL

Petrobras Plans $6.5 Billion Chemical Refinery near Rio de Janeiro

Petroleo Brasileiro SA, Brazil's state-controlled oil company, said it plans to build a $6.5 billion petrochemical complex near Rio de Janeiro to help it process rising output of heavy crude from offshore fields.

The new refinery, to be located in Itaborai, Brazil, will have the capacity to process 150,000 barrels of oil a day. The first phase of the project will produce 1.3 metric tons of ethane, 900,000 tons of propane, 360,000 tons of benzene and 700,000 tons of polyethylene, and other oil derivatives, Rio de Janeiro-based Petrobras said in a statement on its Web site.

The first phase, a basic petrochemical unit, will be built in partnership with Brazil's BNDES state-development bank and require an investment of $3.5 billion, the statement said.

MEXICO / CENTRAL AMERICA

KBC Wins $1.5 Million IDB Contract to Study Hydrocarbons Market and Refinery Feasibility

The Inter-American Development Bank (IDB) has awarded British consulting firm KBC Advanced Technologies a US$1.5mn contract to study the integration of Central America's hydrocarbons fuel markets and the feasibility of a new oil refinery, Peter Bate, an IDB spokesperson for Mexico and Central America, told BNamericas.

The studies are in response to a request from Belize, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Nicaragua and Panama at a regional summit in Cancún last December.

The countries agreed to cooperate in energy integration to ensure adequate energy supplies for the region and reduce fuel prices in the face of high international oil prices.

KBC held a meeting on March 13 to discuss plans for the study, KBC spokesperson Margaret O' Brien said.

KBC was chosen from amongst US consulting firms Battelle, Purvin & Gurtz and Gaffney, Cline & Associates and Environmental Resources Management as well as the Mexican-US consortium ICA Fluor Daniel and a joint proposal from Consultoria Colombiana and Venezuelan firm Tecnoconsult, Bate said.

The IDB grant from a technical cooperation fund for regional infrastructure integration will be used to hire the consulting firm as well as to commission complementary studies.

The studies are expected to be carried out in 10 months.

The studies will be carried out in two phases, the first of which consists of an analysis of hydrocarbons integration for the region as well as the feasibility of building a high-conversion refinery.

The studies will determine the need to expand refining capacity in Central America, taking into account factors such as the existing infrastructure, future demand estimates and the use of Maya crude or mixtures of that Mexican crude and other crude oils from Belize, Colombia, Ecuador, Guatemala, Peru and Venezuela.

At least three possible sites for building a refinery will be identified, considering geographical, environmental and logistical factors, available infrastructure, accessibility and security concerns.

The studies will consider possible basic configurations for the refinery and estimate its operating costs and required investments to carry out the project in those locations.

The possibility of a US$3bn-4bn facility with a 250,000 barrel-a-day capacity was suggested at the Cancún summit.

The first phase of studies should be ready for a May regional summit in the Dominican Republic, according to the statement. The second set of studies will be carried out if the countries decide to go ahead with the project.

The second phase will be more detailed and pertain to legal, regulatory and institutional issues and also prepare bases for public tenders, the statement said.

The countries are also involved in other energy integration projects such as Siepac, which involves the construction of a power transmission line linking six Central American countries and the creation of a regional market for wholesale electricity transactions.

MEXICO

Mexican Refinery with Price Tag of $4 Billion Moves Forward Despite Opposition

The Mexican project to build an oil refinery in Central America is running into obstacles that are making it unfeasible, say observers. But the region's governments, including the outgoing administration of President Vicente Fox, assure that it is an excellent idea that will become reality.

Four months ahead of the elections to choose Fox's successor and nine months before his term ends, the government is not letting down its guard on this proposal. The refinery, with a four-billion-dollar price tag, would process crude from Mexico and manufacture petroleum derivatives for Mexico and its Central American neighbors, where oil production is minimal.

"We are betting that the refinery -- which would basically be private -- will be built, because it would benefit everyone," Salvador Beltrán del Río, director of international affairs for Mexico's Energy Secretariat, told Tierramérica.

The Fox administration is not discouraged by gloomy forecasts for Mexico as an oil exporter, or the dramatic decline in oil sales to Central America, or the rejection of the plan by leftist presidential candidate Andrés Manuel López Obrador, who polls indicate is the front-runner.

Crude oil from Mexico, whose reserves are on the decline and can assure only 13 years more of production, supply just 1.2 percent of Central America's annual oil consumption. Venezuela is the leading supplier of petroleum and derivatives to Central America, followed by the United States, Ecuador and Chile.

From March through the end of May, a private consulting firm, hired by the Inter-American Development Bank (IDB), will conduct studies to determine in which Central American country and under what conditions the refinery could be built.

Beltrán del Río said he is confident that the consulting firm will bring good news and stressed that the Mexican government plans to contribute to the construction of the refinery, but would leave its administration in private hands. "It is a project that would be protected from any shifts in the political sphere," he said.

The refinery is the star of a sustainable energy integration project involving Mexico, the Central American countries and Colombia, and includes electrical interconnection, construction of gas pipelines and promotion of renewable energy as well as energy efficiency, at a cost of nine billion dollars, and backed by the IDB.

According to the Fox government, the overall project would free its partners from supply problems, shore up integration, reduce pollution, reduce transportation costs, strengthen cooperation, and make Central America a more attractive region for investment.

But for now that enthusiasm is focused on the refinery.

The head of the energy unit at the Economic Commission for Latin America and the Caribbean, Fernando Cuevas, told Tierramérica that the plant would generate employment and attract investment in companies associated with the provision of goods and services.

If the refinery is built, "the main benefit would be a new supplier of derivative products for the Central American region, which would allow increased competition. That could translate into reductions in prices in each country, as long as the number of actors and the level of competition are strong."

He added that today "there is very limited refining capacity in the world, which could become critical in the next five to 10 years if new refineries aren't built."

Mexico promises to supply the new plant with a daily average of 250,000 barrels of heavy crude.

In 2005 Mexico produced 3.3 million barrels a day, a rate slightly below the previous year. According to several studies and experts, this would be its ceiling, because from now on output, they say, will begin to decline.

Behind the promotion of the Mesoamerican refinery is the fact that Mexico, where petroleum is managed by the state-run company Pemex, has little money to build a new refinery within its own territory and legal limitations for partnering with private firms..

But Pemex can receive private resources and work in partnership with other companies as long as the business is outside Mexico. In addition to Pemex's financial troubles, that is why in recent years most of Mexico's petroleum has been refined in other countries.

Expert David Shields, who heads a specialized energy publication in Mexico, told Tierramérica that the Mexican plan for setting up a refinery in Central America "isn't logical." In the project, he said, "everything is more or less a fraud."

Mexico's crude oil is very heavy to transport to the region, and in the five or six years it would take to build the refinery, if nothing out of the ordinary happens, Pemex will no longer have enough crude to supply the plant, said Shields.

"But one can always go forward with a project (that appears) unfeasible, as long as it has political or economic support, like that of the IDB," he added.

Roger Cerda, former director of the Nicaraguan Institute of Energy and current adviser to that country's Central Bank, also questions the refinery project. "It's a proposal pulled out of nowhere" with the aim of counterbalancing Venezuela's proliferation of oil deals in Central America, Cerda told Tierramérica.

"The problem is that it's quite an ambitious and costly project and at its roots is only inspired by a difficult juncture, which could make it fail," he said.

The governments of Central America see in the Mexican proposal the salvation for the region's oil supply problems and hope for a green light at the end of May, when the presidents will gather to fine-tune the project.

In Central America, Guatemala alone is an oil producer, while refineries exist only in Costa Rica, El Salvador and Nicaragua. In the rest of the countries these plants have been shut down due to financial or technical problems.

In 2004, the region imported 94.7 million barrels of hydrocarbons, of which 83.5 percent were derivatives, and only 16.5 percent crude oil. The total value of those imports was 3.95 billion dollars, 23.3 percent more than in 2003.

Beltrán del Río, Mexico's Energy Secretariat spokesman, said there are no brakes on the plan, unless the consulting firm conducting the assessment decides to rule it out.

"Mexico and Pemex assure that the refinery will have sufficient resources and petroleum to ensure its operation, but if at some point there is the possibility to process crude in other countries, go ahead, we aren't opposed at all," he said.

PANAMA

Panama Studying $6 Billion Occidental Refinery Plan

Panama is interested in a proposal by U.S. company; Occidental Petroleum Corp. to build an oil refinery in the Central American country but would not help out with financing it, the government said on March 30.

Trade and Industry Minister Alejandro Ferrer told Reuters the project could be a boon for Panama's economy but he did not want it to add to the country's $10 billion public debt.

"We are ready to participate in the project but not to take on any financial responsibility because it's entirely private. It will be Occidental that assumes responsibility for seeking financing and not the government," Ferrer said, speaking after Occidental gave a news conference on the project.

Occidental presented the results of a feasibility study for the roughly $6 billion, 400,000 barrels per day refinery, which it wants to build on Panama's Pacific coast, and said the project could be profitable.

The company plans to finance the refinery with private capital, bank loans and on international markets.

The refinery would process crude oil from Mexico, South America and the Middle East, helping fill a shortfall in refining capacity in Central America.

Its location in Panama would make for easy shipping access to international markets, Occidental's Panama representative Jorge Lechin said. He said Mexico would have been a possible location for the refinery if it were not a "closed market".

Separately, oil and gas producers Mexico and Colombia are working on a plan to bring low-cost energy to Central American nations, including Panama. The plan would involve building a huge new refinery somewhere in Central America.

Mexico -- whose energy industry is mostly closed to foreign companies -- also wants to build at least one more refinery within its borders to ease a capacity shortfall and reduce its need for imports of U.S. gasoline.

Occidental wants to start construction of the Panama refinery in 2008 and have it operational in 2011.

VENEZUELA

Petroleos Temporarily Shuts Isla Refinery for Maintenance

Venezuela’s state-oil de Venezuela SA has temporarily closed a plant that produces 50,000 barrels of gasoline per day for maintenance work, a spokesman said March 13.

The Isla refinery in Curacao had planned for the maintenance on its catalytic cracking Unit by building up inventories and arranging fuel imports to continue making gasoline while the plant is down, spokeswoman Elise Krijt said.

“Our clients will not be affected,” she said, adding the unit is expected to resume operation by April 16.

The Isla Refinery has the capacity to process 320,000 barrels of crude oil a day.

Venezuela is the world’s fifth largest oil exporter and a major supplier to the United States.

VIRGIN ISLANDS

Malfunction Slows Production at Hovensa Refinery

A mechanical malfunction has slowed gasoline production at the Western Hemisphere's second largest oil refinery, located in the U.S. Virgin Islands, an official said March 15.

Crews were repairing a unit that converts semi-refined crude into gasoline at the Hovensa oil refinery after it failed March 11, said Alex Moorehead, executive vice president of Hovensa LLC.

Moorehead said it could take up to two weeks to get the refinery on the island of St. Croix back to its daily maximum capacity of 500,000 barrels of gasoline, diesel and jet fuel. He declined to say how much less fuel the facility would produce while under repair.

No environmental damage resulted from the mechanical failure, and the repairs do not affect crude oil refining, he said.

Hovensa, owned by New York-based Amerada-Hess Corp. and Petroleos de Venezuela SA, the national oil company of Venezuela, is the largest private employer in the U.S. Caribbean territory of 110,000 people.

2. ASIA

CHINA

Foster Wheeler to Supply Boilers for $22 million to SINOPEC's Qingdao Refinery

Foster Wheeler Ltd. announced March 9 that subsidiaries of its Global Power Group have been awarded a contract by a unit of the China National Petrochemical Corporation (SINOPEC) to supply two 75 MWe circulating fluidized-bed boilers. The boilers will be built at Qingdao Refinery & Chemical Co. Ltd. in Shandong Province, People's Republic of China.

Foster Wheeler's contract is valued at approximately $22 million and will be included in first-quarter 2006 bookings.

The state-of-the-art, petroleum coke-fired boilers will be designed by Foster Wheeler International Engineering & Consulting (Shanghai) Company Limited and manufactured by Foster Wheeler Power Machinery Company Limited at its facility in Xinhui, China.

The Qingdao project, located on the eastern coast of Shandong Province, is part of SINOPEC's continuing program of refinery expansion. The boilers will be similar in design to Foster Wheeler boilers currently under construction at SINOPEC's Yanshan Petrochemical Plant. Commissioning of the Qingdao boilers is anticipated in 2007.

"In the last ten years SINOPEC has purchased a total of sixteen circulating fluidized-bed boilers from Foster Wheeler," said Bernard H. Cherry, chief executive officer of Foster Wheeler Global Power Group. "We are pleased that customer satisfaction with Foster Wheeler's highly reliable CFB design has resulted in a strong and continuing relationship with SINOPEC. Providing efficient, environmentally sound technologies to countries around the world remains our highest priority."

INDIA

HPCL says Refinery at Mumbai and Visakhapatnam Expansions Delayed

State-run Hindustan Petroleum Corp. Ltd. has delayed until next year refinery expansion projects at Mumbai and Visakhapatnam, the firm's chairman, M. B. Lal, said on March 6.

The company is expanding the capacity of its Mumbai refinery to 7.9 million tonnes a year, or about 158,000 barrels per day (bpd), from 110,000 bpd and upgrading the plant at Visakhapatnam to 168,000 bpd from 150,000 bpd.

The projects were scheduled to be completed this year.

"The refineries will be shut down for maintenance and upgrading in the first quarter of next year," Lal told reporters on the sidelines of a business conference.

He said HPCL's capital expenditure in the year to March 2007 would be $270 million and would include refinery upgrading and the setting up of 850 new petrol stations to expand its network of 7,000 outlets.

India has a surplus refining capacity, but several refiners are expanding production hoping to boost exports.

Analysts had cautioned that several projects, including some new refineries such as Essar's refinery in western India, may be delayed.

In January, Indian Oil Corp., the country's largest refiner, said plans to double the capacity of its 120,000-bpd Panipat refinery had been delayed by two months to May.

During the first part of March, Mangalore Refinery and Petrochemicals Ltd. said it would spend $1.8 billion to boost its refinery capacity to 300,000 bpd from 194,000 bpd.

Some analysts say that a global rush to build new refineries and expand old ones could lead to a slump in the refining sector between 2008 and 2010.

But they disagree over whether to expect a sharp dive into another cycle of despair or a mild dip.

India's former oil minister, Mani Shankar Aiyar, had urged state refiners to boost capacity and export refined products, and Finance Minister Palaniappan Chidambaram said in his budget speech the government would encourage such investment.

He said the refining sector alone would see investments of 220 billion rupees.

Visakha Refinery`s Clean Fuel Project to be Complete by `07

The Rs 2,000-crore clean fuel project in Hindustan Petroleum Corporation’s Visakha Refinery will be completed by March 2007.

“Ordering of equipment and other machinery has been completed and we will start the erection work very shortly. The entire project will be ready by March 2007,” Visakha Refinery executive director A S Rao told Business Standard.

Initially, the project cost was estimated at Rs 1,600 crore but due to delays and hike in several equipment prices, the project outlay has been raised to Rs 2,000 crore, he added.

Once the project is complete, Visakha Refinery will produce Euro-4 standard products. Currently, the refinery produces Euro-2 and Euro-3 standard products. “Besides producing quality products, the clean fuel project will enable the refinery to raise its capacity to about 8.2 million tonnes from the existing 7.5 million tonnes,” Rao said.

Last fiscal, Visakha Refinery processed about 7.8 million tonnes of crude oil but this fiscal it will be limited to about 7.5 million tonnes due to maintenance works.

“This fiscal, we had shutdown the refinery for nearly three months for major maintenance works following which our total crude processing will not cross 7.5 million tonnes this year. However, post maintenance work, the refinery is now working at 8.3 million tonnes capacity. So in spite of a three-month shutdown, we can process 7.5 million tonnes this year,” he said.

HPCL has also given its in-principle approval for increasing the capacity of Visakha Refinery to 10 million tonnes. “The corporation will soon appoint a consultant to prepare the detailed project report and estimates,” Rao said.

ONGC Plans Big Mangalore Refinery Expansion by 100,000 bpd

Oil and Natural Gas Corp. is on track to build new refining capacity of 700,000 barrels per day (bpd) by 2010, Chairman Subir Raha told Reuters on March 10.

Some analysts say Indian refiners may delay plans to build new refineries as the country already has excess capacity and export refineries face the risk of contracting refining margins.

Raha said ONGC subsidiary Mangalore Refinery and Petrochemicals Ltd., which operates a 194,000-bpd refinery, will expand its plant by 100,000 bpd and build a new one to process 300,000 bpd of crude oil, he said.

ONGC will build a refinery in Rajasthan to process 150,000 bpd of crude oil from the fields of Britain's Cairn Energy and set up another unit to refine 150,000 bpd at Kakinada on the east coast, he said.

"Our investment plans are on track. By the time these refineries are built, we expect the country's demand to grow. The only surplus product will be naphtha," he said.

He said rising domestic demand and the availability of ONGC's own crude oil for refining would insulate it from a possible fall in refining margins.

ONGC sells crude oil to state-run Indian Oil Corp., Bharat Petroleum Corp. Ltd. and Hindustan Petroleum Corp Ltd. under agreements in force for decades.

But MRPL, which ONGC acquired a few years ago, needs to import crude oil for its refinery.

"We have written to the government that this must change," he said.

BPCL to Commission $2.33 Billion Bina Refinery by 2009

India's state-run Bharat Petroleum Corp. Ltd. (BPCL) plans to commission a 120,000 b/d refinery at Bina in Madhya Pradesh by yearend 2009. The project will cost $2.33 billion.

The refiner had earlier said it was planning an initial public offering of equity for the facility in about 2 years.

"We are losing 2 rupees/l. on petrol, 3 rupees/l. on diesel, 12 rupees/l. on kerosene, and 171 rupees/14 kg cylinder of liquefied petroleum gas due to the government subsidies on these products," said BPCL Chairman and Managing Director Ashok Sinha. One rupee is worth slightly more than 2¢.

"Our revenue losses on the sale of all fuels are likely to be around 40 billion rupees this fiscal [year]. In fact, crude prices have firmed up over the last few days, further adding to our losses," Sinha said.

BPCL also plans to invest 15 billion rupees during fiscal 2006-07 to expand its retail network, LPG capacity, and Mumbai-Delhi product pipeline.

News of BPCL's plans comes as one of the company's main rivals, Hindustan Petroleum Corp. Ltd. (HPCL), announced similar investment decisions. The company plans to raise the capacities of its Mumbai refinery to 7.9 million tonnes/year from 5.5 million tonnes/year and of its Visakhapatnam refinery to 8.4 million tonnes/year from 7.5 million tonnes/year.

$6 Billion Reliance Petro Project to set Jamnagar as Global Refinery Hub

Jamnagar is set to become the refinery hub of the world after the completion of the brownfield expansion of the existing refinery here by December 2008.

The project is being implemented by Reliance Industries Ltd. (RIL) for its start up venture Reliance Petroleum Ltd (RPL) — a 100 per cent subsidiary. Sources said the proposed refinery and polypropylene plant would be located in a Special Economic Zone (SEZ) adjacent to the RIL's existing refinery and the petrochemicals complex. RIL was planning to tap the capital market to fund the project. Post-issue, RIL would have a 80 per cent ownership of RPL. The requisite papers for the Initial Public Offering (IPO) were filed with the Securities and Exchange Board of India on March 6.

The sources said that while the existing refinery — of 33 million tonnes capacity — made Jamnagar the world's third largest single location refinery, the expansion would catapult the RIL-RPL combine into the world's largest single location refinery league. At present, the existing project exports 45 per cent of its output of petroleum products and 32 per cent of its chemical products like benzene. "The first project made India self-sufficient in petroproducts, this project will transform it from a net importer to a net exporter of petroleum products,'' the sources said, adding that the target markets were Europe, the U.S. and the Far East. The existing project had a refinery complex, a petrochemical facility, power utilities and port facilities (it is the world's second largest oil port).

The new refinery will have a distillation capacity of about 580 kilo barrels per stream day. The polypropylene plant will have a capacity to produce nine lakh tonnes annually. The project was initially contemplated to be set up by RIL, but subsequently it was decided to implement the project through RPL.

The capital cost of the project is estimated at Rs. 27,000 crore (about $6 billion). The debt component is likely to be about Rs. 15,750 crore (about $3.5 billion) and equity Rs. 11,250 crore (about $2.5 billion), including proceeds from the IPO.

Chevron to Pick Stake in Reliance's New Refinery

RIL Chairman Mukesh Ambani was in the US, meeting top executives of Chevron to possibly finalize a pact, industry sources said.

Reliance is looking for strategic partner who could provide crude for processing at the new 29 million tonne unit and a company that can commit offtake of a certain proportion of the petroleum product made at the new refinery

The new refinery would be located in Jamnagar Special Economic Zone, which would give it several fiscal benefits.

The proposed refinery would be more complex than RIL's existing refinery with a Nelson Complexity Index of 14.0 as against 11.3 for RIL's refinery. The higher complexity would enable it to process crude at an average API gravity of 24 as against 28 for RIL's existing refinery.

The unit is expected to have a hydrocracker, which would boost gasoline production. RIL's existing refinery does not have a hydrocracker.

Reliance Industries Ltd (RIL), which was a non-integrated petrochemical company until the late-1990s, made its foray in to refining by setting up a 540,000 barrels per day (27 million tonnes per annum) refinery at Jamnagar in Gujarat. The refinery started commercial operations in April 2000 and was built at a cost of 3.4 billion dollars.

IOC Haldia Refinery Expects Record Refining Volumes of Crude to climb to 7.5 million tonne

The Haldia refinery of Indian Oil Corporation Ltd (IOC) expects to refine the highest-ever volume of crude this year.

B R Choudhury, executive director of the refinery division of the Haldia refinery, said, "We have already refined crude to the tune of 5.418 million tonne, surpassing last year's figure of 5.430 million ton. The year-end figure would be even higher with the refinery registering an all-time record figure."

Meanwhile, the unit is waiting for the government's clearance on land for its Rs 2,000 crore hydro-cracker unit that would enable the refinery to produce Euro-IV diesel.

"The hydro-cracker project has been approved by the company's board in November 2005. The Rs 2,000 crore project will be completed in 36-39 months' time. We are waiting for government approval," Choudhury added.

The new plant would not only enhance the installed capacity to 7.5 million tonne from the current level of 5.5 million tonne, but would enable the unit to produce Euro-IV diesel, to be used by vehicles in 11 metropolitan cities including Kolkata from 2010.

"Currently, we are not even in a position to produce Euro-III fuels in adequate quantity. This upgradation will be most urgent as by 2010, all new vehicles will move on either Euro-IV or Euro-III diesel," Choudhury noted.

IOC was eyeing 82 acres of Kolkata Port Trust (KoPT) land currently occupied by Hindustan Fertiliser Ltd (HFL).

IOC, KoPT and HFL have reached an understanding that once ministry of shipping cleared the transfer of land, IOC will offer the amount to be paid to HFL as asset cost and for development, and to KoPT for the land lease.

"IOC has already got the study done by Projects Development India Ltd (PDIL) under the government of West Bengal for assessing the amount to be paid to HFL under the head of development and asset. It would be around Rs 6 crore. The amount to be paid to KoPT would be around Rs 25.50 crore," he added.

The board would be approached again for approval of these payments for land once the government's approval was received, he added.

The hydro-cracker plants were expected to significantly increase the profitability of the refinery, explained Choudhury.

"Currently, the distillate yield is around 64 per cent, excluding lube oil. With the hydro-cracker plants, it would go beyond 70 per cent, thereby increasing the profitability significantly," he said.

The Haldia refinery commissioned its MS quality improvement unit at a cost of Rs 400 crore on October 2005.

The plant produced environment friendly Euro-III motor spirit (MS) meeting BIS specifications for MS and Bharat Stage-II vehicle emission rules.

INDONESIA

Indonesia, Iran to Sign $2.5 Billion Investment Deal in Refinery

Indonesia and Iran will sign an agreement on an oil refinery project with total investment of 2.5 billion US dollar, oil minister Purnomo Yusgiantoro said here March 13.

The project, which plans to process crude oil from Iran, will be built in Java Island, said Purnomo.

He said a team sent by the Indonesian government to Tehran had completed their mission and returned to the country.

The two sides will sign the agreement during the D8 (eight developing countries) meeting in Bali on May 12-13, he said.

Iran signed a Memorandum of Understanding with Indonesia in March 2005 on cooperation in the building of the oil refinery project.

Indonesia, the only Asia's OPEC member, has nine oil refineries with total production capacity of about 1 million bpd.

Petronas, Pertamina still Interested in Indonesia Refinery

Petroliam Nasional Bhd (Petronas) is still interested in building a refinery in Indonesia with state oil company Pertamina, a Petronas official said March 9.

Indonesia has for some time tried to attract foreign investors to build new refineries to meet domestic demand, but oil prices have put off investors. The government keeps prices below global market levels.

Indonesia has nine oil refineries scattered across the archipelago with a total combined capacity of around 1 million barrels per day (bpd), but 30% of its oil products consumption is still imported.

Petronas has been in talks with Pertamina to build a refinery, but there has been no deal yet.

“With Pertamina, we can work together in many areas, hopefully, in processing and building a refinery,” said Datuk Anuar Ahmad, vice-president of oil business at Petronas.

Pertamina processing director Suroso Atmomartoyo said the company was looking for a partner to build a refinery in East Java.

Indonesia’s Pertamina May Shut 50,000 b/d Refinery in June

Indonesia's state-owned oil and gas company PT Pertamina (PTM.YY) plans to shut its 50,000-barrel-a-day Sungai Pakning in June for 17-to-21 days, a company official said March 14.

Pertamina operates seven oil refineries with a total output capacity of around 1 million b/d. But these refineries only cover about three-quarters of domestic oil demand, with the rest being met by imports.

Suroso didn't say if Pertamina will buy more petroleum products in the overseas spot market because of the shutdown.

The refinery is located near Dumai in Riau province.

VIETNAM

Work on Vietnam’s First Oil Refinery Remains Slow

After delays in the country’s first oil refinery put it a decade behind schedule, seven tardy bidding packages have again delayed progress at the Dung Quat project, only 8 months after work re-opened.

The bidding packages include (Engineering-Procurement-Construction) packages 1+4 and 2+3, which involve procurement and installation of equipment and facilities for the refinery (Package 1), construction of construction of crude oil tank (Package 2), tank for oil product (Package 3), and Single Point Mooring (Package 4).

The international consortium Technip Group from France, which won the four above packages, had broken ground for the project on Nov. 28 last year.

The group’s latest report shows that in January, designed work on the four packages accounted for 17.9 percent, compared with the set ratio of 21.5 percent, three weeks later than schedule.

Technip explained it was because the group had yet to mobilize an adequate workforce, after finding work done before did not meet requirements.

An eight-week delay has arisen in procurement of materials and equipment for the refinery. Of the 172 equipment items need for the construction, only 103 have received approval, while the remainder is still under consideration, said Technip.

Many equipment suppliers had either refused to take orders from the group, or had their products rejected because they did not meet technical standards.

Besides the four packages, the others – package 5A (building a breakwater), package 5B (oil product exporting port) and package 7 (administrative and service house) – are proceeding at a snail’s pace.

The Dung Quat saga initially began in 1995, with Vietnam locating the refinery in the central region to boost development in the area.

But the project has seen international partner pull outs and repeated delays since that time.

Industry experts call the location of the refinery in central Quang Ngai province ‘unfeasible’.

Vietnam’s major oil reserves are off its southern coast, and oil processing markets far from the refinery in Hanoi and HCMC, meaning costly transport for both processing and refining.

Under careful consideration, the Vietnamese government decided to go the project alone in February of 2003, slating completion for 2005, and operation in 2006.

Under the new plan, difficulties again arose, with the government now looking to Technip and its consortium to complete the project.

But if work delays continue to plague the project, it would be difficult to complete the work by 2009, the latest scheduled completion date.

3. EUROPE / AFRICA / MIDDLE EAST

GERMANY

Jacobs to Provide EPCM Services at Europe's Newest Refinery in Eastern Germany

Jacobs Engineering Group Inc. announced that a subsidiary company has received a contract from Total Raffinerie Mitteldeutschland GmbH to provide engineering, procurement, and construction management services at Total's refinery at Spergau in Eastern Germany.

Officials did not disclose the value of the umbrella contract, which has an initial period of one year with possible extensions for up to three years.

The refinery facility, which has a capacity of 11 million tons per day, is the newest grassroots refinery in Europe. This contract marks the first time that Jacobs is serving Total's downstream market in Germany. Jacobs is executing the work from their full-service offices in Cologne and Schkopau, Germany.

In making the announcement, Jacobs Group Vice President Andy Kremer stated, "We are very pleased to extend our relationship with Total and expand our downstream business in Germany. We look forward to helping Total Raffinerie realize their objectives."

GREECE

Foster Wheeler Awarded Front-End Engineering Design Contract for Greek Refinery Upgrade

Foster Wheeler Ltd. announced March 7 that Foster Wheeler Italiana S.p.A., part of its Global Engineering and Construction Group, has been awarded a front-end engineering design (FEED) contract by Hellenic Petroleum S.A. (HELPE) for the upgrade of the Elefsina refinery in Greece.

The terms of the award were not disclosed and the contract was included in Foster Wheeler's fourth-quarter 2005 bookings.

Foster Wheeler Italiana's scope of work includes the selection of technology licensors for certain of the new process units, and coordination of the licensors during the FEED phase. Foster Wheeler will provide a complete process design package, and will also carry out basic engineering, preparation of studies for the necessary permits, early procurement, and preparation of the invitation to bid package for the engineering, procurement and construction phase.

"This award confirms Foster Wheeler's strong presence in the South Mediterranean region and, in particular, in the vibrant Greek refinery market," said Umberto della Sala, chief executive officer of Foster Wheeler's Global Engineering and Construction Group. "HELPE is an important client with whom we have a long-standing relationship, and we look forward to delivering another successful project which meets our client's high expectation of Foster Wheeler."

"We have selected Foster Wheeler Italiana after a competitive tender, in consideration not only of the competitive price, but also of the aggressive project schedule and the highly experienced Foster Wheeler resources made available for the execution of this FEED," said Harry Panitsidis, project director, HELPE.

The FEED phase of the project is expected to be complete by the end of 2006.

NETHERLANDS / CANADA

Jacobs Engineering Gets Refinery and Oil Sands Contracts

Engineering and construction services company Jacobs Engineering Group has been awarded a major contract by Netherlands Refining Company to provide engineering, procurement and field services for the reconfiguration of facilities at Rotterdam-based Europoort Refinery. Jacobs did not disclose the value of this contract.

Another contract is from Suncor Energy Services to proceed with engineering design specification work for Stage 3 of Suncor's Firebag in-situ oil sands program near Fort McMurray, Alberta. The company did not disclose the contract value.

ANGOLA

China to Build $3 Billion Oil Refinery in Angola

Angola's finance ministry said on March 20 it had partnered with China to move ahead with construction of a $3 billion oil refinery in the port of Lobito.

"Yes, it's true, with China," Finance Ministry spokesman Bastos de Almeida told Reuters, confirming local media reports. He gave no further details.

State oil firm Sonangol said in December that construction could start this year and that it was upbeat about finding investors for the project.

China is keen on oil from West Africa to fuel its rapid economic expansion. Last month traders reported that the total flow of West African crude set to go to Asia in March matched the all-time high, buoyed by Chinese buying.

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.

Angola has said in the past that it would like to see the refinery's capacity reach about 200,000 barrels per day.

Local media reported that the refinery would be built by a new joint venture called Sonangol-Sinopec International, an enterprise jointly controlled by the Angolan government run Sonangol oil company and China's state-owned Sinopec.

The new refinery will permit Angola to reduce imports and start to export value-added petroleum goods. The Ministry of Petroleum estimates that 80 percent of Lobito's production will be for export, principally serving regional countries.

Angola is attempting to rebuild after a brutal civil war which ended in 2002.

"The refinery has been one of these prestige projects that the government has been keen to see progress on," said Alex Vines, Africa head at the Royal Institute for International Affairs, a UK-based think-tank.

"It fits into the grand post-conflict infrastructural projects that the presidency wants to see progress on prior to any election," said Vines.

Angola is scheduled to hold its first parliamentary poll since 1992 this year but no firm date has been set.

RUSSIA

Oil Mini-Refinery Put into Operation in Jurievsky District of Russia

The first phase of the mini-refinery in Jurievsky is capable of processing up to 15 thousand tons of oil per month. At present the enterprise is making black oil, diesel fuel and gasoline fractions. Upon the startup of the second phase the mini-plant will increase its capacities to 40 thousand tons of oil per annum.

UKRAINE

Ukraine’s Kherson Oil Refinery under Repair until 2010

Kherson Oil Refinery Plant has been closed for modernization till 2010. Thereby, the domestic oil products market will be filled by three Ukrainian plants and import as well.

Oil traders are open to the fact that to sell Belarusian, Bulgarian and Romanian petrol is more profitable than producing it in Ukraine.

Valery Yasyuk the Deputy Fuel and Energy Minister agreed with the oil traders regarding the Ukraine’s oil market. Nevertheless, he does not worry much about it because the fuel problem and spring field operations are under governmental control, he stressed.

“Taking into account the energy balance and Ukraine’s oil and oil products balance, the plant repair is not a problem at all,” stressed Yasyuk.

IRAN

Iran’s Tabriz Refinery will Supply Central Asian Needs by Raising Capacity to 260,000 bpd

Tabriz Refinery is likely to see a huge rise in its production capacity following plans to sign a long-term contract with Central Asian countries, including Azerbaijan and Kazakhstan, to refine oil.

According to ISNA, Mohammad Reza Nematzadeh, deputy oil minister for oil refining and distributing affairs, said the refinery currently has the capacity to refine 110,000 barrels per day (bpd), stressing that the capacity can rise to 260,000 bpd once the deal is reached with the northern neighbors.

He said, however, that there are plans to increase the refinery’s production capacity to 160,000 bpd for domestic use in the near future.

Established in early 1978, the refinery has seen a meager 30,000 bpd rise in its production capacity over the last 28 years. The northwestern refinery receives crude oil from the southern oilfields in Ahvaz.

Iran is expanding energy cooperation with the former Soviet republics of Central Asia and Caucasus.

Azeri minister of energy and fuel said last month that his country is interested in energy cooperation with Iran.

Natik Aliyev said the two nations have good cooperation in electricity and discussions on other project are underway.

“The two nations are reviewing gas supplies to Azerbaijan and its transit to other nations including Europe,” he said.

The minister added import of natural gas from Iran is economically viable. “We are only importing gas from Russia at present,” Aliyev added.

Aliyev added that export of natural gas to Georgia and Ukraine via Azerbaijan is also beneficial for Iran.

“If Tehran and Tbilisi strike a long-term deal, we are ready to meet the transportation needs of the project.”

A natural gas swap contract between Iran and the Azerbaijan Republic was signed by former Iranian president Mohammad Khatami and Azerbaijani President Ilham Aliyev in August 2004.

According to the 25-year contract, Azerbaijan Republic will initially deliver 80.5 mln cubic meters of natural gas to Iran at the Astara border by the end of 2005, the date the pipeline is commissioned, and Iran will deliver 85 % of this amount to the Autonomous Republic of Nakhichevan at Jolfa border point.

Nakhichevan needs 250 mln cubic meters of natural gas per year and another 100 mln to fuel its power plant.

ISRAEL

Israel Refinery Privatization Deemed Legal

The privatization process of the Ashdod Oil Refinery, already well under way, got the green light from the Israeli government March 20.

"The privatization of Oil Refineries is the most complex economic measure ever carried out in Israel, and it would have been wrong to come to the Finance Committee before all the loose ends were tied," Government Companies Authority director Eyal Gabbai told the Knesset committee, according to a report in the Israeli business newspaper Globes.

"We settled all the issues that always and justifiably concern the Finance Committee in advance," Gabbai said.

Six major bidders have been identified as the main competitors for the refinery tender, whose stock will be sold as a single block. These include Israel's fuel companies, Delek, Paz, Sonol and Dor Alon; energy baron Yossi Maiman's holding company Ampal, and Financial Levers.

Delek and Paz, having met the Government Companies Authority's requirements for bidding, were granted access to the refinery's information rooms last week to research the company.

However, not all Finance Committee members supported the refinery's decision to start without them.

"Opening the information rooms for the sale of Oil Refineries Ltd. before obtaining approval of the Knesset Finance Committee violated the spirit of the law," Meretz-Yahad member of the Knesset Haim Oron told the newspaper.

"The Government Companies Authority should not have initiated the sales process for Oil Refineries without the prior consent of the Finance Committee," Oron added.

KUWAIT

Kuwait to Construct New $6.3 Billion Oil Refinery

The chairman of Kuwait National Petroleum Company (KNPC) said that Kuwait will invite four bids for construction of a new $6.3 billion oil refinery next month, AFP reported.

Manufacturing units in the 600,000 barrels per day (bpd) refinery have been divided into two tenders, and the third tender is for building utilities and services and the fourth is for storage tanks and a pier.

The refinery will be built in Al-Zour area, some 100 km (60 miles) south of the capital and near the border with Saudi Arabia, and the project is planned to be completed in early 2010.

Kuwait’s KNPC Places $190Mln Japan Steel Order for New Refinery

State owned Kuwait National Petroleum Corporation has placed a $190m order with Japan Steel Works to build 12 of the 36 residue desulphurization reactors for its new 615,000 bpd refinery at Al Zour on the southern coast of the country.

SAUDI ARABIA

Hyperion Systems Secures Refinery Support Project for Saudi Aramco

Hyperion Systems Engineering, which provides custom-made solutions and services to process industries worldwide, has been awarded a project for the supply and implementation of Operator Training Simulators (OTS) for two refineries of the Saudi Aramco Lubricating Oil Refining Company, in Saudi Arabia.

Hyperion is headquartered in Cyprus and operates subsidiaries in the UK, Russia, Greece, India and Bahrain.

The new OTS solutions are part of an investment in modernizing the control facilities of these plants, and will be used both for operator training, and for additional purposes, such as control system check out, and ongoing engineering and operations analyses.

Saudi Aramco Lubricating Oil Refining Company is the sole producer of base oils in Saudi Arabia.

It operates two refineries, with a total capacity of 3.8 million barrels per year, producing four base oils, which are blended into lubricants and greases.

JGC Wins $860 Million Contract to Build for the Rabigh Project in Saudi Arabia

JGC has won an $860m contract to build one of the main facilities for the Rabigh petrochemical project in Saudi Arabia, reported Nihon Keizai business daily. The cost of the Rabigh refining and petrochemical complex being constructed jointly by Sumitomo Chemical and Saudi Aramco has doubled to $9.8bn. Sumitomo Chemicals blamed the soaring cost of construction and materials.

A $5.8bn financing package was signed by the Japan Bank for International Cooperation and 17 financial institutions.

McIlvaine Company,

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