june 06 update

During this time, gasoline production will be reduced by 15,000 barrels per day. Distillate production -- which includes diesel -- will be reduced by some 40,000 barrels per day during the repairs.

The company's Texas City refinery has the ability to process a total of 245,000 barrels-of-oil-per-day. The facility is located between Houston and Galveston.

Chevron Reports Excess Flaring at Richmond Refinery

A problem May 10 at a crude unit at Chevron Corp.'s Richmond refinery triggered intermittent flaring, or burning of excess gases.

A Chevron spokeswoman said the company does not comment on the refinery's day-to-day operations. She confirmed there was a small amount of excess flaring, but said there was no impact to the community, and added that the refinery has returned to a steady state.

Each of the five refineries in the East Bay have several flare devices that burn excess vent gas rather than let it be released directly into the atmosphere. Excess gases may be produced as refinery process units are started up or shut down. A flare system, which is in standby mode most of the time, provides for the safe combustion of those gases and can be used to prevent serious incidents from occurring. Chevron's 243,000-barrel a day refinery has six flare systems, according to the Bay Area Air Quality Control Management District.

On May 5, Chevron reported the excess flaring to the Contra Costa County Health Services Hazardous Materials Program, according to Randy Sawyer, chief of the Hazardous Materials Program. Notification is mandatory when through the flaring process, releases of chemicals such as sulfur dioxide or nitrous oxide reach specific levels.

Other state and local agencies, including the Bay Area Air Quality Control Management District are notified as well.

The flaring did not reach a level to justify community notification, Sawyer said.

Mesa, AZ Hopes for Windfall from $5.1 Million Pinal Refinery, Land

While gasoline prices take record bites from consumers' budgets, Mesa could reap millions in profits from the possible sale of a defunct refinery and the land it sits on in Pinal County.

"Nobody had been interested in the refinery since it closed," said Doug Tessendorf, Mesa Real Estate Services director. "After it was shut down, we followed up trying to find out if there was interest in it and there wasn't. But now, all of a sudden, there's a huge interest in it."

Tessendorf was referring to a refinery on almost 11,700 acres of Pinal County farmland purchased by the city in the 1980s for rights to its underground water.

The Sun Belt Refinery opened in 1989 on 37-acres under a lease-agreement with the city. It was hailed as pioneer for production of diesel and jet fuel in Arizona for consumption by Arizonans.

Whether Mesa ends up with the refinery, valued at more than $4.2 million, or has to settle with the $735,000 worth of dirt under it, depends on the outcome of an apparent chess match between the city and the inoperable refinery's owner, petroleum giant Valero Energy Corp.

Mesa is marketing portions of the water farm to retire bonded indebtedness in the face of a city budget crisis, but the 37-acre refinery parcel may be left out of the equation for at least two more years.

Valero is still paying $12,000 a month to lease the property, Tessendorf said.

"At the end of the lease period, the company has an option to renew for another 20 years, but that wouldn't seem to be in their best interests," he said.

This means the city could end up with the refinery, too.

But Valero may have different plans.

"While it is still under evaluation, we will probably exercise our renewal option," Valero spokeswoman Mary Rose Brown said in an e-mail on May 9. Sunbelt, a limited liability corporation, was acquired by San Antonio-based Valero in 2001, Brown said.

She said the refinery is owned by Valero's Sunbelt Refining Co., L.P., in a partnership with Huntway Refining Co. of Wilmington, Calif.

Mesa paid $92,500 20 years ago for the tract with the refinery. Today, the parcel is worth an estimated $735,000, Tessendorf said. Add the refinery, and the value jumps to $5.1 million, he said.

BP Refinery in Texas called Biggest Polluter

The nation's worst polluting plant is the BP PLC oil refinery where 15 workers died in an explosion last year, raising questions about whether the company has been underreporting toxic emissions.

BP's Texas City refinery released three times as much pollution in 2004 as it did in 2003, according to the most recent data from the Environmental Protection Agency.

The increase at BP was so large that it accounted for the bulk of a 15 percent increase in refinery emissions nationwide in 2004, the highest level since 2000.

The company is investigating whether it has been accurately documenting pollution, the Houston Chronicle reported on May 7. There could be more federal fines levied against the energy giant if mistakes are found.

BP already faces a record $21.3 million fine from the U.S. Occupational Safety and Health Administration for 300 safety and health violations found at the Texas City refinery after the deadly explosion in March 2005 that also injured 170 workers.

The company reported that it released 10.25 million pounds of pollution in 2004, up from 3.3 million pounds the year before, according to EPA's Toxics Release Inventory, which tracks nearly 650 toxic chemicals released into the air, water and land.

BP cautioned that its latest pollution estimates might not be correct because of a recent change in how the plant calculates emissions.

"These were on-paper calculations - not based on real measurements through valves or stacks," spokesman Neil Geary told the newspaper.

According to the EPA, the Texas City plant had more than three times the toxic pollutants as the nation's second most-polluted plant, an Exxon Mobil Corp. refinery in Baton Rouge, La.

The Texas Commission on Environmental Quality said it was too early to speculate about the accuracy of BP's reported figures. A spokesman said the difference might have been in reported emissions, not actual emissions.

But the Environmental Integrity Project, a Washington-D.C. based advocacy group, said the increase shouldn't be dismissed as merely an increase on paper.

"It's real; it just never got reported before," said Eric Shaeffer, a former EPA staffer and the organization's founder. "You can argue that it's not an increase, but the next sentence has to be, 'We've always been bad.'"

Most of the increase in pollution was from formaldehyde and ammonia, which can form smog and soot and irritate the eyes, nose and throat.

BP says that when all pollution is taken into account, emissions from its Texas City plant have dropped 40 percent since 2000.

Before last year's explosion, the refinery processed up to 460,000 barrels of crude oil a day and 3 percent of the nation's gasoline.

BP still faces criticism for management lapses that may have contributed to last year's explosion. The company faces a possible Justice Department investigation and is dealing with victims' lawsuits.

$28 Million Cleanup of a Former Chevron Refinery Proposed by EPA

The U.S. Environmental Protection Agency has proposed a $28 million cleanup of groundwater contamination at the site of a Chevron refinery that has been closed for 20 years.

The groundwater at the site, in the unincorporated community of Hooven in Whitewater Township, OH has been contaminated by petroleum hydrocarbons.

The EPA says the contaminated water poses no health risk to Hooven residents' drinking water, which comes from areas unaffected by the contamination.

The greatest threat, the agency says, is to the plants and animals relying for survival on the Great Miami River. The river runs near the north, east and south borders of the former Chevron site. Spots of oil have been observed on the river in several areas, the agency says.

The EPA's proposed cleanup plan involves periodic high-volume pumping of groundwater in highly contaminated areas, shutting down wells over a period of time and testing the groundwater to make sure the pollution doesn't spread.

It would take 30 years to meet the cleanup goals of federal drinking water guidelines.

"I think they need to do more," said Alysha Johnson, who has lived in Hooven for 24 years and had been part of a citizens' group urging the cleanup. "There's no reason why we should have to live with this for 30 years when we've already lived with it for 20-plus years."

The EPA's recommended cleanup plan is far less expensive than three other cleanup plans it has considered. One plan would cost $47 million; another, $63 million, and a third, $117 million.

Johnson said she favors the $63 million cleanup plan. That would require injecting air into the groundwater at the Chevron site through a series of 3,500 wells 50 feet apart.

In a written summary of its proposal for cleaning up the site, the EPA said it supports the $28 million plan because it "can be readily implemented, is a proven technology and is the least expensive."

Once EPA picks a cleanup plan, it will negotiate an agreement with Chevron for the company to do the cleanup work under supervision.

Plans for $500-Million plus Expansion of Bakersfield Oil Refinery

With California fuel prices at record heights, Flying J Inc. has approved plans for a more than $500-million expansion at its Bakersfield refinery that would double the plant's gasoline output as early as mid-2008.

The Ogden, Utah-based company, best known for its 178 truck stops, promised to increase the plant's production when it bought the refinery from Shell Oil Co. last year. Shell had planned to shutter the plant, saying it was inefficient and not profitable enough, but was pressured into selling it instead.

Plant manager Gene Cotten announced the milestone in internal meetings and an employee newsletter.

"The Bakersfield refinery is set to embark on another evolution in the refinery's long history," Cotten said in the newsletter. "The clean fuels project … has been given the final green light."

Flying J hopes to obtain permits from the likes of the San Joaquin Valley Air Pollution Control District by the end of the year, Cotten said. Plans call for new equipment and upgrades that would increase the refinery's oil-processing capacity and squeeze significantly more gasoline from each barrel of crude.

The Bakersfield refinery, which processes as many as 68,000 barrels of oil per day, makes about 2% of California's gasoline supply and 6% of its diesel.

Cotten said he expected that the project would take 2 1/2 years to complete. Its cost will top $500 million, said an employee who asked not to be named. That is almost four times the $130 million Flying J reportedly paid Shell for the refinery.

The refinery purchase was a big step for privately owned Flying J, which also owns a tiny refinery in Utah.

Since taking over the Bakersfield refinery, Flying J has struggled through problems with crude oil supplies, labor friction and mechanical breakdowns.

However, California refiners such as Flying J have enjoyed record profits in the last two years as supplies have failed to keep pace with demand, helping to push up pump prices.

Saudi Refining Supports Project to Expand Port Arthur Refinery

Citing U.S. market conditions that urgently call for increased domestic oil refining capacity, Saudi Refining, Inc. has reaffirmed its commitment to support a proposed multi-billion expansion of the Port Arthur, Texas refinery it jointly owns with Shell Oil through Motiva Enterprises LLC.

The potential expansion program, announced in April 2006, would add 325,000 barrels per day (bpd) of throughput capacity to the existing plant, bringing it up to 600,000 bpd and making it the largest refining complex in the country.

Sharaf Salamah, president and chief executive officer of Saudi Refining, said extensive technical and economic studies favored expansion at Port Arthur, one of three refineries operated by Motiva in Texas and Louisiana. "All indicators put Port Arthur at the forefront of any expansion plans, given its many strategic advantages within the Gulf Coast energy sector," he said.

While a final decision to proceed remains imminent, Saudi Refining expects to work closely with its partner on a definitive construction schedule through the end of the decade. The completed expansion would increase available supplies of motor gasoline, diesel and aviation fuels to the U.S. market.

Firefighters Respond to Flame at Salt Lake Refinery

There were some nervous moments May 15 at a North Salt Lake refinery.

Firefighters from Bountiful and Salt Lake City went to the Flying J refinery. At the time, a flame shot several hundred feet into the air. The flame could be seen all around the valley, and there were several calls.

The company says Flying J was simply burning off excess fuel. But even veteran refinery watchers say the plume was out of the ordinary.

Honeywell Refinery Initiatives Target Corrosion

Honeywell May 18 announced two new corrosion research programs (known as Joint Industry Programs) that will help refineries increase the production of alkylates for high-octane gasoline and maximize production per barrel of crude oil, particularly cheaper but highly corrosive “opportunity” crudes. Joint Industry Programs are target research programs sponsored by companies in the refining industry to address common industry corrosion issues. Previous Joint Industry Programs have been extremely successful, producing new levels of understanding and knowledge on corrosion issues.

Participation and sponsorship of the two new Joint Industry Programs (JIPs) – Predicting Corrosion in Sulfuric Acid Alkylation and Assessing Refinery Crude Oil Corrosivity – are being offered to refining customers. These programs were identified and developed based on input from Honeywell refining customers worldwide. Refining companies that participate in these programs will partner with Honeywell to develop new approaches to corrosion management and will have access to the latest software tools for corrosion prediction, risk assessment and process optimization.

“It’s a paradox for refiners: They can improve their profitability by increasing per-unit throughput of alkylates or processing lower-grade crude oils,” said Dr. Russell Kane, director of corrosion services, Honeywell Process Solutions. “However, both processes are highly corrosive and, if not managed carefully, can actually reduce throughput, increase downtime, damage equipment and endanger workers.”

Participants (e.g. sponsors) in previous Honeywell Joint Industry Programs attained sizeable savings by implementing the program results. For example, companies that participated in a recently completed program on refinery ammonium bisulfide corrosion (commonly found in reactor effluent air coolers), saved up to $10 million per application when they implemented the program results and software. Initial participants in the Joint Industry Programs are afforded substantial savings on program fees and proprietary access to program findings.

“Corrosion is the biggest threat to the productivity of the alkylate process,” Kane said.

“Yet despite the demand for increased unit productivity, there are few corrosion prediction tools and little quantitative data to accurately assess acid corrosion rates for the alkylation process.”

Addressing this issue the Honeywell-managed program for Predicting Corrosion in Sulfuric Acid Alkylation will provide the underlying data needed to create better and more accurate guidelines to reduce corrosion. These include recommended materials for revamps, suggested upgrades for improved performance, and better definition of operating limits for alkylation units. A Predict® software tool will be developed to enable participants to predict corrosion for alloys typically used in the construction of these units.

The Honeywell-managed program for Assessing Refinery Crude Oil Corrosivity will integrate a corrosion test program with supporting analytical data on naphthenic acid and sulfur species. This information will be used to define key process parameters, develop quicker screening methods and more accurate modeling techniques to define safe operating envelopes and identify conditions that pose a risk of accelerated corrosion to commonly used alloys. The results will be integrated with a new Predict® software tool to aid in the assessment of refinery hot oil corrosivity within the refining circuit.

Wynnewood Refinery Back on Line after Fire

A crude oil refinery at Wynnewood is back on line after an explosion and fire at the plant in May.

Officials with the Gary-Williams Company refinery say the fire appears to have been contained in the alkylation unit where butane is converted into high-octane, low-sulfur gasoline.

Company vice president Sally Allen says investigators are still looking for the cause of the explosion and fire.

The refinery produces about 30-thousand barrels a day of gasoline and about 25-thousand barrels of jet fuel, kerosene, asphalt, propane and other products.

CANADA

Parkland Income Fund Rethinks Idle Refinery in Alberta

Gas station operator Parkland Income Fund plans to soon begin testing limited processing at its closed refinery in Bowden, Alta., the fund's chief executive officer says.

The fund suspended operations at the refinery in September, 2001, after announcing plans to sell it to the Blood Tribe of Standoff, Alta., a transaction that has since lapsed. Parkland, which is based in Red Deer, Alta., then wrote down the carrying value of the refinery by $25.3-million, offset by an $8.6-million tax recovery associated with the asset.

"We've been looking at various different options of what we do with Bowden," Parkland president and chief executive officer Mike Chorlton said in a call with analysts May 8. "We're talking to a number of parties about proposals that have been brought forward.

"Currently, we have a processing test that should be under way this week, for treating some fluids that would be used in oil fields. It's not the entire refinery but it's some units in the refinery that could be used, and it would offset the cost of maintaining that site.

ARUBA

Valero Has Invested Almost $360 Million in Aruba Refinery

Since acquiring the Aruba refinery in March 2004, Valero Energy Corporation has invested nearly $360 million (640.8 million Afl.) to improve the safety, reliability, environmental performance and profitability of the plant. Most recently, the refinery commissioned a new 450-ton-per-day Sulfur Recovery Unit that has reduced SO2 emissions by nearly 90 percent, and revamped and restarted an idled Visbreaker Unit that has improved the refinery’s upgrading capacity and enabled it to process more refined products.

“We are very excited about the tremendous improvements that we’ve made to the refinery in just two years,” said Ray Buckley, vice president and general manager of the Valero Aruba Refinery.

“We have invested a significant amount of time and money to make the refinery safer and more environmentally friendly, reliable and competitive.

When Valero acquired the Aruba refinery, the company made much-needed reliability improvements to the two existing Sulfur Recovery Units, which resulted in a 40 percent reduction of the refinery’s SO2 emissions. To further improve environmental performance, the company recently invested $15.7 million (27.9 million Afl.) to construct the new Sulfur Recovery Unit, reducing the SO2 emissions by a total of 90 percent. These units recover sulfur from the various refining processes – rather than allowing it to be released into the atmosphere.

Also to make the refinery more environmentally friendly, Valero improved storage tank maintenance, wastewater handling and coke handling; removed idle equipment; conducted soil remediation; and removed asbestos. The company is also evaluating plans to enclose the coke handling facility, which will eliminate the coke dust, and install coke-fired boilers, which will eliminate the smoke caused by burning pitch.

The Visbreaker Unit, which was shut down well before Valero acquired the refinery, was in need of revamping because of operational and safety issues. Valero was able to solve these issues by re-engineering the Visbreaker, making it more reliable and safe. This newly redesigned Visbreaker, which cost $55 million (97.9 million Afl.), allows the refinery to process an additional 30,000 barrels per day (BPD) of refined products.

Also this year, Valero is spending $45 million (80.1 million Afl.) to expand two Coker Units and another $50 million (89 million Afl.) to increase the refinery’s throughput capacity. New state-of-the-art coke drum de-heading devices, which are valves to control the opening and closing of the coke drums, are improving the safety and efficiency of these units. One of the cokers was retrofitted earlier this year and the other is scheduled to be upgraded this summer.

Since acquiring the refinery, Valero has significantly enhanced the plant’s reliability, which has in turn improved the plant’s safety and production levels. The refinery’s utilization rate was 74 percent at the end of 2005, nearly 20 percentage points higher than the 55 percent rate before the acquisition. Similarly, mechanical availability was 92 percent last year, versus 78 percent pre-acquisition.

In terms of safety, Valero has implemented best practices from the company’s other refineries, instituted new programs and policies, created a 24-hour emergency fire brigade, upgraded equipment and much more. The employee Total Recordable Incident Rate (TRIR), which is the industrywide measure of safety performance, was 1.1 last year – 280 percent better than 2003 (pre-acquisition) when it was 3.1.

To develop the skills of local workers, Valero invested $1.1 million (1.95 million Afl.) to develop a two-year technical entry program, called “Let’s Grow Together” or “Ban Crece Hunto.” This program provides training and experience to prepare workers for a career in the refining industry. Valero gave approximately 100 Arubans the opportunity to work in the refinery and gain on-the-job experience during the recent turnaround (maintenance activity), and now those individuals are in a training program to learn one of five technical trades.

BOLIVIA

Bolivia to Compensate Petrobras for Refinery Expropriation

Bolivia will compensate Brazilian government-run energy firm Petrobras for partial expropriation of two oil refineries under the government's nationalization program, said reports from La Paz, capital of Bolivia, on May 10.

The announcement was made by Bolivia's state-owned oil firm Yacimientos Petroliferos Fiscales Bolivianos (YPFB).

It was the clearest statement by the Bolivian authorities on compensation related to the refineries which were among the foreign-owned firms the government has seized control as part of the Bolivian nationalization program.

YPFB President Jorge Alvarado said it preferred to use products like natural gas to compensate Petrobras.

The move came after Bolivian President Evo Morales signed a decree to nationalize the country's energy industry.

The Bolivian government has named its representatives, including two military officers, for the boards of newly nationalized foreign energy companies.

Morales gave the foreign companies 180 days to negotiate and sign new contracts, insisting that Bolivia's state energy company own the bulk of the new joint ventures' shares.

About 20 foreign firms are exploring Bolivia's gas reserves, including Spanish-Argentine Repsol-YPF, Brazil's Petrobras, Britain's BG Group PLC and France's Total.

COLOMBIA

Invensys Process Safety Instrumented Systems help Modernize Colombian Refinery

Triconex triple-modular redundant (TMR) technology from Invensys Process Systems is helping to modernize the burner management systems in the power plant at a Colombian refinery. Ecopetrol S.A.'s Cartagena refinery, located in the Mamonal industrial area on Colombia's north coast, has a capacity of 80,000 barrels per day and produces gasoline, middle distillates, propane, and fuel oil.

As part of the modernization effort, Invensys will implement four Tricon TMR high-availability systems for burner management system (BMS) applications at the plant's steam generators (boilers). The systems will protect new burners being installed as part of the modernization. The equipment is expected to increase control reliability and availability, increase boiler safety, and help bring the refinery into compliance with Safety Integrity Level and Safety Instrumented Systems provisions of international standards.

Invensys Systems L.A. Colombia will install the new systems and provide a range of professional services, including engineering, configuration, and start-up. TMR technology features three isolated, parallel control systems and extensive diagnostics integrated into one system. The architecture eliminates a single failure point and enables on-line maintenance and programming downloads, self-calibration, and fault localization.

2. ASIA

CEYLON

Ceylon Petroleum Corporation gets the Go-ahead for $500 Million Refinery Expansion

The Ceylon government has given state oil giant Ceylon Petroleum Corporation the go ahead for a feasibility study to double capacity at its Sapugaskanda refinery.

"We have got Cabinet approval for a feasibility study as well as a million dollars to fund the study," M H M Fowzie, Minister for Petroleum Resources said on May 11.

Capacity at Ceypetco's Sapugaskanda refinery is to be doubled from 50,000 barrels per day or 6500 metric tonnes, to process high value fuels.

The expansion project is tipped to cost in the region of 500 million dollars, Jaliya Medegama, Ceypetco Chairman said.

"At this stage we have done just a concept paper. We might have to hire consultants for a comprehensive project proposal, for design of the refinery and a financial analysis."

The added capacity will process more high value fuels like petrol, diesel, kerosene and less of low value fuel like furnace oil.

The increased capacity will also up liquid petroleum gas (LPG) production from current 10 percent to 70 percent of Sri Lanka's roughly 150,000 tonne market for LPG.

Funding options for the refinery could include part Ceypetco funds, though the government may also look at lending agencies for concessionary loans. Medegama said.

Top officials at Ceypetco have already been on a scouting mission to the Middle East and Egypt to study refinery models that could be adopted here.

Ceypetco posted a turnover of 7.9 billion rupees last year, up from 7.4 billion rupees in 2004. The corporation also retails fuel alongside Lanka Indian Oil Corporation.

Meanwhile, the Treasury has told Ceypetco that it has no provision for fuel subsidies this year, but the oil corporation says that it still has no word on a request for a price hike.

"The Treasury has said that they have not made a provision for subsidies this year. But we are still losing about 2-billion rupees a month on selling fuel below cost. This money has to be found and we are asking the Treasury for a subsidy to cover this," Fowzie said.

CHINA

China’s 160,000 Bpd Hainan Refinery Slightly behind Schedule

China's new 160,000 barrel-per-day (bpd) Hainan refinery plans to start up at the end of June, about one month behind schedule, and received its first crude the week of May 14, a company official said.

The new plant, whose capacity makes up nearly 3 percent of the country's total, would boost fuel supplies to the key southern Chinese consumers and ease a potential shortage as China heads into peak summer season.

"Deliveries of some of the refining units took longer than expected," said the official from southern Hainan province.

Its first crude, a 2-million-barrel Very Large Crude Carrier (VLCC) of Girassol from west Africa's Angola, arrived on May15 at Yangpu port of Hainan province, off the southern tip of China.

The delay also forced the plant to divert a similar-sized cargo of Yemen's Masila crude, originally to call at Hainan last month, to eastern China, Chinese traders said.

The Hainan official said the plant, a unit of China's state-run Sinopec Group, aimed to operate at 60 percent of capacity during the startup, before raising the throughput late this year.

INDONESIA

Indonesia's Elnusa Seeks New Investors for $5 Billion Refinery Project by June

PT Elnusa said it expects to secure by next month the participation of investors needed to complete a 5.0 bln usd oil refinery project it plans to build jointly with a subsidiary of the National Iranian Oil Company (NIOC).

Elnusa's advisor, Global Union Energy Ventures Ltd, will scout for investors starting May 11 until June 30, Elnusa said in a presentation paper.

It said Global Union will invite Middle East crude producers, as well as fuel buyers in the Southeast Asian region, Japan, Korea and China to join the project.

Elnusa and NIOC unit National Iranian Oil Refining and Distribution Company (NIORDC), have signed a memorandum of understanding to build the refinery.

Elnusa said the MOU calls for Iran to supply part of the refinery's crude requirements and provide up to 30 pct of the required equity investment.

Elnusa president Rudy Radjab said that the company will take up the other 20 pct stake in the project. The rest will have to be covered by other investors, he said.

With a capacity of 300,000 barrels of oil per day, the refinery will be one of the largest refineries in Southeast Asia, Elnusa said.

It said potential export markets are Japan, China and Korea.

Elnusa will also start looking for loans from banks in the Middle East, Far East and Europe, as well as from Islamic banks to fund the project.

The company said it hopes to secure commitments to finance the project by end of this year or early 2007.

Indonesia needs new refineries to reduce its reliance on imported fuel.

Elnusa is a unit of state oil-and-gas company Pertamina.

Iran, Indonesia Sign a $5 Billion Refinery Plan

Iran and Indonesia have signed a deal to develop an oil refinery in Java worth up to $5bn, according to a report in The UK's Financial Times. The refinery would be supplied largely by a minimum of 100,000 bpd of Iranian crude over 20 years. The 300,000-bpd refinery is due to start production in 2010, with 70% of its product bound for China and other Asian markets, said an Indonesian official.

Pertamina, Kuwait's KPC May Build $3 Billion Oil Refinery

Indonesia's state-owned oil and gas company PT Pertamina and Kuwait Petroleum Corp. could jointly build an oil refinery in the Southeast Asian country, Mines and Energy Minister Purnomo Yusgiantoro said May 5.

The size and location of the project haven't been decided, but total investment could reach $3 billion, Purnomo said, without disclosing each company's investment.

"The companies will meet in Jakarta on May 10 to discuss details," he told reporters.

It isn't clear if Kuwait will supply crude for the proposed refinery.

The potential cooperation between the two state-owned companies is an outcome of President Susilo Bambang Yudhoyono's 10-day visit to the Middle East, which ended May 4.

Pertamina also plans to build a $2-billion crude oil refinery with Saudi Arabian Oil Co. (SOI.YY), while its unit, PT Elnusa, plans to tie up with Nafta Iran to build a $4-billion 300,000 barrel-a-day refinery in western Java's Banten province.

Pertamina has been seeking partners to jointly build refineries in Indonesia as the country's seven oil refineries, which have a total production capacity of around 1 million b/d, meet only about three-quarters of domestic oil demand.

PHILIPPINES

Saudi Aramco Eyes Building Oil Refinery in Philippines

The national oil company of Saudi Arabia will study the possibility of building an oil refinery in Mindanao, President Arroyo announced May 11.

Following her four-day official visit to the Saudi kingdom, the President also announced that Saudi Aramco, the government’s partner in Petron Corp., will push through with a $300-million investment to put up a petrochemical plant in Bataan.

Mrs. Arroyo said the plans form part of the "limitless" investment potential sought by the Saudis in the country.

Mrs. Arroyo said the kingdom’s Prince Waleed bin Al-Talal, ranked by Forbes magazine as the fifth richest man in the world, informed her of his investment plans.

Trade Secretary Peter Favila said Saudi King Abdullah was impressed with Mrs. Arroyo’s political and economic policies and pledged to make "limitless" investments in the country.

"Speaking of investments, this is going to be limitless. When you talk to the King (Saudi Arabia), you do not discuss numbers," Favila said.

Mrs. Arroyo added that she invited the Saudis "to join in the efforts to promote the rational exploration, development, utilization and conservation of our mineral resources, to enhance national growth in the Philippines."

She said the Saudi business center was very receptive to her invitation to "recycle their petro-dollars" by investing in the Philippines.

Mrs. Arroyo clarified with Saudi investors that their foreign investments would be welcome in the country’s mining industry, though she pointed out the safeguards in place to protect the environment and the rights of affected communities.

The President also expressed her gratitude to the Saudi royal family in their assurance of a stable oil supply in the country amid surging crude prices in the world market.

Favila added that Saudi Aramco’s officials assured them that their oil reserve is huge enough to last for centuries.

SRI LANKA

Saudi Government Helps Sri Lanka to Improve Sapugaskanda Refinery

The government of Saudi Arabia has provided a soft loan to Sri Lanka to improve the petroleum refinery situated at Sapugaskanda, in the suburbs of Colombo.

The $500 million loan should be paid after 15 years. The improvements to the refinery will enable all the country's petroleum needs to be refined locally. At present the Sri Lanka Petroleum Corporation refines around 2.0 million MT of crude oil to meet 70% of the country's needs. This will spare a considerable amount of foreign currency for Sri Lanka.

Eighty percent of the country’s LP gas consumption can be extracted as a byproduct after the improvements to the refinery.

The island imports 10% of its oil requirements from Saudi Arabia.

3. EUROPE / AFRICA / MIDDLE EAST

BOSNIA

Iran Interested in Bosnian Refinery

Iranian businessmen are interested in Bosnia's Modrica oil refinery, Onasa news agency reported May 16.

Mohammad Reza Morshedzadeh, Iranian ambassador to Bosnia-Herzegovina, said during a meeting with Milorad Dodik, prime minister of the Bosnian Serb republic, that his country's businessmen had eyed the refinery and were interested in the country's tourism potential.

A statement released by the government's press office after the meeting said that, among other issues relating to domestic politics, the ambassador and the prime minister had discussed Bosnia-Herzegovina's resources and investment potential.

The Iranian ambassador is also scheduled to meet with Dragan Cavic, president of the Bosnian Serb republic.

ITALY

Foster Wheeler Awarded Contract for New Refinery Units in Italy

Foster Wheeler Ltd. has announced that Milan-based Foster Wheeler Italiana S.p.A., part of its Global Engineering and Construction Group, has been awarded an engineering and procurement contract by Saras S.p.A. for new process units at the Sarroch refinery in Sardinia, Italy. The contract also includes an option, which Saras may elect to exercise at a later date, for the provision of construction supervision services by Foster Wheeler. Saras is one of the leading industrial companies in Italy and its Sarroch refinery is one of Europe's largest and most advanced refining complexes.

The terms of the contract award, which were included in Foster Wheeler's first-quarter 2006 bookings, were not disclosed.

Foster Wheeler's scope includes a new hydrodesulfurization unit with 180 cubic meters per hour throughput, designed to reduce the sulfur content of a gasoline blending component to seven parts per million weight, while minimizing octane loss. In addition, two new independent tail gas treatment units will be installed, each of approximately 36 metric tonnes per hour capacity. The tail gas treatment units will be designed to achieve a minimum overall sulfur recovery of 99.9 percent from the tail gases, in line with new emissions legislation. Tail gases are "leftover" gases from the sulfur recovery unit.

"We are very pleased to be awarded this project by Saras," said Umberto della Sala, chief executive officer of Foster Wheeler's Global Engineering and Construction Group. "The importance of this award goes far beyond the contract itself and represents a significant first step in the development of a long-term alliance relationship with Saras."

"This project is very important for the future development of our refinery at Sarroch," said Paolo Alfani, executive vice president, Saras S.p.A. "We are confident that Foster Wheeler has the right experience, expertise and professionalism to meet our objectives for this challenging project and also to establish a successful partnership relationship with Saras."

PORTUGAL

Portugal may Discard Project for New $4 Billion Refinery or Expand Existing Unit

Portugal is close to abandoning a planned investment in a new refinery in Sines, south of Lisbon, promoted by a group led by businessman Patrick Monteiro de Barros, opting instead to modernize an existing unit located near the same city and owned by Galp Energia, Portugal's Economy Minister said.

Speaking to financial daily, Jornal de Negócios on May 9, Manuel Pinho said that “either the Vasco da Gama refinery project [belonging to Monteiro de Barros] is reformulated, or the Government cannot support it."

The minister particularly criticized, "the very high level of direct financial incentives,” requested and the fact that associated levels of pollution were higher than initially forecast, which, he said, placed the reaching of Kyoto protocol targets at risk.

The new refinery was the largest investment project in the pipeline for Portugal, after Monteiro de Barros signed a memorandum of understanding with API on December 9.

With an estimated cost of US$4 billion, the unit would have an expected production capacity of 300,000 barrels per day, 1.5 times more than the biggest current refinery, owned by Galp Energia and also located in Sines.

Meanwhile, Galp Energia is preparing to present a 1 billion-euro investment project for reconfiguring its Sines refinery in the next few days.

TURKEY

Turkey’s Petrol Ofisi to Establish Refinery with Austrian Partner

Turkey’s widest reaching oil supplier, Petrol Ofisi, is preparing to establish a refinery plant of at least five million tons capacity with the Austrian energy giant OMV.

In mid-March it was announced that Dogan Holding would sell 34 percent of its shares in Petrol Ofisi to the Austrian gas and oil company.

Following approval by the Competition Board, the transfer of shares took place on May 16.

$1,054 billion was paid in cash for the transfer.

Dogan Holding CEO Aydin Dogan said they want to carry Petrol Ofisi to an international level, which includes the research, production and refining of oil and gas, and transform it into a regional power.

OMV Acting Top Manager Gerhard Roiss said there are many promising opportunities in Turkey, especially when Turkey’s integration with the European Union, or EU, is taken into consideration.

“We unite our powers and we will develop this company more and more,” Roiss said, emphasizing that Turkey should be a part of the EU; they consider Turkey as such and their presence here shows this.

“The establishment of an oil refinery with the annual capacity of five million tons is planned for Turkey”, reads a Petroleum Office (PO) statement regarding the refinery investment.

While Dogan Holding’s 86.73 percent share in Petroleum Office capital falls to 52.73 percent, the holding derived YTL 986.34 million in income.

The two groups planning to transform their shareholding to a “strategic partnership” will cooperate in the exploration for oil and gas reserves, production and distribution in the Middle East and Caucasus, as well as in Turkey.

Experts say, “OMW is one of the biggest oil companies in Europe. If the partnership is signed, PO will have significant advantages both in Turkey and Europe.”

OMW, seeking sizeable benefits from the partnership in the long-run, plans to enter the Iraqi market also.

David Davies, Executive of OMW Financial Affairs, announced the intentions of the company and said they will wait for a quiet down in Iraq.

Davies said, “The Dogan group has important relations both in the Caspian region and Iraq.”

OMW continues to carry out exploration and drilling for oil.

OMW officials spoke initially about their plans to establish oil refining works in Turkey, and said Turkey has the necessary potential for a new refining capacity, but it will not be established in the near future, at least not in the next 12 months.

The refinery plan of the two groups amounts to 18 percent of 27.6 million tons annual capacity of four TUPRAS refineries.

UNITED KINGDOM

Klaxon Signals Emergency Sirens Installed at Shell UK Refinery

Klaxon Signals has completed installation of its sirens at one of Shell's major sites. The Stanlow Manufacturing Complex, which is Shell's only refinery and petrochemical complex in the UK, has installed a number of siren configurations from the company's ES range at its four square mile site near Ellesmere Port in Cheshire.

The ES range of sirens provides electronic warning over large distances and has been designed for outdoor use with a durable and rugged construction. ES sirens are particularly suitable for critical alarms such as toxic gas release, disaster and emergency warning, flood alert and COMAH alarms.

Clive Bould, Klaxon’s Technical Sales Engineer, said, “Klaxon worked closely with Shell for a number of months prior to the installation in order to identify and meet the safety requirements of the Ellesmere Port site and I am delighted that it has proved a success.”

Stuart Warburton, the Site Fire and Security Manager, remarked, “We are very happy with the sirens and are confident that Klaxon has provided us with the best solution to enable us to notify our neighbors in the event of an off-site emergency.”

KENYA

Iran to Aid Kenya in Building Oil Refinery

Iran has agreed to help Kenya construct a new petroleum refinery, a senior Kenyan official said.

Chairman of the Kenyan Parliament Departmental Committee on Energy and Roads said at a press briefing in Nairobi that the Iranian government was eager to help replace the now obsolete Kenya Petroleum Refinery Limited, The Standard Web site reported.

"We had fruitful discussions with the Iranians. They were keen on constructing a new refinery for us. As you know our refinery is obsolete," Moi said.

The Baringo Central lawmaker also indicated that Tehran would be willing to engage the government in capacity building as far as energy matters were concerned.

The energy committee also briefed its Iranian counterpart on the energy situation in the country. The Iranians invited Kenyan officials to visit Tehran in August this year to see first hand how the country handles energy matters.

NIGERIA

Nigerian Government Commends Orient on Private Refinery

Nigeria’s Federal government has described the Orient Refinery and Petrochemical project in Anambra State which will save Nigeria over N130 billion on fuel import as a significant private sector response to calls for downstream investments.

Minister of State for Petroleum, Dr Edmond Daukoru, who represented President Olusegun Obasanjo in the foundation laying ceremony for the project, said government was evolving policies to guarantee quick returns on the investment.

The president's assurance came just as governments of Rivers, Enugu and Anambra States stated their commitment to support the project with substantial investment funds and sundry patronage.

The investment funds by individuals, institutions and corporate organizations through ongoing private placements are expected to boost funding support from a consortium of local banks led by Intercontinental Bank Plc.

Daukoru said the refinery located in Nsugbe Umuleri in Anambra North council area of the state would improve product supply in the country, boost economic activities in the area, and help in realizing government's goals of domestic fuel sufficiency.

He lamented that import of petroleum products into the country has subjected the nation's economy to the vagaries of international market prices and the associated distortions.

In pledging support for the project, Daukoru said government would install policy measures to foster public-private sector collaboration in eliminating high cost importation of petroleum products into the country by building adequate local refining capacity to service the economy.

Part of the measures, he said, include establishment of open access pipeline for bulk transportation of products, and installation of price modulation in the domestic market to address concerns about appropriate pricing of the products in a deregulated environment.

He commended Orient Petroleum Resources (OPR) for integrating into upstream operations to secure crude oil feedstock for the refinery and capture the optimum economics of the business. He also advised other refinery licensees to follow the OPR investment model.

Daukoru restated federal government's commitment to support upstream and downstream investments as the foundation for economic development of the country.

In his remarks, the chairman of OPR, Chief Emeka Anyaoku, said the company embarked on the project to help in solving Nigeria's "unacceptable paradox" of high fuel cost in a country that exports petroleum.

He said product output from the refinery would substitute import up to $500 million or N65 billion to $1.0 billion (N130 billion), adding that the savings would increase with the expansion of the refinery.

He added that the project would also initiate oil production activities in the Anambra Basin, build infrastructure to support rapid industrial growth of the area, create jobs for the local people and open the window for ancillary enterprises to grow.

He listed the ancillary enterprises to include independent power plants.

Managing Director of the company, Mr Nnaemeka Nwawka, encouraged investors to place money on table for the project, assuring them of returns in three years time.

He gave the rate of returns at over 50 percent, explaining that the project conception was based on high yield, quick win and guaranteed returns on investment.

Chief host of the event, Governor Peter Obi, said the building of the refinery aligned positively with the vision of his administration for rapid industrialization of the state to among other things create jobs for the people.

He stated his government's commitment to invest in the project as well as address all community concerns over compensation on land acquired for the project.

ZAMBIA

Zambia's Sole Oil Refinery to be Shutdown for Routine Maintenance

The Zambian government said that the country's sole oil refinery would be shut down for annual routine maintenance but ensured that the oil supply would not be affected.

Energy Minister Felix Mutati confirmed this in a telephone interview, saying the shutdown of Indeni Oil Refinery would last four weeks from August 1st to the end of the month.

Mutati said that in order to ensure continued supply of oil, the government would start importing finished oil products once the refurbishment begins.

He further noted that the country's general elections, which are scheduled to kick off later this year, would not be affected by the shutdown, though the shortage of oil arising from the breakdown of the refinery last year paralyzed the mass transportation severely.

Indeni, co-owned by French oil major Total and the Zambian government, has been plagued by breakdowns because of obsolete equipment and was shut for almost four weeks in September last year before reopening in mid-October.

It produces more than 350,000 liters of oil and more than 1 million liters of diesel per day.

The minister said after the rehabilitation, production capacity of the refinery was expected to double which could greatly benefit consumers.

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

KAZAKSTAN

Kazakhstan’s Updated Atyrau Refinery after Total Investments of $370 Million is Commissioned

"The Atyrau Refinery reconstruction project is one of the biggest investment projects of the National Oil & Gas Company of Kazakhstan. It aims to provide the efficient development of Kazakhstani oil & gas resources." Uzakbai Karabalin, CEO of "KazMunaiGas" NC" JSC (KMG,) said May 12 at the commissioning ceremony of the newly reconstructed Atyrau Refinery.

The reconstruction has equipped the refinery with technological installations for additional treatment of petrol and diesel fuel and will start production of oil products complying with modern standards and environmental demands.

The plant built 60 years ago on a land lease is the oldest one in the country. After reconstruction the oil processing rate will be 85-92%. The production of petrol and diesel fuel will comply with modern standards and environmental demands. The share of "Euro-4" petrol will reach 22% of all petrol produced at the Atyrau Refinery. The discharges into the atmosphere will be reduced by 998 tonnes per annum, which will allow the environmental situation at the refinery and in the city of Atyrau to improve significantly.

According to KMG, the total volume of investments in the Atyrau Refinery reconstruction was around $370 million. The project included two parallel flows. In the first flow the loans from international financial institutions in the amount of $235 million were spent for construction of technological installations. In the second flow "KazMunaiGas" NC" JSCs own funds in the amount of 18.4 billion KZT ($3.64 billion) were used for the equipment update. The construction of technological installations was carried out per the turnkey contract as of December 4, 2001 concluded between "KazMunaiGas" and the contractors - "Marubeni Corp." and "JGC Corporation" from Japan.

IRAN

Iran to Build Sour Crude Refinery

Iran plans to build a 120,000 bpd refinery by 2009 to process low quality crude from its Soroush and Nowruz fields, according to Reuters. Engineering contracts have yet to be awarded. Iran hopes to expand its refining capacity to 2.126m bpd by 2011 through a $13.7bn program.

ISRAEL

Final Value of Haifa Refinery Could be $1 Billion

Israel plans to sell at least half its stake in Oil Refineries Haifa in a flotation on the Tel Aviv Stock Exchange later this year.

"The price tag for Oil Refineries Haifa will be set as a multiple of the sale price of Oil Refineries Ashdod in the tender scheduled to be held in late June," according to a report in the Israeli business newspaper Globes.

The Ashdod facility is expected to fetch between $300 million and $400 million, which would place the Haifa refinery's value at between $600 million and $800 million, the report said.

However, market sources told the newspaper that the final value of the Haifa site could reach $1.2 billion. "Bidding for Oil Refineries Haifa is expected to be especially lively in view of the high current refining margins in the world," the report said.

Other factors that could drive up the price include the company's profitability and the fact that it will have a market advantage even after the Ashdod refinery is privatized; planned reforms in Israel's energy industry that will allow a single company to import oil, refine it and market it; and the presence of a potential new customer in Cyprus, whose only refinery just closed, the report said.

Israel Petrochemical Enterprises Ltd. and the Israel Corp. are the most prominent interested parties in the Haifa facility to date, the report said. Another large company, Ofer Brothers, has also expressed interest, and several other Israeli and multinational energy companies are expected to join in the bidding later, the report said.

KUWAIT

Kuwait Mulls IPO for $6 Billion New Refinery

Kuwaiti state refiner KNPC said it was considering making an initial public offering of a 20 per cent stake in a new $6bn refinery project to local private investors.

Sami Rushaid, chairman and managing director of Kuwait National Petroleum Co (KNPC), also said on May 15 KNPC might allow international companies to take a stake in the 615,000-barrel-per-day refining complex to be built by 2010.

"An IPO is an option, but certainly there are other ways," Rushaid said at a conference on major project opportunities in Kuwait, organized by business weekly MEED.

"We have a directive from the SPC, the Supreme Petroleum Council, to introduce 20 per cent equity in the new refinery project for local contractors," he said, referring to the state body in overall charge of energy policy.

"We have a consultant working with us to develop the best strategy because 20 per cent is huge, so it may be too big for an IPO," Rushaid added.

On the issue of foreign participation in the giant downstream project, Rushaid said: "Also we are not closing the door for international participation, but that is over and above the 20 per cent for local (companies)."

He added: "We are still looking for an international partner, and we will be evaluating such joint venture with any major international oil company."

Rushaid said an IPO might be complicated by the fact that Kuwait's stock market has been declining, in line with falls across the oil-producing region.

"Because of the current stock market situation, I think it may be important that we don't go in with such a huge IPO," Rushaid added.

An IPO would suck liquidity out of the once high-flying Kuwait bourse, whose main index fell as much as 20 per cent earlier this year, reversing a multi-year rally.

Energy Minister Sheikh Ahmad Al Fahd Al Sabah said earlier this month the government would push for more partial energy sector privatization after it had set up a private company that now operates a third of state-run petrol stations.

He said that in addition to the partial privatization of the new refinery, the government plans to privatize at least 30 per cent of Kuwait Foreign Petroleum Exploration Co, Kuwait's foreign exploration arm, and state-run Kuwait Oil Tanker Company before year-end.

Last month, KNPC asked pre-qualified international contractors for the new refinery to come forward for bid documents. Twelve contractors have been pre-qualified for the refinery, which will replace the 200,000-bpd Shuaiba plant.

A KNPC official has said pre-tender meetings would be held in the United States in June and that offers will be submitted in August and that Kuwait's central tenders committee is expected to announce the winners by October or November.

Rushaid told the conference that the new refinery would process mostly medium and heavy crude oils and be able to produce up to 225,000 bpd of low sulfur fuel oil.

KNPC is in charge of the downstream sector in OPEC producer Kuwait, which has a crude oil output capacity of 2.7 million bpd and a refining capacity of 930,000 bpd from three refineries, which is set to rise to 1.5 million bpd when the new complex is finished.

Accident at Kuwait’s Shuaiba Refinery

The Kuwait National Petroleum Company has said that it has controlled a minor accident at the 200,000 bpd Shuaiba oil refinery, reported the KUNA. No injuries or environmental damage have been caused and the refinery is functioning normally. KNPC Deputy Managing Director Hussein Ismail has said that the refinery would be closed until May 18 for maintenance work.

SAUDI ARABIA

RIL & Saudi's Aramco in Talks to Build Petrochem Complex

Reliance's oil ambitions are leaping almost as fast as crude prices are rising. The group is talking with Saudi Arabian national oil company, Saudi Aramco, to set up a petrochemical complex there. The complex will cost USD 8 billion. Reliance is competing with Exxon Mobil, Dow Chemicals and Sabic.

First there were plans for a new refinery in Jamnagar and now there's a possibility of a petrochemical complex in Saudi Arabia. Mukesh Ambani's oil plans keep getting more ambitious. High level sources say Reliance Industries is in advanced talks with Saudi Aramco to build an USD 8 billion petrochemical complex in Saudi Arabia.

Sources say RIL has submitted an expression of interest to Saudi Aramco. Others in the race include oil giants like Exxon Mobil, Dow Chemicals and Sabic. If the deal goes through, Reliance will develop the complex through a joint venture with Aramco.

The complex would be linked to Aramco's existing refinery at Ras Tanura. The refinery currently produces 30 million barrels of oil per day. Government sources say that Mukesh Ambani has written to the Prime Minister in this regard. Reliance is the only Asian company to be short-listed by Aramco.

Reliance Industries, did not comment. But a few months ago, public sector oil companies like HPCL had evinced interest in buying stake in Saudi Aramco's refinery in Yanbu.

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