nov 06 update

Mixing Solutions will be showing at the ADIPEC exhibition shared with Petro Middle East, their combination Lancer™ propeller mounted on the Cutlass™ side-entry mixer, which has been developed to virtually eliminate energy waste, especially welcomed by refineries with increased demands for refined products but facing rising costs.

A problem for refiners when pressured to operate at levels approaching maximum capacity is to ensure that fuel quality specifications are always fully met, which means that stored product must be thoroughly blended. Many mixing processes waste large amounts of electrical energy, which is said to account for roughly half of a refinery's operating costs.

The higher efficiency and effectiveness of the Lancer propeller eliminates this energy drain by developing a 'focused flow' that channels power into a jet-stream, maximizing efficiency.

Compared to 'pitch adjusted propellers' and other mixing systems from other companies, the Lancer generates increased penetration, produces higher upward velocity movement which ensures that the tank contents are 'rolled' bottom-to-top-to-bottom for the most accurate blending. Users tests with the Lancer/Cutlass combination, report a full 2:1 mixing advantage, with mixing time cut in half for the same energy input.

Additionally, the design of the Lancer/Cutlass system also incorporates a mechanical shut-off device that is engineered to adhere to the strictest environmental regulations.

The shut-off device is designed into the shaft and mounting flange with a stainless steel taper-to-taper shut-off feature that securely "locks" the system so that no leakage occurs during bearing and seal change-out procedures.

Valero Energy Corp. is examining the possibility of expanding its St. Charles refinery.

The company has filed a permit application with the Louisiana Department of Environmental Quality.

Valero spokeswoman Mary Rose Brown says the company is reviewing several projects for the refinery, including the possible expansion of the crude distillation unit and delayed coker and the construction of a gas-oil hydrocracker, sulfur recovery unit, tankage and associated infrastructure.

However, none of these projects have yet been approved by management, Brown says.

The St. Charles refinery was built in the 1930s and has had more than $2 billion in upgrades over the past several years. It currently has a throughput capacity of 250,000 barrels per day and produces gasoline, diesel and heating oil.

"It is important to note that while Valero is requesting an operating permit for modifications to increase capacity, the company has not yet approved any of these projects for construction," Brown explains. "The notice posted in the newspaper simply begins the lengthy process of obtaining a permit for a number of long-term expansion options, which are being studied for the Valero St. Charles refinery."

Valero is beginning the process, which could take up to two years, in order to move forward with the projects if they are ultimately approved by the board of directors.

If approved, she adds, all of these projects would be constructed within the refinery's existing property of about 1,000 acres.

Praxair Inc on October 11 said it will build a hydrogen facility at Chevron Corp.'s Richmond refinery in Contra Costa County, California, that is expected to be completed in 2008.

In a news statement, the industrial gases company said the new facility, which will have a capacity of 260 million cubic feet of hydrogen per day, will supply hydrogen to Chevron's refinery over a 15-year period.

Praxair will also construct a pipeline network to supply hydrogen to other refineries in the northern California area.

State regulators plan to take public comments though Oct. 18 on a settlement with Valero’s refinery near Delaware City that would allow construction of two new, large boilers at the plant.

Valero appealed a Department of Natural Resources and Environmental Control permit proposal in 2004, arguing that the agency wrongly demanded additional pollution control equipment for the boilers and set nitrogen oxide emission levels below required levels.

Nitrogen oxides are a common air pollutant; that contribute to formation of ground-level ozone and smog.

Under the settlement, DNREC must approve the looser requirements unless regulators determine, based on public comments, that the changes are inappropriate. The agreement includes additional requirements for company monitoring of its compliance with permit limits.

DNREC plans to take public comments through Oct. 18, with a decision to follow within 30 days. The boilers will supply steam to systems installed as part of a larger pollution control project but also will provide heat for other plant systems.

BP said it is investing 100 mln usd to build a 250 MegaWatt steam turbine power generating plant at its Texas City refinery site.

The unit will be located next to the existing South Houston GreenPower LP cogeneration facility and will boost the total electricity generating capacity located at the Texas City refinery site to 1,000 MW.

The new unit will result in reduced emissions and noise from steam venting activity.

The new plant is expected to come on stream in the second quarter of 2008, BP added.

The Bellingham construction company is shipping six large modules for an ultra-low-sulfur diesel project to the Tesoro refinery in the Kenai Peninsula.

The project involved about 70 Haskell employees, working in Bellingham since June, fabricating the pipes and building three process units, said Craig Messenger, project manager. The modules, weighing up to 150 tons each, were being loaded onto a barge on Port of Bellingham property.

"It is the kind of job that requires a lot of coordinating, because we want to get as much done as possible in Bellingham," said Messenger. "We don't want to have workers making a bunch of adjustments just when winter is coming in Alaska."

The barge is expected to take about 10 days for the journey to Kenai. If the weather is agreeable when it gets to the peninsula, the units will be unloaded onto a hard, rocky beach and then transported about seven miles by special loaders to the refinery, said Sherri Brown, regional manager of the Texas Division for Lynden Transport. Lynden Transport is in charge of moving the units.

The sulfur diesel project is similar to what other refineries, including BP Cherry Point and ConocoPhillips, have previously completed. Messenger said the $6 million project was something a little different for the crew, who normally work inside the refineries doing upgrades and repair work.

BP Plc. began shutting units on October 9 at its 260,000 barrel per day (bpd) Los Angeles-area refinery in Carson, California, as part of a planned overhaul of several units including a crude unit, according to state and local agencies.

Prices were unchanged in Los Angeles refined products markets, traders said, as refiners are seen well-supplied.

A refinery spokesman was not immediately available to discuss refinery operations.

In addition to the crude unit, a coking unit, a gasoil hydrotreater and other units at the refinery will be overhauled over 30 days.

A refinery crude unit initially refines the oil. A coker increases the amount of refinable material in a barrel of crude. A gasoil hydrotreater uses hydrogen to reduce sulfur in the feedstock going to a gasoline-producing catalytic cracking unit.

Philadelphia Officials said it could take weeks for crews to clean up a massive oil spill at a Sunoco refinery in South Philadelphia.

Approximately 5,600 barrels of oil poured onto the ground at 26th Street and Penrose Avenue.

The Department of Environmental Protection said there is no need be concerned as the spill occurred in a containment area.

Jacobs Engineering has secured a contract to provide front-end and detailed design engineering, procurement, and construction management services for Motiva's hydrotreater expansion project in Texas.

Through this project the Port Arthur refinery will produce additional ultra low sulfur diesel. The project is expected to be completed in the fourth quarter of 2007, the Pasadena, Calif.-based company said.

Fluor Corp. obtained contracts to engineer and manage the $3 billion upgrade of BP PLC's refinery in Whiting, Ind., the company said October 25.

The company will also execute three turn-key projects destined to make the refinery process more heavy crude, Fluor said in a press release.

The initial award for the work, valued at $300 million, will be booked in the fourth quarter, Fluor said.

BP's expansion plan will allow its Whiting refinery to process up to 90 percent Canadian crude oil, from the current 20 percent, and potentially increase its transportation fuels output by 15 percent to 14 million gallons a day.

The project comes in preparation for a major influx of Canadian heavy crude into the U.S., following the completion of massive oil-sands developments in Alberta.

The BP Whiting expansion is tentatively scheduled to begin in 2007 and be completed by 2011, Fluor said in the release. The Whiting refinery, the largest in the Midwest, can process up to 410,000 b/d of crude.

CHS Refinery officials reported that the release of a small amount of “sour water” inside a valve being disassembled by refinery workers caused nine people to go to Billings area hospitals on October 14.

The crew was working on a unit that was shut down October 13, CHS Refinery Manager Pat Kimmet said. The crew was working on equipment when about a cup of “sour water,” which smelled like rotten eggs, was released, he said. “There was just a lot of odor to it.” Workers quickly rinsed the water away. Officials did not determine if the workers were actually exposed to Hydrogen Sulfide gas which can be deadly.

The source of the liquid remaining inside the valve is still undetermined, Greg Brown, refinery environmental health and safety manager said. “We are conducting an investigation to determine why the liquid was inside the valve, so an incident like this doesn't happen again.”

The crew followed refinery procedure to be checked when there was a possible exposure, both men said.

Irving Oil of New Brunswick is seeking a partner to help it build a $7-billion oil refinery in Saint John that will supply the energy-hungry northeastern United States.

Officials with the privately owned oil company confirmed October 5 that the firm has already acquired 3,000 acres of land on the outskirts of town for a massive development that could produce billions of dollars in economic spinoffs for the province.

Irving Oil, which is based in Saint John, already owns and operates Canada's largest refinery in the port city, producing 300,000 barrels a day.

The new refinery, if built, would produce an additional 300,000 barrels a day of transportation fuels: gasoline, jet fuel and ultra-low-sulfur diesel destined largely for the U.S. northeast.

Beth Nagusky of the Maine Office of Energy Independence and Security said the state gets a major portion of its fuel from Irving and a second refinery could help boost supply and hold down prices.

Kevin Scott, Irving Oil's director of refining growth, revealed details of the proposal at a luncheon in Saint John.

He said the company needs a permit, it needs a feasible economic plan and, perhaps most importantly, it needs a partner for the "world-scale project."

"Many oil companies are doing that," he said. "The Exxons and the BPs, they partner up with other companies as well to do these types of investments because of the size of the investment and the risks. That will be a key condition in terms of moving forward."

Scott said Irving Oil has had preliminary discussions with possible partners, but he would not reveal details.

Irving Oil has already partnered with Repsol YPF SA of Spain, one of the largest energy firms in the world, to build a liquefied natural gas receiving terminal in the same area that is being considered for the new refinery.

The LNG terminal is expected to be operating by 2009 with one billion cubic feet per day being shipped through a pipeline.

Scott said Irving Oil is not worried that growing concern over global climate change could short-circuit growth in the now-thriving petroleum industry.

"Fifty per cent of energy consumed in the U.S. northeast today is in the form of petroleum products and we see an upward trend in that every year," he said.

"We believe people will conserve ... but it's going to be many generations before we make a wholesale shift away from petroleum."

Environmentalists are already sounding alarms about the possible second refinery in Saint John.

"Apparently, Mr. Irving hasn't heard we're in the midst of a global meltdown," said David Coon of the Conservation Council of New Brunswick.

"Every new barrel of oil that is pumped out of the ground and refined is making the problem worse."

Environmentalists say the air in Saint John is seriously polluted because of the existing refinery.

While excited promoters of a second refinery are talking about Saint John as an emerging energy hub for eastern North America, conservationists are seeing it as a pollution hub.

Despite the negative outlook from environmentalists, who are promising to make any permit process demanding, business leaders at the luncheon were overjoyed at Scott's announcement.

"It means a new era of prosperity for this city," said Bob Manning of the Saint John Board of Trade.

A massive refinery planned for Newfoundland has doubled in cost and faces new competition from the biggest player in the region, but the proposal's investor group remains interested, an executive behind the initiative said on October 30.

Newfoundland and Labrador Refining Corp. is about a month from finishing a feasibility study for the plan, to which it has made a host of design upgrades that will boost capital costs but also widen options for the oil processes.

The 300,000 barrel a day plant at Placentia Bay on Newfoundland's southeast coast is now expected to cost more than $4 billion, up from a February estimate of about $2 billion, said Brian Dalton, chief executive of Altius Minerals Corp., one of the group's investors.

The study is in its third and final stage, one that includes hammering down detailed cost estimates. The backers began the environmental permitting process two months ago.

"Our long-term outlook for the market opportunity hasn't shifted, and at least at the end of the second stage we were within capital cost numbers that make the project look attractive," Dalton said.

The goal is to take advantage of high demand for petroleum products, especially in the U.S. Northeast, as well as Newfoundland's North Atlantic location for tanker traffic.

Since launching the study, the group has added several pieces of equipment to the design, including hydrocracking and coking capacity, that will allow it to run more heavy, medium and sour-grade oil and generate higher revenue, Dalton said.

"That's a key part of the whole business case," he said. "Ultimately, what we'll have here is about as complex a refinery as you can make. It will be the most advanced refinery, I would think, in the whole North Atlantic basin."

However, the group is not the only one planning a new refinery in Eastern Canada to serve the U.S. Northeast.

Early in October, privately held Irving Oil Ltd. said it plans to build a second refinery in Saint John, New Brunswick, at a cost of up to C$7 billion ($6.2 billion).

It would also have a capacity of 300,000 barrels a day, close to that of its existing Saint John refinery, which is Canada's biggest.

Dalton said his group is well aware of competition for capital and eventual market share, not just in Canada, but worldwide. OPEC officials have said the cartel's members have planned as many as 100 refining projects worth $180 billion.

"When there's a market deficit there, it prices in expansion. All we can do is proceed as we're proceeding here," he said. "We know our site has pretty substantial advantages over pretty well any competing site from a transportation and location perspective."

Placentia Bay is also the site of the 115,000 barrel a day Come By Chance refinery, which Harvest Energy Trust acquired from Vitol SA this month for C$1.6 billion, with the aim of eventual expansion.

Besides Altius, a mineral exploration firm, Newfoundland and Labrador Refining's investors are Dermot Desmond, founder of Dublin-based International Investment and Underwriting; Scottish financier Harry Dobson; and Stephen Posford, former head of European operations for investment bank Salomon Brothers.

The group is considering an initial public offering in the next five to six months, as the project passes some of its key milestones, Dalton said.

China Petroleum and Chemical Corporation (Sinopec) and its wholly-owned overseas subsidiary Shengjun International Investment Co., Ltd. (Shengjun International) have signed a contract to invest an additional RMB 3 bln (USD 380 mln) in Sinopec's Hainan Refinery.

Indian Oil Corporation (IOC) is planning to invest Rs 5,000 crore to expand the capacity of its 12 million tonne (mt) Panipat refinery to 15 mt. The expansion, which has already been approved by the IOC board, will be completed in three years. The 2 mt naphtha cracker plant is also expected to be complete by the same time.

The total value of the petrochemicals project in Panipat is estimated at Rs 11,900 crore, significantly higher than the previous estimate of Rs 6,300 crore.

The naphtha plant will have a capacity to manufacture 8 lakh tonne per annum (tpa) of ethylene, 5.75 lakh tpa of propylene, 3.5 lakh tpa of linear low-density polyethylene, 3 lakh tpa of high-density polyethylene, 2 x 3,00,000 tonne of polypropylene and 2.5 lakh tonne of monoethylene glycol.

Last year, the company had expanded the capacity of the refinery from 6 mt to 12 mt and also commissioned the paraxylene and purified terephthalic acid (PxPTA) plant.

IOC has identified the petrochemicals business as a driver for growth and has drawn up an ambitious Rs 30,000 crore masterplan for the petrochemicals business. The plan includes development of world-class petrochemicals hubs in Panipat and Paradip.

IOC is also expanding the capacity of its Haldia refinery to 7.5 mt from the existing 6 mt at a cost of Rs 1,600 crore with technology upgrade to ensure higher crude cut at Haldia refinery.

The company is also considering putting up a hydrocracker facility at the Haldia complex. This would be IOC’s fourth hydrocracker plant.

In the past, the company has bought the technology from two US companies, Chevron and UOP.

IOC already has hydrocracker facilities at the Mathura and Panipat refineries. The 15 mt refinery coming up at Paradip will also incorporate a hydrocracker. The Rs 20,000-25,000 crore Paradip complex is expected to be commissioned by 2010.

Gail India has announced that the joint venture(JV) agreement for the Assam gas cracker project was signed October 18.

According to a release issued by Gail to the BSE today, the other promoters of the JV are Numaligarh Refinery, Oil India and the Assam government.

The JV, which has Gail holding 70 percent stake, will implement an integrated petrochemical complex at Lepetkata, Dibrugarh in Assam at a cost of Rs 5,460 crore.

The project will be completed in 60 months from the date of financial closure, the release added.

India's largest private player in the refinery business, Reliance Petroleum Limited (RPL), has concluded a $2 billion borrowing deal for its $6 billion export-oriented refinery project at Jamnagar in Gujarat.

The $2 billion syndicated loan facility is the single largest foreign currency financing in India. It is also the single largest limited resource financing mandated in the Asian market in recent years, an RPL statement said.

RPL, a wholly owned subsidiary of Reliance Industries Ltd (RIL), has secured commitments of over $3.4 billion from over 50 international banks.

'In a well executed global syndication, RPL secured commitments of over $3.4 billion from over 50 banks across three continents. This reflects an over-subscription of 2.3 times its initial loan facility of $1.5 billion,' the statement said.

'RPL has utilized a part of the excess demand by launching an additional loan facility of $500 million, towards meeting a part of the balance debt requirements for the project,' it said.

'The facility will be used to finance the setting up of a new refinery having an installed capacity of approximately 27 million tonnes and a 0.9-million tonnes polypropylene complex,' said a RPL official here.

'The new refinery is expected to be the sixth largest at any single location in the world and together with RIL's existing 33 million tones per annum refinery at Jamnagar, this will be the largest concentration of refinery assets at a single location globally,' he added.

'I am pleased with the progress achieved by the RPL team on various fronts, including the financial closure and project implementation,' said RIL chairman Mukesh Ambani said.

'The construction activities have taken off smoothly and the project is well on its way towards timely completion. I am convinced that RPL is well positioned to capitalize on the emerging opportunities and create superior value for its shareholders,' he said.

Reliance Industries Ltd. is operating its refinery with its usual grades of crude oil and will meet all sales commitments it said a day after fire damaged a desulphurization unit.

"The refinery has enough flexibility built into its configuration to allow normal operations as per its usual heavy and sour crude slate and premium-grade product mix," the company said in a statement October 26.

"All sales and other commitments of the refinery are being adhered to without any interruption at all," it said.

Fire damaged a secondary unit of the refinery on October 25, sending its shares down 1.6 percent.

The affected unit -- also known as a hydrotreater -- at the 660,000 barrels per day refinery at Jamnagar in Gujarat was put out of action by the blaze but an official said the firm had been able to make up for its loss.

Capacity at a second hydrotreater was being utilized and other partly processed feed stocks were being used to ensure production went unaffected.

The shut unit supplied a fluidized catalytic cracker unit (FCCU), which produced gasoline and olefins.

"Feed to the FCCU can come either come by processing the intermediate feed or we can actually use finished inputs like sweet vacuum gas oil which can always be imported," P. Raghavendran, chief of the firm's refining business said.

He said Reliance had a stock of intermediate feed that would last for 25 days. The company has ordered two independent investigations into what went wrong.

"A specialist committee from outside, including some foreign experts, (will) investigate the cause of the fire and thoroughly ensure that never again will any such thing happen," P.K. Kapil, the refinery's head, said.

India is interested in Russian companies taking part in expanding oil refining capacity in India, Indian Deputy Petroleum Minister M.S. Srinivasan said in Moscow.

He said that an Indian delegation presented this initiative at a meeting with Russian Industry and Energy Minister Viktor Khristenko.

In particular, he said that Indian Oil Corporation, which has a refining capacity of 52 million tonnes per year, plans to increase production by another 30 million tonnes. He also said that it is planned to build a new refinery with a capacity of 15 million tonnes per year.

He said that India is interested in participation by Russian companies in this, and is inviting them to cooperate

A trade delegation from China visited the Pakistan State Oil Company’s PSO House on October 17 and during discussions with the management of the company expressed interest in setting up a refinery in Pakistan.

The team headed by Yang Hansheng was accompanied by Director Refining, Ministry of Petroleum, Muhammad Azam and officials of the Chinese Consulate, said a PSO press release.

Managing Director and Chief Executive Officer PSO Jalees Ahmed Siddiqi briefed the visiting delegation on working of PSO and its future plans. He said the company is using technology to its advantage by seeking to reinforce technology-driven initiatives and also working for diversification of fuel and non-fuel business.

He highlighted the performance of the company in recent years and said, in the first quarter of this financial year, PSO has further improved its market share in key products.

Yang said that China would like to set up a refinery in Pakistan. He showed keen interest in PSO, in particular the working of supply and operations.

The team members appreciated the transformation of PSO into a modern, customer-focused oil marketing company.

Kuwait has scrapped a plan to sell Kuwait Petroleum International's (KPI) refinery in Rotterdam since it now aims to add rather than divest downstream assets, the energy minister said.

'The sale has been overlooked; there's a different strategy now,' Sheikh Ali Al Jarrah Al Sabah said in an interview, when asked if KPI would finalize the sale of the 80,000 barrels-per-day refinery soon.

In May, KPI said it has received 15 bids for the refinery in the Dutch port, including approaches from state-owned oil companies from Europe and Latin America as well as private firms. KPI President Abdullatif Al Houti said then that, if the price is right, KPI would sell the refinery.

International oil industry sources said early this month that Russia's LUKOIL was close to buying the KPI Rotterdam refinery, making its first foray into West European downstream activities.

One industry source in Rotterdam said early this month that Russia's No 1 oil firm LUKOIL has been confirmed as the final buyer but added it was not clear if a deal would be finalized this month or next. LUKOIL has not commented on any deal.

'There will be no sale in line with my instructions to KPI to halt the sale,' Sheikh Ali said. 'I informed KPI, which is overseeing the operation, and they will call the investment bank running the deal so they stop it.'

The minister -- a former financier selected to his post in July in a new cabinet following summer parliamentary polls -- said Kuwait was now looking to invest in downstream assets.

Asked if the Rotterdam refinery can be upgraded, Sheikh Ali said: 'Yes, of course, we may upgrade it ... We are trying to acquire assets not get rid of them.'

Asked if Kuwait now believed investing in the downstream sector was lucrative, Sheikh Ali said: 'Yes, exactly. We already have these assets and people are interested in acquiring them so we should not get rid of them.'

Opec member Kuwait is studying plans to build a multi-billion-dollar refinery and petrochemical plant in south China with PetroChina.

Also, KPI and France's Total may each pick up a stake of 25-30 per cent in a refinery and petrochemical complex in India, a source at the Indian firm said last month.

An explosion November 1 at an oil refinery in northeast Romania left three workers dead, an emergency official said.

The blast at the RAFO refinery in Onesti was probably caused by an accumulation of methane gas, said Col. Mihai Simionescu, who heads the local emergency department.

The part of the refinery where the blast occurred was closed for maintenance. The explosion caused a metal roof to collapse.

Southampton port has been reopened after a gas leak at an oil refinery saw it sealed off.

The port was closed on October 17 after the incident at the Exxon Mobil oil refinery at Fawley.

A faulty valve caused the leak on a tanker taking liquid propane gas away from the refinery and prompted fears that the leaked gas could ignite.

Ferries, along with commercial ships, had to stop using the port and experts worked against the clock to refit the valve before the "maritime rush hour".

A statement from Associated British Ports, the country's harbor authority, said: "Following the isolation of the leak and the reduction in the gas flow, and after a detailed risk assessment, the port was reopened at 5.40a m with a 400 meter exclusion zone around the marine terminal.

Earlier, Southampton harbourmaster Steven Young had warned that ships would be delayed if the ports was not reopened before the morning.

The refinery is on the approach to the port and the port was closed as a precautionary measure.

The tanker, Ennerdale, was carrying 1,600 tonnes of liquid propane, he said. The refinery is the largest in the UK.

Lithuania's prime minister is concerned that Polish group PKN Orlen may abandon its $2.6 billion deal to buy refiner Mazeikiu Nafta after a fire destroyed key equipment and hit output, he said on October 13.

Shortly after Prime Minister Gediminas Kirkilas made the remarks, PKN Orlen said it had delayed signing a banking deal to buy the Baltic region's only oil refining complex, a major outlet for Russian oil to Europe, while it studied the implications of the blaze.

"Yes of course we are concerned," Kirkilas said in a telephone interview, when asked if he worried whether PKN could walk away.

Kirkilas said his government had asked British law firm DLA Piper, to examine the impact of the fire on the deal's closure.

He said he hoped the purchase, expected to be approved by EU competition authorities in November, would still be completed.

Lithuania's bourse suspended Mazeikiu shares to protect investors, a spokeswoman said. The stock, which closed down 0.5 percent at 8.75 litas on October 12, before the fire was announced, is expected to resume trading on October16.

The fire, at a vacuum distillation unit, completely destroyed a 50 meter tower and, according to Kirkilas, caused millions of dollars in damage that will take months to repair.

One core production unit at Mazeikiu has shut down completely. On October 13 the refinery's two other units were at minimum processing levels, a company spokesman said.

After the PKN deal was announced in May the key Russian crude oil pipeline to Mazeikiu halted flows, due to a reported leak, and the refinery has switched to more costly supplies from ocean-going tankers.

Some analysts have suggested the pipeline interruption may be intended to punish the Lithuanian state for backing PKN's bid over those of competitors favored by Moscow, or to press the Polish company into withdrawing from the purchase.

Doubts are mounting about whether PKN will stick to the deal, despite its statement that the fire would not significantly affect the purchase, as the Polish company has an opt out clause available if Mazeikiu's value falls substantially.

"According to the agreement we have the right to resign from the purchase by December 31 if Mazeikiu's value falls significantly," PKN Chief Executive Igor Chalupec told reporters in August. He subsequently said his remarks were misinterpreted.

In the announcement on October 13, PKN's spokesman Dawid Piekarz said: "The financing agreement will be slightly delayed. We want to sign it after we analyze the situation and have better knowledge about the effects of the fire."

"We hope the fire will not have a serious impact on the purchase," Pierkarz said without elaborating. Before the fire, PKN had been planning to sign the deal in mid-October.

"Since the problems with oil supplies to Mazeikiu started, the planned purchase has been weighing on the share of PKN. The negative developments that followed will keep investors worried about the deal," said Michal Buczynski, analyst at Bank Millennium in Warsaw.

Mazeikiu's share price since the purchase was announced on May 26 has been volatile. It fell 23 percent to a year low in early August before rebounding with oil prices. By October 12, the shares were down 4 percent from the PKN announcement level.

"The market is waiting for news on the damage and how long it will take to restore full production," said analyst Andrius Adomkus with Vilnius broker JT.

Lithuania Officials at Lithuania's Mazeikiu Nafta oil refinery announced October 16 that a fire the previous week’s caused 131 million litas (€37.9 million, US$48.5 million) in damage and would reduce this year's profits by one-fifth.

Mazeikiu Nafta said it would take up to nine months to restore the working capacity of 27,400 tons of crude per day. The refinery, Lithuania's largest enterprise, continued to operate at 15,000 tons per day, the company said.

"This accident may cut the company's 2006 net profit by one-fifth to 402.8 million litas (€116 million; US$148 million)," company spokesman Giedrius Karsokas said.

The fire broke out in a diesel complex and shot flames 150 meters (500 feet) into the air. It was extinguished the next morning.

The cause of the fire is still unknown. Local prosecutors have launched an investigation.

Russia's Yukos and the Lithuanian government recently sold a combined 83 percent stake in the refinery to Poland's PKN Orlen for US$2.3 billion. The deal has yet to be approved by the European Commission, and it is unclear what affect the fire will have on the sale.

The sale was assailed by Moscow, which had wanted a Russian oil major to acquire the lucrative refinery.

At the end of July, Russia ceased supplying the refinery with crude oil after pipeline damage was discovered on a spur in Belarus, which the pipe crosses before reaching Lithuania.

Mazeikiu Nafta, the only refinery in the Baltics, posted earnings of 885 million litas (€256 million, US$321 million) in 2005, up 22 percent year-on-year.

Mazeikiu Nafta has an annual refining capacity of 15 million tons of crude and employs some 3,200 people.

Indian Oil is looking at Europe for growth. The country's largest refiner has applied to the Energy Market Regulatory Authority of Turkey for setting up a 15-million-tonne, $6-billion grassroots refinery at the Mediterranean port city, Ceyhan.

Since Turkey has very low appetite for refined products, the project would primarily focus on exports to Europe.

Other companies which expressed interest in setting up refinery in Ceyhan are Kazakh oil company, KazmunaiGas and Turkish Petrol Office.

In a parallel development, the company is negotiating with a consortium of ENI, Italy and Calik Group of Turkey for a "significant" stake in the $1.5-billion oil pipeline from the Turkish Northern Black Sea city Samsun to Ceyhan.

IOC entered into a MoU with Calik Group in 2005 to jointly explore investment opportunities in the downstream sector in Turkey.

The 550-km Samsun-Ceyhan pipeline will carry up to 1.5 million barrels of crude per day primarily from Kazakhstan and will replace the tanker movements through the Bosphorus straits by almost 50 per cent. Apart from IOC, Royal Dutch Shell has also expressed intention to take part in the project.

IOC sources said that a stake in the pipeline would ensure supply of crude to the proposed refinery.

'We are negotiating with ENI-Calik for a significant stake in the pipeline so as to ensure representation in the board room', an official said.

'Negotiations are in fairly advanced stages for both the projects and decisions are expected in two months,' the official said adding that the decision on the pipeline project is expected early.

IOC is exploring opportunities in the refining and pipeline sector in Turkey for last two years and was outbid by a Shell-led consortium in the race for majority stake in the Tupras Refinery, last year.

Located between the oil rich land-locked CIS countries and the Black Sea and the Mediterranean, Turkey has already witnessed commissioning of 1,760-km-long world's second -longest Baku-Tbilisi-Ceyhan crude pipeline.

The government of Slovenia has confirmed a program for the sale of Nafta Lendava, the country’s sole oil refinery. The sale of the 100 percent stake, which has a nominal value of SIT 2.6bn (EUR 10.8m), is to be completed by the end of 2007.

The program, adopted on October 26, comes two months after Economy Minister Andrej Vizjak and the boss of Russian oil giant Lukoil, Vagit Alekperov, signed a memorandum of understanding on Lukoil's participation in the privatization of Nafta Lendava.

The government says it wants a buyer that will treat Nafta Lendava as a strategic investment. In addition, it needs to have the market and financial clout to promote growth and create jobs at the company.

The buyer will be selected in a two-stage bidding procedure. The prices will be just one criterion, the Government PR and Media Office said in a press release.

Nafta Lendava and its subsidiaries Nafta Petrochem, Nafta Strojna, Nafta Geoterm, Eko Nafta, Nafta Inzeniring and Nafta Informatika are on the government's 2006/07 list of state property for sale.

The Algerian national assembly has reasserted sovereignty over the nation's natural resources by giving the state-owned Sonatrach company majority control in all oil and gas contracts.

It also voted October to impose a special tax on foreign oil companies of up to 50 per cent on all petroleum profits when the price of oil exceeds $30 (U.S.) a barrel.

A March, 2005, law sought to liberalize the market and attract new investments by allowing foreign companies to compete independently rather than having to work in partnership with Sonatrach, and to control most of the reserves they discovered.

The law said they could keep up to 70 per cent of reserves they discovered, or 100 per cent if Sonatrach expressed no interest in them.

The Algerian state nationalized the oil and gas industry in 1971 and handed over all operations to Sonatrach. However, the government began to look abroad in the 1990s because of lack of investment. It allowed American and European companies to compete in the market in partnership with Sonatrach.

But the change in the law drew such fiery opposition from nationalist quarters and unions that President Abdelaziz Bouteflika was obliged to put it on hold.

Other amendments give Sonatrach the monopoly right to transport oil and gas by pipeline, and ban any resort to international arbitration in the case of conflict between Sonatrach and its foreign partners. The law now requires any dispute go to Algerian court.

Foreign companies associated with Sonatrach will be taxed on extraordinary profits for any month in which the price of crude oil exceeds $30 a barrel on international markets. The tax is retroactive to Aug. 1.

The Minister of Energy and Mines, Chakib Khelil, said Algeria earned $40-billion from oil and gas exports in the first nine months of this year, and has unprecedented cash reserves of $70-billion, according to the Finance Ministry.

Petroleum is the country's main source of wealth and accounts for 97 per cent of its export revenue.

Although he supported the 2005 law, Mr. Khelil said recently that the amendments would permit "the enlargement and reinforcement of the state's control over hydrocarbon reserves, their rational use and their preservation for future generations."

Reliance Industries Ltd (RIL) and state-owned Engineers India Ltd (EIL) have submitted a joint bid for the revamp of a refinery in Libya. The joint bid for revamping the Azzawiya refinery owned by Libya's state-run National Oil Corp was submitted at the end of August, industry sources said.

The Azzawiya refinery currently processes 100,000 barrels per day and Libya plans to increase its capacity to 122,800 barrels per day. Sources said a decision is expected by the year-end and work would begin in January 2007.

Mukesh Ambani Group Company, Reliance Industries, is already in the exploration business and is operating the largest refinery in the country.

State-run EIL has also evinced interest in joining the gas exploration business in Turkmenistan along with GAIL India. It has also expressed interest in pipeline and city gas distribution and refinery upgrading projects in Central Asia.

Winfield Resources invited by Libya to Participate in Azzawiya Oil Refinery Refurbishment Program

Winfield Resources Limited has announced that the Azzawiya Oil Refinery Company, a subsidiary of the Libyan National Oil Company is implementing its revamp and modernization program and has invited Winfield Resources Limited Libya to participate in the project budgeting.

Winfield has engaged Mr. David Morrison McClement, P.Eng., of Calgary, to conduct a scoping study leading to project budget recommendations.

McClement's budget recommendations will be incorporated into the tender offer for the AZZAWIYA OIL REFINERY revamp and modernization program. He, specializes in the area of refinery optimization and design.

The Azzawiya Oil Refinery (ARC) is currently the second largest oil refinery in Libya, with a throughput of 100,000 barrels of crude oil per day.

ARC is considering the installation of a new residual fluidized catalytic cracker unit; Methyl tertiary butyl ether (MTBE) facilities and an additional sulfur treatment plant.

This planned undertaking is part of Libya's $3,500,000,000 program aimed at modernizing its refinery infrastructure over the next 5 years.

Winfield seeks participation via successful tender in the engineering, procurement, construction and management (EPC(M)) of energy related capital projects; such as Oil Refineries, LNG facilities and Co-Generation Facilities.

South Africa's energy ministry said a Brazilian company, which it declined to identify, is considering investing in a crude oil refinery at Coega in Eastern Cape province.

The country is evaluating its options and any new refinery won't be operational before 2013, Nhlanhla Gumede, chief director of hydrocarbons at the ministry, told reporters in Cape Town. A new refinery would need to be capable of processing at least 200,000 barrels of oil a day, making it the biggest in the country, he added.

Durban's Engen oil refinery was shut down on October 11 after a power failure, an Engen spokesperson said.

Herb Payne said the refinery shut down automatically as a result of the power failure. The shut-down resulted in a huge plume of black smoke being sent "into the atmosphere".

The refinery is located near the suburbs of Wentworth and Austerville as well as Durban International airport.

Twenty minutes after the power failure, the "shut down refinery was stabilized and the smoke stopped".

"We are going through the process of reassessing the refinery before starting her up again. This is unlikely to affect supplies unless there is some damage [to the refinery]. We are still assessing if there was any damage."

The Petroleum Oil and Gas Corporation of South Africa, Petro SA, and its joint venture partners in its Low Temperature Fischer Tropsch (LTFT) Technology initiative, have successfully completed Demonstration Phase 1 of its semi-commercial LTFT plant at the Mossel Bay refinery, they said.

The joint venture company, known as GTL.F1, is a consortium between PetroSA, Statoil and Lurgi. The three parties joined forces to demonstrate LTFT technology based on cobalt catalyst and a three-phase slurry bubble column reactor utilizing Statoil's proprietary technology, as verified at pilot plant scale, can be commercially viable.

"The achievement demonstrates that gas to liquids (GTL) is a technically viable alternative route to producing hydrocarbon fuels that have the potential to reduce the world's dependability on crude oil," they said.

GTL.F1 set itself the objective of meeting critical performance criteria (conversion, selectivity, production rate, etc) in order to verify the catalyst and reactor performance. The semi commercial unit successfully met its targets for the first phase of the demonstration program in July 2006.

In May 2004, a large Fischer Tropsch Semi Commercial Unit (FTSCU) was ready for start-up in Mossel Bay, with the capacity to produce up to 1000 bbl/d of hydrocarbon products. The FTSCU is fully integrated into the existing PetroSA GTL Refinery Plant.

The catalysts for the FTSCU were provided by Johnson Matthey and Technip Italy who constructed the unit. The substantial size of this near-commercial scale plant will ensure that further scale-up risks are minimized.

South African refiner SAPREF said on October 30 it had shut down one diesel desulphurization unit after a fire on October 28, but it was unclear how long the shutdown would last.

Investigations continued at the 180,000 barrels per day plant in the eastern port city of Durban, but the remainder of the refinery was operating as normal, the refinery said in a statement. There were no injuries.

South African Petroleum Refineries (SAPREF) is operated as a 50/50 joint venture by Shell and BP and accounts for more than a third of South Africa's refining capacity.

The desulphurization unit removes sulfur from diesel and is one of four such unit at the refinery.

"The unit was shut down, but it is not clear yet how output has been affected or how long it will be shut down," Prudence Mbatha, SAPREF's spokeswoman said.

Preliminary assessments were being conducted to determine the extent of the damage, how long the unit may be out and whether there would be any need for fuel imports, she added.

Full capacity was resumed earlier this month after the refinery came back on line following scheduled maintenance work that began at the end of June.

The prolonged maintenance work opened a rare arbitrage of diesel fuel to South Africa from India in July to cover for reduced supplies.

Hoima district has been chosen to host a crude petroleum refinery, firmly putting it at the center of the country's emerging oil industry.

The Country Representative of oil explorer; Hardman Resources, John Morley told a newspaper that the district was determined as the most apt home for a refinery because of its proximity to the oil wells. Waraga-1 and Mputa-1, the two exploratory wells that have been confirmed to have commercial petroleum deposits are all located in Hoima.

Initial speculation had held that a refinery was most likely to be constructed in Kampala or Jinja, the country's commercial hubs.

Morley explained that construction of the refinery would possibly begin in May next year to beat the target of completion time of 2009 when commercial production is anticipated to commence. "Just right now we have started work on a development plan which will take us six months and then construction can begin".

While Hoima may think itself lucky for having been chosen as the base of the refinery with the inexorable benefits of jobs from the several sub-industries that will thrive around the oil boom, it will also have to endure the nasty underside of its incessant dark plumes, hazardous gases, noise pollution, oil slicks, discharges of enormous amounts of wastewater and other effects.

Also, mostly likely, the district will also have the added headache of dealing with the social effects having droves of desperate labor migrants who will start streaming into the area as the oil activities move into full gear.

Asked whether the timetable that has been set isn't impracticably tight, Morley said that Hardman's new shareholder; United Kingdom's Tullow Oil has brought enormous financial and technical capacity that makes such a timetable achievable. "With Tullow Oil, everything is going to move pretty fast," he said.

While speaking at the independence celebrations October 9, President Museveni revealed that the government together with exploration companies had agreed on an "Early Oil Production Scheme" which involves erection of a mini refinery to produce Diesel, Petrol, Kerosene and Heavy Fuel Oil by 2009.

"The future for oil production is... extremely promising," he said. Currently, the country has a confirmed production capacity of about 12,000 barrels of oil per day from only two wells.

"Hardman Resources (been taken over by Tullow oil), which discovered the oil is continuing to conduct more exploration and Heritage Oil and Gas of Canada, is also currently drilling the Kingfisher prospect onshore of Lake Albert, which is hoped to contain larger deposits.

Zambia and French oil major Total have agreed to each sell 15 percent stakes in their 50-50 owned Indeni Oil Refinery to a new partner to boost reliability of the plant, a government official said October 13.

"(The) government has instituted a revision of shareholders agreement of the refinery... An additional strategic partner with 30 percent will be sought," Buleti Nsemukila, the permanent secretary for energy and water development, said.

Nsemukila, who did not give a timetable for the partners' plans to dilute their holdings to 35 percent each, said in a statement that the move was part of broader plans to improve the efficiency and reliability of the refinery.

Nsemukila said Indeni had suffered years of under-capitalization and poor performance due to ageing equipment.

"The refinery is only operating at 40 percent of its design capacity (as it) is only processing about 500,000 tonnes of feedstock (crude oil) per year instead of 1,100,000 tonnes feedstock," he added.

A five-year rehabilitation program for Indeni due to cost $65 million was initiated with a six-week shut down for the plant to start the first phase.

Some of the equipment at Indeni is operating near its design limit which is increasing wear and tear due to lack of proper maintenance since the 1970s, Nsemukila said.

"The rotating mechanical equipment is outdated and it is difficult to obtain spare parts, a situation that has compromised the reliability of the refinery," he added.

Zambia's daily fuel requirement stands at 420,000 liters petrol and 1,000,000 liters diesel.

In September, the government awarded a contract to oil giant BP Plc's Zambian unit, BP Zambia, to import 50 million liters (13.21 million U.S. gallons) of finished fuel products. No breakdown has been given on how much diesel or petrol will be imported.

Most of the diesel produced by the refinery is used to run Zambia's vast copper mines, along with its transport and manufacturing industry.

Russian-British oil major TNK-BP is planning to build a refinery in Russia’s Sverdlovsk region in the Ural Mountains, it was reported on Oct. 11.

The Kommersant daily reported that the board of directors of the oil major’s subsidiary, Urals Oil Company, will consider a feasibility study for the 720,000 barrel-per-day refinery on Oct. 13. The paper quoted regional deputy state property minister Nikolai Zuyev.

Zuyev said the first stage of the refinery will have capacity of 360,000 barrels per day, and its production will be mainly distributed among regional consumers. He did not give further details of the project.

The firm owns 51 percent in Urals Oil, while the other 49 percent belongs to the Sverdlovsk region’s government.

Esfahan Oil Refining Co. (EORC) and Iranian Namavaran Company have signed a contract to build a gasoline production unit at Esfahan Refinery.

The project, valued at €160 million, is aimed at increasing gasoline production at Esfahan Refinery to 12 million liters from the current 9 million liters per day. Moreover, the octane of the produced gasoline is expected to improve from 87 to 93.

The production of unleaded gasoline at Esfahan Refinery and subsequent decline in unleaded gasoline imports by 3.3 million liters per day are other aims of this project.

The Franco-Italian Technip Engineering Company will carry out basic engineering and it is to be implemented on EPC (engineering, procurement, and construction) basis.

Three naphtha treatment units, a reforming unit employing continuous reduction method, and an isomerization unit are the host other ventures to be constructed in relevant phases.

These parts are to be implemented by the Korean Hyundai, Indian AKPG, and Iranian Dorriz in cooperation with Namavaran.

“Esfahan Refinery is to be developed within stages. The construction of gasoline production unit is planned for the first stage, and the next stages will be launched once the winners of the bids are determined,” said Nureddin Shahnazi, the managing director of Esfahan Oil Refining Co.

He added that the future development plans at the refinery will be contracted out within the next four months.

He further said that the refinery would generate profit when the ‘development projects’ are finished. “It would then be prepared for privatization,” Shahnazi added.

According to a source in the Iraqi Ministry of Sciences and Technology, the ministry is planning to establish a desalination station for Samawa Refinery.

The official source also revealed that nearly 90 percent of the civil work at the ministry is finished, and the final system designs are ready. Samawa Refinery, is related to Middle Refineries Company which was inaugurated last year.

Oman's new oil refinery in Sohar is expected to start operations at the end of October, Oman Trading International, a joint venture between Oman Oil Co and energy trader Vitol, last year signed a five-year deal with Oman Refinery Co to take output from the 116,400 bpd refinery. Production will be used to satisfy domestic demand before exports, according to an Oman Oil statement.