july 07 update

The new fuel will then make its way through the distribution system, so that by December 1, locomotives and marine vessels, as well as farming, construction and mining equipment, will switch to diesel containing nearly 85 percent less sulfur. This new off-road fuel has a sulfur content of 500 parts per million, reduced from approximately 3,000 parts per million in the previous blend.

"June 1 marks an important next step on the road to clean diesel. Last year saw the nationwide availability of on-highway ultra-low sulfur diesel fuel enabling manufacturers to engineer the cleanest diesel trucks ever. This new fuel will begin bringing the same benefits to off-road equipment," said Allen Schaeffer, executive director of the Diesel Technology Forum.

By 2010, sulfur levels in most non-road diesel fuel will be reduced to 15 parts per million, making it possible for engine manufacturers to use advanced exhaust control systems that significantly reduce emissions. For locomotive and marine fuel, this step will occur in 2012.

Diesel is the predominant, and in some cases, exclusive source of power for many important sectors of the economy, including:

Agriculture: Farms and ranches use diesel to power two-thirds of all agricultural equipment -- almost $19 billion worth of tractors, combines, irrigation pumps and other farm equipment.

Construction: Nearly 100 percent of off-road construction equipment -- approximately $17 billion worth -- is diesel-powered.

Mining: Diesel power accounts for 72 percent of the power used in mining.

Freight Transport: Ninety percent of the nation's freight tonnage and 94 percent of its total freight ton-miles are moved by diesel power, and while trucks move much of this cargo, diesel-powered non-road modes such as rail, shipping and intermodal transport chains also play a key role.

"Diesel engines are the workhorse of the American economy, offering an unmatched range of performance and economic advantages over other forms of energy, including more power, greater energy efficiency, increased safety, better durability and suitability for very large applications," continued Schaeffer.

"This new off-road fuel, combined with innovative engine technology, will dramatically reduce diesel emissions, with far-reaching clean air benefits. The diesel industry is committed to being a part of the clean air solution without sacrificing the power, reliability, maintenance, and fuel economy of modern diesel equipment," Schaeffer said.

The Diesel Technology Forum is a partner in the Clean Diesel Fuel Alliance, which provides a resource on technical issues regarding the introduction of the cleaner fuel.

Repair Delays at BP Indiana Refinery Force Cut In Canadian Oil Intake

Extended unit downtime at BP PLC's Whiting, IN, oil refinery prompted the company to inform Canadian crude suppliers to the plant that it couldn't completely fulfill its purchase obligations, spokeswoman Valerie Corr said June 1.

The 410,000-barrels-a-day refinery, a major source of fuel supply to the Chicago market, has been operating at about half of its capacity since late March. Downtime for several major processing units has stretched from four to six weeks originally to months.

Force majeure is a clause in a contract that frees one or both parties from liability when an extraordinary event outside of its control takes place. Before crude processing rates fell in late March, Canadian crude made up about 20% of its throughput, or 82,000 barrels a day.

"Supply and Logistics has been working around the clock to minimize disruptions to oil suppliers while Whiting's crude oil throughput has been constrained," she said.

Repairs to two of the three crude units at the refinery are seen taking weeks longer than expected, said a person familiar with the plant. One unit, seen back in June is now seen down as late as early July and work on the other, previously seen restarting in early July, is seen taking until August or September, the person said.

BP's Corr declined to comment on the crude unit repair timeline.

A fire at the end of March damaged a hydrotreater, used to remove sulfur and other contaminants, and forced BP to reduce the processing rates of other units there, including those used to produce gasoline. Forced to cut the amount of crude oil processed, BP also took the opportunity to advance planned maintenance on one of the crude units.

Without the force majeure, BP's commitments to crude suppliers could have become problematic because of an expected increase in the flow of Canadian crude.

The main crude oil pipeline linking Canadian oil to Midwestern refineries, owned by Enbridge Inc. (ENB), discovered a leak in mid-April and reduced its daily throughput by 90,000 barrels a day but the line could be back to normal in a matter of weeks.

Enbridge is in the "final stages" of determining the cause of the leak, a necessary step before restoring full throughput on the pipeline, Enbridge spokeswoman Jennifer Varey said.

The extended crude throughput problem at BP's refinery isn't seen affecting the company's plans to boost its use of Canadian crude to include heavy oilsands volumes coming on line in the next few years.

The company is still on track to invest $3 billion to increase heavy Canadian crude oil throughput to 80%-90% of the refinery's total by 2011, Corr said.

Chevron Shuts El Segundo Facility

Chevron Corp. shut a 200,000-barrel-per-day crude distillation unit at its facility in El Segundo on June 1 for planned work, according to a Reuters report.

The CDU is the larger of two facilities at the refinery, with the other having a 60,000-barrel-per-day capacity. CDUs do initial refining of oil when it arrives at a refinery.

The work is expected to last two months. The report cited trade sources in saying that the shutdown is unlikely to affect gasoline prices in Southern California.

U.S. EPA Sued Over Oil Refinery Flares Rule

Environmental Justice Activist Jesse N. Marquez and the Coalition for a Safe Environment filed a lawsuit in federal court June 13 citing current U.S. Environmental Protection Agency rules on "Startup, Shutdown and Malfunction (SSM)" plans for oil refineries which have resulted in hours-long refinery flares spewing toxic emissions over neighborhoods, schools, parks, and community playgrounds. The federal suit, represented by Earthjustice, also alleges that an EPA rule change blocks public access to information about specific oil refinery toxic emissions and public safety plans.

In September 2005, an accidental blackout caused by a Los Angeles Department of Water and Power worker resulted in a complete shutdown of Shell, ConocoPhillips and Valero oil refineries in Wilmington, California. None of the refineries had emergency back-up power systems. When the outage occurred, refinery pollution controls failed to operate resulting in "unscrubbed" toxic gases and chemicals being forced into a smokestack, ignited, and burned; spewing hundreds of tons of toxic black and yellow smoke into the air for more than eight hours.

EPA's current rule allows oil refineries to operate without adequate startup, shutdown and malfunction plans. A review of oil refinery flaring by the California South Coast Air Quality Management District in 2005 disclosed that roughly 80% of refinery flaring was neither an emergency nor a malfunction. Neighboring residents continue to witness refinery flares every month and have filed hundreds of complaints.

Countrymark Cooperative will Invest $20 Million to Expand Mt. Vernon Refinery

Indianapolis-based Countrymark Cooperative LLP says it will invest $20 million to upgrade and expand its refinery in Mt. Vernon. The company says the project will help boost refining capacity by 12 percent, or 45 million gallons per year. Countrymark says the expansion will make much needed gas and diesel products available to Hoosiers. The project is expected to be completed in 2008.

Motiva Ready for Expansion at Port Arthur

Motiva Enterprises is moving forward with site work at its Port Arthur, Texas, refinery though official word of whether the facility will be chosen for a multibillion-dollar expansion remains months away.

Motiva project integration manager Rick Strouse gave Port of Port Arthur commissioners a status report of the as-yet-proposed project June 13 after commissioners approved a resolution laying the groundwork for issuing bonds to provide sewage and solid waste disposal for the site.

The "agreement to agree" is similar to other resolutions the port has approved for other projects in the past, port bond counsel Alan Raynor said.

"It's simply evidence of intent assuming everything will be agreed upon between Motiva and the port," Raynor said.

About 400 workers are prepping the site -- off of Savannah Avenue in western Port Arthur, Strouse said.

The work includes "bathtubbing," or digging areas for the new construction. Construction labor should peak with between 4,000 and 5,000 workers in 2009, with startup scheduled for 2010, Strouse said.

Crews expect to begin driving about 50,000 piles into the ground later this summer for additional preparation, Strouse said.

Consultants from Texas A&M University have been called in to examine traffic flow in the area. A stop light could be added along Savannah Avenue as crews ramp up construction, Strouse said.

Strouse said he will go before Motiva's board about the project as early as the end of this month.

"We should get some positive feedback within the next few weeks," Strouse said.

Final corporate approval for the project could come by September, he said.

Port commissioners granted the first-ever 100 percent tax abatement for the estimated $3.5 billion to $5 billion Motiva project in January.

The abatement agreement requires Motiva to make a concerted effort to hire local subcontractors and direct labor for the project.

Port board secretary-treasurer Linda Turner-Spears emphasized that the port should monitor the project closely to ensure Motiva follows those rules.

Strouse said Motiva has "big initiatives" to hire as many local workers and subcontractors as possible.

In other port business, commissioners approved a draft of the port's fiscal 2005-06 audit. The port ended the fiscal year with a net revenue gain of $485,000, the audit shows.

Other highlights included an increase of $194,000 in terminal revenue to more than $4.3 million; property taxes went up $534,000 to about $4.1 million; loading and unloading expenses went up $114,000 to about $1.6 million; and salaries increased $30,000 to more than $950,000. The port board's next scheduled meeting was scheduled to be July 25.

Flowserve Secures Garyville Refinery Pump Contract to exceed $49 Million from Marathon Oil

An order to Exceed $49 million for 400 Pumps, Seals and a Hydraulic De-coking System....Flowserve Corporation, a global provider of fluid motion and control products and services, announced it has secured a contract to provide nearly 400 pumps, seals and a hydraulic de-coking system.

The order is for Marathon Oil Corporation's refinery expansion in Garyville, Louisiana. The expansion will increase production by 180,000 barrels per day (bpd), bringing total capacity to 425,000 bpd. The value of this order should exceed US$49 million. Construction at the Garyville refinery is scheduled to begin in mid-2007, and should be completed in the fourth quarter of 2009.

U.S. Refinery Safety to Face Expanded Scrutiny

The U.S. Department of Labor has launched a national program to expand the enforcement of refinery regulations, including stepped-up inspections over the next two years, The Wall Street Journal reported June 11.

The initiative is a response to a spate of accidents in the industry in the past few years, and it comes as refiners face political pressure to increase gasoline supplies amid higher prices, the report said.

Among the biggest incidents was an explosion and fire at BP PLC's Texas City, Texas, refinery in 2005, which killed 15 employees and injured 170, according to the report.

"The large number of fatal or catastrophic incidents in the petroleum refining industry indicated the need for a national emphasis program," the Occupational Safety and Health Administration (OSHA) directive stated.

According to the agency, there have been 36 incidents related to the release of highly hazardous chemicals in the refining industry since 1992, causing the death of 52 employees and 250 employee injuries.

The refining industry counters that its safety record has improved in the past few year, despite the accidents.

The report said that inspections under the new program will cover refineries under OSHA's jurisdiction that are not part of its Voluntary Protection Programs.

They will be in addition to other OSHA inspection programs, which largely target workplaces with the highest rates of injuries or illnesses, the report said.

Port Arthur, Texas Refinery Idled after Emergency Flaring

Total SA, Europe's third-largest oil company, said a main blower and a compressor were idled at its refinery in Port Arthur, Texas.

Total said the main blower tripped off June 14 during heavy lightning. The process of restarting the unit began at 5:40 p.m. A compressor tripped off during the blower's restart at 12:15 a.m. June 15 and was off line for about four hours, according to the filing.

Total estimated that it will flare 285 pounds of hydrogen sulfide, a poisonous gas, and 3,973 pounds of sulfur dioxide, its waste product. Sulfur dioxide and hydrogen sulfide can only be flared in an emergency in Texas.

The Paris-based company reported the incident, which necessitated emergency flaring, in a filing with Texas environmental regulators. The flaring, or burning off of chemicals into the air, was expected to end after 24 hours, according to the filing.

Total spokesman Rick Hagar said he wasn't immediately able to comment on whether the incident reduced production at the plant, which is located about 99 miles (159 kilometers) east of Houston. The refinery is capable of processing 240,000 barrels of crude oil and condensate a day.

$8 Billion South Dakota Refinery Could Face Long Permit Process

Hyperion Resources Inc., a privately held Dallas-based energy company, revealed in June that it's considering Elk Point in South Dakota as the site for the Hyperion Energy Center an $8 billion refinery that would turn 400,000 barrels of Canadian crude oil a day into low-sulfur gasoline and diesel.

The permitting process for such a venture is a five-year "test of time and will," said Mary Novak, managing director of energy services at the economic consulting firm Global Insight.

Factor in construction, which Novak said can drag on another five years, and you've got a decade-long proposal that can scare away even the most forward-thinking investors.

"The problem is between identifying it and when you would actually get a return from it, a lot can happen," she said. "The permitting process is very difficult."

Industry officials in August told the Senate Energy and Natural Resources Committee that the lengthy permitting process discourages companies from investing the time and money in refinery construction.

They pointed to Arizona Clean Fuels Yuma, which first began working on a permit for a 150,000 barrel-per-day refinery near Mobile, Ariz., in 1998. The final permit was issued in April 2005 -- seven years after the company first began its work. The project's latest timetable has construction starting in 2008 with operation slated for late 2011.

Oil insiders have been trying to decide what to do with the increasing amount of crude coming from Alberta's oil sands ever since rising oil prices in recent years prompted an expansion of the industry north of the border.

Should the crude be refined in Alberta? Should it be moved by pipeline to Texas refineries? Should companies consider building new refineries or further expanding its existing ones?

Hyperion's proposed Elk Point location -- one of a few sites the company says it is considering -- would be within 40 miles of the proposed TransCanada Keystone Pipeline, a separate venture which would move 435,000 barrels of crude oil a day from Hardisty, Alberta, to Patoka, Ill.

Preston Phillips, a Hyperion executive, said the company is considering many possible ways to receive and move its product.

"Hyperion had discussions with several pipeline companies, but one of the great positive things about this project -- being at 400,000 barrels a day -- it can constitute having its own dedicated pipeline and as such is not contingent on any pipeline project out there," Phillips said.

Phillips said the Hyperion Energy Center would be a state-of-the-art refinery designed to protect air and water quality. It would use 12 million gallons of water a day from the Missouri River, but the company would use aggressive water reuse strategies to return cleaner water to the river, he said.

"We're committed to the highest environmental standards," Phillips said. "This project's going to have many positive benefits for the community."

Novak said any new refinery will make use of the latest technology, but it still will be an oil refinery.

"The site is still going to emit a lot, and it's still going to have groundwater issues," she said. "As good as you are, it's still very heavy manufacturing of energy into energy, and so it's just a dirty process."

The project has received support from local economic development leaders, state officials and some local residents, but it will need widespread local support if it's to become a reality, Novak said.

Tesoro Confirms 5,000-Barrel Oil Spill at Wilmington Refinery

A Tesoro refinery spokesperson confirmed June 25 an earlier report from the Governor's Office of Emergency Services that 5,000 barrels of crude oil spilled into a soil berm at its 98,500 barrel-a-day refinery in Wilmington, Calif.

"The spill isn't having any effect on refinery operations," Tesoro spokeswoman Natalie Silva said. She didn't give any time frame for cleaning up the oil spill from a ruptured 12-inch pipeline responsible for the release, but indicated Tesoro employees were working on the cleanup.

The incident is the fourth recorded in the last five weeks at the facility, with a June 16 power outage affecting operations for several days.

Interline Resources Receives EPA Small Refinery Exemption Status for Wyoming Facility

Interline Resources Corporation has received small refiners status from the EPA effective June 20, 2007 for the 4,000 b/d refinery it intends to rebuild at its Douglas, Wyoming facility. As announced in May, Northcut Refining, LLC, was formed to rebuild and operate the refinery to take advantage of low refining capacity in Wyoming and strong refining margins for the high sulfur diesel the refinery intends to produce.

According to Michael Williams, CEO of Interline, "Almost all refineries must now meet very low sulfur specifications for their diesel products. This requires very expensive processing equipment. Because the Douglas facility has been classified as a small refiner by the EPA, the sulfur specifications are not as stringent, and we do not have to install the expensive desulfurization equipment. This really reduces our capital and operating costs."

Under the EPA rules, Northcut Refining will be able to produce 500 ppm sulfur diesel until 2014 for sale to most off road users. After 2014 the diesel can be sold to the locomotive market.

Citgo Found Guilty of Clean Air Violations

A federal jury found Citgo Petroleum Corp. guilty on June 27 of two felony violations of the Clean Air Act in the first case of a refiner going before a jury on criminal charges, the U.S. Department of Justice said.

Citgo said it would appeal.

Citgo Petroleum Corp. and its subsidiary, Citgo Refining and Chemicals Co., were convicted of operating two huge open-top tanks without proper emission controls at its Corpus Christi East Plant refinery.

The company faces up to a $500,000 fine on each of the counts, or twice any economic gain for not installing the controls, plus five years probation.

For a decade ending in 2004, Citgo removed oil from the surface of tanks with vacuum trucks without installing controls to prevent the release of volatile organic compounds, including the carcinogen benzene, from the tanks.

The tanks, which were used as oil water separators, were required by law to have either a fixed roof and ventilation device or floating roof, but had neither.

"CITGO failed to install required emissions controls, which emitted benzene, a known carcinogen, into the air," said Granta Y. Nakayama, an official with the Environmental Protection Agency. "Today's jury conviction sends a clear message that neither the public nor the government will allow corporations to knowingly break the law and pose a risk to the local community and the environment."

Citgo spokesman Jesse Garcia noted that the company was found innocent on two counts regarding reporting requirements and believed they were following EPA guidelines that did not require roofs.

"There seems to be a contradiction from EPA and the Justice Department," he said. "We feel like we're going to go ahead and get that back on an appeal."

Justice Department spokesman Andrew Ames said this was the first time a refiner had been brought before a jury on criminal charges, though several other criminal cases against refiners have settled out of court.

Tesoro Dedicates $63 Million DDU Project at Alaska Refinery

Tesoro Alaska Co., a wholly owned subsidiary of Tesoro Corp., dedicated its $63 million distillate desulfurization unit (DDU) at the Kenai refinery June 27, making the company the sole manufacturer of ultra low sulfur diesel ULSD in Alaska. "We are very proud of Tesoro's 38-year history in Alaska, and the DDU investment creates a bright future for the Kenai refinery," said Steve Hansen, refinery manager.

Over 150 employees, contractors, and community leaders were on hand at Tesoro's Kenai refinery to witness the dedication. "The new unit is part of a company-wide capital investment program that focuses on improving existing refineries to grow opportunities for the company. We made the investment so we can produce the EPA-required ULSD for Alaskan consumers," said Tesoro's Chief Operating Officer Bill Finnerty.

The DDU has a nameplate production capacity of 10,000 barrels per day, and is designed to manufacture diesel with less than five parts per million of sulfur. The Kenai refinery has manufactured gasoline meeting 2007 EPA specifications for low sulfur since 1986.

The Kenai refinery, which began operations in 1969, was the company's first refinery. From 1998 to 2007, the company acquired six other refineries - Kapolei in Hawaii, Anacortes in Washington; Martinez and Los Angeles in California, Salt Lake City in Utah, and Mandan in North Dakota.

CANADA

Proposed Sarnia Refinery Clears Environmental Hurdle

The Ontario government has given the go-ahead for Shell Canada's environmental assessment of its proposed new refinery near Sarnia.

Environment Minister Laurel Broten announced June 27 she has approved the oil company's plan for identifying the refinery's impact on the environment. Shell has an option to buy 2,400 hectares of land in Lambton County, near its current refinery, which processes 65,000 barrels a day of crude oil. The projected capacity of the new refinery would be 150,000 to 250,000 barrels per day.

BOLIVIA

Insurance Woes Delay Bolivia's Takeover of Refineries

Bolivia's state energy company has postponed the official takeover of two refineries run by Brazil's state-controlled oil company Petroleo Brasileiro SA (PBR), or Petrobras, because of difficulty finding insurance for the refineries, the Hydrocarbons Ministry confirmed in a release June 12.

"None of the companies that made a bid for the insurance of the refineries fulfilled the necessary prerequisites, thus we preferred to take some more days to hold another tender and contract an insurance company that will provide coverage and contingencies," Hydrocarbons Minister Carlos Villegas was quoted as saying in the release.

The takeover of the refineries from Petrobras without proper insurance would have been irresponsible, the ministry said. Petrobras' insurance would expire once Bolivian state energy company Yacimientos Petroliferos Fiscales Bolivianos takes over the refineries, the ministry added.

Bolivian state news agency ABI reported earlier June 12 that the takeover had been postponed after Petrobras' Bolivian refining unit canceled a tender for insurance for the refineries because insurance companies that had submitted bids didn't indicate prices for their services.

ABI said the insurance question was the only remaining issue regarding the transfer of ownership of the Gualberto Villarroel and the Guillermo Elder Bell refineries.

On June 11, Bolivia said it had made an initial $56 million payment toward its repurchase of two refineries from Petrobras and will pay another $56 million on Aug. 11.

Any new insurance policy would have to provide coverage worth $180 million, the Hydrocarbons Ministry said in its June 12 release.

Petrobras Chief Financial Officer Almir Barbassa confirmed that Bolivia made the $56 million installment, a Petrobras press official said.

Bolivia asked for a few more days to resolve pending contractual issues, before taking control of the refineries, Barbassa said. The CFO didn't comment on the insurance issue, the Petrobras press official said.

Bolivian President Evo Morales nationalized the refineries along with much of the oil and gas industry in the country in May 2006. Bolivia and Petrobras reached a deal May 10 on the sale of the refineries after Petrobras had threatened to seek international arbitration.

Petrobras bought the refineries in 1999 from Bolivia for $104 million and says it has since invested about $30 million to modernize the facilities. Analysts have estimated that building the refineries today would cost far more than $134 million.

According to Petrobras' Web site, the two refineries jointly processed 39,800 barrels a day in 2005, or about 67% of their installed capacity. Output from the refineries meets all of Bolivia's demand for gasoline and jet fuel and 70% of its domestic demand for diesel.

DOMINICAN REPUBLIC

Shell Denies Wrongdoing in Alleged Dominican Refinery Irregularities

Shell said June 13 that a crisis exists in the Dominican Petroleum Refinery (Refidomsa) and said it will soon make a statement regarding its position, in reply to reports of alleged irregularities in that facility.

Since late 2005 Refidomsa has been at the center of controversy, including allegations of interference with the Petrocaribe Accord with Venezuela, signed by presidents Hugo Chavez and Leonel Fernandez, among other regional leaders.

Although a source at Shell quoted by the newspaper El Nacional said the statement will be soon issued by the company’s representative in the country, Rafael Maradiaga, who is abroad, they said the report at issue and the other topics which have been disclosed in relation to the company will be addressed.

For weeks reports say relations between the Dominican State and Shell, equal partners in Refidomsa, have deteriorated from a conflict over a statutory modification to allow the State a more active role in the facility’s administration.

Those reports, as yet unconfirmed by the parts, say the bitter internal struggle includes accusations of altered invoices to maintain high prices for imported fuels, whereas the Government officials reportedly have sought a wage increase that is so high, it scandalized its partners. The reports say the increase was already approved and in percentage surpasses the one by the Accounts Chamber’s judges, which caused a national scandal.

It was reported that the members of Refidomsa’s Governing Board who previously made an almost symbolic wage, now receive a base pay of some 150,000 pesos and other benefits.

The report says Shell didn’t accept the increase and even led to the multinational’s decision to announce the sale of its shares in July.

One the factors that it has generated the crisis commits this related to the transport fuels, where the cost the loads has been increased, it says that in artificial form, to maintain stops the prices parity import used by the Secretariat Industry and Commerce to fix the prices weekly fuels.

In October 2005 then Refidomsa president Aristides Fernandez Zucco was fired after a widespread gas spill in the complex, and after another bitter public controversy regarding fuel transport costs, where alleged alterations also occurred.

In a later development, Justice minister Radhames Jimenez ordered the director of the Corruption Prevention Department (DEPRECO), Octavio Líster, to begin a "exhaustive investigation" on the allegations by the Dominican Government’s representatives of in Refidomsa, on the alleged alterations of invoices.

ECUADOR

Petroecuador Board Okays $4 Billion Refinery Construction

The board of directors of Ecuador's state-owned oil company, Petroecuador, has approved plans to build a new refinery at an estimated cost of $4 billion, interim Energy Minister Jorge Alban said June 27.

"Construction will be carried out through a strategic alliance between Petroecuador and another (foreign) state oil company, which will be determined through a tender process," Alban said.

A 12-hour board meeting held June 26, and run by President Rafael Correa, set out the broad guidelines for new energy projects to be carried out under the current administration, which took office January 15.

The new refinery would be built in the coastal province of Manabi, and would have the capacity to process around 300,000 barrels of heavy crude oil per day, Alban said.

Ecuador is a net exporter of crude oil, but the country is forced to import processed petroleum products such as gasoline because of a lack of refining capacity. Furthermore, much of the new oil discoveries in Ecuador are heavy crude, and cannot be processed at the country's three existing light-crude refineries.

Still, the minister said the timetable for construction of the refinery is linked to development of the mammoth Ishpingo-Tambococha-Tiputini oil block, which is located inside the Yazuni National Park.

The June 26 meeting ratified the government's decision to wait until June 2008 to decide whether to proceed with development of ITT. The government has offered to refrain from developing the fields in exchange for a payment from the international community of $350 million per year.

The offer, designed to appeal to environmental interests, hasn't yet received any firm commitments.

Petroecuador, meanwhile, will proceed with licensing for the project in case the decision is taken to proceed, Alban said.

Brazil's Petroleo Brasileiro (PBR), Chile's Enap and China Petroleum and Chemical Corp. (SNP), or Sinopec, have all expressed interest in developing ITT, which has some 1 billion barrels of crude oil reserves.

Alban said Venezuela's state oil company, Petroleos de Venezuela, or PdVSA, is a possible partner for the refinery project, but added that other companies have also expressed interest, without disclosing names.

Correa's administration has opted for political reasons to partner with state oil companies, rather than private sector companies.

Part of the investment would come from Ecuador's Feiseh oil fund, which accumulates reserves from three fields confiscated in May 2006 from Occidental Petroleum Company (OXY). The remainder would be put in by the partner, although no final percentages have been determined yet, he said.

"It's very premature to talk about that. The approval is given, but the call for the tender process as well as defining the details depends on various factors, including the development of (Petroecuador's) oil fields," Alban said.

The board also approved construction of a gas storage terminal to receive natural gas imports, through a partnership between the government-run Ecuadorean Petroleum Fleet, or Flopec, and Petroecuador, Alban said.

Ecuador currently imports about 80% of its liquefied gas and the current contract with international trading firm Trafigura Beheer B.V expires in December.

An initial tender process to build the onshore terminal was recently abandoned because bids of between $160 million and $285 million for construction were above the government's budgeted figure of around $97 million.

Ecuador will hire floating vessels to store gas until the onshore terminal is built, he said. The permanent land-based terminal could reduce operating costs by $30 million per year, by removing the need to hire floating storage.

JAMAICA

Jamaica Determined to Modernize Petrojam Refinery to 50,000 Bpd

Minister of Industry Technology, Energy and Commerce (MITEC), Phillip Paulwell, June 22, unveiled plans to transform the state-owned Petrojam refinery into a more modern, efficient and profitable facility within the next three years.

"The Government is determined to modernize the refinery by a massive upgrade program that will start very shortly, and at the same time we expect to expand the refinery from 30,000 barrels per day to 50,000 barrels per day," he said.

This project, which will cost approximately $500 million will be carried out as part of the government's PetroCaribe arrangement with Venezuela.

Paulwell pointed out that the plant will also start processing new fuels such as Petcoke, a fuel used for power generation, which will be sold to the Jamaica Public Service, resulting in cheaper electricity for consumers.

Expressing optimism about the future of the market for ethanol, Paulwell reported that Petrojam Ethanol Limited, which restarted ethanol production in 2004 after forming a corporate partnership with COIMEX of Brazil, now produces 40 million U.S. gallons per annum.

"This is an area where we believe there are tremendous opportunities for our country," he said. The Minister said that apart from the fact that Jamaica is pursuing full implementation of replacing the current octane enhancer produced from petroleum, Methyl Tertiary Butyl Ether (MTBE) with the more environmentally friendly ethanol based fuel (E-10) by 2008, "we also see the opportunities for export."

"The US market is one that we are targeting and Jamaica intends to remain the lead country in the CBI for exporting ethanol to the United States of America," he asserted, adding that two private sector companies have now accepted the challenge and are establishing ethanol refineries throughout Jamaica.

"We (Petrojam) are looking to add another 60 million gallons very shortly, and we are hoping that this is going to enable our sugar cane industry to be revitalized, with ethanol being a major value added product in short order," Mr. Paulwell said.

Since commissioning and up to March 2007, Petrojam Ethanol has shipped approximately 42 million gallons of anhydrous ethanol to the U.S.A. The Petrojam Ethanol Dehydration plant, which was refurbished in 2005, has the capacity to export 150 million liters of fuel grade ethanol annually to the United States.

Petrojam Limited, a wholly owned subsidiary company of the Petroleum Corporation of Jamaica (PCJ) operates Jamaica's only refinery located on 76 acres at the Kingston Harbour.

The operation comprises the 36,000 barrels per day refinery, loading racks for Road Tanker Wagon distribution to retail outlets of the petroleum marketing companies and for delivery to the Jamaica Aircraft Refueling Services (JARS), a joint venture company of Petrojam.

The Refinery manufactures products from crude oil such as unleaded gasoline in two grades, 87 and 90 octane, liquid petroleum gas, kerosene and turbo fuels, auto diesel, heavy fuel oil, and asphalt. Petrojam also operates a 125,000 barrel storage terminal for finished products in Montego Bay.

Petrojam Buys Two Properties for $7 Million for Refinery Upgrade

The Jamaican oil refinery, Petrojam, has acquired properties that formerly housed Esso Standard Oil and Antilles Chemical for US$7 million, saying the space would be used for the refinery's ongoing expansion.

This year, the refinery will pump $1.13 billion into the upgrading program that began in 2005, but says it is still finalizing financing.

The expansion is supposed to increase the refinery's processing capacity from 35,000 to 50,000 barrel per day and install a new cataclytic cracker, which will improve the efficiency of the plant and enhance its ability to refine heavier crudes.

The first phase of the upgrading work, which started in 2005, is expected to be completed next year.

The two properties located beside the refinery at Marcus Garvey Drive, Kingston, were acquired last December, Petrojam managing director Winston Watson said.

He said the designs for the upgrade work were currently being done and should be completed by February next year.

"In parallel with that, we are working with our financial advisers to raise the money."

But Watson also said a portion of the $43 billion earned from the sale of a 49 per cent stake in Petrojam to Venezuela's state-owned oil refinery, PDVSA, would be used to finance the refinery project.

Petrojam controls 80-85 per cent of Jamaica's petroleum market and is one of few state-owned entities that are profitable.

Last year, the refinery made $256 million in profits from revenues of $77.9 billion, slightly lower than the previous year. However, sales are expected to grow 2.1 per cent to just over $79 billion this year, and in turn, generate profits of an estimated $395 million.

PANAMA

Qatar Petroleum-Oxy 350,000 Bpd Panama Refinery Expected to Cost $7 Billion

Qatar Petroleum, the state-run oil and gas company, said a refinery it planned to build in Panama with Occidental Petroleum might cost $7 billion. The refinery would have a daily capacity of 350,000 barrels of crude oil, the Qatar Petroleum chairman, Abdullah bin Hamad al-Attiyah, said in comments reported June 16 by the official Qatar News Agency. The company said last month that it had signed a memorandum of understanding for the refinery with a unit of Occidental and the government of Panama.

The planned refinery is part of $20 billion of foreign projects that Qatar Petroleum has agreed to or is negotiating, said al- Attiyah, who is also the energy minister of Qatar.

The country, which has the largest single natural gas field in the world, has a $130 billion, eight-year investment program in oil, gas, education and health. Economic growth will rise from 8 percent this year to 11 percent in 2010 on sales of gas, Standard & Poor's forecast in March.

2. ASIA

CHINA

Sinopec to Enlarge Five Refineries

China Petroleum and Chemical Corporation (Sinopec), one of the largest oil refiners in Asia-Pacific, plans to enlarge five refineries in cities along the Yangtze River, including Anqing, Changling, Jingmen, Baling and Wuhan.

Aiming to cut its cost, Sinopec is now exercising primary research for the associated affairs, said its spokesman Chen Ge, who introduced that the five refineries will surely upgrade the product quality by more advanced facilities.

For example, the Anqing Branch of Sinopec processes crude oil of 5.5 million tons every year, so does the Jingmen Branch, and the Wuhan Branch is able to process 5 million tons currently.

Presently, Sinopec has 17 branches with 5-million ton-plus processing capacity, 8 of which are capable of processing over 10 million tons annually.

And the giant plans to process crude oil of 156 million tons in 2007, after finishing 146.32 million tons in 2006.

INDIA

Reliance New 580,000 Bpd Refinery to Start Q2 2008

India's top private firm, Reliance Industries Ltd., hopes to commission its new 580,000 barrels per day refinery by the second quarter of 2008, and aims to acquire oil retailing assets in the United States and Europe, a top official said June 26.

The refinery was scheduled to be completed by December next year. It is being built by its subsidiary Reliance Petroleum Ltd., in which Chevron Corp. holds 5 percent.

The unit is coming up near Reliance Industries' 660,000 bpd refinery, the world's third-largest, at Jamnagar in Gujarat.

"The new refinery is likely to be commissioned in the second quarter of 2008. We are looking at Europe and USA for exports," P.M.S. Prasad, president and CEO, petroleum, told Reuters in an interview.

Reliance is also keen to acquire oil retailing assets or companies in the United States and Europe, said Prasad.

The company's network of petrol stations in India had captured 15 percent of the market last year, but subsidiszed sales by state-run Indian Oil Corp., Bharat Petroleum Corp. Ltd. and Hindustan Petroleum Corp. Ltd. hurt its operations.

"Our experience in India has given us expertise and understanding of the situation in a developing country," he said.

Reliance is also optimistic about a steady start for gas production in its deep-sea field in the Krishna-Godavari basin off India's east coast.

The field, which will double India's natural gas output when it starts pumping 80,000 cubic meters a day next year, is being developed at a cost of $5.2 billion.

Prasad said Reliance had obtained government approval to spend another $3.6 billion to maintain the field after its starts production.

Rajasthan 7.5 Million Tons Refinery still being Considered

State-run Oil and Natural Gas Corp said the proposal to build a 7.5 million tons refinery in Rajasthan to process crude oil found by Cairn India was still under consideration but an alternate plan for a 4 million tons refinery was found to be uneconomical.

"The original project for a 7.5 million tons per annum refinery is still undergoing due diligence between ONGC and Government of Rajasthan for arriving at an agreed fiscal support by the state government for achieving the economic viability of the project," ONGC said in a press release.

Besides the above proposal, a parallel exercise was undertaken by ONGC to evaluate the viability of downsizing the refinery to 4 million tons capacity with a view to containing the capital expenditure.

A smaller refinery was being contemplated to process the crude oil near the production site, eliminating the cost for laying a pipeline for exports and extending the availability of the Barmer crude at a reduced rate of production of 80,000 barrels a day, close to the economic life of the refinery.

Cairn India is to begin production of crude oil from Rajasthan fields in first quarter of 2009 with planned peak output of 150,000 barrels per day (7.5 million tons).

"The economic evaluation for the 4 million tons refinery in view of the crude evacuation pipeline is not working out to be viable," the release said. Since a decision on the original size of the refinery was likely to take some time, a decision on laying an oil pipeline from Barmer to Gujarat coast was likely still to come soon, it added.

"Substantively, the proposal for the development of 7.5 million tons refinery, which is independent of pipeline proposal, is under serious consideration," ONGC said.

India Okays $850 Million Mittal Refinery Deal

On June 21 India bent the rules to clear steel magnate Lakshmi Mittal’s purchase of a 49% stake in a long-planned oil refinery, thus allowing the largest ever foreign investment in a state-run refiner.

Singapore-based Mittal Energy Investments, a subsidiary of Luxembourg-based Mittal Investments, will pump about $850 million into the project in order to build a refinery with an annual capacity of 9 million tons in Bhatinda in the northern state of Punjab. State-run Hindustan Petroleum will have a 49% stake in the operation, while financial institutions will hold the remaining 2%. The refinery is expected to cost about $4.5 billion.

The government caps foreign direct investment in state-run refineries at 26%; the federal Cabinet’s decision to clear a 49% stake for Mittal, who ranks fifth on Forbes’ global rich list, could reflect the government’s desire to get the long-delayed project off the ground.

Hindustan Petroleum has approached 17 prospective partners about the refinery project since it received government approval in 2000. Last year, BP backed out due to fears that government controls on gas and diesel prices would result in losses. ExxonMobil and Saudi Arabia’s Aramco also passed.

State-run firms lose millions every month because of government controls on pricing. Analysts say Mittal’s investment is likely to be a one-off deal, since foreign companies are wary of entering India until they get a clear directive from the government on its pricing strategy.

The refinery is expected to be completed by the end of 2010. The joint venture will also build a 700-mile oil pipeline to the Western state of Gujarat, a crude oil terminal and other facilities. The refinery is expected to cater mainly to the domestic market.

Hindustan Petroleum operates two major refineries, one in Mumbai and the other in the southern city of Vishakapatnam, with a combined annual capacity of 13 million tons.

KOREA

South Korea’s S-Oil freezes $4 Billion Refinery Project

On June 12 South Korean refiner S-Oil Corporation put an indefinite hold on its $4bn plans to build a major new refinery, the latest energy project to fall victim to tight contractor markets and soaring costs.

S-Oil, the country’s third-largest refiner and one-third owned by state oil firm Saudi Aramco, announced plans last April to build a sophisticated new 480,000 barrels per day (bpd) refinery by 2010, one of a host of similar projects worldwide to address the current shortage of fuel production capacity.

But some of those projects have already slipped or risk being cancelled after construction costs surged as much as threefold, even as some analysts said the rush to build new plants risked undermining profit margins at the end of this decade.

“The current construction market is too overheated for us to start construction and this is causing the delay,” company spokesman Lee Dong-hoon said.

S-Oil could not say when construction would start and emphasized that the project was delayed, not cancelled. But analysts said it may be forced to wait years before seeing any relief in costs.

As much as 3.8 million bpd of refining capacity that had been planned in Asia and the Middle East may now not be built due to higher costs, Fereidun Fesharaki, Chairman and CEO of consultancy Facts Global Energy, said in May.

He had already included S-Oil’s project on that list, saying that costs could have risen to double-digit levels.

Kuwait had to retender for investors in its planned 615,000 bpd refinery this year after costs doubled to an estimated $12bn.

“S-Oil would have to pay billions of dollars more if it tries to follow the plan now,” said Hwang Kyu-won, analyst at Tong Yang Investment Bank.

“It will not cancel the project but overheated market conditions are likely to last for at least three years.”

S-Oil’s 3.6 trillion won ($3.87bn) investment plan included building two crude distillation units (CDU) with total capacity of 480,000 bpd, a 75,000-bpd hydrocracker and a 75,000-bpd residual fluid catalytic cracking (RFCC) unit.

The project would boost S-Oil’s refining capacity by 83 percent to make it South Korea’s second-largest refiner after SK Corp.

S-Oil is 35 per cent-owned by Saudi Arabia’s state oil firm Saudi Aramco, which has been looking to invest in refineries in Asia to guarantee buyers for its crude and to tap the region’s growing fuel demand, and has also touted its investments as proving its efforts to help consumer nations get enough fuel.

Refinery project cancellations have accelerated in recent months as escalating costs, a shortage of engineers and uncertainty about returns raise doubts over the future profitability of new units making key transport fuels.

MALAYSIA

Trading Firm Vitol Indicates Possible Plans for Fujairah Refinery

Vitol's newly purchased refinery in Fujairah, Malaysia which has sat idle for four years, has excellent oil storage tanks that can hold over three million barrels, the trading firm's chairman said June 12.

"It's a great storage terminal," Ian Taylor, chairman and president of one of the world's two biggest independent oil traders, told reporters at the Asia Oil and Gas Conference.

He said the capacity at the site in Fujairah, the world's second-biggest marine fuel port by volume, was 500,000 cubic meters.

Asked whether Vitol would ever revive the 82,000 bpd refinery, which analysts say is a piecemeal combination of various units that limits its value, he said: "I think there'll be times when we run it and times when we don't."

He said Vitol would invest some funds in both the refinery and the terminal, but did not give any figures.

Vitol bought the refinery from the government of Fujairah in May for an undisclosed sum. It has been mothballed since March 2003, even though global refining margins since then have surged to record levels amid a worldwide shortage of capacity.

PHILIPPINES

Shell Reviewing Options to Upgrade Philippines Refinery

Royal Dutch Shell PLC subsidiary Pilipinas Shell Petroleum Corp said it is exploring investment and upgrade options for its Tabangao refinery at Batangas, south of the Philippine capital, Manila.

"Pilipinas Shell remains committed to growing its businesses in the Philippines ...and it continues to explore options and alternatives for running and maintaining the Tabangao Refinery," Pilipinas Shell said in a statement.

"As such, a team is currently looking at such options and a review is ongoing," it added, without elaborating further.

Pilipinas Shell issued the statement following reports in local newspapers recently quoting unidentified industry sources as saying that Shell was planning to upgrade its Tabangao refinery at a cost of 15 bln pesos.

The scope and investment involved in the refinery upgrade, the reports said, would be similar to that undertaken by rival Petron Corp, which spent about US$300 million to upgrade its refinery in Bataan, north of Manila.

Petron Corp, the largest and only publicly listed oil refiner in the Philippines, is 40 percent owned by Saudi Aramco and 40 percent owned by the Philippine government through Philippine National Oil Co.

3. EUROPE / AFRICA / MIDDLE EAST

FRANCE

QuestAir Ships First Refinery Hydrogen Purifier to French ExxonMobil Refinery

AIM-quoted QuestAir Technologies Inc said it has shipped the first H-6200 hydrogen purifier to an ExxonMobil refinery located in France.

In early December, QuestAir said the purifier would be the key catalyst to its profitability and it expected to ship the prototype to the refinery early in the first quarter. In February, it said it expected to ship it by mid-April.

Today, QuestAir said the system will be installed and tested during the remainder of 2007 and so will remain at the ExxonMobil refinery and be utilized in ongoing commercial operations.

"The shipment of the first H-6200 system is a significant milestone towards the commercialization of the novel hydrogen purifier that QuestAir and ExxonMobil Research and Engineering Co have been developing since 2003," QuestAir chief executive Jonathan Wilkinson said.

GERMANY

Siemens Installs Demineralization Line for OMV refinery in Burghausen, Germany

The Siemens Industrial Solutions and Services Group (I&S) is installing a new demineralization line in the Burghausen refinery for OMV Deutschland GmbH and connecting it to existing systems. This aim is to cover the boiler feedwater needs of the expanded ethylene plant. Commissioning of the demineralization line is scheduled for summer 2007.

OMV Deutschland GmbH is the leading mineral-oil company in south Germany. With a 45 % holding in Bayernoil Raffineriegesellschaft, OMV has an annual crude-oil refining capacity of 8.8 million metric tons. The refinery in Burghausen mainly produces high-quality middle distillates, petrochemical raw materials and petroleum coke for the aluminum industry.

With the commissioning of the new cracking furnaces of the expanded ethylene, the need for boiler feedwater has increased. This necessitates a third treatment line (Row 6) for fully demineralized water from well water and a second mixed bed filter. The process engineering and technical aspects of the new line will be such that it will reliably produce salt-free potable water that can be used for high-pressure steam boilers.

Siemens is to build the complete demineralization line and integrate it into the existing systems. The new line includes a cation and anion exchanger – each of which uses a fluidized bed procedure and has a capacity of 180 m³/h – plus CO2 removal by means of a trickler, including blower, and also pumping with trickle pumps, one of which will be in operating mode and the other in stand-by mode. The mixed bed exchanger with a capacity of 360 m³/h is also part of the scope of supply. In addition, the media needed for operating the demineralization line such as compressed air, hydrochloric acid and caustic soda will be integrated into the existing plant and into the supply and removal systems.

Siemens is also responsible for planning, designing, project management, manufacturing and commissioning as well as trial operation and preparation of the documentation.

SPAIN

Technip Wins Contract from CEPSA for Huelva Refinery Hydrogen Plant

On June 27 Technip revealed the receipt of a lump sum engineering, procurement and construction contract for a hydrogen plant to be built at the Huelva refinery, Spain, from the CEPSA. The company noted that the contract, which is valued at approximately EUR 60 million, would be executed at Technip's operations and engineering center in Zoetermeer, with support from the center in Barcelona. According to the company, the project is expected to be completed in the fourth quarter of 2009, and is part of CEPSA's major expansion plan to meet the growing demand for middle distillates in Spain.

SUDAN

Malaysia Assessing Bids for Sudan Refinery Project

National oil firm Petronas said it is assessing engineering bids with its counterpart in Sudan to build a refinery for high-quality petroleum products. Petronas chief executive officer Mohd Hassan Merican said the refinery project at Port Sudan 'was still going on' and that it will have the capacity to process 150,000 barrels per day.

'The Port of Sudan joint-venture refinery project is ... entering a new phase,' Hassan told reporters on the sidelines of the two-day Asia Oil and Gas Conference in Kuala Lumpur.

'A decision will be made once we have reviewed all the bids,' he said.

Petronas acquired a 50 pct stake in the refinery project in 2005 through its unit Petronas International Corp Ltd. The remaining stake is held by Sudan's Ministry of Energy and Mining.

Under the tie-up, Petronas and its partner will jointly invest in, develop and operate the export-oriented refinery at Sudan's only entry port.

The refinery is designed to process high acid crude from Blocks 3 and 7 of the Sudan Melut Basin, where Petronas already has a 40 pct interest, and is expected to be operational by 2009, Petronas said.

Petronas also holds a 35 pct stake in an offshore oil and gas project in an area known as Block 15 in the Red Sea Basin in Sudan.

NIGERIA

Nigerian Government Revalidates 12,000 Bpd Amakpe Refinery Construction License

The Department of Petroleum Resources (DPR), the regulatory arm of the Nigerian Ministry of Petroleum Resources, has issued a revalidated Refinery Construction License (Approval to Construct - ATC) to Amakpe International Refineries Nigeria Limited. The DPR had in March 2007 cancelled all 18 Refinery Construction Licenses issued in 2002 and 2004 and required each beneficiary Company provide evidence of available Funding, complete Engineering Design and Work Plan as well as payment of applicable Security Deposit and Revalidation Fees before re-issuance of any Refinery Construction License.

Amakpe Refinery, having satisfied all the current License revalidation requirements of DPR, is the first Private Nigerian Company to receive a revalidated Construction License. Following this development, U.S. Ex-Im Bank is expected to make the approved Amakpe Comprehensive Loan Guarantee operative to enable UPS Capital Business Credit disburse related Loan Funds being Guaranteed by Sterling Bank, Plc., of Nigeria. The U.S. Loan will finance start-up construction of U.S. Plants and Machinery at Ventech’s Facility in Pasadena, Texas. This will compliment the Funds already raised through Equity, Investment Capital and Bridge Loan that will be applied towards execution of Project Site Construction Work Plan and full Project Implementation and Start-up within the overall Project Scope.

Start-up Construction at the Eket Project Site is expected to commence in July 2007, covering Site Clearing/Leveling, Fencing, Water Well, set up of Project Site-Office, installation of Pre-Engineered Project Buildings, construction of Foundations for Tank Farm & Refinery P&M, Temporary Power, etc. The Refinery Plants and Machinery will thereafter be shipped and installed at the developed Project Site for start-up production.

Based on current developments, phase 1 – 6,000BPD of the Amakpe Refinery is scheduled to commence production by September 2008 to produce Export Grade Naphtha, Diesel, Kerosene and Fuel Oil. Following the first two years of operations, the Refinery Project will expand into a second phase that will double the capacity of the Plant to 12,000BPD, incorporating a Catalytic Reformer/Hydrotreater to also produce Unleaded Gasoline. By the fifth through seventh year of production, the Project would have expanded to 30,000BPD capacity with the systematic addition of Distillation Units, Tank Farms, Support Systems and Accessories.

The Amakpe Refinery Project will provide employment to over 150 local Nigerian workers initially, increased to approximately 250 direct employees in its second phase. The establishment of the Refinery will propel the development of new Small and Medium sized Businesses in Akwa Ibom State in particular and Nigeria in general through Products Marketing and Distribution, Transportation, Construction, Supply Contracts, and Local Support Services. The establishment of Amakpe Refinery will be a catalyst for development of Downstream Petrochemical Industrial Projects that will source Raw Materials from the Refinery.

SOUTH AFRICA

PetroSA Looking for Site to Construct $2.5 Billion Refinery in South Africa

Petroleum Oil and Gas Corporation, known as PetroSA, is performing site studies to construct a $2.5 billion, 150,000-barrel-per-day refinery in Parow, South Africa. The company is considering options of constructing the refinery to process crude oil from Nigeria or the Middle East.

ZAMBIA

Zambia's Lone Oil Refinery to Close in September for Maintenance

Zambia's sole oil refinery, Indeni, will close in September for four weeks of maintenance as the government steps up efforts to make the refinery more reliable, the Ministry of Energy and Water Development said.

Permanent Secretary Buleti Nsemukila said the refinery will halt output during the maintenance work but that the government is putting in place measures to ensure that during the shut down, the country doesn't suffer fuel shortages.

"By September, all petroleum products will have been built up to 30 days working stock in reserves," he said.

The refinery is jointly owned by the government and France-based Total SA (TOT) and has the capacity to produce up to 20,000 barrels of fuel a day and supplies the bulk of its fuel to copper mines.

The government is trying to avoid a repeat of the 2005 fuel crisis which hurt the mining industry, stalling operations at Mopani and Konkola Copper Mines, the country's leading copper producers. The effects of the crisis are blamed for the failure of the country to meet its 2005 and 2006 copper output targets, the Chamber of Mines of Zambia says.

The state-run Energy Regulatory Board has since made it mandatory for oil marketing companies to keep a 15-day strategic fuel reserves but according to Nsemukila, only four of the 17 oil companies operating in Zambia have so far fully complied, the ERB has threatened to cancel the licenses of the non-compliant companies.

IRAN

Iran's First Private Refinery Goes Online

Iran's first private oil refinery complex became operational in the Aras Free Trade Zone on June 14.

The private refinery is designed to produce and export more than 73,000 tons of lubricants and oil derivatives to the markets of the region.

Managing Director of the complex gave the investment figure for the complex as more than 70 billion Rials by the private sector and 10 billion Rials by Iran's Bank of Sepah.

Mohammad Sabralilou added, the complex would refine more than 182,500 tons of various kinds of oil products annually and supply them to local and foreign markets.

He notified the objective for construction and operating of the complex as to increase the production capacity and export level of oil products from East Azarbaijan province to the countries of Armenia, Georgia, Afghanistan, Turkey, Pakistan, UAE, Nakhichevan as well as African continent and parts of the Europe.

Kerosene, gas, heavy oil gas, fuel oil and light lubricants are major products of the complex.

IRAQ

U.S. Commander Fallon Visits Bayji Oil Refinery to Discuss Future Plans

Adm. William Fallon, commander of U.S. Central Command, met with Maj. Gen. Benjamin Mixon, 25th Infantry Division commander, and other Iraqi and coalition leaders June 11, 2007, at the Bayji Oil Refinery to discuss the future of the refinery.

Fallon expressed his concern with getting the Bayji Oil Refinery running at its maximum potential, which included proposed methods for the protection of the oil pipelines that run to other cities and neighboring countries.

During the meeting, a representative from the Army Corps of Engineers introduced a $16 million plan to re-design traffic flow throughout the refinery, making tankers and fuel trucks less vulnerable to insurgents extorting resources.

The plan also includes surveillance and lighting equipment in heavy traffic areas to increase security in the refinery.

The discussions went beyond the Bayji Oil Refinery's problems and shifted to fixing other refineries in Iraq to maximize fuel efficiency in other provinces throughout the country.

The refinery in Haditha seemed to be one of Fallon's main concerns. He wanted to know what the Ministry of Oil and the Bayji Oil Refinery could do to help the Anbar province see some of the same positive changes that Salah ad Din has seen with the Bayji Oil Refinery.

Bayji Oil Refinery representatives said that money is not the primary issue when it comes to repairing some of the problems at the oil refineries in Iraq. Contracting is the issue. It is hard for the Ministry of Oil to find contractors who will work on the different problems each refinery is experiencing.

Since the Paratroopers with 1st Battalion, 505th Parachute Infantry Regiment, 82nd Airborne Division, have been working with the Bayji Oil Refinery, they have seen decreased prices of black market fuel throughout Salah ad Din province, a gas station inspection plan that makes sure various gas stations are accounting for the fuel they receive, and fuel availability to the local population.

"We've done some polling throughout the area, and people of Iraq are actually getting drastically increased amounts of fuel now compared to what they were getting, say, four or five months ago," said Capt. Kwenton Kuhlman, overseer of the Bayji Oil Refinery and Company B commander, 1st Battalion, 505th Parachute Infantry Regiment, 82nd Airborne Division.

"I think (Fallon) left with a positive assessment that those things (discussed) are possible and that we are working towards the way ahead on those issues," said Kuhlman.

QATAR

Qatar Seeks Tenders to Build 250,000 Bpd Oil Refinery

Qatar is seeking tenders to build an oil refinery with a capacity of 250,000 barrels a day, energy minister Abdullah Bin Hamad Al Attiyah said June 23.

The technical and financial studies for construction of a refinery at the Shahine oilfield have been completed, he told journalists, with 2011 set as the target for the facility to become operational.

OPEC member Qatar, which produces some 700,000 bpd, currently has only one refinery at Messaid. With a capacity of only 24,000 bpd, it does not even meet the country's 32,000 bpd domestic requirements, with the difference being met by imports.

SAUDI ARABIA

Aramco, Dow to Award Ras Tanura Complex $20 Billion Plus Refinery Deal in July

Saudi Arabian Oil Co. and Dow Chemical Co. (DOW) plan to award an initial contract in July to build an estimated $20 billion-$25 billion refinery and petrochemicals complex in eastern Saudi Arabia, a company executive said June 4.

"We are not far away, hopefully in July we will award it," Saudi Arabia's director for the Ras Tanura project, Fayez Al Sharef, told reporters on the sidelines of a conference in Bahrain.

Al Sharef didn't specify which companies have been invited to bid for the contract for early engineering on the Ras Tanura complex. The facility is being developed by Aramco, the world's largest oil company by production, and its joint venture partner Michigan, U.S.-based Dow.

Companies including Fluor Corp., Foster Wheeler Ltd. and KBR Inc. have traditionally been among the bidders for similar contracts in Saudi Arabia.

The joint venture partners have moved ahead with the project despite industry estimates that costs have more than doubled to as much as $25 billion, and signed a memorandum of understanding in May.

Al Sharef declined to comment on what the project would cost, but said some estimates of $25 billion were "on the high side."

Project costs in the Middle East have soared as governments spend record oil revenues on building and expanding industries and infrastructure, leading to a shortage of contractors, raw materials, equipment and qualified labor, which in turn has driven up prices.

Aramco and Dow have not committed to a timeframe for making an investment decision on the project but "will do it in the shortest and most practical time possible," Al Sharef told the Gulf Petrochemicals 2007 conference organized by London-based Middle East Economic Digest.

Aramco and Dow plan to sell a 30% stake in the project in an initial public offering at the Saudi stock market but no timeframe has been set, Al Sharef said.

"We want to do it as soon as is practicable," he said, adding it won't happen by the end of 2007 and will be at least two years away.

Oil companies including Aramco are seeking greater integration of refining and petrochemicals production to benefit from economies of scale, and to diversify their product portfolio.

Companies such as Dow see Persian Gulf countries as an attractive investment destination due the availability of cheap gas, which can be used to make plastics and chemicals.

YEMEN

Yemen’s Oil Ministry to Extend Marib Refinery to 25,000 Bpd

Yemen’s Ministry of Oil and Minerals said that the capability of Safer Refinery in Marib will be extended from 10,000 barrels to 25,000 barrels daily and that more oil reservoirs in Ras Issa in Hodeidah will be set up to contain three million barrels.

The project of the Marib refinery extension and making oil reservoirs in Hodeidah would cost $100 million, according to a report released by the ministry.

It said that the project aims at improving the oil derivatives based on international standards, reducing the costs of carrying oil from Marib to other governorates and rapidly covering increasing demands of oil derivatives.

The report said that the extension process would also include updates in the mechanism of controlling the refinery to reduce oil wastes or any emergent problems.

Yemen-Gulf Company for Petroleum Services announced last May it would start constructing an oil refinery in Ras Issa of Hodeidah next August for the approximate cost of $200 mln. It said that the first stage might be completed by August 2009.

It said that the production might start on October 2009 with capacity of 45,000 barrels daily to cover the demands of local market of crude oil, diesel and gas.

McIlvaine Company,

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