REFINERY UPDATE

 

April 2008

 

McIlvaine Company

www.mcilvainecompany.com

 

TABLE OF CONTENTS

 

INDUSTRY ANALYSIS

AMERICAS

U.S.

Big West has Power Outage at Bakersfield Refinery

BP's Texas City Compensation Bill Tops $2 Billion

N.J. Blames Valero Refinery for Odor across Large Area

Fluor Wins $1.9 Billion Project from Total SA at Port Arthur Refinery

Kansas Loses $10 Billion Refinery Opportunity

NATCO Awarded Contracts to Provide Technology and Equipment for Motiva Port Arthur Expansion

BE&K to Provide for Expansion of $675 Million Hunt Refining Project in Tuscaloosa

California’s Greka Oil & Gas Refinery Accused of Massive Inland Oil Pollution

CANADA

BP Joins Irving Oil in Proposed Eider Rock Refinery Project

MEXICO

Mexico Announces Feasibility Study for New Refinery

BRAZIL

Skanska Secures $150 Million Contract for Brazil Refinery Expansion

VIRGIN ISLANDS

EPA Seeks U.S. Virgin Islands Comment about Oil Cleanup

ASIA

CHINA

Total invests $240 Million in Dalian, China Refinery

INDIA

Possible End to Income Tax Benefits for New Refinery Projects in India

RIL KG 1,440 km Gas Pipeline set to be Commissioned

BP and Spice Energy to Move and Reassemble German Refinery to India for $1 Billion

Emerson Gets $19 Million Contract from RPL

Florida's SMF Energy to Buy San Antonio Area Refinery

INDONESIA

Japanese Investors to Spend $6.5 Billion on Refinery, LNG in Indonesia

SINGAPORE

PetroChina may Build 400,000 to 500,000 bpd Refinery in Singapore

VIETNAM

Keppel to Build $205 Million Jack-up Rig for PetroVietnam

EUROPE / AFRICA / MIDDLE EAST

FRANCE

LyondellBasell Completes Refinery Purchase in France

GREECE

Technip Awarded EPC Contract for Crude Distillation Unit in Greek Refinery

ITALY

Saras Awards Italian Refinery Revamp Contract to Foster Wheeler

LATVIA

First Oil Refinery for Latvia in 2010 to be 6 Mln tn/yr

NORWAY / FINLAND

Metso Automation and ABB Sign MoU for Future Collaboration

SLOVAKIA

Bratislava Refinery Plans Q2 Maintenance

SPAIN

Foster Wheeler Wins Contracts for Delayed Coker Complex for Spain’s REPSOL YPF

UNITED KINGDOM

Chevron Plans 6-Week FCC Maintenance at UK Pembroke Refinery

KENYA

Upgrade Set to Modernize Kenya Refinery

MOZAMBIQUE

Construction Begins on 300,000 bpd Mozambique Refinery

WEST AFRICA

Australia’s CityView Corp. Buying Oil Refinery for West African Site

SOUTH AFRICA

PetroSA‘s Coega Crude Refinery Plans in Progress

SYRIA

Petrofac Wins $454 Million Syria Gas Plant Project

RUSSIA

Lensk, Russia to get 1.5 Mln tonnes Oil Refinery

UKRAINE

Ukraine to Appoint New Refinery Management Soon

IRAN

Private Sector to Construct 300,000 Barrel Refinery in Northern Iran

KUWAIT

Kuwait Sees Asia Refinery Deals by Next Year

SAUDI ARABIA

Alfa Laval Wins Refinery Order in Saudi Arabia

 

 

 

INDUSTRY ANALYSIS

AMERICAS

 

   U.S.

 

Big West has Power Outage at Bakersfield Refinery

Big West of California suffered a power outage at its 68,000 barrels per day oil refinery in Bakersfield, California, the company said in a filing March 3 with environmental regulators.

 

"Substance is being released to flare due to a power outage," Big West of California said in the filing with the California Governor's Office of Emergency Services.

 

Officials at Big West of California, a wholly owned subsidiary of Flying J. Inc, could not be reached immediately for comment.

 

The refinery is supplied by local California crude oils and Big West mainly markets finished motor fuel products in the Bakersfield and Fresno areas. The refinery is also a large supplier of gas oil products to other refiners.

 

BP's Texas City Compensation Bill Tops $2 Billion

BP's compensation bill for an explosion at its Texas City refinery in 2005 which killed 15 workers has passed $2 billion, a spokesman for the oil giant said on March 4.

 

BP has paid out $1.6 billion already and has set aside another $525 for other claims. The spokesman said the total covered the biggest claims but was unable to say whether further charges would need to be taken to cover compensation costs.

 

Repairs and lost profits have also cost BP over $1 billion. BP said in its annual report that it had settled some shareholder legal actions related to the blast, but the spokesman declined to say how much, if anything, had been paid.

 

N.J. Blames Valero Refinery for Odor across Large Area

New Jersey environmental investigators said in March they’re convinced that the Valero refinery near Delaware City was the source of a mystery odor that annoyed residents over a wide swath of South Jersey on Jan. 4.

 

Darlene Yuhas, spokeswoman for New Jersey’s Department of Environmental Protection, said the conclusion followed a weeks-long investigation using detailed weather data, pollution release records from three states and other information.

 

“They did what’s referred to as a backwards trajectory,” Yuhas sad. “We were very thorough and very deliberate in tracking this down.”

 

Valero officials reported that a cooling water intake problem disrupted operations for about 15 hours on Jan. 4, leading to unplanned pollution releases that included 15,000 pounds of sulfur dioxide.

 

Yuhas said the information has been relayed to Delaware’s Department of Natural Resources and Environmental Control.

 

Delaware’s environmental agency already is investigating the Jan. 4 episode and another larger and longer-duration pollution release that began Feb. 11 when an electrical component failed, causing a fire, power loss and production cuts.

 

Valero spokesman Bill Day said company officials doubt suggestions that Delaware City caused the South Jersey complaints.

 

“Based on the size of the release, which was not large, weather conditions that day including the wind direction and distance between the Delaware City plant and where the odor complaints were, we don’t think they’re connected,” Day said.

 

“We have not seen, still, the data that the regulators in New Jersey are talking about. We’re eager to see it.”

 

Ravi Rangan, a DNREC engineer assigned to the refinery, said Delaware is still doing its own review, but generally agrees with weather models and weather data used by New Jersey.

 

The Delaware plant, built to process heavy, high-sulfur crude oil and other refining leftovers, has sent bad air over similar distances in the past when wind and weather conditions are just right and when major processing units act up.

 

In January 2000, Pennsylvania officials reported chasing odor complaints well into Montgomery County, Pa., north of Philadelphia, after problems in Delaware.

 

In 1999, a brief release from a single unit at Delaware City sent a cloud of gas beyond Hockessin, prompting an evacuation of a school in Pike Creek. A smaller incident in 2004 triggered reports of respiratory irritations and illnesses as far away as Newark.

 

National pollution reporting records list the Delaware City plant as the only site experiencing a major pollution release in the region on Jan. 4.

 

Fluor Wins $1.9 Billion Project from Total SA at Port Arthur Refinery

Fluor Corp. has received a $1.9 billion contract from French oil company Total SA to provide engineering, procurement and construction services at Total's Port Arthur refinery.

 

Irving-based Fluor said the full value of the contract will be booked in the first quarter this year.

 

The company will build a coker, a desulfurization unit, a vacuum distillation unit and other related infrastructure. Fluor said it is expects to employ as many as 2,200 workers for the project with the completion of the coker scheduled to be in 2011. Petrochemical expansions are not planned Total says.

 

The new contract follows the completion of the front-end engineering and design work that Fluor has performed for Total at the Port Arthur refinery. Fluor will perform a portion of the work as self-perform construction and also will maintain the role of overall construction management.

 

When commissioned in 2011, the refinery will convert heavy and process sour crude. The new units will increase the facility's deep-conversion capacity and expand its ability to process an additional 3 million tons-per-year of ultra-low sulfur automotive diesel. This will raise the refinery's total output of all products to about 12 million tons per year, the company said.

 

Fluor offices in Aliso Viejo, Calif., Houston and New Delhi, India, will be involved in the project.

 

Kansas Loses $10 Billion Refinery Opportunity

Kansas lost a chance to win a $10 billion refinery because of its rejection of a power plant expansion in western Kansas, critics of that decision say.

 

Dallas-based Hyperion Resources Inc. is no longer considering northeast Kansas for a new oil refinery and is leaning toward South Dakota, legislative leaders said March19.

 

"Due to the uncertain regulatory climate, they're not going to pursue their permit in Kansas," said House Speaker Melvin Neufeld.

 

Rep. Richard Carlson, who was in talks with Hyperion, said a company official cited regulatory uncertainty as the reason.

 

Hyperion has applied for an environmental permit in South Dakota and in March won zoning approval for the project. Hyperion has filed no permit application in Kansas.

 

Joe Blubaugh, a spokesman from the Kansas Department of Health and Environment, said Hyperion had asked the staff about its chances of getting an air permit. Blubaugh said staff reviewed data filed in South Dakota and told Hyperion that a similar application in Kansas likely would be granted.

 

The project would have brought 1,800 permanent jobs and $10 billion in investment in Kansas.

 

NATCO Awarded Contracts to Provide Technology and Equipment for Motiva Port Arthur Expansion

NATCO Group Inc. recently announced that it has been awarded contracts to provide equipment and technology for the Motiva Port Arthur Refinery Expansion Project in Port Arthur, Texas.

 

One award to NATCO features the Dual Polarity advanced crude desalting technology. NATCO will design four large vessels that will process 325,000 barrels per day (bpd) crude charge in two process trains. This represents the largest refinery crude unit desalter project for NATCO in a U.S. refinery, and clearly marks the company’s entrance into the U.S. downstream market.

 

Additionally, NATCO’s Linco Electromatic subsidiary in Midland, Texas, a leader in petroleum measurement systems, recently received a purchase order to provide a refined products metering terminal for the expansion project. This contract consists of five skid packages and is designed to meter the increased production of gasoline, diesel, jet fuel, and other refined products that the refinery’s expansion will produce.

 

Linco had previously received additional orders for two crude skids and component metering systems, used for leak detection and pipeline operations, for additional crude oil and refined products terminals associated with the Motiva Port Arthur Refinery Expansion Project.

 

Motiva has contracted with a joint venture of Bechtel Corporation and Jacobs Engineering Group to manage engineering, procurement and construction for the entire Port Arthur refinery expansion project.

 

BE&K to Provide for Expansion of $675 Million Hunt Refining Project in Tuscaloosa

BE&K's Engineering & Construction Group will provide engineering, construction and project management services for the Black Warrior Project Refinery Expansion, a project with an overall value of $675 million.

 

The expansion is expected to be complete in June 2010.

 

BE&K Construction President Tom Vaughn said the work is significant to the company because it is one of the largest construction projects taking place in Alabama right now.

 

Its duration of 2½ years also will allow BE&K to implement training programs and hire craftsmen to stay on the job for an extended period of time, opportunities that are not always feasible for shorter-term projects, he said.

 

"Having an Alabama-based contractor was important to Hunt," Vaughn said. "We're here, and we're not going to be leaving when that project's over. It's just a commitment on a different level."

 

Hunt Refining President John Matson said the company is pleased to partner with an Alabama company.

 

"BE&K shares our companies' values, particularly regarding people and safety. Their experience in engineering and large scale construction will be of great benefit to us as we undertake the most important expansion in the company's history," he said.

 

The Tuscaloosa facility now processes 52,000 barrels of crude oil per day to produce asphalt, diesel, kerosene, and fuel grade coke.

 

The expansion, which will increase output to 65,000 barrels per day, along with more intensive processing, will about double gasoline and diesel fuel production.

 

BE&K, with 10,000 employees worldwide and 1,000 in the Birmingham area, ranks No. 48 on Engineering News-Record's list of Top 400 contractors.

 

Tuscaloosa-based Hunt Refining, a regional supplier of gasoline, diesel fuel, jet fuel and asphalt, owns and operates transportation facilities in Alabama, Mississippi and New Jersey.

 

California’s Greka Oil & Gas Refinery Accused of Massive Inland Oil Pollution

Of 21 refineries in California, Greka Oil & Gas Inc. is the fourth-smallest producer but the state’s biggest inland oil polluter, according to state officials.

 

Broken pumps, busted pipes, overflowing ponds and cracked tanks at Greka installations have spilled more than a half-million gallons of oil and contaminated water since 1999, fouling the water, soil and air in the Southern California county many consider the birthplace of the nation’s environmental movement.

 

In the last nine years, the Santa Barbara County Fire Department has responded at least 400 times to oil spills and gas leaks at Greka, resulting in fines, citations, federal and local prosecutions and investigations by the Environmental Protection Agency and state Fish and Game.

 

“I’ve been in the hazardous materials business for 20 years, and this is the worst oil company I’ve ever seen,” said Robert Wise, who works at EPA’s Superfund division.

 

The company says it is a victim of sabotage — a claim local and federal authorities dispute — and overzealous regulators.

 

“To say that Greka is a major polluter is a joke,” said President Andrew deVegvar. “To the extent to which we’re being portrayed as some kind of Darth Vader of the oil industry is not appropriate.”

 

The company has been fined more than $2.5 million over the years. This winter the county fire department hit the company with stop-work orders against most of its operations.

 

Some conservationists and others suspect Greka’s political connections — along with piecemeal regulation by overlapping agencies and weak inland oil spill laws — have allowed it to continue operating. Greka leases land from current and former county supervisors; another former supervisor is on the Greka payroll.

 

That the spills are happening in Santa Barbara County is perhaps the cruelest twist for environmentalists.

 

The mountainous coastal area dotted with boutique wineries and the ranches of President Ronald Reagan and Michael Jackson was a catalyst for the environmental movement. A disaster at a Union Oil Co. platform in 1969 coated miles of beaches with oil, killed birds and helped lead to the Clean Water Act and a moratorium on offshore drilling.

 

Greka set up shop in Santa Maria in 1999, taking over aging facilities from oil companies and turning crude into asphalt and other products.

 

From 1999 to 2007, the Santa Barbara Air Pollution Control District inspected Greka facilities 855 times and issued 298 violations. In that period, 203 Greka spills threatened or polluted state waters 20 times, according to Fish and Game.

 

Greka has spent tens of millions of dollars in upgrades, deVegvar said.

 

The company recently said it was tightening security and in January announced an environmental initiative dubbed Greka Green. But just a day later, it was hit with an 8,400-gallon spill.

 

Greka officials have mounted a defense, threatening to sue the county for $100 million if it is not allowed to reopen and offering a $25,000 reward for information leading to the arrest of saboteurs.

 

Even with operations largely shut down, firefighters responded to five incidents within two weeks at Greka installations.

 

   CANADA

 

BP Joins Irving Oil in Proposed Eider Rock Refinery Project

BP will contribute US$40M as its share of funding for this stage of the study and the two companies will also investigate the possibility of forming a joint venture to build the refinery should they decide to proceed.

 

Irving Oil conducted initial feasibility work and informal public consultation in 2006, and has been engaged since January 2007 in permitting, public consultation, and engineering design for the proposed 300,000 barrel per day refinery. The refinery would be situated close to Irving Oil's existing 300,000 barrel per day refinery and the existing Irving Canaport deepwater crude oil terminal which receives VLCC cargoes of crude oil and is located 65 miles (105 km) from the U.S. border.

 

This next phase of engineering, design and feasibility work, combined with ongoing permitting and community engagement activities represents over US$100 million of investment over the next 12-15 months.

 

"We are excited that a company of BP's caliber sees the potential in our region and in this project to meet the need for a reliable and secure supply of refined products for the north east," said Kenneth Irving, president of Irving Oil. "BP brings international expertise and crude supply, but what really drew us to partner with BP was the cultural fit with our company and our shared belief that the world has changed when it comes to matters that relate to environmental performance and security of supply. Our shared belief on the future of energy will increase the potential of this project."

 

"This refinery project is of great interest to BP because of its ideal location close to the markets of the north eastern U.S. where product supplies are increasingly in deficit," said Iain Conn, chief executive of BP's refining and marketing business. "BP is keen to develop projects which enhance the energy security of Canada and the U.S. Irving Oil has a well-deserved leading reputation in refining for the east coast. The two companies have a good track record of working together and we are pleased to be jointly undertaking the feasibility work on this exciting opportunity."

 

"This project would support the further development of the New Brunswick energy hub and the refining industry on the East Coast," said Kevin Scott, Irving Oil's director of refining growth. "We will continue to follow the rigorous permitting process outlined by our Federal and Provincial Governments, and we will continue to consult our community to ensure that, if the project proceeds, it will be one the community can be proud of."

 

A final investment decision is not expected before 2009 and, although the final costs will only be clear once all the detailed engineering and design work is completed, the refinery is expected to cost at least US$7 billion. If permitting approval is received and an investment decision is made to proceed, site preparation would begin in 2010, and full scale construction would begin in 2011 with start-up expected in 2015. Irving Oil has committed to using the best available proven technology to develop a refinery with leading environmental performance and economic efficiency.

 

   MEXICO

 

Mexico Announces Feasibility Study for New Refinery

The Mexican energy ministry and the state-run energy company have begun a feasibility study to build a new refinery, the country's President Felipe Calderon announced March 18.

 

The new refinery is being considered because Mexico is "an oil-producing country importing 40 percent of our gasoline, and what we produce does not measure up national and international environmental standards," Calderon said.

 

Mexico's six existing refineries process 1.3 million barrels a day of crude oil into gasoline, aircraft fuel, diesel and bunker fuel.

 

"Starting work will allow us to have, in the near future, a new refinery, a good way to celebrate the 70th anniversary of expropriation," Calderon said.

 

Mexico expropriated 16 foreign companies to form the state company Petroleos Mexicanos (Pemex) in 1938.

 

In the same speech, Calderon also reaffirmed that Pemex will not be privatized.

 

"Today, as it has been for 70 years, oil is and will remain the property of all Mexicans, and we will continue to exercise our full sovereignty over our hydrocarbons," he said.

 

The president further called for an "open, objective and calm" assessment of Mexico's energy needs, with the goal of strengthening the oil industry and the nation.

 

   BRAZIL

 

Skanska Secures $150 Million Contract for Brazil Refinery Expansion

Skanska has secured a contract to build a hydrodesulphurization (HDS) unit at a refinery in Brazil. Skanska's contract amount totals US$150 million. The customer is Refap, a consortium comprising the state-owned Brazilian oil company Petrobas and privately owned Spanish-Argentine Repsol YPF.

 

The contract covers construction of a HDS unit at Alberto Pasqualini refinery (Refap) in Rio Grande do Sul. The facility will have a capacity to process 5000cum per day. The scope of the contract includes detail engineering, purchasing, construction, electromechanical installations and assistance with commissioning and start-up of the plant.

 

The project is part of a nationwide environmental program to reduce sulfur contaminants in petroleum products. Work begins in April and is scheduled for completion within 30 months.

 

   VIRGIN ISLANDS

 

EPA Seeks U.S. Virgin Islands Comment about Oil Cleanup

Federal authorities sought comment March 19 from U.S. Virgin Islands residents about groundwater cleanup and modifications to waste treatment operations at the Western Hemisphere's second-largest oil refinery.

 

U.S. Environmental Protection Agency officials joined representatives from Hovensa's refinery to pursue feedback on efforts to recover about a million gallons (liters) of oil spilled on the 1,500-acre (600-hectare) refinery property in the 1980s.

 

The comment period ends April 26 regarding the ongoing cleanup and possible EPA permit changes at the giant Hovensa refinery on the south coast of St. Croix, where smokestacks stand adjacent to coral reefs and wildlife refuges.

 

Since recovery and treatment wells began operating in 1987, roughly 42 million gallons (159 million liters) of petroleum waste has been reclaimed from the onsite groundwater at the refinery site, the EPA said in a statement.

 

While leaky sewer lines and tanks responsible for the property's pollution were repaired long ago, the federal agency says an estimated 1.2 million gallons (4.5 million liters) of spilled oil still remains.

 

Hovensa, owned by New York-based Hess Corp. and Petroleos de Venezuela SA, the national oil company of Venezuela, is the largest private employer in the U.S. Virgin Islands. A spokesman for the company could not immediately be reached for comment.

 

ASIA

 

   CHINA

 

Total invests $240 Million in Dalian, China Refinery

Total has started a new distillate hydrocracker at the Wepec refinery in Dalian, China. Representing a total investment of $240 million, the new conversion unit increases the refinery’s diesel fuel production capacity by 40% to 3.5 million metric tpy.

 

   INDIA

 

Possible End to Income Tax Benefits for New Refinery Projects in India

Investments by oil refiners in new refinery projects could be in jeopardy after the latest Union Budget, which has a provision that strips new refinery projects of income tax benefits. As things stand, a petroleum refinery is eligible for 100% income tax exemption for the first seven years of its operation.

 

The Budget memorandum has now introduced a Sunset clause for 100% tax exemption for refining of mineral oil, if the project starts after April 2009.

 

This means the new refineries will no longer enjoy the I-T benefits, under Section 80-IB of the Income-Tax Act, that other projects have had. If implemented, the provision could grossly reduce the return on capital and increase the payback period for new refinery projects. SV Narasimhan, finance director of India’s largest petroleum refining company Indian Oil, expressed concern over the development.

 

“The removal of tax benefits is a big concern for the industry. Considering the huge investment needed in setting up a refinery, these incentives were essential for their economics to work out well. We plan to take up this issue with the government at the earliest to restore these benefits,” he said. Industry sources said the move could impact new investments in the business.

 

Among those facing the heat immediately will be Bharat Petroleum’s Bina refinery and the Hindustan Petroleum-Mittal joint venture refinery at Bhatinda. The Rs 10,500-crore Bina refinery is expected to be completed by December 2009, while the Bhatinda refinery is scheduled to commence operations only by end of 2010. Both will not be eligible to claim tax benefits. However, Reliance Petroleum’s 27-million-tonne new refinery at Jamnagar is luckier, as it is on schedule to commission operations by December 2008.

 

Tax consultants Ernst & Young acknowledged the problem in their report on the Union Budget 2008. The report said, “The removal of tax holiday on refining will adversely impact new refinery projects.” Tax holiday claims for production of natural gas could also be questioned in the future, the report said.

 

The Budget has actually proposed a new provision in sub-section (9) of Section 80-IB, to provide that no deduction will be allowed to a mineral oil refiner if they begin operations after April 2009. However, confusion exists with the same Budget memorandum redefining the words ‘mineral oil’. According to the memorandum; “For the purpose of this section, the term ‘mineral oil’ does not include petroleum and natural gas, unlike in other sections of the Act.”

 

In the absence of any clear understanding as to what ‘mineral oil’ would mean if not petroleum crude, most of the refiners are convinced that their new projects will get hit. However, one public sector refiner said the development does not apply to the petroleum refining sector. 

 

RIL KG 1,440 km Gas Pipeline set to be Commissioned

The pipeline to evacuate gas from Reliance Industries (RIL) block in the Krishna-Godavari (KG) basin – the so called East-West pipeline linking Kakinada in Andhra Pradesh to Bharuch in Gujarat – is set to be commissioned in the next three months. 

 

The company has set second week of May as an internal deadline for commissioning the 1,440-km pipeline, said senior company executives. 

 

“We are close to finishing the civil and mechanical work for the entire pipeline and will soon start dry runs to make it ready for gas transportation,” said an executive. 

 

The 48-inch diameter East-West Pipeline is the longest in the country and covers Andhra Pradesh, Karnataka, Maharashtra and Gujarat. 

 

Officials said that the pipeline would be tested in three phases – first to start from Bharuch in Gujarat to a section in Maharashtra and then from Maharashtra to Karnataka and in the last leg, up to Kakinada where the pipeline begins. 

 

More than 1,500 workers, including skilled workers from China were working to lay the pipeline, mooted in 2005 soon after the discovery of the largest gas discovery in the world at KG basin. 

 

Earlier, reports said RIL would delay work on the pipeline to synchronize with completion of its new refinery at Jamnagar and availability of gas from the KG basin. 

 

Sources said the company was hopeful of starting gas production in the second half of this year and the refinery project was nearing completion ahead of initial schedule of 2008 end. 

 

“It will take six to eight months for fully commissioning the refinery since it is the largest refinery in the world and includes about 30-40 different units at a single location,” said another executive. 

 

RIL has tied up with the Gujarat State Petronet (GSPL) to transport gas from Bhadbhut in Bharuch to RIL’s refinery and petrochemical complex in Jamnagar. After receiving gas from RIL, GSPL will transport the same using its existing pipeline between Bharuch and Rajkot and through new pipelines laid up to Jamnagar. 

 

RIL is also setting up two advanced master control centers at its Nocil facility in Mumbai and at Kakinada to monitor and control the flow of gas through the pipeline using the supervisory control and data acquisition system (SCADA), an optical fibre cable network along the pipeline. 

 

RIL is also planning another pipeline, in the next phase, from Kakinada to Chennai, and from there to Bangalore and Mangalore. 

 

The East-West project is being implemented by Reliance Gas Transportation Infrastructure (RGTIL), a Mukesh Ambani company. 

 

The pipeline had to cross the Krishna River near Kakinada and this was one of the most important challenges in implementing the project. 

 

Similarly, RIL had to get a Supreme Court clearance to lay the pipeline through a bird sanctuary in Maharashtra, said sources.

 

BP and Spice Energy to Move and Reassemble German Refinery to India for $1 Billion

BP has entered talks with Spice Energy, the group of Indian investors behind a $1bn (£500m) plan to dismantle a refinery in Germany, pack it into containers and ship it to a site near the Indian city of Calcutta.

 

The talks show that BP has not abandoned its plans to build a position in India's refining and petrol-retailing business after the collapse of its $3bn deal to build a refinery with India's Hindustan Petroleum two years ago.

 

Spice Energy – a start-up backed by Indian businessman Sanjay Malhotra – agreed to buy the 90,000-barrel-per-day refinery from Germany's Lohrmann International, a specialist in second-hand industrial plants, in the second half of last year.

 

Located in Ingolstadt on the river Danube, the refinery is one of the three linked plants which make up Bayernoil, a joint venture between Austria's OMV, BP, Italy's Eni and PDVSA from Venezuela.

 

After the plant shuts down in June, Lohrmann will begin to take it apart piece by piece, packing it into 3,000 containers.

 

Spice Energy's US relocation contractor will then take over, shipping the 32,000-ton consignment to Antwerp, and then on through the Suez Canal to the Indian port of Haldia for reconstruction. Spice Energy expects to carry out the entire process in 24 months at a total cost of around $1bn. The reconstructed refinery is scheduled to begin production again in January 2010. Building a similar-scale refinery from scratch would cost more than $1.5bn and take 60 months, Spice Energy estimates.

 

The company has hired UK refinery engineers KBC to upgrade the plant, adding new units so it can also refine lower-quality Arab crude oil.

 

"We are talking to them," said a source advising BP. "If there was a deal where BP was taking a limited risk, there's no reason why we wouldn't try it."

 

Spice Energy's holding company for the project, Cals Refineries, raised $200m through issuing a global depository receipt on the Luxembourg Stock Exchange in November, attracting investments from Dubai Investment Group, part of Dubai Holding, and London's RP Capital. It is now hoping to raise a further $100m to $200m from a strategic investor.

 

"We don't want to take money from anyone," said a source close to Spice Energy. "It has to be a strategic match for us."

 

Talks with BP have been continuing for two months and Spice Energy is also talking to oil trading and shipping companies, the source said.

 

Emerson Gets $19 Million Contract from RPL

Emerson Process Management has a contract of $19 million to supply metering systems to Reliance Petroleum ltd. (RPL).  RPL plans to construct a greenfield petroleum refinery and polypropylene plant at a special economic zone in Jamnagar, India. According to the contract, Emerson will engineer and deliver the multi-run high-performance oil and gas metering systems.

 

Florida's SMF Energy to Buy San Antonio Area Refinery

A Florida company that provides petroleum product distribution services, transportation logistics and emergency response services for the trucking, construction, utility, energy and chemical industries has agreed to merge with Lazarus Energy LLC.

 

Fort Lauderdale-based SMF Energy Corp. has agreed to buy Lazarus Energy from Lazarus Energy Holdings LLC in Houston for an undisclosed sum and with it the company's refinery in Nixon, Texas, just east of San Antonio.

 

Lazarus has been working to renovate and bring the Nixon refinery back online ever since it bought it in 2006. Originally built in 1981, the refinery has been closed since 1993. However, Lazarus expects to re-commence operations by June.

 

The Nixon refinery will have an initial crude oil processing capacity of 15,000 barrels per day, giving it the ability to process light, sweet crude oil into some 220 million gallons of petroleum products per year.

 

By 2009, capacity should be increased to 20,000 barrels per day, giving it the ability to process 300 million gallons of products per year.

 

The refinery will produce distillates such as diesel and jet fuel, as well as naphtha and atmospheric tower bottoms, which are feedstocks for producing gasoline.

 

The refinery complex also has 265,000 barrels of storage on its 56-acre site and will have the ability to ship product to new and existing SMF customers in the San Antonio, Austin and surrounding markets.

 

Lazarus also owns three other idled refineries in Longview, TX; Mermentau, LA.; and Church Point, LA. Under this proposed purchase agreement with Lazarus Holdings, SMF will have the option to buy the three refineries, which have a crude oil capacity of 60,000 barrels per day.

 

   INDONESIA

 

Japanese Investors to Spend $6.5 Billion on Refinery, LNG in Indonesia

Three Japanese investors have agreed to cooperate with state-owned oil and gas company PT Pertamina to invest US$6.5 billion on oil refinery and LNG projects in Indonesia.

 

Mitsui Oil Exploration Co. will team up with Pertamina to modify the old Cilacap oil refinery in Cilacap, Central Java. The US$1.9 billion project will expand the facility's processing capacity from 348,000 to 410,000 b/d.

 

In cooperation with Itochu Corp. Pertamina will expand the daily processing capacity of its oil refinery in Balikpapan from 260,000 to 280,000 b/d and that of the Balongan refinery in Indramayu from 125,000 to 250,000 b/d at a total cost of approximately US$3.2 billion, a Pertamina official said.

 

"We also plan to build an LNG plant in Senoro, Central Sulawesi at a cost of US$1.4 billion in cooperation with Mitsubishi Heavy Industries ", Vice President Communications Wisnuntoro said.

 

Construction of the Senoro LNG project, which also involves PT Medco Energi Internasional, has been delayed over gas price disagreement. Pertamina and Medco are to supply gas for the plant.

 

The project, which will have an annual production capacity of 35 cargoes (1.925 million tons), aims to be operational in 2011.

 

   SINGAPORE

 

PetroChina may Build 400,000 to 500,000 bpd Refinery in Singapore

China's largest oil firm, PetroChina, is reportedly planning to build a multibillion-dollar refinery in Singapore, seeking an overseas production base to meet its home country's rising energy demand.

 

PetroChina is shooting for a world-class refinery, with a capacity of at least 400,000 to 500,000 barrels per day, a scale comparable to Exxon Mobil's 605,000 bpd refinery on Singapore’s Jurong Island and Shell's 500,000 bpd plant on Pulau Bukom, another small island just off Singapore. "It is currently doing a feasibility study and doing due diligence on this ... and so far the feedback has been positive," The Business Times in Singapore reported March 4, citing an unnamed source.

 

The project may cost PetroChina in excess of $10 billion, according to The Business Times. Its forecast made reference to an earlier estimate by Singapore Petroleum Co. CEO Koh Ban Seng that it would $5 billion to build a moderately complex 200,000 bpd refinery in the country and then factored in the island state’s current high engineering, procurement and construction costs.

 

PetroChina's refinery plan will be welcome news to the Economic Development Board of Singapore, which has announced several initiatives in the past year favoring refinery construction. The country aims to preserve its status as the world's No. 3 oil trading hub after New York and London.

 

A refinery in Singapore would enable PetroChina to increase its oil imports over the medium term to satisfy China's exploding energy demand. The Chinese media reported recently that the oil giant is planning to import 300,000 tons of diesel oil this month, 50% more than it did in February, to meet higher oil consumption as the huge agricultural sector gears up for planting in March.

 

To ensure sufficient oil supply, Beijing has recently been reducing import tariffs on diesel oil, to 1% at the beginning of the year from 6% in November 2007.

 

   VIETNAM

 

Keppel to Build $205 Million Jack-up Rig for PetroVietnam

Keppel FELS Ltd will build a third KFELS B class jack-up drilling rig worth US$205 million for PetroVietnam Drilling Investment Corp. This latest unit and PVD Invest's second rig, PV Drilling II, which is already under construction at Keppel FELS, are scheduled for delivery in 4Q 2009.

 

To meet the tight exploration schedule, PV Drilling intends to make capital investments of around US$1.7 billion from now until 2025 to build and operate an 11-strong fleet of offshore and onshore rigs. The latest KFELS B class rig will be able to operate in water depths of 360ft with a drilling depth of 30,000ft.

 

The rig features engines that meet more stringent emission standards, and lower spud can bearing pressure for operation in areas with soft soil conditions. Its living quarters are designed to accommodate up to 110 men.

 

EUROPE / AFRICA / MIDDLE EAST

   FRANCE

 

LyondellBasell Completes Refinery Purchase in France

LyondellBasell Industries announced that it has completed the purchase of the Shell oil refinery and associated infrastructure and businesses at the Berre l'Etang petrochemical complex in France.

 

The refinery, with production capacity of 105,000 barrels per day, is adjacent to a LyondellBasell polyolefins complex at Berre that includes a steam cracker, butadiene extraction unit and world-scale polypropylene and polyethylene plants. LyondellBasell also has a polyethylene plant and a site that produces propylene oxide, MTBE and ETBE nearby at Fos-sur-Mer.

 

"The acquisition of the Berre refinery enhances raw material integration for our operations in France and supports our polyolefins business in Europe," said Volker Trautz, CEO of LyondellBasell. "Furthermore, this transaction puts us in a better position to build upon our fuels and chemicals businesses in Europe."

 

LyondellBasell has been the largest customer of the Berre refinery, purchasing naphtha, vacuum gas oil (VGO) and liquefied petroleum gas (LPG) as raw material for its steam cracker. Other refined products include gasoline, diesel, jet fuel, bitumen and heating oil.

 

In addition to its industry leadership in polyolefins, LyondellBasell is the largest producer of biofuels in the European merchant market with approximately 1.2 million metric tonnes per year of capacity at its plants in Fos-sur-Mer, France and Rotterdam, Netherlands. The LyondellBasell plant at Fos-sur-Mer has the flexibility to produce both MTBE (methyl tertiary butyl ether) and bio-ETBE (ethyl tertiary butyl ether) in support of the European biofuels directive. LyondellBasell also operates a 268,000 barrel per day full-conversion refinery in Houston, Texas.

 

   GREECE

 

Technip Awarded EPC Contract for Crude Distillation Unit in Greek Refinery

Technip has been awarded by Motor Oil (Hellas) Corinth Refineries S.A. a contract for the engineering, procurement and construction management of a crude oil distillation unit at the Corinth refinery, Greece.

 

This unit will have a production capacity of 60,000bpd. It is scheduled to be operational at the beginning of 2010.

 

The investment for the new unit will be EUR 180 million. This project is part of the refinery expansion program. Following the installation of the new unit, the total capacity of the refinery will exceed 170,000bpd. Technip's operations and engineering center in Rome will execute this contract.

 

   ITALY

 

Saras Awards Italian Refinery Revamp Contract to Foster Wheeler

Foster Wheeler Ltd. said that Milan-based Foster Wheeler Italiana S.p.A., part of its Global Engineering and Construction Group, has been awarded an engineering, procurement, and construction management contract by Saras S.p.A. for the revamp of the mild hydrocracking unit at the Sarroch refinery in Sardinia, Italy. This project is part of an important refinery upgrade.

 

The terms of the contract, which will be included in Foster Wheeler's first-quarter 2008 bookings, were not disclosed.

 

This award follows the successful completion by Foster Wheeler of the front-end engineering design for the mild hydrocracker revamp and the procurement of major items. The revamp's objectives are the upgrade of the mild hydrocracker's capacity, performance and conversion while achieving longer catalyst life duration. The revamp includes major modification to the reaction section including installation of a new pretreat reactor, as well as upgrading the gas compression circuit and installing a new high-pressure amine wash section.

 

"We are very pleased to be awarded this revamp project by Saras," said Marco Moresco, chief executive officer, Foster Wheeler Italiana S.p.A. "We have been working with Saras for a number of years at this refinery. We have an alliance-type frame agreement with Saras under which we undertake work at this refinery and, under this agreement we have developed a strong, successful and cooperative working relationship with our client."

 

"The upgrading of our refinery at Sarroch, one of Europe's largest and most complex refineries, is proceeding at a fast pace," said Dario Scaffardi, general manager, Saras S.p.A. "This latest award to Foster Wheeler demonstrates our continued satisfaction with its professionalism and expertise and our confidence in its ability to maintain a successful relationship with Saras."

 

   LATVIA

 

First Oil Refinery for Latvia in 2010 to be 6 Mln tn/yr

Latvia-based Dinaz said it plans to start construction of the country's first refinery in 2010 so it can reduce product imports. Dinaz Pres. Nikolay Yermolayev said the EUR 2 billion, 6 million tn/yr refinery would be built near Daugavpils just north of the Belarus-Lithuania border. The greenfield site is 4km from the Druzhba pipeline, which transports Russian oil to Europe. Yermolayev said the company is conducting a feasibility study for the refinery and will start the environmental process in 2009. Dinaz is also seeking partners in developing the refinery.

 

Separately, Dinaz also plans to construct a 10 million tn/yr oil terminal in Riga that would increase its trade links and improve domestic fuel trading, Yermolayev said.

 

   NORWAY / FINLAND

 

Metso Automation and ABB Sign MoU for Future Collaboration

ABB in Norway and Finland based Metso Automation have come to a mutual agreement regarding joint activities and have signed a memorandum of understanding for future collaboration in the oil and gas industry. The integration of Metso Automation's flow control technology with ABB's automation systems will result in improved safety, reliability and process efficiency on oil and gas installations.

 

 ABB has extensive knowledge and experience of automation technology products, enhanced oil production, asset management and information management systems, and system integration. Metso Automation has extensive knowledge and experience of process control valves, emergency valves, intelligent valve controllers and partial-stroke testing devices for emergency valves.

 

Both companies recognize that their capabilities and expertise are complementary within the field of valve monitoring in the oil and gas industry and wish to exploit this knowledge further. Metso Automation is continuously enhancing the integration of its Neles Product Line with all automation systems. The Neles ValvGuard product provides valve testing, monitoring, and maintenance tools that compliment the capabilities of ABB's asset management solutions. Integration will provide ABB System 800xA users a proven solution for their valve applications.

 

   SLOVAKIA

 

Bratislava Refinery Plans Q2 Maintenance

The 115,000 barrel a day Bratislava refinery in Slovakia will carry out maintenance in the second quarter on its crude distillation and other units, the refinery's owner Slovnaft  said on March 3.

 

The work, which will also be carried out on the refinery's reformer and gasoline isomerisation unit, will last a month, she said.

 

The spokeswoman declined to give more specific dates.

 

The refinery exports about 75 percent of its production, mainly to EU member states.

 

Slovnaft said it was building up stocks to avoid any supply disruption to customers when the work takes place.

 

The most recent maintenance shutdown at the plant was in the fourth quarter of 2006.

 

Slovnaft is owned by Hungarian oil and gas company MOL.

 

   SPAIN

 

Foster Wheeler Wins Contracts for Delayed Coker Complex for Spain’s REPSOL YPF

Foster Wheeler Ltd. announced recently that its Madrid-based subsidiary Foster Wheeler Iberia, S.A.U., part of its Global Engineering and Construction Group, has been awarded a contract by REPSOL YPF for the detailed engineering, procurement services and construction management of a new delayed coker complex at its refinery at Cartagena, in southeast Spain. The coking complex consists of a 53,000 barrels per stream day (bpsd) delayed coker unit, which will use Foster Wheeler’s leading SYDEC technology, a gas concentration unit and a 90,000 bpsd vacuum distillation unit.

 

The value of this contract, which was not disclosed, will be included in Foster Wheeler’s first-quarter 2008 bookings. In 2007, Foster Wheeler Iberia was awarded a separate contract for the design and supply of the coker fired heaters which are an integral part of the coker unit. The value of the heater award was not disclosed and was included in Foster Wheeler’s fourth-quarter 2007 bookings.

 

This award follows the successful completion of the process design package for the delayed coker unit by Foster Wheeler’s coking center of excellence in Houston, and the front-end engineering design by Foster Wheeler Iberia. The basic design of the vacuum distillation unit has already been completed by Foster Wheeler Iberia.

 

"We are very pleased that REPSOL YPF has selected our delayed coking technology and our project execution expertise for this important project,” commented Jesús Cadenas, chief executive officer of Foster Wheeler Iberia S.A.U. “This award follows the similar recent award to us of the coker complex for Petronor’s Somorrostro Refinery in Spain. The Petronor refinery is majority owned by REPSOL YPF.”

 

Foster Wheeler's SYDEC process is a thermal conversion process used by refiners worldwide to upgrade heavy residue feed and process it into high-value transport fuels. The SYDEC process achieves maximum clean liquid yields and minimum fuel coke yields. Foster Wheeler is a market leader in delayed coking and has supplied its delayed coking process technology worldwide for over 80 new cokers and has worked on more than 70 delayed coker revamps.

 

   UNITED KINGDOM

 

Chevron Plans 6-Week FCC Maintenance at UK Pembroke Refinery

Chevron Corp.'s 220,000 barrel a day Pembroke refinery in Wales will partially shut for maintenance in September, the company said March 19.

 

Maintenance will be carried out at the plant's fluid catalytic cracker, or FCC, unit for about six weeks, according to a Chevron spokesman based in London.

 

The spokesman didn't specify the amount of production that would be affected by the outage.

 

   KENYA

 

Upgrade Set to Modernize Kenya Refinery

The government of Kenya is in the final stages of identifying a strategic partner to help modernize Kenya Petroleum Refineries Limited (KPRL) in Mombasa.

 

Energy Minister, Mr Kiraitu Murungi, says Sh20 billion has been earmarked for the upgrading exercise, which will see the refinery that was commissioned in 1956 modernized. According to the Minister the project was long overdue.

 

The refinery processes crude oil for more than 20 marketers under the terms of a processing agreement.

 

Essar Oil Limited, India's second biggest private oil company is eyeing a stake in KPRL's 50 per cent share.

 

The Indian firm has already entered into an agreement to buy the 50 per cent share previously owned by Shell, BP and Chevron. At the same time, Kiraitu pointed out that electricity connection in the country was low compared to the rest of Africa.

 

He said penetration levels were less than 10 per cent compared to Africa's most populous nation, Nigeria that has 90 per cent.

 

He said since 2003, the level of connectivity has stood at four per cent.

 

"We are now at six per cent and our target by 2010 is 20 per cent," he said.

 

"The margin between demand and capacity is extremely thin. We are working on ways to enhance our generation capacity," he added.

 

Meanwhile, Kenya Pipeline Company has commissioned a line costing Sh230 million to enhance the transfer of oil from Kipevu Oil Storage Facility to Shimanzi Terminal.

 

Kiraitu said the line would reduce the cost of oil imports at the Shimanzi terminal by Sh700 per tonne, since ships with cargo will be offloaded at Kipevu.

 

He said the project is expected to improve the flow-rate from 440,000 liters an hour to 880,000 liters.

 

Kiraitu said pump stations would be constructed at Samburu, Manyani, Makindu and Konza along the Mombasa-Nairobi road.

 

KPC chairman, Mr James Kenani, said the facility will create more space at Kipevu.

 

   MOZAMBIQUE

 

Construction Begins on 300,000 bpd Mozambique Refinery

Construction of a refinery in Nacala-a-Velha, in Mozambique’s Nampula province, has begun with the transport of equipment and machinery to its location, Eurico Simão, consultant for the construction company said February 29 in Maputo.

 

Speaking to Mozambican news agency AIM, Simão said that the initial pahse, which has now been started, included construction of an arts and vocational school, in order to provide professional training to future workers.

 

He also noted that the school would have the support of the governments of Mozambique and Brazil.

 

One of the advantages of the proposed plan, which has been applied all over the world, is that teaching modules are already available in Portuguese, Mozambique’s official language, and will also be taught by teachers in Portuguese.

 

Simão also said that he thought it was possible for the refinery to be up and running within three years so that by 2010 the first shipments of gasoline and diesel could leave the refinery.

 

The refinery, which will cover an area of 838 hectares, will have a production capacity of 300,000 barrels of oil per day and will provide jobs for around 450 people.

 

   WEST AFRICA

 

Australia’s CityView Corp. Buying Oil Refinery for West African Site

CityView Corp. will buy an oil refinery with 100,000 bpd capacity in conjunction with a major African partner. The refinery will be relocated to West Africa.

 

Details are governed by a strict confidentiality agreement and further information will follow.

 

Western and Southern Africa do not have enough refinery capacity and refined product is in short supply and very expensive.

 

   SOUTH AFRICA

 

PetroSA‘s Coega Crude Refinery Plans in Progress

South Africa’s PetroSA has completed the pre-feasibility study into the planned multi-billion Rand crude oil refinery in Coega.

 

The refinery is expected to enable South Africa to generate high quality fuels.

 

"Planning for the new refinery is now well under way," PetroSA Chief Executive Officer Sipho Mkhize said March 18.

 

The study, which was completed by a leading United States-based refinery specialist, in conjunction with local project engineering company Ilitha, was presented to PetroSA at its head office in Cape Town March 17.

 

"Configuration design is advanced and we have now begun discussions with several international and local parties regarding potential financial and operating partnerships,"

 

He said the refinery was part of a holistic strategy to ensure that the current urgent national fuels supply scenario was reversed, because the country could not afford a liquid fuels crisis.

 

The economics for the project looked encouraging following the World Bank's indication that it supports the concept.

 

Mr Mkhize said production has been planned for a product mix of up to 70 percent distillates, diesel and aviation fuel, and 30 percent high octane gasoline.

 

These fuels will meet the highest Clean Fuels (Euro V) Specifications, in line with anticipated legislation with bio-fuels and petrochemicals opportunities also included in the design parameters.

 

"With the high quality of fuels produced, a world class configuration ready to process challenging cheaper crudes, export opportunities will also be economically attractive," said Mr Mkhize.

 

Early this year, Coega Development Corporation selected PetroSA as a preferred investor for a refinery in the Coega Industrial Development Zone (IDZ).

 

The decision to locate the refinery at Coega was based on commercial drivers, but national interest factors such as unlocking growth potential in a region were also considered, said the Chief Executive Officer.

 

Department of Minerals and Energy, on the other hand, has recently gazetted the Energy Master Plan which will support an additional crude refinery to address the rapidly increasing shortfall of locally refined products for the country's economy.

 

Such a crude oil refinery, according to Mr Mkhize, would also assist in reducing the balance of payment pressures that resulted from South Africa's growing dependence on refined products and imports.

 

"This crude refinery will be the lowest cost, high quality fuels producer in the African continent.

 

"In support of the planned refinery and national supply network as laid out in the DME's Energy Master Plan, PetroSA's planning includes the provision of new oil terminal facilities and upgrades at Cape Town, Mossel Bay, Port Elizabeth, Durban and Gauteng," Mr Mkhize said.

 

   SYRIA

 

Petrofac Wins $454 Million Syria Gas Plant Project

Petrofac has received a letter of intent for the award of a EUR291 million (US$454 million) lump-sum contract by the Hayan Petroleum Co. in Syria to construct a gas treatment plant.

 

The plant will be built on the Jihar field in the Hayan Block, located near to the town of Palmyra, which consists of the gas/condensate/oil fields for Jihar, Al Mahr & Jazal. Petrofac's comprehensive scope of work will cover engineering, procurement and construction, pre-commissioning and commissioning, and start-up of the gas processing facilities. In addition to the plant, Petrofac will build an LPG recovery system, LPG storage and loading facility, gas gathering and collection systems, satellite gathering station, well sites, flow lines, utilities and offsite facilities, gathering pipelines and living quarters. The project is due to be completed first quarter 2011.

 

The Hayan Petroleum Company (HPC) is a joint stock company owned equally between Syrian Petroleum Co. (a Syrian Government company) and INA Industrija Nafte d.d.-Naftaplin (a part of INA d.d., a Croatian company) that has some ten years of experience in Syria's oil industry.

 

Commenting on the award, Maroun Semaan, Chief Executive, Petrofac Engineering & Construction, said: "This development capitalizes on our execution capability in Syria where we have successfully completed several EPC projects. We are pleased to be back in this market."

 

Petrofac is a leading international provider of facilities solutions to the oil & gas production and processing industry, with a diverse customer portfolio including many of the world's leading integrated, independent and national oil & gas companies.

 

   RUSSIA

 

Lensk, Russia to get 1.5 Mln tonnes Oil Refinery

Taas-Yuryah Neftegazodobycha Ltd, in which 35% is owned by Urals Energy, is planning to build an oil refinery of the capacity of 1.5 million tonnes in the city of Lensk. The company has not finalized the production capacity yet as it continues to study the region's requirements.

 

The company will specialize in the production for the needs of Sakha Republic and facilitate the solution of the Republic's fuel problems.

 

   UKRAINE

 

Ukraine to Appoint New Refinery Management Soon

Ukraine will soon appoint new management to the country's largest refinery, in dispute with Russian shareholder and oil supplier Tatneft, which has cut deliveries since October, Prime Minister Yulia Tymoshenko said.

 

Tatneft objects to the current manager, who took over last year after a court ruling, and says it is owed hundreds of millions of dollars in unpaid bills and wants to take the case to an international arbitration court.

 

But it was not immediately clear whether the move, announced by Tymoshenko on March 19 would placate Tatneft and restore supplies, as she promised.

 

"This enterprise was seized by a specific commercial entity, which has only a 1.5 percent stake. The government, which has a 62 percent stake, has neither management, nor a representative (at the refinery), nothing," Tymoshenko told journalists.

 

"In the coming days we will name the management and ... we will do everything so that the refinery becomes well-supplied and oil products are put on the internal market at normal prices," she said.

 

Tatneft disputes that Ukraine owns a 62 percent stake in Kremenchug, saying that 18 percent of that landed in government hands illegally, through a transfer of stakes belonging to two offshore firms controlled by Tatneft. The company, based in Russia's Tatarstan region, has hired international law firm Cleary Gottlieb for its case, but a ruling may be a year away.

 

In the meantime, going as far as to Iraq for alternative supplies, Kremenchug has had to cut production by about 10 percent, while prices for its oil products have soared.

 

   IRAN

 

Private Sector to Construct 300,000 Barrel Refinery in Northern Iran

Engineering & Construction Management of National Iranian Engineering & Construction Company stated the private sector intends to construct 300,000 barrel “Caspian” oil refinery in Golestan Province, North of Iran close to Turkmen Port.

 

Ali Asghar Sajadi said the main aim of construction of this refinery is to process crude oil from countries surrounding the Caspian Sea. Before now Turkmenistan and Kazakhstan had also announced willingness to invest in this project.

 

With the increase in crude oil imports to Neka Port from 370,000 to 500,000 barrels per day, a pipeline will be drawn to the port to provide “Caspian” oil refinery with its material.

 

According to Sajadi, the studies to choose the location and placing of the refinery have begun and investment on the project will come from the private sector.

 

The operations are expected to cost in the region of Rla600b and with the completion of the project, possibility for docking of 70,000-ton tankers will be achieved.

 

It has also been decided to construct three 63,000-ton oil tankers in the north of the country with another 3 orders being placed with Russia.

 

Operations to expand the Neka port lagoon to 1-1.5 million barrels capacity will be carried out by a joint venture between a Dutch and Iranian company under management of Naft Khazar Company by April 2008. The operation will last 18-20 months. The project is now in the stage of contractor selection.

 

Engineering & Construction Management of National Engineering & Construction Company of IRI stated the new refinery foreign investment will come from Malaysia, Indonesia, and Syria according to signed agreements. The feasibility studies on the Indonesian side have ended and the time has been assigned. The Syrian studies are still under way.

 

   KUWAIT

 

Kuwait Sees Asia Refinery Deals by Next Year

State-owned Kuwait Petroleum Corp (KPC) hopes to finalize by next year deals to build new refineries and petrochemical plants with Chinese, Vietnamese and Indian firms, its top executive said March 4.

 

Kuwait is also to award the contract for the construction of the country's fourth refinery, which it says will be the biggest in the Middle East, "this month or next month".

"We are currently negotiating with several parties ... which are China, Vietnam and India," Saad al-Shuwaib, Chief Executive of KPC, said at an oil seminar.

 

KPC was particularly eyeing investments in refineries related to petrochemicals, he said.

"But we don't want to be alone. We want to get into a partnership with others and to own a certain percentage in it ... Today a refinery is not less than $5 billion... a refinery with petrochemical," Shuwaib said.

 

Last month, Vietnamese state oil group Petrovietnam said it was getting closer to an agreement with two companies including Kuwait Petroleum International to form a joint venture to build Vietnam's second refinery, with a capacity of 170,000 barrels per day (bpd).

 

KPC was in talks in December with Indian firms to build a large refinery and petrochemical plant in India.

 

It was looking at a large scale refinery with a capacity of 150,000-400,000 bpd, while the petrochemical project would have an ethylene capacity of up to one million tonnes.

 

More than 10 firms are bidding for the 615,000 bpd al-Zour refinery. The refinery is part of Kuwait's plans to boost refining capacity to 1.415 million bpd from the current 930,000 bpd. The project has been delayed but a KPC official said last month the contracts would be awarded in March.

 

   SAUDI ARABIA

 

Alfa Laval Wins Refinery Order in Saudi Arabia

Alfa Laval a world leader in heat transfer, centrifugal separation and fluid handling – has received an order for the unique Alfa Laval Packinox plate heat exchangers for a refinery in Saudi Arabia. The order value is about 50 MSEK. Delivery is scheduled for 2009.

 

The order is for the Ras Tanaura Refinery in Saudi Arabia and the plate heat exchangers will be used to produce diesel fuel. The Alfa Laval Packinox plate heat exchanger can be up to 20 meters long and have a weight of up to 300 tons.

 

 “This order underlines the very strong position that Alfa Laval has established in the refinery industry and the ongoing investments in the refinery industry, which Alfa Laval will continue to benefit from,” says Lars Renström, CEO and President of the Alfa Laval Group.

 

McIlvaine Company,

Northfield, IL 60093-2743

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