Sonhoe Development Co. has selected GE Oil & Gas as a "supplier of choice" for a new heavy oil upgrader on its planned £2-billion refinery project in Teesside. GE will provide reactors, centrifugal and reciprocating compressors, centrifugal pumps and air coolers for the facility under the contract, which is worth around $200 million.

According to GE Oil & Gas, the new plant will upgrade low quality heavy oil into premium quality, ultra low sulphur diesel, kerosene and petrochemical naphtha in the 200,000 bbl/day facility that is scheduled to come on stream by 2014. Sonhoe plans to source the acidic, sulphurous and low API crudes from a number of regions including the North Sea,Latin America, Middle East and West Africa.

“This is a major and important energy infrastructure project in the UK and we have been working with SONHOE for some time to understand their needs and validate the development," said Claudi Santiago, GE Senior Vice President and President and CEO of GE Oil & Gas. "We have a good understanding of its critical success factors and, by entering into a supplier of choice agreement with Sonhoe, we can work together to mitigate risk, support the technical design and achieve schedule advantage in terms of lead-time length and predictability.

The facility will comprise as its major components a 110,000 bbl/day hydro-cracking capability and a gasification complex that will produce over 500 tonnes/day of hydrogen & over 240,000 therms/day of synthetic gas. The upgrader has been designed to process low quality, heavy crude oil at scale into premium distillates for the European market and elsewhere.

Meanwhile, Sonhoe has signed a heads of agreement for a license with Chevron Lummus Global LLC (CLG) for a new grassroots hydroprocessing complex including three Isocracking units and one new gasoil Isotreating unit to be built in the upgrader at Teesside.

CLG’s hydroprocessing technology will be embedded at the heart of the facility and will "ensure high levels of performance and operational and financial stability for all stakeholders associated with the development,” according to Howard Simons, Sonhoe technical director.

The Isocracking units are designed for greater than 85% conversion of straight run vacuum gasoils, applying CLG’s two-stage Isocracking technology, which is designed to deliver high yields of premium quality diesel and kerosene. The complex will also include a gasoil Isotreating unit designed for 99% conversion of straight-run and cracked atmospheric gasoils and light vacuum gasoils to premium quality diesel and kerosene. The reaction products will be fractionated in a combined fractionation section designed by CLG.

According to CLG, the complex will help Sonhoe to achieve its strategy to convert heavy crude oils into ultra-low sulphur diesel for the European market. The design, it said, is based on existing operating plants and the basic engineering design is due for completion by the end of 2008, with start-up scheduled for summer 2014.

CLG licenses refining hydroprocessing technologies and catalyst systems worldwide, and is a 50-50 joint venture between Chevron USA Inc. - a wholly owned subsidiary of Chevron Corp, and Lummus Technology - a CB&I Company.

Murphy Oil Considers $6 Billion Superior Refinery Expansion

Murphy Oil USA is contemplating a $6 billion expansion of its Superior refinery.

By 2010, Enbridge plans to open a new 42-inch diameter pipeline that will carry Canadian bitumen in diluted form through Superior, en route to a Chicago hub.

Murphy is just one of several owners of Midwestern refineries that are eyeing massive upgrades to tap into this new supply of heavy crude.

To process the high-carbon, heavy Canadian crude, refineries that want a seat at the table will need to install processing machines called cokers.

"It will require a huge investment," said Denise Hamsher, an Enbridge spokeswoman. She noted that Midwestern refineries typically have used lighter crude as a feedstock and subsequently did not need systems to deal with coke byproducts of high-carbon crude.

Dave Podratz, manager of the Superior refinery, said the immense cost and complexity of the prospective project make its outlook uncertain.

Murphy still lacks a crucial partner needed for its Superior expansion plans to proceed. Podratz explained that the project hinges on obtaining a long-term commitment from a Canadian producer who could reliably supply crude to the refinery.

Until it finds a partner, Murphy has put its plans on hold for the moment, but the company is not sitting still. It continues to push ahead with analysis that could be used to prepare a required environmental assessment of the project. The refinery has not yet applied for any permits to significantly expand its operations in Superior.

But Murphy has purchased about 400 acres of land surrounding its refinery, on top of 600 acres it already owned.

The company also has invested millions of dollars on preliminary engineering for the plant.

"Sure, we've spent significant money. But when you're looking at a project this big, you can't noodle around on the back of an envelope," Podratz said. "You need to know what the economics of it are and recognize if there's some kind of fatal flaw."

With oil selling for about $120 a barrel lately, you might imagine companies in Canada would be clamoring to bring additional production online in Alberta. And development of the oil-sand deposits has continued.

But tight supplies of workers in the region and high demand for specialized equipment has driven development costs sharply upward, according to Kevin Wilson, an energy sector analyst and senior vice president of NBC Financial Services. In the past five years, he estimates the start-up costs for tar-sand projects has doubled and even tripled in some cases.

David Carson, vice president of the Canadian Centre for Energy, agreed that a shortage of qualified workers has slowed the development of oil production in Alberta.

"Labor has been a problem," he said. "But we have had a lot of people moving there from elsewhere in Canada, and some international workers have been coming to help, as well."

The shortage of labor is affecting the types of operations being built in Alberta, too. Many producers traditionally have focused on processing bitumen into a form with qualities similar to those of light crude. But such plants are expensive to build and staff.

Now, an increasing number of producers are taking a cheaper route. They are taking the thick, raw bitumen they extract from the ground and simply diluting it with lighter fluorocarbons to achieve a syrup-like consistency that can be transported by pipeline.

The pipeline Enbridge aims to construct is specially designed to accommodate this product, called diluted bitumen -- or dilbit for short. The main 42-inch diameter pipe will carry dilbit south to market. But it is paired with a second 20-inch diameter pipe that will be used to move diluent back north to producers. Hamsher explained that U.S. refineries in the U.S. typically strip off these same low-octane, low-value hydrocarbons in the course of refining fuel, and they will now be able to put them right back into a pipeline for return to Alberta for use as diluent.

"It will be the biggest recycling pipeline in the world," Hamsher said.

Pipeline or not, Wilson said Murphy's expansion plans could be clouded by the looming recession and the possibility that cost-conscious Americans might finally trim their fuel consumption.

"Their timing could have been better," he said. "If this is a mild recession, I think their [Murphy's] project has a good chance of getting off the ground, but if it's a deep recession, all bets are off."

Should Murphy decide to proceed with an expansion in Superior, Podratz said it will likely take a minimum of five years to obtain needed permits and build the new facility.

BP Sees Texas City, TX Refinery Full at Capacity by End 2008

BP expects its Texas City, TX refinery to reach "full economic contribution" by the end of the year as units continue to return to service.

Byron Grote, chief financial officer, told analysts that the crude distillation capacity at the troubled refinery is now over 400,000 barrels per day.

The refinery has been operating at about half of its crude distillation capacity since it returned from its shutdown ahead of Hurricane Rita in September 2005.

An ultraformer is expected to come online in the second half of the year, which will allow for naphtha upgrading.

LyondellBasell Houston Refinery Restarts Unit

LyondellBasell Industries announced April 29 that its Houston refinery has returned the fluid catalytic cracking unit (FCCU) to service. The FCCU at the 268,000 barrels per day refinery was shut down for unplanned maintenance in late March.

Sioux City Hospital Endorses $10 Billion Refinery

A Sioux City, Iowa, hospital has endorsed plans to build a $10 billion oil refinery near Elk Point.

A Mercy Medical Center official says the project has huge economic potential.

Hospital Chief Executive Officer Paul Dougherty says Texas-based Hyperion Resources is a good corporate citizen that has promised the refinery will meet or exceed state and federal safety standards.

Mercy Medical Center is about 30 miles from the site of the proposed refinery.

Union County voters will cast ballots June third in a referendum on the project.

If the project is approved and gets all of its permits, construction could begin in 2010.

The refinery would process 400,000 barrels of Canadian crude oil daily into gasoline and diesel fuel.

Kansas Coal Decision Influences Pursuit of $10 Billion Refinery Project

Kansas state officials haven't given up on landing a $10 billion refinery project.

But top legislators believe success depends on clearing the way for two coal-fired power plants in southwest Kansas.

Hyperion Resources is pursuing its refinery separately from efforts by Sunflower Electric Power to build the two coal-fired plants outside Holcomb, in Finney County.

But both need air-quality permits from the Kansas Department of Health and Environment.

That pulled Hyperion into the debate after department Secretary Rod Bremby denied a permit for Sunflower in October.

Internal state government e-mails, obtained by Sunflower supporters and shared with The Associated Press, show the decision to block Sunflower's project concerned Hyperion.

One Department of Commerce official believed it created "considerable uncertainty."

BP’s Carson, CA Refinery Breakdown due to Faulty Valve

A breakdown at BP Plc's 265,000-barrel-per-day Los Angeles-area refinery in Carson, California was due to a faulty valve in the hydrogen plant that was quickly repaired, sources familiar with refinery operations said on April 21.

The breakdown triggered flaring at the refinery, according to a report filed with the South Coast Air Quality Management District.

The effect on the refinery's production was minor, the sources said.

A BP representative at the time declined to discuss operations at the refinery.

Sinclair to Spend $1 Billion for Expansion of Refinery in Tulsa

Sinclair Tulsa Refining Co. has broken ground on a $1 billion project to expand its operation in west Tulsa.

Kevin Brown, the company's executive vice president, says the goal of the expansion is to boost production and cut the plant's emissions. The company says the project will raise the refinery's output by 60%.

When the project is done in 2010, the plant's refining capacity will climb to 115,000 of barrels of crude oil per day. Its current refining capacity is 70,000 barrels per day.

Production of diesel fuel at the Sinclair refinery also will increase to 56,300 barrels per day.

Total Reports Maintenance at Port Arthur Refinery

Total Petrochemicals may have reduced operating rates at distillate hydrotreating units on April 19 as it conducted maintenance at its Port Arthur, Texas refinery, according to a filing with state environmental regulators.

The maintenance removed contaminants from incinerator tubes at the 285,000 barrel per day Port Arthur refinery, Total said in the filing with the Texas Commission for Environmental Quality.

Total's filing did not provide information about the exact amount of reduction in distillate hydrotreating operating rates or the capacity of the units affected.

A Total representative was not immediately available to comment.

Andarko Environmental Cleanup of Property at Champlin Refinery Site

Environmental crews currently are working a long-term cleanup of property at the old Champlin refinery site in Enid, OK.

John Christiansen, a spokesman for Anadarko Petroleum, which owns the property, said a group of contract and company employees are working on the project.

“It’s widely known the old Champlin refinery ... there’s been some monitoring of groundwater for several years. That continues, and we’re also taking some steps to remediate the ground water,” Christiansen said. “With historical operations such as Champlin, you run into this from time to time.”

The Champlin refinery closed in 1983, and Anadarko has been monitoring the ground water at the location for the past 10 years. There are 150 active monitoring wells. Anadarko also is doing some construction work that is expected be completed in August.

According to Don Hensch, of Oklahoma Department of Environmental Quality, there are three separate systems operating simultaneously. One system injects nutrients into the ground to assist microbes already in the ground that will decompose petroleum hydrocarbons back into natural elements. To do that, the microbes need nutrients, and oxygen and compressed air also will be injected into the ground through a series of wells across the southern boundary of the old refinery site.

In a nearby area, another series of wells will vacuum vapors and some water out of the ground. Hydrocarbon vapors will go through a separator system, Hensch said. The vapor will go through a thermal oxidizer, he said, and the water to a water treatment system to further degrade it and inject it back into the ground to continue the circulation.

Hensch said it is hard to tell how long the remediation effort will require. Similar systems have been successful in just a few years. Anadarko Petroleum has certification and full approval of the DEQ, which approved the process, he said.

A bioplug system also is being set up in other areas of the refinery site to see which system works best. That system injects large quantities of nutrients to build up a biomass in the formation and continuously treats water as it flows through the biomass. The system working best will be used in other areas of the old refinery that also need remediation work, Hensch said.

There are 12 contractors on site at any time, and the monitoring has been ongoing for some time, Christiansen said. The separation effort will continue for a number of years.

“This was the old refinery that was part of Union Pacific resources, which Anadarko acquired in 2000.” Christiansen said. “The main thing is for us to make sure it is cleaned up and done safely and kept right.”

Fire Breaks Out as Alon Reopens Refinery

Alon USA Energy Inc. said an asphalt tank fire April 7 temporarily affected the restart of its Big Spring refinery, forcing it to shut down its crude unit.

Alon Chief Executive Jeff Morris called the fire "minor" and said there were no injuries, according to an Associated Press report. Dallas-based Alon closed the refinery in February after an explosion and fire there injured five people.

Alon said the tank fire was quickly controlled and charge to the crude unit was suspended as a precautionary measure. The refinery's reformer continued to operate and restart of the crude unit was expected to restart as early as April 8.

The company said the asphalt tank is in an isolated area away from the refinery's process units and all reconstruction work on the refinery is continuing as planned.

Alon's Big Spring refinery is one of Alon's four refineries.

Alon said the refinery had returned to the first stage of operation, producing gasoline, diesel and asphalt. Alon began the production and sale of non-modified grades of asphalt via truck and rail car. The company plans to begin production and sale of rubber modified grades of asphalt, excluding ground tire grades, by May 15 and ground tire rubber grades by June 15.

Alon also said it has inspected almost all the equipment in the fluid catalytic cracking unit and has found no major long-lead equipment that will require replacement.

Morris said the company is ahead of schedule in returning the refinery to full production and still plans to have the cracking unit running by mid-July.

Refinery Water Pollution Costs ConocoPhillips $1.2 Million

ConocoPhillips has agreed to pay a $1.2 million civil penalty to resolve alleged violations of the Clean Water Act at a petroleum refinery it operates in the city of Borger, located in the Texas panhandle.

The U.S. Justice Department and Environmental Protection Agency announced that their complaint, filed simultaneously with today's consent decree, alleges that ConocoPhillips violated effluent limits in its Clean Water Act permit on over 2,000 occasions between 1999 and 2006.

"It is imperative that business and industry do their part to minimize the possible harm their operations may cause to our environment," said EPA Regional Administrator Richard Greene.

The discharges from the refinery involved two types of water pollutants - selenium and whole effluent toxicity. Whole effluent toxicity means the aggregate toxic effect to aquatic organisms from all pollutants contained in a facility's wastewater.

Although Selenium is a naturally occurring element that the federal Agency for Toxic Substances says is an essential nutrient for humans and animals, selenium can be harmful when regularly taken in amounts higher than those needed for good health, the agency says.

If mildly excessive amounts of selenium are eaten over long periods, brittle hair and deformed nails can develop. In extreme cases, people may lose feeling and control in arms and legs, the agency says.

No human populations in the United States have been reported with long-term selenium poisoning, including populations in the western part of the country where selenium levels are naturally high in the soil.

Still, the EPA Office of Drinking Water regulates the amount of selenium allowed in drinking water. Public water supplies are not allowed to exceed 50 ppb total selenium.

Selenium is considered a pollutant and the federal Clean Water Act prohibits the discharge of any pollutant to waters within U.S. jurisdiction unless the discharge is authorized by a Clean Water Act permit.

After the federal government took this enforcement action, ConocoPhillips brought the refinery into compliance with its Clean Water Act permit limits for both these pollutants.

The April 7 agreement, filed in the U.S. District Court for the Northern District of Texas, requires the company to monitor surrounding waters for selenium levels, including Dixon Creek and the Canadian River, as well as for accumulation of selenium in fish tissue.

The Canadian River is the largest tributary of the Arkansas River. It is about 760 miles long, starting in Colorado and traveling through New Mexico, the Texas Panhandle, and most of Oklahoma.

The agreement requires ConocoPhillips to maintain the controls that it has already put into place to minimize its selenium discharges and to correct whole effluent toxicity violations.

In addition, ConocoPhillips will perform a Supplemental Environmental Project, estimated to cost $600,000, which will reduce the amount of solids discharged into local waterways during storm events.

"We are pleased that ConocoPhillips has taken steps to resolve these Clean Water Act violations," said Ronald Tenpas, assistant attorney general for the Justice Department's Environment and Natural Resources.

"This settlement will maintain the Borger refinery's compliance and provides for an appropriate civil penalty as well as a beneficial Supplemental Environmental Project that will improve water quality."

Borger is host to some of the world's largest inland petrochemical complexes. ConocoPhillips processes crude oil and natural gas liquids at its refinery there.

This agreement is subject to a 30-day public comment period and final judicial approval. The settlement is also signed by WRB Refining, the current owner of the ConocoPhillips-operated refinery.

Exxon Says It Continues To Operate Chalmette Refinery despite PdVSA Ownership

ExxonMobil Corp. said April 9 it continues to operate the Louisiana oil refinery that it jointly owns with Venezuela's national oil company, but it confirmed that the Venezuelan company is trying to exercise its right to remove Exxon as the operator in the joint venture.

Venezuela's oil minister said that state-owned Petroleos de Venezuela SA, or PdVSA, is seeking a new operator to replace ExxonMobil in their Chalmette, La., oil refinery partnership.

Exxon spokeswoman Margaret Ross said: "ExxonMobil is aware that PdVSA is considering its option to exercise its rights under the Chalmette Refining LLC, operating agreement to remove ExxonMobil Oil Corp. as operator of the refinery. It is our policy not to comment in detail on the specifics of our contracts."

Ross added that Exxon, the largest U.S. oil company by market value, remains open to meaningful discussion with PdVSA.

PdVSA and Exxon each own half of the Chalmette plant, an asset that is now part of compensation talks between the partners stemming from President Hugo Chavez's decision last year to nationalize a series of oil projects, including one controlled by Exxon.

Petroplus Interested In U.S. Refinery Acquisitions

The chairman of mid-size European refiner Petroplus said April 8 his company was considering acquisitions of U.S. refinery operations within the next 12 to 18 months, particularly those with lower working capital requirements.

"We're interested in acquiring refineries in the United States on which we can make money ... we're looking at everything on the market," Chairman Thomas O'Malley said on the sidelines of an energy conference here.

Petroplus earlier this year set up a $2 billion partnership with two private equity firms, Blackstone Group and First Reserve, to fund a U.S. refinery buying spree.

Last month, O'Malley said he believed "there will be some excellent prices in the U.S.," as recent prices have been "vastly inflated" and will fall off.

He also said he was looking at refineries that produced more than 100,000 barrels a day, particularly those large refineries with access to population centers, such as on the Texas Gulf Coast.

O'Malley built two U.S. refining empires, paying cents on the dollar for assets in the 1990s, and earlier this decade. As asset prices in Europe soared, he took the helm of Petroplus, a European refiner.

According to people close to the transactions, the partnership is one of the top contenders for three Valero Energy Corp. refineries, the 255,000 barrel-a-day Aruba refinery and plants in Memphis, Tenn., and Krotz Springs, La.

O'Malley declined to comment on whether his firm was interested specifically in Valero's assets.

CANADA

Petro-Canada Plans Turnaround at Alberta Refinery

Petro-Canada) said April 28 it plans a 60-day maintenance turnaround at its 125,000 barrel per day refinery in Edmonton, Alberta, beginning in August.

The turnaround, to tie in equipment that will allow the refinery to use heavy feedstock from Alberta's oil sands, will cut production to about 30 percent of normal volume, Chief Executive Ron Brenneman said on a conference call.

Carson, CA, refinery hydrogen unit shut--sources

A hydrogen desulfurization unit was shut April 27 at BP Plc's 265,000 barrel per day Los Angeles-area refinery in Carson, California, sources familiar with refinery operations said.

The unit's upset triggered flaring April 27 at the refinery, according to notices filed with state and local air-pollution regulators.

A BP spokeswoman declined to discuss refinery operations.

The shutdown of the hydrogen desulfurization was not expected to affect production at the refinery, the sources said.

The sources did not know when BP planned to restart the unit.

BP filed a planned flaring notice on April 28 for the refinery indicating flaring may occur between April 29 and May 5, according to the filing with the South Coast Air Quality Management District.

Shell Examines Carbon Capture Project at Its Canadian Refinery

Royal Dutch Shell Plc, Europe's largest oil company, said it's examining a carbon capture project at its Scotford refinery and upgrader in the Canadian province of Alberta.

The company is studying a plan nicknamed ``Quest,'' which would capture carbon at the 155,000-barrel-a-day upgrader and ``transport it to a mature field for sequestration,'' Chief Financial Officer Peter Voser said. ``We are looking into that and we are working on that.''

The Muskeg River Mine supplies bitumen to Shell's Scotford upgrader, which converts bitumen extracted from Alberta's oil sands into refinery-ready crude. Alberta, Canada's biggest carbon dioxide-emitting province, passed regulations last year forcing companies like Shell to cut greenhouse emissions per unit of output.

Shell, Exxon Mobil Corp. and the rest of the oil industry may face higher costs to exploit Canada's tar sands, the biggest deposit outside of Saudi Arabia, because of efforts to curb climate change. The accumulation of carbon because of burning fossil fuels is blamed for global warming.

Shell Canada Selects SNC Lavalin for Feasibility Study

Shell Canada Limited, the Canadian operating arm of Royal Dutch Shell, has selected SNC Lavalin to perform a feasibility study for the proposed 150,000- to 250,000-barrel-per-day heavy oil refinery in Sarnia. The refinery expects to receive approval from the Ministry of the Environment by fall 2008. After approval, the company will select a firm to perform engineering, procurement and construction services.

Imperial Oil in Sarnia Shuts down Main Refinery Boiler for Repairs

Imperial Oil has shut down the main boiler at its Sarnia refinery for “unexpected but necessary” repairs.

During the work time, dark emissions will likely be released from the refinery stacks, according to a press release sent out April 24 from the company.

The company notified the Ontario Ministry of Environment.

Repairs were to continue around the clock to minimize the length of the outage.

The affected boiler unit burns exhaust gases from the refinery’s coker unit along with petroleum coke and fuel gas to produce steam.

During the outage, only the exhaust gas would be emitted from the stack as the burning of petroleum coke and fuel gas is stopped.

$60,000 in Participant Funding Made Available to Proposed Shell Canada Refinery Project

The Canadian Environmental Assessment Agency is making available $60,000 under its participant funding program to assist groups and/or individuals to take part in the environmental assessment of a Shell Canada proposed refinery development project.

Shell Canada proposes to construct and operate facilities in the Township of St. Clair to process crude oil. These facilities will operate on an integrated basis as an extension of Shell Canada's existing refinery located in the Township of St. Clair, south of Sarnia, Ontario known as the Sarnia Manufacturing Centre (SMC), and adjacent to the St. Clair river. The facilities may include new processing units, docking facilities, an electricity generating facility and transmission lines, a gasifier, road and rail improvements and pipelines that would integrate the extended facilities with the SMC. There would also be modification and decommissioning of some of the existing refinery process units at the SMC.

To receive funding, successful applicants must participate in the environmental assessment of the project. This funding is intended for activities that will follow the public consultation currently underway on the scope of the project.

Funding applications received by the Agency at the address indicated below by May 26, 2008 will be considered. An announcement of the successful funding recipients will be made at a later date.

Information on the program, including the Participant Funding Program Guide, the application form and the contribution agreement that describes the obligations of each party and the conditions for payments, is available on the Agency's web site.

Shell Examines Carbon Capture Project at Its Canadian Refinery

Royal Dutch Shell Plc, Europe's largest oil company, said it's examining a carbon capture project at its Scotford refinery and upgrader in the Canadian province of Alberta.

Petro-Canada Plans Turnaround at Alberta Refinery

Petro-Canada) said April 28 it plans a 60-day maintenance turnaround at its 125,000 barrel per day refinery in Edmonton, Alberta, beginning in August.

ARUBA

Petrobras Confirms Talks to Buy Valero Aruba Refinery for Possible $2 Billion

Brazilian oil company Petrobras Brasileiro is in talks to buy a 255,000-barrels-a-day refinery on the Caribbean island of Aruba from Valero Energy Corp., Petrobras' international director said April 15.

"A decision (on whether to purchase the asset) is expected to be made by our directorate and board in April," Jorge Zelada said.

Petrobras could buy the refinery for $2 billion, according to industry sources.

Zelada didn't give a figure for the possible deal and Valero didn't comment on Zelada's remarks.

But Valero spokesman Bill Day said his company didn't want to disclose the name of the possible buyer for any of its refineries.

Valero bought the refinery in 2004 for $465 million, according to John S. Herold, a Connecticut-based research firm.

"It would sure be a good deal for Valero," said Chi Chow at Tristone Capital Co. in Denver, Colo. "Even if refinery assets have appreciated a lot recently, this would still be a decent return on investment."

Valero has recently identified several under performing refineries it wants to sell, including the Aruba one, Chow said.

Valero said it wants to hang on only to its most profitable refineries, and plans to retain large refineries with the ability to upgrade cheaper grades of crude into high-value products like gasoline and diesel.

"Valero wants to improve returns and profitability," Chow added.

The Aruba refinery doesn't produce gasoline, and produces only a small amount of finished diesel fuel. The bulk of the plant's products are feedstocks that require further processing.

It was less clear, though, what the benefit from the acquisition would be for Petrobras.

The oil giant earlier said it wants to boost its overseas refining capacity to refine abroad more of its excess heavy crude from Brazilian production. Petrobras still needs to import light oil and diesel to Brazil, while it exports heavy crude and gasoline.

The company during some recent quarters was a net oil exporter, while in others became a net importer of crude.

To process in new markets its Brazilian heavy crude - that sells at a discount in international markets compared to light crude - Petrobras in April completed the purchase of an 87.5% stake in a refinery on Okinawa from a unit of ExxonMobil Corp. in Japan.

In September 2006, Petrobras closed the acquisition of a 50% stake in the Pasadena Refining Systems Inc. in Texas from Astra Oil, the U.S. refining arm of Belgian Compagnie Nationale a Portefeuille, for $360 million.

Zelada also confirmed that Petrobras is in talks to buy the remaining stake in the Pasadena refinery. But he said the company currently isn't seeking to buy refineries from Valero in the U.S.

According to industry sources, the Aruba refinery currently processes mainly Maya crude, which, like Brazilian crude, is heavy. That aspect of the plant seems to fit well into Petrobras' strategy, said Monica Araujo, an oil analyst with the Rio de Janeiro-based Ativa brokerage.

A $2-billion purchase price would be relatively cheap for the size of the refinery, compared to prices being paid for top refineries, Araujo said.

The discount seems to derive from the Aruba refinery's inability to process oil directly into gasoline and diesel.

"It remains to be seen what the final purchase price will really be in order to know whether this could be a good deal for Petrobras or not," Araujo said.

To upgrade the refinery to produce gasoline and diesel, several billion dollars in investment are needed, Tristone's Chow said.

Another uncertainty is the tax regime in which it operates. Valero currently operates the plant under a tax holiday from the government of Aruba until 2011, which, according to analysts is the refinery's chief advantage. It is unclear whether this exemption from federal taxes would be extended to Petrobras.

The Aruba refinery was originally built by ExxonMobil Corp. to process Venezuelan crude, but was mothballed, and largely dismantled in the 1980s, when the refining business became particularly unattractive.

It was stripped of key units, including a gasoline-producing fluid catalytic cracking unit. The refinery was then reopened by Coastal, and was widely acknowledged to be a poor refinery. El Paso Corp. subsequently acquired the plant in its acquisition of Coastal.

In February 2004, Valero purchased the plant from Coastal.

The refinery seemed attractive to Valero because it produced some finished diesel, and feedstock for Valero's U.S. refineries. Additionally, at the time of the purchase, Valero was considering buying European refineries, and it viewed that the Aruba refinery would be advantageous for exporting feedstock to that region as well as to its existing refineries.

However, Valero never bought the European refineries. As margins collapsed, the Aruba refinery - which was unable to produce gasoline and had some operational problems - began to require more investment than the refiner was willing to put in.

Since October, the refinery has had a fire and two major plant-wide power outages that caused downtime. These latest incidents are just the most recent blips in a history of problematic operations at the plant.

Petrobras' Zelada said the recent fire at the refinery contributed to uncertainty about the purchase.

VENEZUELA

Venezuela to Invest in Indian Oil Projects

Venezuela, which potentially holds the world's largest oil reserves ahead of Saudi Arabia, may invest multi-billion dollars in oil refinery and petrochemical projects in India and give New Delhi a stake in its large oilfields.

Latin America's only OPEC member country is looking to diversify its oil exports and has agreed to look into the feasibility of an integrated multi-billion-dollar oil project with India that would see ONGC Videsh Ltd getting a stake in a big field giving at least 200,000 barrels of oil per day and Venezuelan national oil company PdVSA investing in refinery-cum-petrochemical project in India.

The agreement came during the visit of Petroleum Minister Murli Deora to Venezuela, the first by any oil minister from India to the Latin American nation.

Venezuelan Oil Minister Rafal Ramirez Carreno said his nation was impressed by India's refining capacity and PdVSA will look at setting up a refinery project in India.

"We see export of 200,000 barrels per day of oil (from field jointly operated by PdVSA and OVL in Venezuela) to a refinery project in India," he said, indicating that the Indian flagship firm would be given a large field in the Orinoco heavy oil basin.

The Orinoco heavy oil basin may hold up to 270 billion barrels of oil reserves in addition to the existing 80 billion barrels of proven oil reserves, making it the nation with largest oil reserves ahead of Saudi Arabia that has close to 160 billion barrels of reserves.

INDIA

Cals Refineries to Dismantle its German Unit

Delhi-based private sector refiner Cals Refineries will start the process of dismantling its Bayeroil Refinery in Germany from May this year and will shift the unit to West Bengal, state Industry Minister Nirupam Sen has said. “The main process units of Bayeroil Refinery would be transplanted from Germany to Haldia in East Midnapore district. The project would take two years to be operational,” Sen said in Kolkata April 28.

Cals Refineries has already signed an MoU with Haldia Development Authority (HDA) and West Bengal Industrial Development Corp (WBIDC) to set up an oil refinery with an initial outlay of Rs.40 billion ($1 billion).

The oil refinery will have five million-tonne capacity per annum.

The refinery unit will also have a 100 MW captive power plant and a photovoltaic cell manufacturing unit.

“Initially, we have given 200 acres at Haldia for the project and another 600 acres would be given to the company over a period of time,” Sen said.

India Reliance to Commission Refinery in September

India's Reliance Industries Ltd will begin testing its new 580,000 barrels per day (bpd) oil refinery in July and commission it in September, a source familiar with operations said on April 24.

News of the start-up is in line with previous reports suggesting Reliance would start the plant late in the second quarter or early in the third quarter, well ahead of its official December target, bringing earlier relief to oil markets that continue to rally on fears of tight supplies.

Together with Reliance's existing 660,000-bpd refinery, the new unit will make the Jamnagar complex in western Gujarat state, the world's biggest with a capacity of 1.24 million bpd. Chevron Corp holds a 5 percent stake in the unit that is building the second plant, Reliance Petroleum.

"Trial runs are planned to begin in July and should be over by end-August, so that the refinery can be commissioned on some auspicious day in September," the source, who did not wish to be identified, told Reuters.

Reliance's existing refinery, commissioned in 2000, almost instantly turned India from Asia's biggest diesel buyer into a net exporter of the fuel.

The company's spokesman reiterated Reliance's position that the refinery would be commissioned before December 2008.

About 90 percent work at the $6 billion-refinery has been completed. "We are quite confident that most of the units, at least 70 percent, will be up and running by December. The project is on track for completion in second half 2008," said Antony Francis, general manager, petroleum division, at Reliance Industries.

Reliance aims to process medium grade crude with an American Petroleum Institute (API) gravity of 24 degrees at the new plant. Its current refinery is processing crude of 26 API, Francis told an industry conference in Singapore.

For its new plant, Reliance has signed a long-term deal with Venezuelan state oil firm PDVSA to source 150,000 bpd from June.

The early commissioning gives Reliance a bigger head start to capitalize on robust refining profits before other export-focused refineries — the biggest of which are being built in the Middle East — weaken margins when they launch early next decade.

But with the U.S. economy weakening, some analysts have warned that a cyclical downturn in refining margins could come sooner rather than later and even Reliance's ability to turn cheap low-grade crude into high-value products may not spare it.

Reliance has offered term diesel to selected trading houses for June 2008-May 2009 supplies, including first cargoes from the new plant, with an eye on Western and African markets. The tender is yet to be awarded. The export-oriented refiner is offering gas oil with 0.05 percent sulphur content and even cleaner grades in the tender, traders said.

RPL to Complete $5.8 Billion Jamnagar Refinery Project by September

Reliance Petroleum Ltd (RPL) has completed 90 per cent work at its upcoming Jamnagar complex and expects start trial runs in July. The company expects to commission the 580,000 barrels per day oil refinery in September ahead of the December 2008 schedule.

RPL is building the refinery adjacent to the existing 660,000 barrel per day refinery at Jamnagar. The two refineries together will form the world's largest refining complex, processing 1.24 million barrels crude daily.

The new refinery will process medium grade crude with an API (American Petroleum Institute) gravity of 24 degrees.

Reliance has also tied up 150,000 bpd of long-term crude supplies with Venezuelan state oil firm PDVSA beginning June.

In a filing to the Bombay Stock Exchange, the firm said that based on the progress made to date, the project is expected to be completed ahead of December 2008.

As of March 31, the firm has utilized US$5.8 billion more than originally projected. This is mainly due to payments in advance under the contracts for continued efficient and fast implementation of the project, the filing said.

US-based Chevron Corp has a five per cent stake in the company. It also has the right to raise its interest to 29 per cent before the plant is commissioned.

JAPAN

Nippon Oil to Add to Negishi Refinery, Produce ETBE

Japan's Nippon Oil Corp., facing reduced domestic demand for oil products, plans to increase exports and to begin mass-producing ethyl tertiary butyl ether at yearend 2009.

The petroleum wholesaler will invest about ¥2 billion at its Negishi refinery in Yokohama to build a facility capable of turning out 100,000 kl/year of ETBE. Demand for ETBE in Japan is expected to reach 840,000 kl in 2010, based on projections for sales of biofuel.

Japan currently imports all ETBE used for biofuel, and domestic production will help reduce transport costs and carbon dioxide emissions. Nippon Oil aims to purchase bioethanol from domestic sources in Hokkaido.

Meanwhile, Nippon Oil, aiming to offset the fall in demand for oil products in the domestic market, will nearly double its oil product exports to 2.7 million kl in the fiscal year started in April.

The refiner will increase its export capacity to 260,000 b/d from 230,000 b/d by the fiscal year ending March 2011, said Nippon Oil Pres. Shinji Nishio.

Shinji said most of the planned exports, mainly kerosene, jet fuel, and gas oil, will be sold to oil traders in the Asia Pacific market.

The drop in demand for oil products in Japan in recent years is due to improved energy efficient technology and diversification to other energy sources.

PAKISTAN

Descon to Install 100,000 bpd Refinery in Pakistan

Descon Engineering has signed a contract with Trans Asia Refinery Limited. The contract was signed by MD & CEO of Descon Engineering, Sheikh Azhar Ali and CEO Trans Asia Refinery, Muhammad Salim. Chairman of Descon Abdul Razak Dawood was also present at the ceremony.

According to the contract, Descon Engineering will install a 100,000-barrel per day oil refinery from Italy at Port Qasim, Karachi and the project will be completed in April 2010. Descon Engineering will complete designing construction and all other work areas of the refinery installation project.

On the occasion, MD Descon, Sheikh Azhar Ali said that the project will bring more than $500 million in direct foreign investment to Pakistan.

Trans Asia Refinery will be the eighth refinery to be set in Pakistan after Attock, Bosicor, Bosicor, Indus, National, PakñArab y and Pakistan Refineries.

MALAYSIA

Gulf Petroleum Receives Approval for $5 Billion Malaysia Refinery

Qatar-based Gulf Petroleum, part-owned by the state's royal family, has received final approval from Malaysia's government for the construction of a $5bn oil and gas complex in the state of Perak.

The 400-hectare site at Manjung was approved by Malaysia's Ministry of International Trade and Industry on April 25, according to Malaysia's official state news agency, Bernama.

The first phase will involve the development of an oil refinery with capacity of 100,000-barrels-a-day (b/d) to 150,000 b/d, while an integrated petrochemicals facility is also expected to be built.

Gulf Petroleum has previously said that at least two Middle East national oil companies will participate in the project, along with other consortium members including major oil and gas groups, and prominent banking and insurance firms.

SRI LANKA

Iran to Modernize Sri Lanka Refinery to 100,000 bpd

Iran is to modernize Sri Lanka's Sapugaskanda oil refinery in a bid to double the capacity of the island nation's sole refining complex.

Iran would help expand the capacity of the south Asian nation's oil refinery to 100,000 barrels per day (bpd) from the current 50,000 bpd within the next four or five years.

According to an agreement signed between Iran and Sri Lanka Monday during the visit of the Iranian President Mahmoud Ahmadinejad, Tehran will take 12 percent of the refinery's profit once it has been modernized.

The project, once completed, will reportedly make Sri Lanka self-sufficient in aviation fuel and bitumen (tar).

Tehran and Colombo signed four economic cooperation agreements to improve the south Asian nation's infrastructure.

Iran has promised to provide $1.9 billion in loans and grants to Sri Lanka to help the country expand its only oil refinery, develop Uma Oya hydroelectricity and irrigation project and buy Iranian oil, the Sri Lankan government said.

"Especially the signing of the MoU for the Uma Oya project would be immensely beneficial for the rural poor of the Hambantota and Moneragala Districts," Sri Lankan President Mahinda Rajapaksa said.

THAILAND

Thailand’s IRPC Plans $1.4 Billion Refinery Upgrade

IRPC, formerly known as Thai Petrochemical Industry (TPI), plans to invest $1.4 billion from this year until 2011 to upgrade its refinery, increase petrochemical capacity, and enlarge its deep-sea port.

President and chief executive Piti Yimpasert said the investments would be spent on four projects starting with a refinery improvement program to increase production of high-margin refined oils such as gasoline and diesel.

After completion, IRPC's maximum refining capacity would be increased to 258,000 barrels per day from the current 215,000 barrels. The refinery is now running at about 180,000 to 190,000 bpd, Mr Piti said.

Ten percent of its capacity goes to gasoline and diesel and 43 percent and 20 percent of the output are for low-margin, high-sulfur diesel together with long-residue oil, and naphtha, respectively. The remaining capacity is for lubricants and asphalt.

Piti said the current budget would be spent producing low-sulfur diesel that meets Euro 4 emission standards.

As well, IRPC would increase its propylene capacity from the current 312,000 tonnes per year to 412,000 tonnes by 2011. The fourth project is to enlarge its deep seaport to accommodate vast carriers, Piti said, adding that the project would be completed by end of 2011.

In addition, IRPC is joining with other local refineries including Thai Oil and PTT group to invest US$1 billion in a residue conversion unit. The project is expected to have an annual capacity of 70,000 to 120,000 tonnes, Piti said.

The residue conversion unit would upgrade refineries by converting their long-residue output to higher-margin oils. IRPC produces 50,000 tonnes a year of long-residue petrol, or 33 percent of its total output compared to the industry average of 6-7 percent, he added.

Given IRPC's expected lower gross refining margin (GRM) this year compared to the past recent years, Piti said the company hoped to cut costs this year.

The measures, which cover crude procurement, operation and maintenance costs and marketing expenses, are aimed at cutting overall expenses by 10 percent or 1.7 billion baht per year.

IRPC, 33 percent owned by the energy giant PTT Plc, reported 2007 profits of 12.98 billion baht on revenues of 232.3 billion, sharply up from profits of 6.8 billion on revenues of 209.45 billion the year before.

VIETNAM

Vietnam to Form Oil Trading Firm for First Refinery and Invest $6 Billion in Second Refinery

The Vietnamese government said in April it has approved the establishment of an oil trading firm to trade crude oil and products for the country's first refinery, the 140,000-bpd Dung Quat plant.

State oil group Petrovietnam has said its $2.5-billion Dung Quat refinery in the central province of Quang Ngai would come onstream by February next year.

A government directive said the trading firm, Binh Son Refining-Petrochemical Co Ltd, would be a subsidiary of Petrovietnam.

In its first year, Dung Quat refinery is designed to use mainly Vietnam's light sweet Bach Ho crude but Petrovietnam officials have said the plant would have to switch to using foreign crude oil because of Bach Ho's declining production.

Bach Ho output accounts for about half of Vietnam's daily production of about 300,000 barrels per day.

In April Petrovietnam also signed an agreement with Japanese refiner Idemitsu and Kuwait Petroleum International to invest $6 billion in a second refinery, Nghi Son, with a capacity of 200,000 bpd when it is completed in 2013.

AUSTRIA

Eni Presents “Master Plan” to Upgrade and Re-launch Venetian Refinery

Eni has presented a "Master Plan" for a Venetian refinery. They are creating the installation which will upgrade and re-launch the industrial area of Porto Marghera. With a total investment for the period between 2009-2011 of over 600 million euros, Eni intends to re-model some installations which, thanks to the implementation of some of the best and most advanced technology; they can modify the production of heavy oils into products of high quality: kerosene and petrol with a low sulfur content.

The operation will also allow the supply of products to the Trivento area to be faster, with greater safety and less environmental impact; there will be 41 ships less a year which will arrive at the Venetian lagoon and only 3,000 tank trucks traveling on the local roads as well as there being a reduction in atmospheric emissions (-23pct of large particles and -11 pct of sulfuric oxides).

The project will not account for an increase in productions but only an improvement of the quality of the products. The new installations, which will substitute some of the existing ones, will be implemented within the perimeter of the refinery and will ensure the "minimization of noise and the production of waste products". The use of furnaces powered by Fuel Gas and methane will also take place as well the reduction by over 20 thousand tonnes a year of consumed fuel. "The total investment of over 600 million Euros" said Sergio Lucchi, the Industrial Director and Head of Logistics for Primary Refining and Marketing of ENI, "will allow other benefits for employment in the area.

In the construction of the new installations, it will allow productions of 400 units a day, with peaks of around 800 units a day for 36 months.

UNITED KINGDOM

Sonhoe Awards $200 Million Contract for Teesside Refinery Project

Meanwhile, Sonhoe has signed a heads of agreement for a license with Chevron Lummus Global LLC (CLG) for a new grassroots hydroprocessing complex including three Isocracking units and one new gasoil isotreating unit to be built in the upgrader at Teesside.

Grangemouth Refinery Re-start May Be Quicker Than Planned

Restoring operations at the Grangemouth oil refinery, which was shut on April 25 ahead of a weekend strike, may be quicker than refinery owner Ineos originally planned, an Ineos spokesman.

The re-start process was set to begin as soon as the striking workers, who walked out on April 27 in a dispute with the company over pensions, returned to work on April 29, he said.

"We anticipate a quicker start up," the spokesman told said.

He added Ineos could bring the 210,000-barrel-a-day refinery up and running again in two to three weeks, shorter than its previous plan of around three weeks up to a month.

Restoring refinery operations would allow BP Plc to re-open the Forties pipeline that transports over 700,000 barrels of North Sea oil per day to Britain. Forties was shut on ahead of the strike.

Grangemouth supplies power and steam to run BP's Kinneil oil processing plant. Oil from the Forties is processed at Kinneil.

The spokesman at Ineos said power and steam supply was maintained at Grangemouth during the strike, but only at levels sufficient to ensure plant safety and integrity.

UK Chevron Refinery Partially Shut due to Steam Plant Outage

Chevron Corp. had an outage at its 210,000 barrel per day Pembroke refinery which shut down part of the production process, a spokesman for the UK Environmental Agency said April 28.

A spokeswoman for the U.S. company confirmed there was a problem with supplying steam to the refinery but was unable to confirm which units were affected.

"We have a problem with the steam plant. We are investigating what's wrong," said Ruth Kent.

She said once the investigation is complete, the company would have a better idea of the long term impact of the outage but said Chevron is continuing to meet contractual requirements for oil products.

The refinery is heavily gasoline oriented, with large-scale exports to the United States.

Traders said Chevron has been selling a large amount of crude and buying prompt gasoline.

ALGERIA

Cegelec to Revamp the Arzew Refinery in Algeria

French electrical engineering group Cegelec won a major contract to revamp and extend the electrical grid of the Arzew refinery near Oran in western Algeria. The contract was signed with the national oil refining company (Naftec), a subsidiary of Sonatrach, for an amount of 67 million euros.

This project, which must be completed within a period of 28 months, will help to increase the production capacity of hydrocarbons and satisfy local and international demand. The contract covers medium and low voltage distribution as well as the digital instrumentation and control system of the electrical grid. There are three new sub- stations to be built, seven others to be revamped, all including air- conditioning, pressurization and fire detection.

AREVA Awarded $50 Million Algeria Contract

AREVA’s Transmission and Distribution division has been awarded a €32 million (US$50 million) contract with NAFTEC, a subsidiary of Sonatrach, for its oil refinery located in Skikda in the Northeast of Algeria.

AREVA will provide a turnkey installation composed of gas-insulated switchgear and power transformers. This equipment will ensure a power supply to the refinery, the biggest in Africa, and optimise its production capacity.

This new contract confirms the expertise of AREVA’s Transmission and Distribution division in the oil industry.

Moreover, Algerian Authorities’ will to invest in infrastructures in order to double the national grid capacity by 2012, confirms AREVA’s development plan in the country where the group currently employs 88 people.

AREVA's T&D division is an active player around the globe. It designs, manufactures and supplies a complete range of equipment, systems and services for all stages in the transfer of electricity, from the generator to the large end-user.

GHANA

Ghana to Expand Tema Oil Refinery to 145,000 bpd

Ghana plans to expand the capacity of its only oil refinery from 45,000 barrels per day (bpd) to 145,000 bpd in three years as the country moves towards commercial oil production, the plant's director said recently.

Expansion of the state-owned Tema Oil Refinery (TOR) would cost $150 - $200 million and would be financed by syndicated international loans with the participation of some local banks, TOR's Managing Director Kofi Kodua Sarpong said in an interview.

Plans to increase the capacity of the refinery in the West African nation have been given fresh impetus following major oil discoveries last year by independent Tullow Oil in two deepwater Ghana blocks, Tano and West Cape Three Points.

"The oil discovery has heightened the motivation to begin the first phase (of expansion) now, in order to strategically position TOR ... to meet the processing needs of the emerging oil industry," Sarpong said.

He said TOR's management was in the process of securing the funds and would proceed with the engineering contract. Actual construction would start in early 2009 and be completed in a period of between 18 months and two years.

Tullow believes the two deepwater offshore blocks hold well over 1 billion barrels of oil.

Ghana National Petroleum Corp (GNPC) has said it expects Tullow to start production by the first quarter of 2010 at the latest, with initial production of 60,000 barrels a day. Output was expected to rise within two years to between 200,000 and 250,000 barrels a day.

TOR currently refines crude oil into gasoline, diesel, liquefied petroleum gas, kerosene, aviation turbine kerosene (Jet A1), premix (marine fuel) and cracked fuels.

Sarpong said the refinery management hoped to eventually add a plant for processing bitumen.

Ghana's annual domestic fuel consumption is about 2 million tonnes for all products combined.

LIBYA

Libya to Shortlist Three Partners for Zawia Refinery Expansion

Libya will soon shortlist three companies for a project to double capacity of a 120,000 barrel-per-day Zawia refinery, the head of Libya's OPEC delegation Shokri Ghanem said on April 19.

Ghanem said about six companies have applied for the project which would include setting up a 50-50 joint venture.

"We think we will take a decision in the next two months," he said at the International Energy Forum in Rome

MOZAMBIQUE

South Africa’s Group Five May Build $5 Billion Mozambique Refinery

Group Five Ltd., a South African construction company, said it may build a $5 billion oil refinery for Ayr Logistics Ltd. in Mozambique, a country that imports all its motor fuel.

``Both sides have initialed the contract pending the formal signing ceremony in Mozambique,'' Philip Harris, Rockwall, Texas- based Ayr's president and general manager, said. Ayr earlier contracted California Environmental Consultants and Mozambican partner Impacto to undertake an environmental impact study, he said.

The plant, with the potential to process 300,000 barrels of oil a day at the northern port city of Nacala, may become the country's first since its only refinery was shut in 1984. Ayr may also export fuel from the country, southern Africa's fastest- growing economy after Angola.

``The contract is to do the development work and to potentially build the project,'' Greg Heale, Group Five's Johannesburg-based director for business development, said in an interview in April. ``It will include a power generation project, a water treatment plant, a residential village and a training academy,'' providing opportunities for Group Five's building-material factories, he said.

Group Five will be the ``leading contractor'' and is in talks with potential project partners, Heale said. The company helped build PetroSA's Mossgas plant, the world's biggest commercial gas-to-motor-fuels refinery, and carries out work with refineries in South Africa and Angola.

The Mozambique project would boost the construction company's order book, which was worth 14 billion rand ($1.77 billion) on Dec. 31. Group Five, the builder of Johannesburg's stock exchange, expects earnings to rise as much as 50 percent in the fiscal first half ending Dec. 31 as its benefits from a 482 billion-rand government infrastructure program.

Oilmoz Lda, a company founded by former Mozambican foreign affairs minister Leonardo Simao, has said separately it plans to build an $8 billion oil refinery with a capacity of 350,000 barrels a day in Mozambique.

``We don't even really consider them competition,'' Ayr's Harris said. Global demand for refined products ``is just skyrocketing,'' he said.

Ayr is in talks with possible fuel buyers in regions including South America and Asia, Harris also said.

NIGERIA

Nigeria FEC Approves U.S. $23 Million for Repair of Kaduna Refinery

Nigeria’s Federal Executive Council on April 16 approved the sum of $23 million for the Turn-Around Maintenance of the Kaduna Refinery and Petro-Chemical Company.

Other decisions taken at the meeting, which was chaired by the Vice President, Dr. Goodluck Jonathan, include the approval of stiffer controls on the use of explosives and also the approval of a $60 million IDA loan for Kaduna State rural roads project.

Briefing State House correspondents after the meeting, minister of information and communications, Mr. John Odey, said the contract for the maintenance of the refinery will be executed by DKG East ITC, a sea oil and gas engineering group, at the cost of $23 million.

Speaking further on the TAM, Ajumogobia said the exercise was to have been carried out before the proposed privatization of the refinery.

He revealed that the refinery is operating at 60% of its capacity and that by the time the maintenance is carried out it would be working at about 95%. He also said that all the refineries in the country would be rehabilitated.

His words: "If you recall the maintenance was supposed to have been done before the proposed sale of the refinery and that was why the procurement of materials for TAM had been done prior to the sale and that was one of the considerations when the sales were reversed.

"Now that the refinery is back in operation, it is obviously necessary for any facility that has been shut down as Kaduna was for as long as it was apart from the fact that it was due for TAM, would need some sort of rehabilitation and so this was something that was already on course so the council today has approved the labor part of the contract and the work can start immediately and enhance production. Right now it is operating at 60 per cent capacity because it has been down and it took a while to bring it back up with maintenance there will be greater production and we hope to be able to bring it up to 95 per cent production.

"All the refineries will be rehabilitated but I cannot give you the program now but Kaduna was a priority because the materials were already on site.

"The Warri refinery is also producing. I believe the last turn-around maintenance for Warri was done more recently than the Kaduna and Port Harcourt refineries. These are planned at regular intervals by those who run the refineries."

The minister of information and communication in his briefing revealed that eight companies showed interest in the job and after various evaluation of the companies, DKG group was deemed fit for the job.

He also stated that discussion on the issue had been deferred in the previous meeting in order to enable the president and the minister of energy to carry out due diligence on DKG. which was done before the approval in April.

According to him, "We received a memo from the president himself seeking ratification of anticipatory approval for the award of labor services contract for the 7th turn-around maintenance of Kaduna refinery and Petrol-chemical Company in favor of Messr DKG East ITC sea oil and gas engineering group in the sum of US$23,010,872 mln inclusive of VAT.

"Eight companies pre-qualified, only seven returned their documents complete. Out of that, four were technically pre-qualified for the award of a contract as follows: Seapel Contractor Nigeria ltd, DKG Nigeria ltd, East Group Company Dalatrate Belgium Nig. Ltd, Elmo Oil Nigeria Ltd and Sight Services Euro Nig. Ltd.

The bids of the pre-qualified were not evaluated except for Messr Elmo Nigeria which was discovered to be essential for equipment supply.

"Also the commercial bids of the companies were reviewed by the Bureau for Public Procurement. A due process certificate was issued in favor of DKG East ITC Sea Oil and Gas in the sum of $23 million. It will be noted that the council in its previous meeting deferred discussion on this contract in order to enable the president and the minister of energy carry out due diligence on DKG, and this has been done."

RUSSIA

LukOil says Odessa Refinery Upgrade Completed

Lukoil said the Odessa refinery has been commissioned since its reconstruction, started in 2005, has been completed.

The company said one of the AVT distillation units has been modernized, increasing its annual capacity from 2.4 million tons to 2.8 million tons, while the second such unit was put out of operation. The modernization also included the upgrading of the hydrotreatment unit and some general equipment.

A visbreaking unit was also installed, which will result in significantly lower volumes of fuel oil and much higher volumes of vacuum gasoil produced (from 4 percent up to 25 percent) and also in a greater depth of refining (from 56 percent to 78 percent), Lukoil said.

At present, the Odessa refinery is prepared to turn out Euro-3 standard automobile gasolines, Euro-4 diesel fuel, RT brand jet fuel and also petroleum bitumens and liquefied gas for household needs, the group added.

Russia's Surgut Raises Refinery Upgrade Cost to $2 Billion

Surgut, Russia's fourth-largest oil producer said on April 8 it will invest at least $2 billion in its long-delayed Kirishi refinery upgrade, more than doubling the project's initial cost.

Surgut had previously estimated the cost of the reconstruction, which includes building hydrocracking and catalytic cracking units to raise output of light oil products such as gasoline and gas oil, at $800 million.

Last April, a Surgut source told Reuters that the company was going to sign a contract worth more than $1 billion with a general contractor.

Vadim Somov, general director of the 400,000 barrel-per-day refinery, said April 8 that building the hydrocracking unit alone would cost the company $2 billion.

Work is 30 percent complete with the aim of launching the unit at the end of 2009, he said.

The hydrocracking unit is expected to increase the plant's refining depth to 75 percent from the current 54 percent.

In 2011, the refinery plans to start building a catalytic cracking unit to be completed by 2015. Refining depth is expected to reach 90-92 percent by that time, Somov said.

Surgut, which produced 1.3 million barrels per day last year, is one of Russia's most secretive companies. It does not publish results under international accounting standards and since 2003 it has declined to disclose its ownership structure.

Kirishi, Surgut's only refinery and Russia's biggest oil processing plant, has been postponing the major reconstruction work since the mid-1990s.

Somov reiterated Surgut's plans to build a second refinery with capacity of 240,000 bpd in Kirishi, near St Petersburg.

KUWAIT

Kuwait Awards $14 Billion Refinery Contracts to Six Companies

Kuwait Petroleum Corp. awarded contracts to build a refinery at Al-Zour to six Japanese and South Korean companies, it was reported April 19, citing an unidentified official at the Kuwaiti exporter of oil products.

GS Engineering & Construction Corp., SK Engineering & Construction, Daelim Industrial Co. Ltd., Daewoo Engineering & Construction Co. and Hyundai Heavy Industries Co. Ltd. were among the winners, the Kuwait-based newspaper said.

Saudi Arabia Asks Kuwait to Change $15 Billion Oil Refinery Site

Saudi Arabia has asked Kuwait to change the site of a planned $15 billion oil refinery in the countries' shared border area, it was reported.

The nations agreed to look for a new location within the Al-Zour area about 1 kilometer (0.6 mile) from the original site, a Kuwaiti newspaper said, adding that the two countries may also seek a site in another region.

Saudi Arabia, which has for years contracted Chevron Corp. to operate oil fields in its part of the shared area, is seeking to change the refinery's location because the U.S. company needs land for a storage facility and for a possible future project, the newspaper said. Kuwait will incur costs of as much as 100 million dinars ($377 million) to move the site, al-Watan said.

QATAR

QP Awards Work Contract to Axens for New Refinery in Qatar

Qatar Petroleum has let an engineering contract to Axens to design processing units for a new 250,000 b/d refinery in the Messaieed Industrial City in Qatar that is scheduled to start up by first-quarter 2012.

The Al Shaheen refinery will use Axens' process technologies to establish a 51,000 b/d Hyvahl vacuum residue desulfurization unit; a R2R 60,000 b/d residue fluidized catalytic cracker (RFCC); and a 30,000 b/d Prime-G+ RFCC gasoline desulfurization unit.

The refinery units, combined with advanced technologies, will make this "one of the most modern refinery complexes in the world," Axens said.

The Hyvahl unit will improve the feed quality to the R2R unit and will co-produce an upgraded diesel cut, Axens reported. Hyvahl has long cycle lengths on the 11% asphalt containing Al Shaheen VR feed because of the permutable reactor system (PRS) system. The PRS system increases hydroprocessing operations by removing particulate matter and metals in the feed, eliminating pressure drop build-up in the hydroprocessing section, it added.

The R2R RFCC is a "cold-wall construction adapted to maximize gasoline and propylene production," Axens added, and its Prime-G+ FCC naphtha desulfurization technology will enable the production of ultralow-sulfur gasoline, the company said.

Last year, QP let a lump sum front-end engineering design contract to Technip for the facility. An oil pipeline will extend from Al Shaheen oil and gas field 90 km offshore to Messaieed, 110 km onshore, as well as to other import-export facilities.

SAUDI ARABIA

RIL Enters into Saudi Hydrocarbon Processing with Jizan Oil Refinery

Reliance Industries (RIL) has set its sights on acquiring a majority stake in Jizan oil refinery in the Saudi Kingdom. Jizan oil refinery, with a capacity of processing up to 4,00,000 barrels of oil per day (bopd), will be the first refinery in Saudi Arabia to be wholly owned and operated by the private sector. RIL has been looking for an entry in the hydrocarbon-rich Kingdom for quite some time, but without much success.

Confirming the move, a source close to the development told ET: “We are interested in the Jizan refinery project. Saudi Aramco is also likely to participate. The government is likely to call for an expression of interest (EoI) in a couple of months.”

However, he refused to divulge the investments in the project. A Reliance spokesperson declined to comment.

RIL chairman Mukesh Ambani last year announced investments to the tune of $24 billion in the Gulf region in various energy projects. Malaysia’s state-owned oil firm, Petronas, is also believed to be in the race for this project.

Asked why the company is not successful in executing big-ticket acquisitions, Atul Chandra, president of international operations, Reliance, said: “We need to justify such investments to our shareholders. We are looking for acquisitions in all parts of the world.”

If Jizan refinery project goes ahead, the scheme would be the third such JV in the Kingdom. This follows the Petro-Rabigh and Ras Tanura complexes, which Saudi Aramco is developing with Japan’s Sumitomo Chemical Company and US’ Dow Chemical Company, respectively.

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