Oil major Total SA's president of refining and marketing expects weak demand for petroleum products to continue through the end of the year and doesn't see signs of a global recovery in demand.

Asked if he sees signs that demand is picking up, Michel Benezit said "no," not at the global level. He also said he doesn't expect demand to recover in 2009.

Meanwhile, the Organization of Petroleum Exporting Countries, or OPEC, is pumping less heavy crude and more light oil as it seeks to maximize revenue despite having lowered output. But that hasn't penalized Total, Benezit said.

"Demand is very low," he said, adding: "We don't have any problem finding crude."

Refining heavy crude, which is generally cheaper than lighter grades, in complex refineries that maximize the output of valuable products, is a strategy to maximize refining profits.

Global Oil, Gas Projects Delayed in 2009

Following is a list of some of the oil and gas projects and oil refinery expansion plans that have been delayed or cancelled so far in 2009.

The global financial crisis, falling oil demand, a slide in prices and poor general market conditions have prompted many in the industry to scale back spending and delay projects.

* June 30 - The Singapore government will take over development of its first $1 billion liquefied natural gas (LNG) terminal from a consortium to avoid more delays, and will defer its completion by a year to 2013. [ID:nLU779428]

* June 15 - U.S. oil major Chevron (CVX.N) said it expected its natural gas project in Vietnam to be delayed until late 2014 due to prolonged negotiations over gas prices with oil monopoly Petrovietnam. Chevron said last year it wanted to start gas production in 2012 from the project off the southwest coast of Vietnam. [ID:nHAN360121]

* June 1 - Indonesian Energy Minister Purnomo Yusgiantoro told Reuters production from the Cepu block -- Indonesia's biggest oil find in a decade which is being jointly developed by Exxon Mobil (XOM.N) -- was facing delays over a local land dispute. [ID:nSP393631]

* May 22 - Jurong Aromatics Corp (JAC) said it had delayed the start-up of its $2.4 billion aromatics project in Singapore until early 2013 from 2011, as it struggled to obtain funding in the current credit crunch. [ID:nSP477329]

* May 14 - Singapore industrial landlord JTC Corp scrapped the operational tender for the city-state's underground rock cavern oil storage and said it would re-issue it in three years' time. [ID:nSP124882]

* May 12 - SP Chemicals, which makes chemicals in China, has scrapped a $1.5 billion naphtha cracker project in Vietnam due to poor economic conditions and as it aims to lean on growing Chinese petrochemical feedstock supply. [ID:nSP444323]

* April 24 - Paris-based Perenco, a privately-held oil and natural gas company, said it would delay its $2 billion investment to develop an oil field in Peru's northern jungle because of low prices. The company said it expected to start production from lot by 2013, two years later than previously announced.

* April 13 - Saudi Aramco defers plans to expand capacity at its Ras Tanura refinery. [ID:nLD657309]

* March 24 - Qatar delays plans to build the 250,000 bpd Shaheen refinery by one year. [ID:nLO329588]

* March 21 - Qatar and ExxonMobil (XOM.N) delay development of the $5 billion Barzan gas field joint venture, primarily to cut costs. [ID:nLL517983]

* March 20 - Kuwait said it scrapped a tender to build a $15 billion refinery project, the second multibillion-dollar major deal to be cancelled in three months after facing opposition in parliament. [ID:nN20516815]

* March 17 - Royal Dutch Shell Plc (RDSa.L) said start-up of the Perdido platform in the Gulf of Mexico had been pushed back to the beginning of next year from this November.

The Forcados Yokri and Bonga North West projects in Nigeria which were due to come onstream in 2010 or 2011 will now come onstream in 2012 or later. Bonga North West is being re-tendered.

AMERICAS

CUBA

Cuba Begins Expansion of JV Refinery with Venezuela

The Cuban authorities have begun the expansion of the storage capacity of a Cuban-Venezuelan refinery, local media reported July 16.

Cuban Basic Industry Minister Yadira Garcia hailed the advance of the work, including the installation of four tanks, each one with a capacity of 20,000 cubic meters, reports said.

During a tour of these facilities July 15, Garcia said expanding the storage capacity of the refinery is "strategic" work.

The refinery, Camilo Cienfuegos, which is a joint venture between Cuban state-owned Cuba Petroleo and Venezuelan state-owned Petroleos de Venezuela, is located in Cienfuegos province, some 250 km southeast of Havana. The plant processed 19.4 million barrels of crude in 2008.

Among the new tanks, three will be used to store crude oil and the other for aviation fuel.

BRAZIL

Alfa Laval to Supply Heat Exchangers for Petrobras

Alfa Laval has received two orders for Alfa Laval Packinox heat exchangers from Petrobras in Brazil. The total value is about SEK 55 million and was booked late June 2009. The delivery is scheduled for 2011.

The Alfa Laval Packinox heat exchangers will be used for heat recovery within the reforming process - one of the main processes in refining.

"It is encouraging to see that our refinery customers continue to invest", says Lars Renstrom, President and CEO of the Alfa Laval Group. "It also confirms our position as a strong partner to Petrobras."

Alfa Laval has been cooperating with Petrobras for more than 25 years supplying equipment for different stages of the oil production process; from extraction to refining.

In January, Petrobras announced their Business Plan for 2009-2013 where they envisaged total investments of US$174.4 billion (SEK 1355 billion) during the period. This is a 55% increase compared to the Business Plan 2008-2012.

Petrobras Begins Refining Santos Basin 'Pre-Salt' Crude

Bazil’s state-controlled Petrobras said it has begun refining the first oil extracted from the ultra-deep Tupi field, one of the massive, "pre-salt" discoveries in the Santos Basin.

In a statement July 2, Petrobras said it had begun refining the crude at the Capuava Refinery, in Sao Paulo state, and noted that the processed product was characterized by "low sulfur and low acidity."

The company said the start of this process "will be important for evaluating the yield and quality of the derivatives produced."

Tupi - estimated to hold between 5 and 8 billion barrels of recoverable light crude - was the first discovery in the pre-salt area, so-called because the up to 80 billion barrels of oil that new oil frontier may contain are located under a thick layer of salt far beneath the Atlantic Ocean floor.

The discoveries in the pre-salt region, first announced in late 2007, could eventually lead to a nearly six-fold increase in Brazil's current proven reserves of 14 billion barrels and transform that nation into a major oil exporter.

However, the fields pose an enormous technical and financial challenge due to the depth and thickness of the salt and the drastic changes in temperature as the oil is brought to the surface.

Acknowledging that Petrobras alone is not capable of developing the massive pre-salt reserves, Brazil announced in May that it will invite international oil companies to bid for concessions in that region beginning next year.

The country had previously halted the sale of concessions after the massive finds were made.

VENEZUELA

Total-CNPC Plan to Bid for Two Large Oil Sites in Venezuelan Sale

French petroleum firm Total SA and state owned China National Petroleum Corp. or CNPC now plan to bid for two large oil blocks that are being auctioned by Venezuela, instead of one in which they had previously shown interest, reports Wall Street Journal.

Citing two people involved in the bidding round, the newspaper said that the cost of developing just one of the blocks the Sino-French group is considering, together with the construction of upgraded facilities to process the sludge like oil from the block is estimated to be between $7 billion and $10 billion.

The blocks, in the Carabobo region of the country's Orinoco oil belt, are among seven being auctioned by Venezuela. According to the government the blocks hold a combined 272 billion barrels of recoverable reserves.

Reportedly the bids for the blocks must be handed in by July 28 and that the results are to be announced on August 14.

Under the terms, government-owned Petróleos de Venezuela SA will retain at least 60% of each block. Bidders need to pay Venezuela's government an upfront bonus based on expected future output, and explain their oil-distribution plan.

ASIA

CHINA

China’s Oil Giants Speed up Overseas Expansion

China's five leading oil companies have all accelerated the pace of their overseas development in the first half of this year due to sliding prices and rising domestic oil demand, says a Shanghai Securities News report.

China Aviation Oil (Singapore) Co Ltd, a subsidiary of China's largest jet-fuel producer and distributor, China National Aviation Fuel Group, recently announced it intended to buy a refinery in South Korea to expand operations besides aviation oil trade and supply, said the report, citing the company's CEO, Meng Fanqiu.

Although there were slim margins and rare investment opportunities in the refinery sector, some refinery plants in South Korea were still attractive and may be acquired at reasonable prices, Meng said.

The recent news that China's largest oil company, China National Petroleum Corp (CNPC), and China's top offshore oil and gas producer, China National Offshore Oil Corp (CNOOC), made a bid for Spanish oil major Repsol's Argentine unit YPF aroused the world's attention.

If the acquisition is approved, it will make a record in China's crude assets trade history with an estimated investment of $22.6 billion.

CNPC, teamed with Britain BP PLC, won a contract on June 30 to develop the Rumaila oilfield in Iraq, which boasts the third-largest oil reserves in the world. It also planned to bid for the auction of two oil blocks in Venezuela together with France's Total.

In addition, CNPC's listed arm PetroChina completed the purchase of a 45.51 percent stake in Singapore Petroleum Co with $1.02 billion on June 21.

CNPC's smaller rival Sinopec Group said on June 25 it agreed to acquire the Geneva-based oil and gas producer Addax Petroleum Corp for $7.3 billion.

State oil trader Sinochem and CNOOC also led a consortium to enter a bid for Maysan oilfield complex in Iraq, but failed eventually in June.

"These acquisitions imply that some foreign resource enterprises were caught with liquidity difficulties caused by the global financial crisis," said Zhou Fengqi, former director of the Energy Research Institute under the National Development and Reform Commission.

Zhou's views echo those of Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University. "The timing is now good for domestic oil companies to make overseas deals as they can buy assets cheaper."

"But Chinese oil companies should select quality assets prudently," Zhou added.

Meng said China Aviation Oil is extremely prudent about overseas acquisitions as it follows a set of strict evaluation procedures.

Ping An Insurance, China's second-largest life insurer, incurred a $3.34 billion (22.8 billion-yuan) investment loss in Fortis, a Belgian-Dutch bank last year, being an expensive lesson to Chinese companies which are still inexperienced in foreign acquisitions.

Chinese enterprises' overseas acquisitions had amounted to 67 cases this year as of the end of June, involving an asset value of $26.7 billion, up 26.3 percent year-on-year, the report said, quoting Thomson Reuters figures.

China, the second largest energy consumer in the world, relies on imported oil for nearly half of its requirements. The country's oil consumption grew around 5 percent annually in recent years.

Customs data showed that China's net crude-oil imports rose to 16.62 million tons in May, a 14-month high, as demand gained before the peak summer period.

In order to meet the country's mounting oil demand for rapid economic growth, Chinese oil giants are deploying their strategic overseas expansions by grasping the chance of cash hungry overseas oil firms and lower crude prices.

Crude oil prices have fallen to around $60 a barrel these days, after rocketing to a record above $147 in July last year.

Spanish Repsol Unit may Sell Stake to China's CNPC

China National Petroleum Corp, the country's largest oil company, could pay up to $14.5 billion for 75 percent of Spanish oil major Repsol's Argentine unit YPF, sources said.

CNPC, the parent company of top Asian oil and gas firm PetroChina, and Repsol have begun talks, sources with knowledge of the matter said.

The sources, not authorized to speak publicly, said an offer from CNPC - which in 2007 failed twice to buy all of YPF's Latin American assets amid wrangling over terms - had yet to be put on paper or formally submitted.

China's top offshore oil and gas producer CNOOC, India's Oil and Natural Gas Corporation and Russian companies are also eyeing YPF, newspaper reports said.

Repsol, ONGC, and CNOOC all declined to comment, and a CNPC spokesman said he had no information on the deal.

Recently, Repsol, which is running short of reserves but has been looking to sell YPF for some time, said it had several offers for a stake in the unit, but none were firm.

Analysts have valued YPF at around $15-17 billion, so the around $19 billion implied by the bid CNPC is mulling would offer shareholders only a modest premium.

However, CNOOC is reported to be eyeing the remaining 25 percent of YPF and analysts say CNPC and CNOOC could make a joint bid, although a clear timetable remains unclear.

Sinopec to Buy Geneva Based Addax for $7.3 Bln

Sinopec Group, China's second largest oil company, has agreed to buy the Geneva-based oil and gas producer Addax Petroleum Corp for $7.3 billion, in a bid to tap oil reserves in West Africa and the Middle East.

Sinopec Group made the deal through its subsidiary Sinopec International Petroleum Exploration and Production Corp (SIPC). The company offered to pay $45 (C$52.80) per share in cash for the takeover, the Beijing-based Sinopec said in a statement.

"The deal will enable SIPC to achieve its strategic objective of building a stronger presence and operations in West Africa and Iraq, accelerating its international growth strategy as well as optimizing its offshore oil and gas assets portfolio," said the statement.

"In addition, Addax Petroleum's exploration potential, particularly in offshore deepwater exploration projects, will provide a strong platform for SIPC's ongoing growth and development," it said.

Addax, which is based in Geneva but lists its shares in Toronto and London, had 536 million barrels of proven and probable oil reserves as at end-2008, and average production of approximately 140,000 barrels of oil per day (equivalent to 7 million tons per year) in 2008.

Addax's oil and gas assets are mainly based in West Africa and the Middle East, with core assets in Nigeria. The company said it produced 134,730 barrels of oil a day in the first quarter, with more than three quarters of its output coming from properties in Nigeria.

The price of C$52.80 per share is at a 47 percent premium to Addax's closing share price on June 5, the day prior to its announcement that it had received a takeover approach. Analysts said that given the fact that many oil and gas assets had been devalued in the face of the global financial crisis, Sinopec's offer was "reasonable".

"The timing is now good for domestic oil companies to make overseas deals as they can buy assets cheaper," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University. Compared with $147 per barrel last July, crude prices have fallen by over 50 percent.

The deal signifies that Sinopec, which is Asia's largest refiner, aims to further expand its upstream assets overseas, said analysts.

"It is in line with China's energy strategy to diversify its energy supplies," said Han Xiaoping, energy analyst with Beijing Falcon Pioneer Technology Co.

Currently, imported oil accounts for around half of China's total oil consumption. Industry insiders have long suggested the country further diversify its oil importing sources to find more sustainable supplies.

China's three major oil companies, Sinopec, China National Petroleum Corp (CNPC) and China National Offshore Oil Corp (CNOOC), have all accelerated the pace of their overseas development in recent years. CNPC, the country's biggest oil producer, is reportedly starting talks this month to expand exploration and production opportunities in Mongolia.

The negotiations will cover investments for a refinery and transportation and storage facilities, Galsan Batsukh, Mongolia's ambassador to China, said in an interview with Bloomberg News. Longer-term plans may include a pipeline from Mongolia to the bordering Chinese province of Inner Mongolia, Batsukh added.

Sinopec Revives Hopes of a $2.6 Bln Refinery in China's Guangxi Region

State-controlled oil refiner China Petroleum and Chemical Corp. is revisiting a plan it had mooted a few years ago on building a Greenfield refinery in China's southwestern Guangxi Zhuang autonomous region.

The refinery project, to be built in Guangxi's Beihai city in the Gulf of Tonkin, was seen as being able to process at least 10 million mt of crude a year (200,000 b/d), an official with the municipal development and reform commission of the Beihai government said in June.

"We [the Beihai government] signed a strategic cooperation framework agreement with Sinopec Group in May on developing an integrated refinery project with crude processing capacity of at least 10 million mt a year," the official said.

Investment is expected to be $2.6 billion (Yuan 18 billion), he said. Sinopec Group, which is the state-owned parent of CPCC, and the Beihai government will conduct feasibility studies and are hoping to have the refinery development included in the country's Twelfth Five Year Plan of 2011-2015, the official said.

"Our goal is to secure approval from the central government on the refinery project and to kick-start development over 2011-2015," he added.

In 2006, CPCC and Chinese oil giant PetroChina made separate proposals to the country's top economic policy planner National Development and Reform Commission to build a refinery in Guangxi.

At the time, CPCC had planned to invest about Yuan 12 billion in setting up a 8 million mt/year refinery in Beihai, where it already operates a small 500,000 mt/year crude processing plant.

PetroChina, on the other hand, had proposed a 10 million mt/year

greenfield refinery at Qinzhou, about 75 kilometers (46.6 miles) northwest of

Beihai.

In the end, PetroChina edged out CPCC in the race for the Guangxi refinery project. Chinese media reported at the time that the two were talking about teaming up for the Qinzhou refinery development after PetroChina got NDRC approval for its plan, but the partnership failed to materialize.

PetroChina is planning to hold trial runs at the Qinzhou refinery by the end of this year.

Meanwhile, the Qinzhou municipal government has submitted a plan to the central government to expand the installed capacity of the project, Chinese official news agency Xinhua reported earlier this year.

The proposed expansion includes: another 10 million mt/year of crude processing capacity: a 1 million mt/year aromatics unit, a tank farm with storage capacity for 3 million mt of crude oil and 1 million mt of oil products, Xinhua reported.

The Beihai government official declined to comment on Sinopec's chances of securing NDRC approval for the refinery plan.

"We will go ahead with our planning and studies. Sinopec will be responsible for forecasting oil products demand and supply in Guangxi in our proposal. After that, it'll be all up to the central government to decide," he said.

For now, Beihai is busy with the revamp and upgrade of CPCC's 500,000 mt/year crude processing plant. The facility is in the city center, and the two partners are relocating the plant to the industrial zone in nearby Tieshan port with expanded refining, petrochemical, logistics and storage capabilities.

Crude processing capacity of the expanded facility was originally set at, 3 million mt/year, but the partners are considering raising it further to 5 million mt/year, the Beihai government official said.

The expansion plan also includes new refining facilities such as a 2 million mt/year fluid catalytic cracker, a 500,000 mt/year gas separation unit, a 200,000 mt/year polypropylene unit, and a 2,000 mt/year sulfur recovery unit.

Sinopec Group is also building a crude oil terminal on Weizhou Island off Beihai to support the expanded refinery. The terminal will have a berth capable of handling crude tankers of 300,000 dwt and six crude tanks of 100,000 cu m each.

Sinopec Group is also building 3.2 million cu m of commercial crude storage capacity at the Tieshan port.

Sinopec Group will lay a pipeline to carry oil products from Beihai to Guangxi's capital Nanning, and a crude oil pipeline connecting Tieshan port to Zhanjiang in Guangdong province.

Zhanjiang is CPCC's key refining and petrochemical center in southern China, where the company operates a 13.5 million mt/year Maoming refinery and 5 million mt/year, Dongxing Refinery.

Beihai refinery's expansion began at the end of 2008, and completion and startup of the project are targeted for the third quarter of 2011, the official said.

Investment in the refinery's revamp and upgrade program, together with the pipeline, berth and crude storage tanks development, is estimated at Yuan 10.4 billion ($1.5 billion).

Last month, the Chinese government announced plans to close low-efficiency, low-quality refining facilities of less than 1 million mt/year (20,000 b/d) by 2011 in a move to speed up structural changes and raise overall global competitiveness of the oil and petrochemical industries.

China to Build New Refineries for Myanmar Pipeline Oil

China will build refineries capable of processing 20 million metric tons a year, or 402,000 barrels per day, in southwest China to process crude oil from the Sino-Myanmar pipeline, Jiang Ximin, an official with NDRC's energy research institute said at the end of June.

The refineries will be located in Chongqing City of Sichuan Province and in Yunnan Province, the official said during an energy pipeline conference.

Output of oil products from these refineries is expected to reach 12.77 million tons a year, and a related project will produce 1 million tons of ethylene per year, he said.

China National Petroleum Corp. has signed a memorandum with Myanmar on the cross-border oil pipeline. The designed annual capacity of the pipeline is 22 million tons, or 442,000 barrels a day.

CNPC earlier said that construction will start in September.

A 300,000-deadweight ton crude port and an oil tank with storage capacity of 600,000 cubic meters will be built in Myanmar, the official said.

Sinopec to Increase Oil Processing at Zhenhai Refinery

China Petroleum & Chemical Corp (Sinopec), a subsidiary of China Petrochemical Corp (Sinopec Group), intends to increase the crude oil processing volume at Zhenhai refinery, which is located in Ningbo City, Zhejiang Province, to 1.6 million tons in July, sources reported.

According Dow Jones Newswires, the refinery's processing capacity will swell to 376,800 barrels per day (bpd) this month, up 6.8% from 352,800 bpd last month. Its operating rate will be 94%.

Reportedly, an oilfield project in which Sinopec holds a 25.1% stake and in which Russia-based Rosneft holds the remaining 74.9%, started drilling on Jul. 8. Transocean Shelf Explorer is in charge of the oil and gas exploration for the oilfield, which is located in the Pacific Ocean.

Sinopec and Germany-based BASF AG will jointly invest US$1.4 billion to expand their petrochemical complex in Nanjing in eastern China. The new investment is 40% more than originally budgeted for the expansion project, China Knowledge reported earlier.

Graham Corp. Receives $3.4 Mln Ejector System Order for Hunan Refinery

Graham Corp., a manufacturer of critical equipment for the oil refinery, petrochemical and power industries, has announced that it has been awarded a $3.4 million ejector system order for an oil refinery in China.

The ejector system will be installed at an oil refinery in Hunan Province, China, and is expected to be shipped in the first quarter of fiscal 2011, which ends June 30, 2010. Equipment for this order will be built both in Graham's Batavia, New York facility and by a local fabricator in China. Local manufacture in China of certain components is required by the end user. Graham received this order earlier this month, at the start of the Company's fiscal 2010 second quarter, and it is therefore not included in the order activity reported for the Company's first quarter that was separately announced.

James R. Lines, Graham's President and Chief Executive Officer, commented, "This order will represent Graham's seventh ejector system installation in China over the past three years and is testament both to the global strength of our brand and to the inroads we have made in the Chinese market through our Suzhou-based subsidiary. We see tremendous future opportunity to expand our business in China as that country continues to invest in new oil refining and petrochemical production capacity."

INDIA

Larsen & Toubro Wins Bathinda Greenfield Refinery, FCC Contracts

Larsen & Toubro (L&T) has won major orders aggregating Rs. 651 crore for two hydrocarbon projects.

L&T will build a greenfield refinery project at Bathinda for HPCL-Mittal Energy Limited (HMEL), valued at Rs. 440 crore. In addition, L&T has received an order from Engineers India Limited for the supply and construction of a reactor and regenerator system valued at Rs. 211 crore for the Fluidized Catalytic Cracking (FCC) unit of Mangalore Refinery and Petrochemicals Limited (MRPL), Mangalore.

The HMEL project will be executed by the Construction Business Unit of L&T's E&C Division. The order involves construction of electro-mechanical sections for seven process units for the Guru Gobind Singh Refinery Project. The process units comprise Motor Spirit Block, Diesel Hydrotreater, Delayed Coker Unit, Vacuum Gas Oil Hydro Treater, FCC Unit, Poly Propylene Unit, and Liquefied Petroleum Gas units. The project is scheduled to be completed in 17 months.

L&T is already executing a hydrogen package at Bathinda on lumpsum turnkey basis valued at Rs. 700 crore.

The MRPL job will be executed jointly by L&T's Heavy Engineering Division and the Construction Business Unit of L&T's E&C Division. The order includes supply and erection of reactor, regenerator, and orifice chamber with structural, refractory lined piping works including painting, insulation & refractory works for FCC Unit for Phase III of the refinery project. This project will be completed in 24 months.

L&T will supply critical process equipment valued at Rs. 106 crore for the project. Site erection work is valued at Rs. 105 crore.

L&T is already executing DHDT & Hydrogen Package on lumpsum turnkey basis, valued Rs. 1400 crore, at Mangalore.

L&T, a US$8.5 billion Technology, Engineering & Construction Company with global operations, is one of the largest & most respected companies in the Indian Private Sector.

Bids Received June 09 for Design and Supply of Delayed Coker for Paradip Refinery

Jacobs Engineering on behalf of Indian Oil Corporation has invited bids for project management, residual basic design, engineering, procurement, supply, fabrication, inspection, transportation, storage, construction, installation, testing, mechanical completion, pre-commissioning, commissioning and performance guarantee test runs of delayed coker unit and coke handling system of Paradip Refinery Project at Orissa.

Bid Reference No. 44MM-5200-00-R-02-0003-A4

Sale of Bid Up to 04-Jun-09, Bid Closing 12-Jun-09

Foster Wheeler has an engineering contract awarded in March 09 as an EPC for this grass roots refinery.

August 09 bids were due on Modernizing Delayed Coker Unit at Guwahati Refinery.

Pre bid meeting took place in April.

New Delayed Coker for Haldia in West Bengal

Indian Oil Corporation has received clearance from the Ministry of Environment and Forest for installing its proposed INR 30 billion delayed coker plant at Haldia in West Bengal.

The company said that about 82 acres has already been acquired from Hindustan Fertilizer Corporation. However, the entire 82 acres will not be required and plans include setting up a petrochemical plant.

It said that IOC board will be working on the exact quantum of investment for the plant.

INDONESIA

Three Companies Establish JV to Build $4 Bln Refinery in West Java

Three companies signed a document for the establishment of a joint venture company, PT Banten Bay Refinery, that will build an oil refinery in Bojanegara, Banten, West Java.

The director of processing of state-owned oil and gas company Pertamina, Rukmi Hadihartini, said in Jakarta on July 30 the construction of the project with an investment of US$4 billion was aimed at helping the government ensure domestic fuel oil supply resilience.

"We hope for the support from all parties concerned in the realization of the project," she said.

The signing was done after several delays due to STX Pan Ocean Co. Ltd`s plan to join the consortium.

STX however has asked to be the majority shareholder in the project while the government has also asked Pertamina to be the majority shareholder.

Banten Bay Refinery is a joint venture company of three countries Indonesia (Pertamina), Iran (National Iranian Oil Refining and Distribution Company-NIORDC), and Malaysia (Petrofield).

Pertamina will hold 40 percent of the shares in the refinery that is expected to have a capacity of 300,000 barrels a day, NIORDC 40 percent, and Petrofield 20 percent.

At the initial stage, the refinery will be built to process 50 percent Iranian Extra Heavy Crude and 50 percent Iranian Heavy Crude at a capacity of 150,000 barrels a day, to be supplied by Iran.

The first phase of the construction of the refinery is expected to start in 2010 while production is expected to start in 2014.

The plant is designed to produce gasoline 90/95, diesel oil, fuel oil, avtur, LPG, coke, sulfur and petrochemicals, and 70 to 100 percent of it to be prioritized for the domestic market and the rest for exports in line with standards of Euro IV.

The refinery built on land belonging to PT Pelindo II will receive 110 MMSCFD of gas from PT PGN Tbk and PT BAGS and 5.0 MW of electricity from PT PLN.

JAPAN

China Approves CNPC, NIPPON Oil Refinery Plan

China's National Development and Reform Commission on July 10 said it has authorized plans for state-owned China National Petroleum Corp. (CNPC) to operate a refinery as a joint venture with Nippon Oil Corp.

The Japanese oil company in May 2008 announced plans to transfer its Osaka refinery to a joint venture to be set up with CNPC. Having now received approval, the two oil firms will begin negotiating in earnest with the aim of realizing the deal in the near future. Nippon Oil is positioning the Osaka refinery as a strategic export base serving the Asia/Pacific region, where economic growth is fueling increased demand.

VIETNAM

Foreign Firms Show Interest in Vietnam's $8 Bln Refinery Project

Several foreign companies are interested in joining an $8 billion project to build a refinery in southern Vietnam, state media said July 3.

Among them are Malaysia's Petronas, IPIC of the United Arab Emirates, Singapore's Trafigura and GS Group of South Korea, said the Dau Tu newspaper, which is run by the Ministry of Planning and Investment.

State-run Vietnam Oil and Gas Group, or PetroVietnam, said last month that it and other partners will sign an agreement in September to build the oil refinery, without elaborating.

The refinery is expected to be built in Long Son commune in Ba Ria Vung Tau province, 100 kilometers east of Ho Chi Minh City.

It would have a capacity to process 10 million metric tons of crude oil a year or around 200,800 barrels a day, it said.

The refinery is scheduled to become operational from 2014.

It will use crude oil imported from Venezuela and will produce liquefied petroleum gas, non-leaded gasoline, kerosene, jet fuel and diesel.

EUROPE / AFRICA / MIDDLE EAST

UNITED KINGDOM

Attempts to Sell UK Teesside Refinery Draw Blank

Attempts to find a buyer for the Teesside refinery have so far drawn a blank. Formal consultations with the 150 employees at the Petroplus refinery, on North Tees, are now underway, after doubts over the site's future increased.

The development is the latest blow to hit Teesside in the past few weeks, following the 428 job losses at four Corus plants across the area, and the doubts over the jobs of 3,000 people at the Redcar Teesside Cast Products (TCP) plant.

Petroplus insisted the consultation was one of a number of avenues it was pursuing, but unions said it was not a good sign for the future of the refinery, which slashed production last December to work at 30 per cent capacity after poor margins.

Petroplus announced in February it would be looking to sell the refinery, or that it may be converted into a terminal or storage facility if a buyer could not be found.

Unions have warned that many jobs could be at risk if the refinery was converted, and have renewed calls for Petroplus to do everything possible to find a buyer.

In a statement from Petroplus July 2, the company said the site remained under strategic review.

"Several options are under consideration, including the potential sale of the refinery or conversion to a terminal or storage facility." it said.

In the firm's results for the fourth quarter of last year, it saw a second straight loss because of low demand for fuels.

ALGERIA

Samsung Wins $2.6 Bln Refinery Order from Sonatrach

Samsung Engineering Co., South Korea's top engineering company, said July 6 it has won an order worth US$2.6 billion to renovate an oil refinery in Algeria.

Samsung Engineering signed a formal contract on the deal with Algeria's state-run oil company Sonatrach on July 4, the South Korean company said in a statement.

The contract calls for Samsung Engineering to upgrade facilities at the Skikda refinery over the next three years.

It is the single-biggest contract Samsung has received, the company said.

"The contract also brightens the prospects for winning more orders from Sonatrach," Samsung Engineering chief executive officer Jeong Yeon-ju said.

NIGERIA

IPMAN Plans Nigeria Refinery to Reduce Importing Fuel and other Related Products

The Independent Petroleum Marketers of Nigeria (IPMAN) has said it plans to build a refinery in Nigeria to reduce the challenges associated with importation of fuel and other petroleum products; a situation which it said has cost the nation millions of dollars in oil revenue.

This was announced by the newly elected President of IPMAN, Alhaji Aminu Abdulkadir, at the maiden meeting of IPMAN’s Central Working Committee.

He said the organization was interested in building a refinery to maximize efficiency in the production and distribution of crude products but was waiting for the government's final white paper on the oil industry.

Abdulkadir said, "Constructing a refinery is not a simple issue. You cannot construct a refinery without knowing the government's position on crude oil. Is the government going to give us crude at a concessionary rate, or are they going to say all private refineries will get the same incentives?"

Abdulkadir noted that the new leadership was also assessing the debts owed its members, and is in discussion with the Petroleum Equalization Fund on how to get the bridging claims of members transporting imported products from coastal areas to inland depots.

He noted that the NNPC still owed the PEF about N9 billion in equalization payments that accumulated over a period of time and should have been transferred to the independent marketers.

"The Managing Director of PPMC is taking the issue very seriously with the corporate headquarters.” He further noted that the union had over the years shown that it was committed to the development of the sector due to the nature of projects it had undertaken in cities like Lagos, Benin, and recently, efforts towards expanding farm tanks to the northern part of the country.

He said, "Everybody knows that NIPCO, our commercial arm, has one of the most modern terminals in Nigeria. We will continue with the expansion of our depots in the East, maybe in Port Harcourt and Calabar, in addition to the one in Lagos."

Meanwhile, IPMAN has thrown its weight behind Federal Government's plans to deregulate the downstream sector of the oil and gas industry, even as it urges for a "guided deregulation," which would ensure that the needs of the group are met.

He said as a trade union representing the interest of businessmen, IPMAN would demand favorable concessions from the government, if it must give its full backing to the planned deregulation.

He said, "We are principally businessmen, and would seek policies and concessions that would favor our businesses as well as contribute to the growth and development of the sector. Therefore, we have said that we will only support guided deregulation which would not jeopardize our interests as a trade union."

Abdulkadir added, "If government is ready to open up the downstream sector, what will be the position of independent marketers? We have signed bulk purchase agreement with the Nigerian National Petroleum Corporation, and many of our members constructed several petrol stations because of that agreement.

"Therefore, there is a need for NNPC to sit wit IPMAN and agree on modalities for the deregulation because IPMAN is a major factor in the oil industry and cannot be ignored in policy formulation."

According to the IPMAN boss, the group was ready to support full deregulation, but it would not settle for any policy that would harm the businesses of its members.

"We are still talking with the ministry, NNPC, and members of the Oil and Gas Reforms Implementation Committee so that independent petroleum marketers will not be left out," Abdulkadir remarked.

IRAQ

Britain's BP, Chinese CNPC Win Iraq Oilfield Deals

British energy giant BP and China's Chinese National Petroleum Corp (CNPC) International Ltd won a deal to develop Iraq's biggest oilfield but had to slash its fee as Baghdad's tough terms put off other investors in the country's first major energy auction since the US-led invasion in 2003.

Other companies, including firms from China and India that are eager to get a share of the world's third largest oil reserves, balked at the fees and Iraq failed to strike deals on the remaining seven oil and gas fields on offer.

The controversial auction of Iraq's prized assets took place on the same day that the U.S. troops who toppled Saddam Hussein quit Iraq's cities and left security chiefly to the country's own forces. The sale aims to raise funds for reconstruction as Iraq also takes greater charge of its economy.

"Today we have seen that the Iraqi Oil Ministry and international oil companies are living on different planets," oil analyst Ruba Husari said.

The results of the auction were not a disappointment, said Oil Ministry spokesman Asim Jihad.

"The participation of these well-known, major companies is a good sign and it reflects the desire of these firms to invest in the Iraqi oil sector," Jihad said.

Iraq's Oil Ministry asked companies to submit revised bids at the end of the auction. Seven did, but they were not made public. The bids would be handed to the Iraqi cabinet for a decision, an official close to the process said.

The sale was billed as the first chance since Iraq nationalized its oil in 1972 for major foreign companies to get a run at the country's hydrocarbon reserves, much of which are untapped. But many Iraqi critics said it was a bad bargain.

Foreign companies servicing the fields will be paid per barrel of oil produced above a certain amount.

The BP-led consortium including the CNPC, was the only foreign group to strike a deal -- for the 17-billion barrel Rumaila oilfield, Iraq's biggest, in the Shi'ite south.

The deal only went down after an Exxon Mobil-led group rejected the government's proposed fee.

Iraqi Kurdistan Inaugurates New 40,000 Bpd Oil Refinery

Iraq's largely autonomous Kurdistan region opened a new oil refinery on July 18, with a projected capacity of 40,000 barrels per day (bpd), the director of the group that built the refinery said.

The refinery near the Kurdish capital Arbil is run by private Kurdish group Kar, which will process crude from the Khurmala Dome oilfield, its director Baz Karim told Reuters.

"The (Kurdistan Regional Government) will pay us for what the refinery produces. Our capacity is now 20,000 bpd but it will be 40,000 bpd by the end of the year," Karim said.

As well as producing gasoline for cars, the refinery will make kerosene, heavy fuel oil, diesel, paraffin and aeroplane fuel, Karim said.

The northern Kurdistan region, hoping to quickly develop its oil and gas sector, is entrenched in a long-running feud with the central government in Baghdad over energy contracts Kurds have signed unilaterally with foreign firms and which Baghdad deems illegal.

Last November, Oil Minister Hussain al-Shahristani said that development of Khurmala to supply refining in Kurdistan was a priority. The Oil Ministry was not immediately available for comment on the Arbil refinery opening.

ISRAEL

Israeli Oil Refineries Ltd. Enters Hydrocracking Era with $62 Mln Investment

Oil Refineries Ltd., Israel's largest oil refiner, announced that it has activated the first stage of its mild hydrocracking unit.

The first stage is expected to increase diesel and kerosene (jet fuel) production by over 1.5%, contributing an additional 120 thousand tons of produced middle distillates per annum. The second stage of the mild hydrocracker is expected to become operational in the third quarter of 2010 and to increase the company's diesel and kerosene production capacity by a further 1.5%. The total expected investment cost in both these stages is approximately US$62 million.

The activation of the first stage of the mild hydrocracker will contribute to increasing the company's overall refining margins. The contribution of the first stage is additional US$20 million per annum, based on the average product prices of the past 12 months. This unit will utilize high pressure levels hydrogen as well as a sophisticated catalyst in order to convert heavier compounds such as VGO to diesel and kerosene. These are viewed as higher quality and more environmentally friendly fuels. The unit also produces the raw materials requited to operate the existing catalytic cracker, while improving both qualities and conversion

Yashar Ben-Mordechai, Oil Refineries' Chief Executive Officer added: "The establishment of this Mild Hydrocracker serves as another important phase in strengthening our business foundations by increasing the flexibility of our refining units, enabling us to maximize refining margins while improving both product qualities and production quantities. The company's expanding refining margin base will further strengthen our financial standing and profitability in volatile markets. The first stage of the unit was completed on schedule, with the expected total cost (US$62 million) to be substantially lower than the initial budget of US$79 million."

JORDAN

Infra Mena Bids for Stake in Jordan Refinery Firm

Jordan Petroleum Refinery Co (JPRC) whose major shareholder is the Jordanian government, said July 7 that investment fund Infra Mena made a bid to acquire a strategic stake in the company.

Infra Mena is registered in Jersey with an authorized capital of $500 million, JPRC said in a statement on the Amman bourse website.

Amman-based Al-Rai daily reported, without naming the bidder, that the stake, subject to the bid, represents 51 percent of JPRC's capital and that the aim of the acquisition is to take part in the refinery's planned fourth expansion project whose cost is estimated at $2.1 billion.

The project will be implemented by an Italian-French consortium and will be financed by Deutsche Bank AG (DB), according to Al-Rai's report.

The refinery said in the statement to the Amman bourse that a subcommittee of its board has proposed that the bid should be referred to JPRC's advisers to study it from the financial, legal, and technical sides.

OMAN

Mashael Pre-qualifies for $200 Mln Heavy Oil Refinery Project at Sohar

Bahrain's Mashael Group is pre qualifying engineering and construction contractors to bid on its US$200 million heavy oil refinery project at Sohar port, following the signing of a long term lease agreement at the site, MEED has reported.

Mashael signed an agreement on May 30 with Oman's Sohar Industrial Port Company covering the long-term lease of the land for the refinery.

SIPC is a 50:50 JV between the Omani government and Holland's Port of Rotterdam.

Mr Bryan Chen ED at Mashael said that "We are looking at August or September for the front-end engineering and design tender. It will take four to 6 months and after that we will tender the engineering, procurement and construction contract."

Mr Chen said that the plant will be modeled on an existing Mashael unit at Kemanan on the east coast of Malaysia, which started operations in early 2008.

The 30,000 barrel a day refinery will process ultra-heavy crude oil to produce bitumen and a range of petroleum products including naphtha, kerosene, automotive gas oil and vacuum gas oil.

The oil used to feed the plant will be sourced from South America and the Middle East under long-term supply agreements.

Three south-east Asian contractors, from Singapore, Malaysia and South Korea have been pre-qualified for the FEED tender with a contract award due in October.

QATAR

Qatar Petroleum Re-launches Stalled $10 Bln Energy Schemes

State owned Energy Company Qatar Petroleum is breaking a 6 month moratorium on the development of new energy facilities by re-launching 2 of its largest oil and gas projects, which together are worth more than US$10 billion.

QP will approach contractors for its US$6.8 billion Al-Shaheen refinery by the end of July and a new engineering study has started on the US$5 billion Barzan gas development in the North field. Both projects were frozen while QP waited for construction costs across the energy sector to fall significantly. In December 2008, QP delayed the tendering of key construction contracts on the Al-Shaheen refinery by 6 months as part of a review of engineering, procurement and construction costs.

The state run firm and its JV partner on the Barzan project, the US ExxonMobil Corporation, also delayed construction contract bids on the scheme in March by up to 12 months to assess how the drop in EPC prices would affect the local market.

Two sources close to QP said that the company wants to return to the market because other national oil companies in the region have achieved cost reductions of 20% to 30% on similar oil and gas projects.

A Doha based executive at one bidder said that "It has been probably the most cautious company in the region in terms of re-entering the market but now the dust has settled it is ready to move again."

SAUDI ARABIA

Saudi Aramco’s SASREF Clean Diesel Due for October Startup

The Saudi Aramco Shell Refinery Co. (SASREF) Ultra-Low-Sulfur Diesel Project is slated for startup in October, and Saudi Aramco and SASREF executives visited the site recently for an update.

Saudi Aramco's senior vice president of Operations Services, Abdulrahman F. Al-Wuhaib, also serves as chairman of the SASREF board of directors.

He toured the refinery facility at Jubail Industrial City and was briefed by SASREF president Abdulhakim A. Gouhi, along with the company's management team.

The refinery is expected to produce about 90,000 barrels per day of ultra-low-sulfur diesel, making SASREF the Kingdom's first producer in compliance with new environmental standards.

Chiyoda Enters into Agreement for EPC of Coker Unit for Saudi Jubail Export Refinery

Chiyoda Corporation, Japan's leading engineering and construction firm, announced July 9 that the Chiyoda group and Samsung Engineering group have contracted with SATORP, a joint venture of Saudi Aramco, a Saudi Arabian state owned oil company, and Total, a French Major, for the engineering, procurement, and construction (EPC) of a Coker Unit for Jubail Export Refinery Project.

1. Client: SATORP

(Saudi Aramco Total Refining and Petrochemical Company,

62.5% shared by Saudi Aramco and 37.5% by Total)

2. Contract Date: July 7, 2009

3. Project Outline:

The Chiyoda group and Samsung Engineering group will execute the engineering, procurement and construction for a Coker Unit as a part of the Jubail Export Refinery Project. The refinery in Jubail Industrial City will process heavy crude oil (400,000 barrel per day world-class, full-conversion refinery) and convert it into high quality refined products that meet the highest international specifications.

4. Project Execution Organization:

The onshore work will be executed by a joint venture of Chiyoda Petrostar Ltd.*, as the leader, and Samsung Saudi Arabia Ltd., and the offshore work will be executed by a joint venture of Chiyoda, as the leader, and Samsung Engineering Co., Ltd. Both the onshore and offshore joint ventures will operate on a 50/50 basis.

5. Completion Date: Second half of 2013

*Chiyoda Petrostar Ltd. was established in Saudi Arabia in 1975 along with Petrostar Ltd., a local company in Saudi Arabia. The investment ratio is Chiyoda 49%, Petrostar 51%. Chiyoda Petrostar executes the work in Saudi Arabia for projects awarded to Chiyoda Group.

Saudi, Total Sign $9.6 Bln Jubail Refinery Deals

Saudi Aramco and France's Total signed on July 7, 13 agreements with contractors to build a $9.6 billion joint-venture refinery in the kingdom, state news agency SPA reported.

The two companies awarded the contracts for the 400,000 barrels per day (bpd) refinery last month. Spain's Tecnicas Reunidas and France's Technip won three of the biggest contracts offered.

The contract award was delayed by several months as Aramco and Total forced bidders to price in lower commodity and contracting prices in their bids. The final contracts awarded came in some $2.4 billion below the highest estimate for the refinery cost of $12 billion.

Aramco has since relaunched the bidding process for a second 400,000 bpd export refinery in a joint venture with ConocoPhillips. That process was halted last year due to uncertainty in global financial markets.

Saudi’s to Boost Refining Capacity by 1.6 mln bpd

Saudi Arabia is on the verge of launching multi-billion dollar projects to expand its oil refining production capacity by about 1.6 million barrels per day (bpd) within a massive hydrocarbon development program, according to official data.

Saudi Arabia, which controls nearly a quarter of the world's recoverable crude resources, will construct four refineries with an output capacity of 400,000bpd each to expand output to nearly 3.7 million bpd in the next three years, according to figures by the Organization of Arab Petroleum Exporting Countries (Opec), which groups Saudi Arabia with 10 other Arab oil producers.

Industry sources said the four ventures had been delayed for two years because of soaring construction costs that pushed their total value to more than $50bn. But a fall in the costs after the international financial crisis and Riyadh's decision to retender some hydrocarbon projects had pushed that value below $30bn.

"The trend in Saudi now is that the government wants to benefit from the prevailing economic conditions and secure attractive bids to carry out the new projects in refining and other energy sectors," said Oapec.

"The current refining projects to be carried out by the kingdom in Yanbu, Jubail, Ras Tanura and Jizan will boost its total refining output capacity from about 2.098 million bpd to 3.698 million bpd when they are completed in 2012."

In a report from Riyadh in July, the Saudi daily Aleqtisadia said the Yanbu refinery would cost about $6bn compared with an estimated cost of $12 to $13bn in 2008. The paper said the government-owned Saudi Aramco and its partner in the refinery, Conoco Philips of the US, had set January 31 as a deadline for submitting bids for the project.

"This project had faced many obstacles and Conoco Philips was about to pull out of it because of its surging costs due to high construction costs and the location of Yanbu far away from the kingdom's oil fields in the Eastern region," it said.

"But the company later agreed to join Saudi Aramco as partner in the project after they managed to slash its costs following Aramco's decision to retender or re-negotiate some of its hydrocarbon ventures to secure lower costs."

Saudi Aramco, the world's largest oil producing company, said in June it had extended some project tenders to take advantage of falling construction expenses and cut their costs after a sharp rise in late 2007 and 2008.

"Yes we have extended some project tenders but we are talking here about a period of weeks or months. We want to give contractors an opportunity to discuss these projects and update their costs," said Khalid Al Falih, Saudi Aramco's President and Chief Executive.

"We have taken into consideration the recent decline in the prices of building materials and the cost of labor and project construction. The aim of these measures is to give ourselves a chance to take advantage of lower costs this year compared to that of last year's. At the same time we are giving contractors an opportunity to give the best offers in terms of prices and costs," he said.

Industry sources said Saudi Arabia currently has ample oil output capacity to feed the new refineries, referring to its ongoing program to expand the existing capacity to more than 12 million bpd by the end of 2009. The kingdom had a sustainable crude production capacity of 11.3 million bpd at the end of 2008 but Saudi Arabia has said it would push ahead with the expansions despite slackening world demand due to the global crisis.

At just more than 12 million bpd, the kingdom's spare capacity will double to nearly four million bpd following a cut in its output of over one million bpd in line with a collective Opec agreement to trim supplies to support sagging prices.

Saudi Arabia, long dubbed the world's swing oil producer, has traditionally maintained a spare capacity of at least two million bpd as a cushion for any sharp fluctuation in the global supply-demand balance.

Besides those new refineries, Saudi Aramco is also carrying out projects to upgrade existing units, including its Mobil Refinery in Yanbu. The two-phase project involves the construction of hydrogen processing unit at a cost of $700m and a sulfur treatment unit at a cost of $800m.

McIlvaine Company,

Northfield, IL 60093-2743

Tel: 847-784-0012; Fax: 847-784-0061;

E-mail: editor@mcilvainecompany.com