Refinery UPDATE

 

July 2011

 

McIlvaine Company

www.mcilvainecompany.com

 

TABLE OF CONTENTS

 

 

INDUSTRY ANALYSIS

AMERICAS

U.S.

Air Products to Supply Hydrogen for Valero Gulf Coast Refineries

Alon Krotz Springs Commences Restart

New Mexico Assesses $350K Civil Penalty against Western Refining

Kinder Morgan Expands Petcoke Terminal Network with $67 MlnTerminal

Air Liquide, Valero Agree to Hydrogen Supply Deals to Port Arthur and Texas City Refineries

EPA’s First Carbon Rules Costing Little but Gaining Little

Gasoline Rises as Refinery Shutdowns May Reduce U.S. Supplies

Federal Court will Allow Lawsuit Accusing Exxon’s Texas Refinery of Violating Clean Air Act

Wyoming Refinery Reaches $5.4 Mln Pollution Settlement for Spill

TCEQ Won't Pursue Foreign-Born Pollution Relief

HollyFrontier Completes Frontier Oil Merger

Matrix Subsidiary Wins ConocoPhillips Refinery Project

Husky Reports Temporary Shutdown at Lima Refinery

Mustang Completes Engineering Contract at the North Slope’s Eni Nikaitchuq Facility

CUBA

China, Cuba Agree on $6 Bln Refinery Project, New Loans

VENEZUELA

Venezuela PDVSA Signs $1.5 Bln Loan from Japan’s Mitsubishi and Itochu Corp

ASIA

MONGOLIA

Bechtel Wins Planning Contract for Mongolia Industrial Hub to Include Oil Refinery

SURINAME

Suriname's State Oil Company Signs $424 Mln Contract to Expand Refinery

VIETNAM

Vietnam Dung Quat Refinery to Expand to 200,800 bpd by 2017

EUROPE / AFRICA / MIDDLE EAST

SPAIN

Foster Wheeler Wins Engineering Prize for Repsol Refinery Project

SWEDEN

Foster Wheeler Wins Contract for Swedish Preemraff Lysekil Refinery Turnaround

UNITED KINGDOM

Blast at Chevron's Pembroke Refinery Kills Four in the UK

AZERBAIJAN

SOCAR Says Design, Survey for Azerbaijan Processing Complex May Take 2 Years and Cost $12-13 Bln

TURKMENISTAN

Turkmen Refinery Reconstructing Cat Cracker

MIDDLE EAST / U.S.

Graham Corp Awarded Two Orders Totaling $4.7 Mln

IRAQ

Iraq's Largest Oil Refinery in Beiji Shuts Down after Fire

Honeywell Wins North Refineries $9.6 Mln Automation System Contract for Iraq Refinery

KUWAIT

Kuwait May Tap Private Investors to Help Pay for $14.5 Billion Refinery

SAUDI ARABIA

Saudi Aramco May Tender $7 Bln Jizan Refinery in 2Q 2012

Hitachi to Supply Compressors and After-Services for Oil and Gas Plants in Saudi Arabia

WORLDWIDE

Shell Global Solutions, KBR Form Hydroprocessing Tech Alliance

 

 

INDUSTRY ANALYSIS

AMERICAS

   U.S.

Air Products to Supply Hydrogen for Valero Gulf Coast Refineries

Air Products, the leading global hydrogen provider, on June 6 announced that Valero Energy Corporation has awarded the company a combined additional supply of over 200 million standard cubic feet per day of hydrogen for Valero's refineries in St. Charles, Louisiana and Port Arthur, Texas.

As part of this award, Air Products has also proposed development of a new world scale steam methane reformer hydrogen production facility to be located in St. Charles, which is to be on stream during the second half of 2013. The facility would be connected to Air Products' industry-leading Gulf Coast hydrogen pipeline supply network, which supplies multiple refinery and petrochemical companies in the region.

 

"This supply arrangement builds on our well-established relationship with Valero. We already provide hydrogen to help meet their product demands with our two steam methane reformer hydrogen production facilities in Port Arthur. This proposed new hydrogen facility would help to serve Valero's St. Charles and Port Arthur locations, and also help to meet additional demands of customers on the Air Products' pipeline system," said Wilbur Mok, vice president - North America Tonnage Gases at Air Products. "The facility will be connected to our Gulf Coast hydrogen pipeline network, which increases product supply reliability, and provides flexibility to meet increased hydrogen needs through the largest hydrogen pipeline network in the Gulf Coast."

Air Products has been supplying hydrogen via pipeline to Valero's St Charles refinery since 1997 and also to Port Arthur since 1996. Valero's hydrogen demand is increasing at both facilities with the expansion of its hydrocracking capacity.

 

Air Products is working toward increasing its hydrogen pipeline supply capability in the Gulf Coast to make it the world's largest hydrogen pipeline network. Air Products announced plans to construct a new 180-mile long pipeline in 2010. The new pipeline extension, which is in the project execution phase, will connect Air Products' Texas hydrogen system to the Louisiana hydrogen system. Once complete, Air Products' hydrogen pipeline supply network will stretch from the Houston Ship Channel in Texas to New Orleans, creating the world's largest hydrogen plant and pipeline supply network. This integrated pipeline system will unite over 20 hydrogen plants and over 600 miles of pipelines. It will supply the Louisiana and Texas refinery and petrochemical industries with over 1.2 billion cubic feet of hydrogen per day. The new Gulf Coast hydrogen pipeline network is expected to be operational in 2012.

 

Globally, Air Products' hydrogen pipeline operational expertise is evidenced by the 40 year safe operation of its network of systems. Pipelines offer a safe, robust and reliable supply of hydrogen to the refinery and petrochemical industry around the world. In addition to the Gulf Coast hydrogen pipeline system, Air Products also has hydrogen pipeline networks operating around the world in the U.S. in Southern California; in Canada in Sarnia, Ontario, and Edmonton, Alberta; and in The Netherlands in Rotterdam.

 

The proposed St. Charles hydrogen facility would be built through the global hydrogen alliance between Air Products and Technip. The hydrogen plant will feature the latest technology advancements to maximize energy efficiency and emissions reduction. The enhanced SMR design targets optimal heat integration and minimal loss of heat to the environment, which in turn lowers natural gas feedstock consumption. These efforts and other productivity improvements support Air Products' overall sustainability goals of reducing energy consumption and emissions.

 

This Air Products and Technip worldwide alliance, which has built over 30 hydrogen production facilities, continues to provide the worldwide refining industry with competitive technology and world-class safety and reliability. Technip provides the design and construction expertise for steam reformers while Air Products provides the gas separation technology. Air Products, through its extensive operating network, and Technip, from its large reference base, also bring effective operational and engineering knowledge to "design-in" high reliability and efficiency.

 

Hydrogen is widely used in petroleum refining processes to remove impurities found in crude oil such as sulfur, olefins and aromatics for meeting the product fuels specifications. Removing these components allows gasoline and diesel to burn cleaner and thus makes hydrogen a critical component in the production of cleaner fuels needed by modern, efficient internal combustion engines.

Alon Krotz Springs Commences Restart

Alon Refining Krotz Springs, Inc. on June 8 provided an update on the operation of the Company's refinery located in Krotz Springs, Louisiana.

 

The Company has commenced the restart of the Krotz Springs refinery after its shutdown in late May in anticipation of flooding resulting from opening of the Morganza Spillway due to historic flooding along the Mississippi River basin.

 

Paul Eisman, the Company's CEO and President, commented, "We are happy to report that the floodwaters forecasted by the U.S. Army Corps of Engineers never approached our refinery and that the high water levels of the Atchafalaya River are now receding. The U.S. Army Corps of Engineers has indicated that they may close the remaining open gates at the Morganza Spillway over the next several days. This is expected to accelerate the lowering of water levels in the lower Atchafalaya River. Barges are currently heading towards Krotz Springs, reopening one of the avenues from which we receive crude and distribute products.

 

"Due to our dedicated staff, the crude unit at the refinery has returned to service and is operating well. The remaining process units at the refinery will restart in an orderly fashion as remaining logistical constraints resulting from the flooding are eliminated. We expect the refinery to be in full operation in the next couple of weeks. Maintenance that was originally planned for the third quarter was successfully completed during the outage, and the resulting impact to throughput for the year from this event should be minor."

 

Alon Refining Krotz Springs, Inc., a subsidiary of Alon USA Energy, Inc., owns and operates a high conversion crude oil refinery in Krotz Springs, Louisiana with a crude oil throughput capacity of approximately 83,000 barrels per day. The Krotz Springs refinery is located on the Atchafalaya River with direct access to the Colonial products pipeline and the Exxon crude system and services markets in the Southern and Eastern United States.

New Mexico Assesses $350K Civil Penalty against Western Refining

Western Refining Co. of El Paso, the nation's fourth-largest publicly traded independent oil refiner, agreed to pay a $350,000 civil penalty to the New Mexico Environment Department, officials announced June 9.

 

The civil penalty was assessed in a recent compliance order alleging that compressor engines at Western's refinery east of Gallup, N.M., violated their permitted emission limits for nitrogen oxides and carbon monoxide between March and September 2010.

 

The violations were detected during routine testing of the engines.

 

Western Refining has revised its permitted emission limits and has retested the engines to show compliance.

 

During the permitting process, New Mexico officials determined that the engine violations did not cause or contribute to exceeding state or federal standards for ambient air quality.

 

New Mexico officials said the order is not the first compliance matter for the Gallup refinery, which Western Refining bought from Giant Industries of Arizona in 2006.

 

The previous year, the state Environment Department and Giant Industries entered a stipulated final order requiring Giant to implement extensive environmental upgrades at both the Gallup and Bloomfield refineries and to pay a civil penalty of $850,000.

 

In 2009, the New Mexico Environment Department and Western Refining agreed to amend the stipulated final order, in part to resolve pending violations, and as part of this process, Western agreed to pay an additional $2,250,000 in stipulated penalties to the state.

Kinder Morgan Expands Petcoke Terminal Network with $67 MlnTerminal

Kinder Morgan Energy Partners, L.P. (KMP) on June 13 announced that it has acquired a newly constructed petroleum coke (petcoke) terminal in Port Arthur, Texas, for approximately $67 million from TGS Development Group.

 

KMP will operate the facility, which handles petcoke from Total Petrochemicals USA, Inc.'s recently expanded Port Arthur refinery, and provide conveying, storage and ship loading services to Total pursuant to a 25-year contract. The refinery is expected to produce more than 1 million tons of petcoke annually. The transaction, which was developed in partnership with TGS and Total, is expected to be immediately accretive to cash distributable to KMP unitholders.

 

"We are pleased to expand our large petcoke handling network and look forward to providing superior service to Total through this long-term contract," said Jeff Armstrong, president of Kinder Morgan's Terminals segment. Kinder Morgan is the largest handler of petcoke in North America and expects to handle more than 13 million tons in 2011.

Air Liquide, Valero Agree to Hydrogen Supply Deals to Port Arthur and Texas City Refineries

Air Liquide Large Industries U.S. LP has entered into agreements with Valero Energy Corporation for the long term supply of hydrogen to two Texas refineries, one in Texas City and the other in Port Arthur. Air Liquide will supply a total of 105 million standard cubic feet per day (SCFD) of hydrogen to the two refineries.

 

Air Liquide has been a long term partner with Valero, beginning in 1996 with hydrogen supply to Valero's Corpus Christi refinery and then to the Texas City and Three Rivers refineries in 1998. The long-term hydrogen supply agreements for Valero's Texas City and Port Arthur refineries will span more than 15 years.

 

Commenting on the new agreements, Michael Graff, President & CEO of American Air Liquide Holdings, Inc., said:

 

"Air Liquide and Valero share a vision for a reliable, efficient and environmentally responsible energy supply, and our companies enjoy a long term relationship that continues to grow. Air Liquide's advanced hydrogen production technologies and expansive pipeline and logistics network uniquely position us to offer the refining and petrochemical industries the capacity, reliability and energy efficiency required to meet the growing demand for their products."

 

Maintaining existing sales volumes and securing new hydrogen business is one of Air Liquide's key strategic priorities for its industrial gas business in the U.S. Air Liquide's new 120MMSCFD Steam Methane Reformer (SMR) being built in La Porte, Texas, is expected on-line at the beginning of next year and will serve Valero and other Air Liquide customers along its pipeline network.

 

Hydrogen is used in the oil refining process to convert crude oil into refined products and to remove sulfur for cleaner burning fuels.

 

In the U.S., the Air Liquide Large Industries business serves the refining, natural gas, chemicals and metals industries. It operates an extensive 1,800 mile pipeline system along the Gulf Coast and the Mississippi River as well as providing its customers with on-site gas production capabilities.

EPA’s First Carbon Rules Costing Little but Gaining Little

The first round of greenhouse-gas rules issued by the U.S. Environmental Protection Agency is unlikely to burden companies with substantial costs or significantly cut emissions linked to climate change, according to a Bloomberg Government study.

 

The EPA rules let new and modified industrial facilities such as power generators and refineries meet the standards by investing in energy efficiency. Most companies are already incorporating conservation measures into their construction and expansion projects, according to the study published today.

 

President Barack Obama’s EPA pushed ahead with regulations last year after Congress failed to pass climate-change legislation. The rules prompted protests from industry officials such as Mike Morris, chief executive officer of American Electric Power Co., who has said the regulations will impose a moratorium on U.S. power-plant construction.

 

Such comments are overblown, at least for the initial phase, according to the study by Marisa Buchanan and Rob Barnett, Bloomberg Government energy analysts.

 

“The rules don’t change industry behavior much from business as usual,” Barnett said in an interview. “It’s a rubber stamp on what companies would do anyway.”

 

The regulations under the Clean Air Act, which took effect in January, require polluters to apply for state permits if they build or enlarge operations. The decision on what controls are needed is made on a case-by-case basis.

 

A second phase may be more costly and affect existing plants, according to the report.

 

Nucor’s Plant

Greenhouse-gas permits issued under the new rules include one for Nucor Corp. (NUE), the second-largest U.S.-based steelmaker by sales. The Charlotte, North Carolina-based company announced in March that it began construction of a $750 million iron-making plant in Louisiana after meeting federal and state pollution requirements. The project will spur job growth and help the economy, Nucor Chairman and Chief Executive Officer Dan DiMicco said in a March 7 statement.

 

So far, the only direct challenges to permits issued under the new EPA rules have come from environmental groups arguing the emission controls don’t go far enough. The Sierra Club petitioned the EPA last month, asking the agency to challenge the company’s state air permit. The group said the emissions the Nucor plant will be allowed to discharge are at a “considerably higher” level than they should be.

 

The EPA, as part of a legal settlement with 11 states and groups such as the San Francisco-based Sierra Club, has said it will propose further greenhouse-gas rules later this year.

 

The EPA said on June 13 that the next proposal for utilities will be delayed by two months to give the Obama administration more time to hear recommendations, including from companies and states. The agency, which had faced a July 26 deadline, now intends to issue a draft rule by Sept. 30.

Gasoline Rises as Refinery Shutdowns May Reduce U.S. Supplies

Gasoline rose, outperforming crude oil and heating oil, on speculation that shutdowns at refineries serving the New York Harbor market will reduce inventories.

 

Futures gained 2 percent as refineries in New Jersey and New Brunswick with a total capacity of about 550,000 barrels a day, had unplanned shutdowns this month. New York Harbor is the delivery point for Nymex futures.

 

"Prompt barrels in the Harbor are very tight," said Tom Knight, vice president of trading and supply at Truman Arnold Cos. in Texarkana, Texas.

 

Gasoline for July delivery gained 5.91 cents to $2.9826 a gallon at 9:386 a.m. on the New York Mercantile Exchange. The premium for July over August futures widened to 6.42 cents from 4.64 cents yesterday. It was the widest spread between the contracts closest to expiration since May 31.

 

Gasoline stockpiles in Padd I, which includes East Coast refineries, were 4.7 percent below year-earlier levels in the week ended June 10, according to Energy Department data.

 

Regular gasoline at the pump declined 0.4 cent to $3.685 June 14, according to AAA data on its website.

 

Heating oil for July delivery added 2.42 cents, or 0.8 percent, to $3.009 a gallon on the Nymex.

Federal Court will Allow Lawsuit Accusing Exxon’s Texas Refinery of Violating Clean Air Act 

A federal court has decided to allow environmental groups to pursue a lawsuit that accuses the largest U.S. refinery of violating federal air pollution laws thousands of times in the past five years.

 

The U.S. District Court Southern District on June 7 dismissed a request by Exxon Mobil Corp. to dismiss the lawsuit regarding its Texas facility.

 

The lawsuit filed by Sierra Club and Environment Texas says Irving-based Exxon’s Baytown refinery released 8 million pounds of illegal pollution, including cancer-causing toxins, without facing proper fines or being forced to fix equipment.

 

The environmental groups say they are suing refineries in the Houston Ship Channel to force compliance with the federal Clean Air Act because Texas state regulators are failing to do so. They have reached a $5.8 million with Shell.

Wyoming Refinery Reaches $5.4 Mln Pollution Settlement for Spill

The state on June 6 announced a pollution settlement worth nearly $5.4 million, likely Wyoming's largest, for a spill that has killed nearly 150 birds at a refinery since last year.

 

The state Department of Environmental Quality has not tracked every one of its pollution settlements over the years but this was the biggest anybody remembers, said department spokesman Keith Guille.

 

Sinclair Wyoming Refining Co. agreed to pay an $850,000 state penalty and spend $4.5 million to improve its refinery in south-central Wyoming. The spill of petroleum products began in April 2010 in a 40-acre wastewater pond at the refinery.

 

Spills continued off and on for the rest of the year as Sinclair worked to clean up the pollution and used noise-making devices and an artificial alligator to discourage more birds from landing there, said Charles Plymale, a project manager for enforcement and compliance for the department.

 

"It's a major flyway. A lot of birds land on there continuously," Plymale said.

 

Through this May, 147 dead birds had been found at the pond, including dozens of grebes, a water bird that eats fish. Another 224 birds caught from the area were cleaned and released, Guille said, adding that the settlement size reflects the spill's seriousness.

 

Salt Lake City-based Sinclair Oil Corp. operates two refineries, both in Wyoming. The fine follows a $660,000 settlement between the state and Sinclair for a 2009 spill of nearly 3 million gallons of gasoline blend from a storage tank at the refinery.

 

While Sinclair has agreed to spend $4.5 million to improve the refinery, Plymale said the final cost of improving systems to control pollution could run much higher.

 

The problem began when refinery workers drained hydrocarbons from refinery piping and vessels ahead of routine maintenance, said Clint Ensign, senior vice president for government relations for Sinclair.

 

"We contain that hydrocarbon in an internal slop system. But oil got past that slop system into the sewer system and then into an internal containment pond," he said.

 

Usually the only water that flows into the pond is fully treated wastewater from the refinery. None of the water in the pond leaves the site, Ensign said.

 

"We've modified our containment procedures to try to prevent this from happening again," he said.

 

He said under the settlement, Sinclair will install a system to recover, treat and recycle all oil before it gets to the wastewater system.

 

The Wyoming Department of Environmental Quality has no power to fine polluters outside of taking them to court. The state and Sinclair reached the settlement in lieu of going to court.

TCEQ Won't Pursue Foreign-Born Pollution Relief

The Texas Commission on Environmental Quality will not ask federal regulators for a break on smog rules because of foreign-born pollution.

 

The TCEQ's board on June 22 denied the request of a Houston attorney seeking regulatory relief for what's blowing into the state from other countries.

 

Attorney Jed Anderson, who represents industry on air-quality issues, made the request, saying oil refiners, chemical makers and other heavy industries are spending billions on extra emissions controls to meet federal smog limits because of pollution from Mexico and elsewhere.

 

Federal law gives states the primary responsibility for assuring that the air is safe to breathe -- even if some of the sources of pollution are beyond their control. The law does allow an exception if foreign-born pollution is the only reason an area is not in compliance with smog limits, but that is difficult to prove.

 

Federal regulators have granted such an exception for El Paso, but Anderson wanted one for the entire state.

 

"The state of Texas isn't in the best position to deal with foreign pollution," Anderson told the commission. "If you put the responsibility on anybody, it should be the federal government."

 

The commissioners said they agreed with Anderson's position but sided with staff in rejecting his petition. A staff analysis concluded that Anderson "only makes vague assertions regarding the costs or effects of air contaminants originating outside the U.S."

 

Staff also said the request may be premature because the Environmental Protection Agency is likely to finalize even tougher limits for ozone, or smog, later this year.

 

Environmentalists said Anderson's petition fails to address the reason for federal standards for air pollutants -- to protect public health.

HollyFrontier Completes Frontier Oil Merger

HollyFrontier Corp. on July 1 announced the completion of the merger of Holly Corp. and Frontier Oil Corp. HollyFrontier Corp. combines two leading independent refiners to create the most profitable (on a per barrel basis) independent refiner in the U.S.

 

HollyFrontier Corp., which has a refining capacity in excess of 440,000 barrels-per-day (bpd) across five refineries, serves the niche mid-continent, Rocky Mountain and southwestern refining markets and has access to growing regional domestic and Canadian crude oil supplies.

 

In a joint statement, Matt Clifton, Executive Chairman, and Mike Jennings, President and Chief Executive Officer, said: "HollyFrontier has significant refining capacity in fast growing, traditionally high demand areas and will take advantage of diversified revenue sources, expanded infrastructure and increased scale of assets. HollyFrontier is committed to safe, reliable and environmentally responsible operations, and to outstanding corporate citizenship. The completion of this merger is a significant event for our shareholders, who will benefit from the synergies of this combination and from the significant growth potential that we anticipate as one of the largest independent refiners in the U.S. We are excited to move forward and to deliver on the promise of this transaction to create value for shareholders."

 

In accordance with the terms of the merger, Frontier shareholders received 0.4811 Holly shares for each share of Frontier common stock they owned at closing. The combined entity will begin trading today under the symbol HFC.

 

Deutsche Bank Securities Inc. and Morgan Stanley & Co. Incorporated acted as financial advisors to Holly and Vinson & Elkins LLP was its legal advisor. Citi and Credit Suisse Securities (USA) LLC acted as financial advisors to Frontier and Andrews Kurth LLP was its legal advisor.

Matrix Subsidiary Wins ConocoPhillips Refinery Project

One of Matrix Service Co.'s subsidiaries has been awarded a contract to build a new heat recovery boiler at a ConocoPhillips refinery in New Jersey, the Tulsa-based infrastructure firm announced June 27.

 

Matrix Service Industrial Contractors Inc. will handle structural steel, equipment, piping, ducting and mechanical erection, and the project could generate about 200 jobs, company officials said. The new boiler will replace a 49-year-old unit at ConocoPhillips' Bayway Refinery in Linden, N.J.

 

"We are pleased to have been selected for this significant project and look forward to successfully completing this work for ConocoPhillips," Matrix CEO John Hewitt said in a statement.

 

Matrix will begin construction on the boiler immediately, with the work scheduled for completion by January.

 

No financial details about the contract were released.

 

Matrix Service has benefitted from an increased level of contracts in recent months. The consolidated backlog topped $383 million worth of future projects as of March 31, according to reports.

 

Matrix Service performs engineering, construction, repair and maintenance work for infrastructure in the oil and gas, petrochemical, storage terminal, pipeline and power generation industries.

Husky Reports Temporary Shutdown at Lima Refinery

Husky Energy Inc. reported June 29 that it has temporarily suspended production at its refinery in Lima, Ohio, in order to carry out repairs on a crude unit furnace.

 

A controlled shutdown of the crude unit furnace was initiated on June 27, following the discovery of a small leak in a radiant tube inside the unit. There are no environmental releases or safety issues associated with the event.

 

It is estimated it will take approximately 10 days to complete the repairs and return the crude unit furnace to normal operations. During this period a minimum amount of finished product will be produced from fuels in inventory. The Company will manage crude oil inventories by selling excess crude into the market.

 

The overall pre-tax impact, including repair costs; is estimated as an opportunity cost of between $15 to $20 million; which considers the current market price environment. The impact will be reflected in third quarter results. Husky plans to carry out pro-active maintenance work while repairs are being completed.

Mustang Completes Engineering Contract at the North Slope’s Eni Nikaitchuq Facility

Mustang, a Wood Group company, provided the detail engineering, design and procurement services for two processing modules for the new Eni Nikaitchuq processing facility on the North Slope of Alaska, 60 miles west of Prudhoe Bay. The facility, which began oil production in late January 2011, has a treatment capacity of 40,000 BPD oil, 41,000 BPD produced water, 56,000 BPD source water and 6.1 MMscfd gas. In addition, the facility has a water injection capacity of up to 90,000 BPD water. Nikaitchuq is Eni's first operated development in Alaska.

 

Weighing approximately 4,000 tons each, the process and utilities modules were built in Louisiana and transported on barges through the Panama Canal to Alaska. The facility was designed to process 16-19 API oil with up to 2% sand content, to operate in –50°F arctic temperatures, to comply with the International Building Code, and to have minimal impact on the environment. These facilities allow Eni to ship sales-quality crude oil through the Trans-Alaska oil pipeline.

 

Mustang also provided detailed engineering for the integrated control and safety systems for the facility.

      CUBA

China, Cuba Agree on $6 Bln Refinery Project, New Loans

In a major endorsement for Cuba’s economic reform project, the man expected to become China’s president in 2013 witnessed the signing of 13 agreements in Havana that include the billion-dollar expansion of a refinery, the extension of fresh loans, and an agreement to set a five-year cooperation plan.

 

In a meeting with Raúl Castro — the culmination of his two-day visit — Vice President Xi Jinping said that China intends to increase its “practical cooperation.”

 

“The Chinese government supports competent Chinese enterprises in seeking new opportunities for cooperation and investment in Cuba,” Xi said, according to official news agency Xinhua.

 

Xi lauded the 6th Congress of the Communist Party of Cuba in April, which ratified 300-plus reforms, as a key event that “determined the direction of the future development of the country.”

 

Agreements include a new line of credit, a restructuring of two existing lines, a donation, and a loan for the modernization of Cuba’s healthcare system, according to a bulletin provided to journalists. No further details were available.

 

A letter of intent signed June 5 paves the way for a doubling of the Cienfuegos refinery’s capacity from 65,000 to 150,000 barrels per day. According to Reuters, this is a three-way agreement between Cuvenpetrol, the Cuban-Venezuelan joint venture that owns the refinery; China Huanqiu Contracting & Engineering Corp., a subsidiary of state oil company CNPC; and the Italian subsidiary of Technip, a French oil engineering company.

 

No further details have been published; the Reuters article puts the cost of the expansion at $6 billion. Observers have speculated that Huanqiu might take an equity stake in the refinery in exchange for part of its work.

 

In a second letter of intent, according to Reuters, Huanqui and Cuvenpetrol agreed on the construction of a regasification plant near the refinery in Cienfuegos. The plant would process liquefied natural gas from Venezuela to be used by power plants in Cuba.

 

Another letter of intent is about expansion of the Port of Cienfuegos and dredging.

 

These projects are expected to be financed by China’s Export-Import Bank, using Venezuelan oil as collateral, according to Reuters.

 

Also, state oil companies Cupet and China National Petroleum Corporation (CNPC) signed a framework agreement to expand cooperation in the oil sector.

 

In the meeting with Castro, Xi Jinping was joined by Zhu Zhixin, vice president of the National Commission on Development and Reform, Deputy Trade Minister Zhong Shan, and China Development Bank Vice President Chen Yuan, among others.

 

China is Cuba’s second-largest trade partner, after Venezuela. Bilateral trade rose from $1.5 billion in 2009 —after a 30-percent drop in the wake of Cuba’s 2008 liquidity crisis — to $1.8 billion last year.

 

Xi is on a tour of four countries; he was in Italy before arriving in Cuba, and is scheduled to visit Uruguay and Chile after his stop in Havana.

 

“The deepening of reform in Cuba and the broadening of liberalization measures will call more attention among Chinese companies,” said Wu Hongyin, director of the Latin America Institute of the Chinese Academy of International Relations, on China Radio International. “This, in turn, will increase Chinese-Cuban economic cooperation, and create more opportunities for both nations in important economic sectors such as agriculture, telecommunications, infrastructure, services, energy, among others. Future economic relations will be closer.”

VENEZUELA

Venezuela PDVSA Signs $1.5 Bln Loan from Japan’s Mitsubishi and Itochu Corp

Venezuelan state oil company Petroleos de Venezuela signed a $1.5 billion loan agreement with Japanese companies, which will be used to expand an oil refinery and deep sea heavy oil conversion projects, officials said June 28. The money will go toward financing a deep conversion project at the Puerto la Cruz refinery and an expansion of the El Palito refinery, in conjunction with Mitsubishi and Itochu Corp. The 15-year loan from the Japan Bank for International Cooperation may be paid back with oil or cash and carries an interest rate of 3.8 percentage points over Libor, Venezuelan Oil Minister and PdVSA chief Rafael Ramirez said during a signing ceremony. Venezuelan officials are looking to nearly double the output at the 140,000-barrel-a-day El Palito refinery, Ramirez said, while Puerto la Cruz is slated to raise production to 210,000 barrels a day.

ASIA

      MONGOLIA

Bechtel Wins Planning Contract for Mongolia Industrial Hub to Include Oil Refinery

Bechtel has been selected by the National Development and Innovation Committee (NDIC) of the government of Mongolia to provide master planning services for the development of the Sainshand Industrial Complex. The planned industrial hub is considered a centerpiece of Mongolia's National Development Strategy.

 

Under the agreement, Bechtel will develop a master plan for the complex, incorporating infrastructure and industrial projects including a coal gasification power plant, oil refinery, and mineral processing facilities. In addition, Bechtel will perform economic analysis for each of the industrial and infrastructure projects and review debt financing options.

 

"The Sainshand Industrial Complex is key to Mongolia's social and economic development," said Ch. Khashchuluun, head of Mongolia's National Development and Innovation Committee. "Bechtel's experience and expertise will help us achieve our vision of creating an industrial complex that will allow us to be more competitive in the global market."

 

"Bechtel has successfully delivered hundreds of projects across Asia including the CSPC Nanhai Petrochemicals Complex and Hong Kong International Airport, and we are delighted to add the government of Mongolia to our client roster. We are confident we can apply our decades of expertise to help NDIC achieve its vision to create a world class industrial complex," said Steve Katzman, President of Bechtel Asia.

   SURINAME

Suriname's State Oil Company Signs $424 Mln Contract to Expand Refinery

Staatsolie, Suriname's state-owned oil company, signed an agreement June 24 with Saipem S.p.A for the engineering, procurement and construction of its new oil refinery at Tout Lui Faut, 20 kilometers south of the capital Paramaribo.

 

The US$424 million contract is a more detailed version of an agreement signed in June 2010 with the Italian company.

 

"With the signing of the lump sum contract, Saipem gets the go-ahead from Staatsolie for the engineering, procurement of material and equipment and construction of the modules abroad and to ship them to Suriname. Staatsolie will carry out the remaining construction in Suriname with its own management and under supervision of Saipem," the company said in a statement.

 

Construction will start in the second quarter of 2012, while production is scheduled to begin mid-2014. The contracts were signed at Saipem's headquarters in Rome, Italy by Staatsolie's CEO, Marc Waaldijk and Saipem's vice-president project management, Giovani Scimone.

 

After completion of the refinery expansion project, the company's refining capacity will increase from 7,000 bpd to 15,000 bpd. According to Staatsolie, it will produce high quality end products, including premium diesel and premium gasoline for the local market, which will significantly cut Suriname's oil imports.

 

Currently, the company manages three onshore oil fields in Suriname, while offshore explorations are continuing. The output from the three oil fields is transported through giant underground pipes to the refineries located at Tout Lui Faut that has a capacity of 7,000 bpd, besides marketing production process.

 

The company's crude oil production amounted to 16,000 barrels per day, while its annual production from 2007 to 2009 was 5.44 million barrels; 5.90 million barrels and 5.86 million barrels respectively.

 

Besides meeting the domestic needs and consumption, Suriname's oil and gas products were also exported to a number of countries in the Caribbean such as Trinidad & Tobago, Curacao, St Lucia, Barbados, Panama and several others.

 

Meanwhile, the government of Indonesia is exploring avenues of cooperation in the oil industry with Suriname, the Indonesian ambassador to Suriname disclosed. Efforts are being made to establish contact between the Indonesia's state oil company, Pertamina and Staatsolie.

 

At a meeting recently with Staatsolie's CEO, Marc Waaldijk, Ambassador Nur Syahrir Rahardjo presented his government's intentions.

 

"We told them about the oil and gas industry in Indonesia and the progress made by Pertamina in its effort to establish cooperation with oil and gas companies from various countries, including Suriname," the diplomat said after the meeting.

 

The ambassador added that, in the meeting, the Surinamese officials expressed their desire to establish cooperation with foreign oil and gas companies including from Indonesia.

 

"The aim is to establish oil and gas exploration, both offshore and onshore," explained Rahardja.

   VIETNAM

Vietnam Dung Quat Refinery to Expand to 200,800 bpd by 2017

Dung Quat oil refinery, Vietnam's first such facility, will expand its capacity by about half to up to 200,800 barrels per day (bpd) by 2017 and import Middle Eastern and probably Venezuelan crude, a senior executive said on June 13.

 

The refinery will require $1 billion to $2 billion for the capacity expansion, said Nguyen Hoai Giang, Chief Executive of Binh Son Refining and Petrochemical Co, which operates Dung Quat.

 

The annual capacity of the plant, built at a cost of $2.2 billion, would be expanded to 9.5-10 million tonnes (190,800 to 200,800 bpd) by 2017, from 6.5 million tonnes (130,500 bpd) now, Giang told the Reuters Global Energy and Climate Summit via a telephone interview.

 

The latest capacity expansion plan is bigger than the projection made in January, when Giang said the plant would be expanded to 9.2-9.3 million tonnes per year by end-2015 or early 2016.

 

"It is important that Middle East sour crude oil could be used, making up 50 percent of the refinery's capacity, instead of 100 percent sweet crude oil produced domestically and in Southeast Asia now," he said.

 

"Middle East sour crude oil is cheaper and will increase our refinery's efficiency."

 

It was unclear if the refinery would import oil from Venezuela because shipping costs would be high, given the weight of crude from the South American country and the long distance, Giang said.

 

Venezuelan state oil firm PDVSA said in April it hopes to extract the first 50,000 bpd from a project with Vietnamese partner Petrovietnam in the Orinoco region by the third quarter of 2012.

 

The companies are working in the Orinoco extra heavy crude belt's Junin 2 block, which has proven reserves of 7.5 billion barrels, PDVSA had said.

 

Dung Quat is also seeking foreign partners to take a 49 percent stake to fund the upgrading project and Giang said it was still in negotiations with Japanese, South Korean, Russian and Venezuelan companies.

 

PDVSA had said that the Venezuelan firm and Petrovietnam planned to work together on expanding the Dung Quat facility.

 

Asia is seeing a boom in new refinery developments and expansions, the latest being plans by state-run Petronas PETR.UL to build a $20 billion oil and petrochemical complex to boost Malaysia's refining capacity by half.

 

South Korea's four refiners are competing to upgrade their facilities, India's Reliance Industries is ramping up production and Chinese refiners are likely to add around 3.7 million bpd of new capacity between 2010 and 2015.

 

Vietnam has traditionally exported crude oil and imported all of its refined products but Dung Quat, which came online in early 2009, and plans to build several other refineries are slowly reversing that trend.

 

Output from Dung Quat, along with the 200,000-bpd Nghi Son refinery, which is expected to be operational in 2014, should be able to meet 60-70 percent of domestic demand by 2015.

 

The Dung Quat plant has been running at 105 percent of capacity since late 2010, meeting more than 30 percent of domestic demand.

 

Between February 22, 2009 and December 31, 2010 it processed 8.3 million tonnes of crude oil into 7.2 million tonnes of products.

 

A Japanese consultancy is working on a feasibility study due in October, which will also look at the possibility to use Venezuela's crude oil, Giang added.

 

The plant has picked Japanese engineering firm JGC Corp as adviser.

EUROPE / AFRICA / MIDDLE EAST

    SPAIN

Foster Wheeler Wins Engineering Prize for Repsol Refinery Project

Foster Wheeler AG announced June 6 that a subsidiary of its Global Engineering and Construction (E&C) Group has been awarded the 2010 National Prize of Industrial Engineering by the Spanish National Society of Professional Industrial Engineers. Foster Wheeler received the award in the "Engineering Project" category for its contribution to the Refinery Expansion Project for Repsol Petroleo S.A. in Cartagena (Murcia), Spain.

 

Foster Wheeler is the engineering, procurement and construction management (EPCm) contractor for the vacuum distillation unit and a delayed coking complex. The coking complex uses Foster Wheeler's leading SYDEC delayed coking technology. Foster Wheeler's scope of work is expected to be completed during the fourth-quarter of 2011.

 

"Foster Wheeler is honored to receive this prestigious award from the Spanish National Society of Professional Industrial Engineers," said Umberto della Sala, Interim Chief Executive Officer, Foster Wheeler AG. "I would like to congratulate our Madrid operation on this award, which demonstrates once again the success we deliver by combining our project execution capability, our in-depth refining expertise, and our ability to provide leading coking technology. We firmly believe that selecting Foster Wheeler to provide the delayed coking technology, and then to engineer and construct the coking complex, results in the best possible outcome for our clients, delivering a high-performing coking complex, built safely and to the highest standards of quality, reliability and environmental performance."

 

Francisco Javier Cobo, president of the Spanish National Society of Professional Industrial Engineers, presented the award to Foster Wheeler, at a ceremony in Madrid, Spain, on May 30, 2011.

 

Foster Wheeler's SYDEC process is a flexible thermal conversion process used by refiners worldwide to upgrade heavy residue feed and process it into high value transport fuels and coke products for fuel and metallurgical markets. The SYDEC process can be designed to maximize clean liquid yields while minimizing fuel coke yields, or to achieve other objectives, for example, to minimize heavy gas oil yields or to produce specific grades of coke for industrial use. Foster Wheeler is a market leader in delayed coking and has supplied its process technology worldwide for over 80 new cokers and has implemented more than 70 delayed coker revamps.

   SWEDEN

Foster Wheeler Wins Contract for Swedish Preemraff Lysekil Refinery Turnaround

Foster Wheeler AG announced June 15 that a subsidiary of its Global Engineering and Construction Group has been awarded a contract by Preem AB (Publ) Preemraff Lysekil (Preem) to perform the basic engineering design (BED) and front-end engineering design (FEED) for Preem's Energy Savings Program 2013 Turnaround at the Preemraff Lysekil oil refinery, located north of Gothenburg on the west coast of Sweden.

 

The Foster Wheeler contract value for this project was not disclosed. The contract value for the BED was included in the company's first-quarter 2011 bookings. The FEED will be booked upon release of this work by the client. This release is expected to be given during the second-quarter of 2011.

 

Last year Preem awarded an energy improvement study (EIS) to Foster Wheeler's Business Solutions Group, working with AspenTech, with the aim of improving energy efficiency and reducing emissions in this complex refinery. The study covered both design and operational improvement options. Five design options from this study were selected by Preem for further development and economic analysis.

 

During the basic engineering design phase, Foster Wheeler's UK Operations will further develop these five options. This will involve determining the feasibility and extent of modifications required and estimating their associated costs. Preem then plans to select one or more options, for which Foster Wheeler will then perform the FEED to allow Preem to make a financial investment decision in October 2011. The basic engineering design is scheduled for completion in June 2011 and the FEED in September 2011.

 

"The team of Foster Wheeler and AspenTech developed design options for the refinery which were sophisticated, innovative and offer the potential for good energy savings returns," said Umberto della Sala, Interim Chief Executive Officer of Foster Wheeler AG. "Preem has chosen to go forward with five of these opportunities. We look forward to demonstrating continued added value to Preem as we develop these opportunities further."

   UNITED KINGDOM

Blast at Chevron's Pembroke Refinery Kills Four in the UK

An explosion at the Chevron-operated Pembroke Refinery in the UK on June 3 has claimed the lives of four people, as authorities launch an investigation into the accident, BBC News reported.

 

Four contractors were killed and another critically wounded in the explosion at the Pembroke oil refinery during routine maintenance of one of the storage tanks.

 

One storage tank was destroyed, and another storage tank was damaged.

 

Both Chevron and the UK Health and Safety Executive, or HSE, agency have launched investigations into the incident.

 

Located in southwest Wales, the Pembroke refinery specializes in the processing of heavy, lower-quality crudes. Announced in March 2011, Chevron is in the process of selling the Pembroke Refinery and related downstream assets to Valero Energy for $1.7 billion.

   AZERBAIJAN

SOCAR Says Design, Survey for Azerbaijan Processing Complex May Take 2 Years and Cost $12-13 Bln

The design and survey work may begin within establishing a new complex on oil and gas in Azerbaijan, as well as the production of petrochemical products in late 2011, SOCAR's senior official said.

 

He said that the preliminary draft of the new complex will be presented to the leadership of the republic soon. Afterwards, it will be sent to the relevant ministries and agencies to get views.

 

"We think that the design work may begin by late 2011," he said. "These are a core project and the choice of licensors. The project involves many processes and the vast majority of them represents the licensing process."

 

He said that the design and survey work may take about two years.

 

The investment required within the construction of the new complex will hit $12-13 billion. The funds, to be invested in building the complex, will be repaid for 6-7 years.

 

A new processing facility will be commissioned in stages and will cover 2018-2020. Primarily, it is planned to commission a gas processing plant with capacity of 10 billion cubic meters, then -- chemical industry. Afterwards, a refinery with a capacity of 10 million tons will be commissioned.

 

The plant plans to process gas from the fields developed by SOCAR alone, gas from the block of fields Azeri-Chirag-Guneshli, and if necessary, gas (SOCAR's share) from the Shah Deniz field. The complex will produce A-92, A-95, A-98 petrol, jet fuel. Diesel fuel will be also produced because demand for diesel is increasing.

 

Such global companies as Technip, Foster Wheeler AG, UOP were involved in the preparation of the feasibility of the new complex.

 

The area of the complex is 1,500 hectares.

   TURKMENISTAN

Turkmen Refinery Reconstructing Cat Cracker

The catalytic cracking unit is under reconstruction at the largest oil refinery in Turkmenbashi, the Turkmen Ministry of Petroleum and Mineral Resources said.

 

The MSCC's catalytic cracking unit is under reconstruction.

 

The whole complex was supplied by ICS.

 

In late April, Turkmen President Gurbanguly Berdimuhamedov signed the document to authorize the Turkmenbashi oil refinery to conduct the necessary technological operations and the planned overhaul.

   MIDDLE EAST / U.S.

Graham Corp Awarded Two Orders Totaling $4.7 Mln

Graham Corp.; a global designer and manufacturer of critical equipment for the oil refining, petrochemical and power industries; including the supply of components and raw materials to nuclear power plants, on June 14 announced that it has been awarded two orders totaling $4.7 million.

 

One of the orders is for a vacuum system for an oil refinery under construction in the Middle East, with delivery planned for Graham's first quarter of fiscal 2013, which ends June 30, 2012. The second order is for a steam surface condenser in a cogeneration plant in the United States, with an expected delivery in Graham's fourth quarter of fiscal 2012, a period ending March 31, 2012.

 

James R. Lines, Graham's President and Chief Executive Officer, commented, "The oil refining markets in the Middle East are expanding, with plans to add refining and petrochemical production capability throughout the region over the next four to five years. We have an excellent reputation for delivering critical services to oil refineries and petrochemical production plants, and this new contract adds to our recent successes on projects at two other refineries now under construction in the region."

 

"Investment in alternative energy facilities in the United States is also active, and we continue to win bids in this growing market as we are successfully expanding our market share. The outlook in all of our markets remains positive and we continue to believe that we are in the early stages of a recovery," added Lines.

    IRAQ

Iraq's Largest Oil Refinery in Beiji Shuts Down after Fire

Production at Iraq's largest oil refinery was halted after a fire caused serious damage to the complex, sources within the company operating the refinery said June 24.

 

Civil defense teams brought the fire under control four hours after it started, sending thick black smoke from the facility located in Beiji, some 200 kilometers north of Baghdad.

 

The cause of the fire was being investigated, according to the sources.

 

The plant was shut down last March after gunmen attacked it, killing four engineers and bombing three production units.

Honeywell Wins North Refineries $9.6 Mln Automation System Contract for Iraq Refinery

Honeywell announced on June 1 that it had been selected by North Refineries Company (NRC) as the main Engineering, Procurement and Construction (EPC) contractor to upgrade the automation systems at its refinery in Baiji, Iraq.

 

The $9.6 million contract for the upgrading of NRC's existing control system will improve operational efficiencies, reliability and safety at the refinery.

 

Honeywell solutions will be used, fully automating the facility and replacing its 30-year-old single loop instrument control system.

 

In addition to improving safety and security at the plant, the new automation investment will allow NRC to maximize productivity, while offering full scalability to support future technology upgrades.

    KUWAIT

Kuwait May Tap Private Investors to Help Pay for $14.5 Billion Refinery

 Kuwait may seek private investors to help build its largest oil refinery after a government council revived the $14.5 billion (4 billion-dinar) project, which stalled two years ago amid political opposition.

 

The Supreme Petroleum Council, the emirate’s highest decision-making body for oil policy, approved construction of the 615,000 barrel-a-day Al-Zour facility, Oil Minister Mohammad al-Busairy said June 28.

 

The council authorized the plan June 27, along with proposals to upgrade two of the country’s three existing refineries so that they can produce cleaner-burning fuels, the minister said. Kuwait is trying to attract more private investment to help pay for costly industrial improvements and infrastructure as part of a 30.8 billion-dinar development strategy to boost energy output and modernize transport links.

 

“The public will own a minority share” in the new facility, and the ministry may also seek a foreign partner, Kamel al-Harami, an independent oil analyst, said. “This is the direction of the Kuwait parliament and government,” he said, echoing a view expressed earlier by some officials.

 

The Gulf nation may require that part of the Al-Zour refinery be reserved for non-government investors, the chairman of state-owned Kuwait Oil Co., Sami al-Rushaid, told reporters in London on June 22. Kuwait suspended the project in March 2009 after opposition lawmakers said the leadership had circumvented the law in awarding contracts with foreign companies without going through the Central Tenders Committee.

 

The upgrade will be a two-phase operation. In its first phase, the new plant would be able to process 300,000 barrels a day of products for the domestic market, according to al-Harami. The second phase, for 315,000 barrels a day, would replace output from Kuwait’s oldest and smallest refinery at Shuaiba, which is planned for closure, and enable the country to be self-sufficient in refined products, the analyst said.

 

Once the Al-Zour facility is fully built, it should also have enough spare capacity to provide products for export, he said. Kuwait, which imports liquefied natural gas to supply its power stations when demand peaks in the summer months, should be able to reduce its imports of LNG and eventually stop them, al- Harami said.

 

The council’s approval of the plant is “a very big step,” said al-Busairy, the oil minister. “We now have to follow all legal procedures to implement the project.”

 

Kuwait awarded construction contracts for the refinery in May 2008 to JGC Corp. (1963) of Japan and to South Korea’s GS Engineering & Construction Corp. (006360), SK Engineering & Construction Co., Daelim Industrial Co. and Hyundai Engineering & Construction Co. Fluor Corp. (FLR), based in Irving, Texas, won a consulting contract. The initial plan called for the refinery to start operating by 2012.

 

The facility may take form as a public shareholding company to expand the role of private investors in the country’s economic development, the state news agency KUNA reported last July, citing the former minister for development, Sheikh Ahmad al-Fahad al-Sabah.

 

“I don’t expect anything will go ahead this year in Kuwait because the political situation is so unstable,” Thad Malesa, an independent energy analyst, said by telephone from Dubai. “Parliament will drag things out, frustrating any partners.”

 

Disputes between Kuwait’s legislative and executive branches have led to government resignations and halted other projects. Lawmakers’ objections contributed to the scrapping of a joint venture with Midland, Michigan-based Dow Chemical Co. (DOW), in December 2008.

 

Kuwait is the fifth-biggest producer in the Organization of Petroleum Exporting Countries, pumping 2.425 million barrels of oil a day in May, according to data compiled by Bloomberg. The country’s current refining capacity is 930,000 barrels a day.

 

The two refineries approved for clean-fuel upgrades, Mina Al-Ahmadi and Mina Abdulla, have respective output capacities of 460,000 and 270,000 barrels a day. The third, at Shuaiba, can process as much as 200,000 barrels a day.

   SAUDI ARABIA

Saudi Aramco May Tender $7 Bln Jizan Refinery in 2Q 2012

State-run Saudi Arabian Oil Co., or Saudi Aramco, may invite bids in the second quarter next year, earlier than planned, for the contract to build a $7 billion refinery at Jizan in the kingdom's southwest that will supply the local market, a person familiar with the matter said June 27.

 

Aramco's original plan was to invite bids for the engineering, procurement and construction contracts by the end of 2012, a source, who declined to be named, told Zawya Dow Jones. The source didn't say why the project schedule was brought forward.

 

The 400,000-barrel-a-day Jizan refinery, to be located on the Red Sea, aims to provide refined products for the domestic market, which is facing rapidly rising demand. The project was initially due to be implemented by the Saudi government as a private sector initiative but, after generating limited interest, was handed over to Aramco.

 

Saudi Arabia, the Middle East's biggest economy, has seen its domestic energy requirements surge in recent years as the government spent oil revenues on new industries and infrastructure to diversify the local economy and to accommodate the kingdom's growing population.

 

Saudi oil minister Ali Naimi said in the past that the Jizan refinery was expected to start operations in the first quarter of 2015.

 

In February, Aramco awarded KBR the front-end engineering and design, or FEED, contract for the project. KBR is also assisting Aramco in overseeing, managing and directing the work-related activities for all phases of the Jizan refinery and marine terminal project.

 

The project is one of several large-scale refineries being developed in the kingdom. Other projects include two 400,000-barrel-a-day export refineries--one at Jubail in the country's east and one at Yanbu in the west.

Hitachi to Supply Compressors and After-Services for Oil and Gas Plants in Saudi Arabia

Hitachi Plant Technologies, Ltd.(President and Representative Director: Toshiaki Higashihara), on June 21, has entered a Corporate Procurement Agreement (CPA) with Saudi Arabian Oil Company to supply compressors and services for oil and gas plants.

 

Hitachi Plant Technologies will also become the fourth company to enter an agreement with Saudi Aramco as a compressor manufacturer, and the first Japanese manufacturer to do so.

 

The Agreement specifies basic terms and conditions to simplify and standardize the contract process when purchasing compressors, and other agreement terms regarding participation of Hitachi Plant Technologies in projects ranging from the basic planning stage of new projects to the development of new compressor technologies. Through this agreement, Hitachi Plant Technologies achieves a stronger business relationship with Saudi Aramco, and expects to increase orders through new compressor design and new demand. It also expects to enhance the compressor technology standards by participating in new technology development projects.

 

In addition, Hitachi Plant Technologies is studying the establishment of after-service locations to service and maintain compressors in Saudi Arabia in FY2011 with a field study started in March 2011. As a result, Hitachi Plant Technologies is looking to expand its maintenance business for compressors shipped to Saudi Aramco through after-service locations soon to be established in Saudi Arabia that will be developed into a future regional manufacturing facility. Furthermore, Hitachi Plant Technologies plans to develop compressor business opportunities with other Gulf Cooperation Council (GCC) countries.

 

Hitachi Plant Technologies plans to increase its compressor business for oil and gas plants aggressively, mainly in the Middle East, Asia, and South America, where future demand lies, and to achieve revenues of 60 billion yen by FY2015. Hitachi Plant Technologies also plans to accelerate its community-based global development through joint ventures with customers and partners, expansion of its service business through product lifecycles, and by handling the outsourcing of the maintenance business.

WORLDWIDE

Shell Global Solutions, KBR Form Hydroprocessing Tech Alliance

KBR and Shell Global Solutions International B.V. on June 21 announced the formation of a new alliance in which KBR will market, sell and provide technology and design packages with Shell Global Solutions on hydroprocessing solutions worldwide.

 

Refiners use hydroprocessing technologies to help meet the most stringent product specifications and emissions legislation, maximizing the value from bottom of the barrel processing, while enjoying the higher unit availability of owner/operator developed technology. With KBR and Shell as leading licensors in the refining industry, this alliance combines the companies' core technology and processing strengths to provide customers with quality and competitive hydroprocessing solutions.

 

The agreement is effective immediately and allows KBR the opportunity to bring Shell's robust technology solutions to clients across the globe.

 

"This agreement is consistent with KBR Technology's growth strategy for our bottom of the barrel refining technologies. The strength of this alliance lies in the synergies between KBR's technology and engineering expertise and Shell's catalyst and operations experience. We look forward to pursuing commercial opportunities for Shell's hydroprocessing technologies immediately," said John Derbyshire, President, KBR Technology.

 

"Shell Global Solutions is committed to its global alliances and to providing customers with cost effective solutions designed according to their needs. Through our alliance with KBR, we are demonstrating our long term commitment to providing high quality, innovative technology to the refining industry," said Dave Clark, General Manager, Process Licensing, Shell Global Solutions International B.V.

 

KBR is a global engineering, construction and services company supporting the energy, hydrocarbon, government services, minerals, civil infrastructure, power, industrial, and commercial markets.

 

Shell Global Solutions is a network of independent technology companies in the Shell Group which provide technical consultancy and licensed technologies for both the Shell Group and third-party customers within the energy industry. This enables customers to improve the capacity and performance of existing units; integrate new process units into existing refineries and petrochemical complexes; incorporate advanced catalyst systems and reactor internals; through to the design of grassroots refineries. Shell Global Solutions is affiliated with Shell's catalyst companies which innovate and sell catalysts through a network that includes Criterion Catalysts & Technologies, Zeolyst International, CRI Catalyst Company and CRI KataLeuna.

 

McIlvaine Company,

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