Refineries UPDATE
November 2011
McIlvaine Company
TABLE OF CONTENTS
PBF Announces Restart of Delaware City Refinery after $450 Mln in Upgrades
NPRA Announces Name Change for January 2012
Calumet Completes Acquisition of Superior Refinery and Boosts Throughput Capacity by 50 Percent
Technip Wins ExxonMobil Contract to Build Base Oil Plant at Baytown Complex
Valero Plans Overhauls at Refineries in L.A., Houston, Louisiana and Tennessee
PBF’s Delaware Refinery Leak Causing Chemical Emissions Fixed
Fluor Wins Alberta’s Redwater Bitumen Refinery FEED Contract
Ramirez Confirms Petrocaribe's 150,000 bpd Refinery Plans
Mexico's Pemex Plans Salamanca Refinery Upgrade in 2012
China Development Bank Backs PdVSA Loan for $15 Bln Abreu e Lima Refinery
Essar Energy Completes Vadinar Shutdown to Begin $1.85 Bln Upgrade and Expansion
Order Flows to Contractors Expected from Blaze at Shell’s Bukom Refinery
Bosnia Refinery Phase 1 Reconstruction Ends
Metso to Supply Automation, Safety Systems for Finland’s Neste Refineries
Petroplus will Include Shutdown to Reconfigure Petit Couronne Refinery
Total Will Realign Downstream and Chemicals Operations
SOCAR to Lay Foundation of Turkey’s Petkim Oil Refinery with Expected Costs of $4.5-$5 Bln
Sapref Plans Restart of Durban Refinery Gasoline Unit by November 6
Uganda Hopes Estimated $4.62 Bln Hoima Refinery will End East African Downstream Monopoly
Bashneft to Invest $1.2 Bln in Refining and Petrochemicals
Kazakhstan to Begin Construction of Three Mini Oil Refineries by 2012
Gulf States Plan $250 Bln in Downstream Oil Sector Projects
Axens to Supply Process Tech for New Iraq Refinery
Kuwait-Sino $9 Bln Petrochemical Complex Contract Signing Projected to 2012
Oman Could Spend up to $1.5 Bln to Increase Sohar Refinery Capacity
Saudi Aramco Will Raise Domestic Refining Output Capacity with New Start-up Plants
Abu Dhabi's IPIC May Spend $6.5 Bln on New Oman, UAE Refineries
PBF Holding Company LLC and Delaware City Refining Company LLC (together "PBF") on October 7 announced the successful restart of the Delaware City petroleum refinery, which was closed down by previous owners in 2009. In June 2010, Delaware City was purchased by PBF, a company owned by Blackstone and First Reserve Corporation, which have collectively undertaken a restart of the facility and full turnaround, leading to the rehiring of nearly 500 employees and up to 250 contractors. Initial operations began in June of 2011 and the refinery is now fully operational.
"The successful restart of the Delaware City Refinery is the result of the collaborative efforts of government, labor and business," said, Thomas D. O'Malley, PBF's Chairman. "Our operations in Delaware are an example of the success that can be achieved when all interested parties work together for a common goal. We are happy to be part of the Delaware community and to contribute to its well being."
Blackstone and First Reserve have lent their expertise and invested $450 million in growth capital to improve the refinery's performance, reliability and reduce carbon dioxide emissions by as much as 35%. A study conducted by members of the Department of Economics at the University of Delaware estimates that the refinery brings approximately 2000 jobs to the state and nearly $100 million in state and local tax revenues.
The Delaware City refinery is a high-conversion heavy crude oil refinery with a processing capacity of 190,000 barrels per day, located on a 5,000 acre site on the shore of the Delaware River. Major process units include a fluid coking unit, a fluid catalytic cracking unit, a hydrocracking unit with a hydrogen plant, a continuous catalytic reformer, an alkylation unit, and several hydrotreating units. The refinery's production is sold in the U.S. Northeast via pipeline, barge, and truck distribution.
National Petrochemical & Refiners Association President Charles T. Drevna announced October 4 that NPRA will change its name in late January to the American Fuel & Petrochemical Manufacturers.
"Our new name will emphasize more than ever what we stand for," Drevna said. He said this includes: "American manufacturing and jobs, proven and reliable products for your life every day, economic and national security, and benefiting consumers."
"The name American Fuel & Petrochemical Manufacturers will better describe who we are, what we do and how we serve the American people," Drevna said. "AFPM will be the new NPRA."
"AFPM will be just as vigorous as NPRA in educating Congress, regulatory officials and the American people about the vital role our members play in American life," Drevna added.
Drevna said that when NPRA becomes AFPM in late January the association will mark the occasion with an event in Washington to discuss energy issues, will launch a more user-friendly website and will do a small amount of advertising to increase public awareness of the new name.
When NPRA becomes AFPM in January it will also adopt a new red, white and blue logo, Drevna said.
The name change in 2012 — the 110th anniversary of the trade association — will be the fourth in its history. It was founded in 1902 as the National Petroleum Association, became the National Petroleum Refiners Association in 1961, and became the National Petrochemical & Refiners Association in 1998. It will remain NPRA until it becomes AFPM in late January.
"We're changing our name for several reasons," Drevna said. "We're proud to be American, and we want everyone who hears or reads our name to know that. We're proud to be high-tech manufacturers, and we want everyone to know that as well."
In addition, Drevna said association members are "proud to manufacture the fuels that keep America moving — gasoline, diesel, jet fuel and others — along with other refined petroleum products. Just as importantly, we manufacture petrochemicals that are building blocks for everything not made of rocks, plants, other living things or metal."
"America became the world's economic leader in the last century by giving American manufacturers the freedom to innovate, grow their businesses, serve the American people, and create jobs for millions of men and women," Drevna said. "We need to do that again."
Calumet Specialty Products Partners, L.P. announced October 3 that it completed the previously announced acquisition ("Superior Acquisition") of the Superior, Wis., refinery and associated operating assets and inventories of Murphy Oil Corporation on September 30, 2011 for aggregate consideration of approximately $442 million, subject to customary post-closing purchase price adjustments. The Superior Assets provide greater scale, geographic diversity and development potential to Calumet's refining business, as Calumet's current total refining throughput capacity will increase by 50% to 135,000 barrels per day.
The Superior refinery produces gasoline, diesel, asphalt, bunker fuel and specialty petroleum products that are marketed in the Midwest region of the United States, including the surrounding border states, and Canada. The Superior Assets include inventories valued at approximately $220 million as of August 31, 2011 and various owned and leased finished product terminals.
Highlights of the Superior Assets include the following:
The Superior Acquisition was financed with the September 2011 issuances of approximately $193 million of Calumet's common units and general partner units and approximately $180 million of Calumet's senior unsecured notes due 2019 and with borrowings of approximately $69 million under Calumet's revolving credit facility.
Technip announced October 12 that it has been awarded a contract for a specialty lubricant base stock facility that will be built at ExxonMobil's integrated refinery and chemical plant complex in Baytown, Texas.
The project will provide a new synthetic lubricant base stock plant, consisting of the process unit, associated pipe rack and product tanks, as well as pumping and firewater system.
The contract covers project management, detailed engineering, procurement, and construction.
Technip's operating center in Houston, Texas will execute this contract, which is scheduled to be completed in 2013.
Leading independent U.S. refiner Valero Energy Corp said overhauls were planned at refineries in Houston, Los Angeles, Louisiana and Tennessee in the first quarter of 2012, according to a statement issued on November 1.
Valero plans crude unit overhauls at its Los Angeles-area, Memphis, Tennessee, and New Orleans-area refineries during the first quarter, the company said. Valero also plans a gasoline unit overhaul at its Houston refinery in February, according to the statement.
The crude distillation unit and delayed coking unit will be shut for four weeks' work at the company's 78,000 barrel per day (bpd) Los Angeles-area refinery in Wilmington, California, in January, Valero said. A crude unit and coker will also be shut at the 205,000 bpd St. Charles refinery in Norco, Louisiana for 10 weeks beginning in February. Beginning in the same month, the 65,000 bpd gasoline-producing fluidic catalytic cracking unit will be shut for seven weeks of work at the 88,000 bpd Houston refinery, In March, Valero will take down a CDU and coker at the 180,000 bpd Memphis refinery.
A CDU does the initial refining of crude oil coming into a refinery, providing feedstock to all other units in the refinery. A coker increases the amount of motor fuel made from a barrel of crude oil and produces petroleum coke, a coal substitute.
The leak that has been causing higher than usual hydrogen cyanide emissions at the Delaware City refinery since October 2 has been fixed, PBF Energy spokesperson Mike Gayda said October 25.
The refinery began filing reports with the National Response Center earlier this month when one of their boilers cracked and had to be shut down for repair.
This caused up to 200 pounds of the chemical to be released each day.
“It is unusual for us to emit anything but trace levels,” Gayda said.
Since the refinery does not have permits to emit this much hydrogen cyanide, they have to file the reports, Gayda said.
“Based on an analysis of the emissions, DNREC does not consider there to be a threat to public health,” said Michael Globetti, a spokesperson for the Department of Natural Resources and Environmental Control. “Even at its source within the refinery, the HCN now being released is exponentially less than the permissible threshold for exposure allowed under federal law."
In the most recent report filed October 23, the unidentified caller told the NRC that a CO Boiler on the FCC unit blew a hole in the line causing a release of hydrogen cyanide and that the unit has been shut down for repair.
A low level concentration that is about 10 parts per million was emitted into the air, Gayda said.
He compared this to a drop of soy sauce in a pot of water.
“The highest concentration of HCN was projected to occur approximately three-fourths of a mile from the source at a concentration of 3 parts per billion,” Globetti said. “By comparison, the Occupational Safety and Health Administration’s permissible exposure level to HCN without adverse effects is 10 parts per million.”
On October 2, the first report submitted to the NRC said that the “CO Boiler on the FCC united blew a hole in the line causing a release of carbon sulfide and hydrogen cyanide into the air,” emitting only a trace amount of the chemicals.
Gayda said that there was no “high level” and that a person can work all day in the area with out being affected.
He said that other facilities emit much greater levels of hydrogen cyanide on a routine basis.
The Comprehensive Environmental Response, Compensation and Liability Act requires that refineries have to notify the NRC if they release hazardous substances in excess of reportable amounts.
DNREC expects a carbon monoxide boiler whose outage at the refinery led to the HCN release to be back in operation within days, following repairs, Globetti said. The boiler outage will be investigated in accordance with DNREC's standard practices.
The Delaware City refinery reopened October 7 after being closed for nearly two years.
The refinery is a high conversion heavy crude oil refinery, with capabilities of processing 190,000 barrels per day.
Fluor Corporation announced October 6 that it was awarded a contract by North West Redwater Partnership to provide front-end engineering and design (FEED) services for a new refinery project in Alberta, Canada. Fluor booked the undisclosed contract value in the third quarter of 2011.
Under the contract, Fluor will be responsible for two sections of the refinery that will upgrade bitumen, separating components and removing impurities, and will also re-evaluate the FEED deliverables based on a revised crude slate.
"The Redwater bitumen refinery will feature state-of-the-art controls to minimize its environmental footprint while providing much needed additional energy resources for North America," said Peter Oosterveer, president of Fluor's Energy & Chemicals Group. "Fluor looks forward to providing FEED services to the North West Redwater Partnership as the important Canadian energy sector continues to expand."
The North West Redwater Partnership is a joint venture between North West Upgrading, Inc. and Canadian Natural Resources Limited.
The Redwater refinery, which will be located north of Edmonton, will use oil sands bitumen to produce diesel, diluent, naphtha and other related products. The refinery will incorporate gasification and carbon capture and storage to reduce its environmental impact.
The engineering project will be executed by Fluor's offices in Calgary, Houston and New Delhi.
At a Petrocaribe ministerial summit in the Nicaraguan capital of Managua October 24 it was announced that the Venezuelan-backed Petrocaribe oil scheme is planning to build new oil refineries in Cuba and in Nicaragua. It was confirmed by Venezuela's Minister of Energy and Oil, and head of PDVSA, the state-owned oil company, Rafael Ramirez.
Speaking at the opening session of the summit, Ramirez specified that Petrocaribe would construct the refinery, to be named El Supremo Sueno de Bolivar, on Nicaragua's Pacific coast. The refinery will have a capacity of some 150,000 barrels per day. Petrocaribe provides subsidized Venezuelan oil to its 18 member states through Central America and the Caribbean, including Nicaragua, Cuba, Jamaica, the Dominican Republic, Haiti, and Guatemala. Ramirez also noted that Petrocaribe has supported an increase in electricity generation in member countries including Nicaragua, which has gained 291MV of generation capacity through Petrocaribe support.
The refinery project appears to be an attempt to kick-start an already planned facility whose first construction phases were inaugurated in July 2007, but stalled. The prospect is attractive to both Venezuela and Nicaragua. For the former, because of a shortages in its own refining capacity, and because Nicaragua as a fellow member of the ALBA group of left-wing countries is a key strategic ally. For Nicaragua, which lacks adequate refining capacity, the attractions are clear. However, whether or not the construction of the facility will go ahead within the short-to-medium term is considered doubtful.
Pronouncements on grandiose projects are a feature of Petrocaribe summits, but past evidence is that such projects do not always get off the ground. In that context, the prognosis for a rapid start to construction on the Nicaraguan refinery is probably not good, especially given that Venezuelan financial backing for the scheme could well be stretched between now and elections in that country which could take place as soon as October 2012.
Mexico's state oil monopoly Pemex will start upgrading its Salamanca refinery next year in an effort to cut down on gasoline imports, which now account for around 40 percent of national demand.
"We hope to start the reconfiguration of the Salamanca refinery during the first half of 2012," Pemex official Ignacio Aguilar told a conference call with investors October 28 after the company reported a $5.8 billion third quarter loss.
The Salamanca refinery, located in central Mexico, is the fourth largest in the country, with a processing capacity of 245,000 barrels per day (bpd).
Mexico's six refineries process a total of 1.54 million bpd not including the added output from the recently completed expansion of the Minatitlan refinery.
The Minatitlan upgrade increased capacity there to 240,000 bpd, a jump of more than 150,000 bpd, Aguilar said.
Salamanca's reconfiguration plan aims to boost diesel and gasoline production, while reducing fuel oil output.
Announced in 2009, the plan includes the construction of a delayed coking plant with 44,000 bpd capacity and hydro-desulfurization plants, at a cost of more than $3 billion, according to information from Pemex.
Pemex officials hope to cut gasoline imports by 6 percent by 2016 with increased refining capacity to meet growing demand. The state oil monopoly also plans to build a new refinery in the central Mexican state of Hidalgo that would process 300,000 bpd and that is slated to begin operating in 2016.
A Chinese government-backed bank will provide loan guarantees needed by Venezuela's government-run oil company, Petroleos de Venezuela SA, to participate in construction of an oil refinery in Brazil, according to a person familiar with the transaction.
The O Estado de Sao Paulo newspaper reported the China Development Bank will provide 75% of the bank guarantees needed by PdVSA to participate in the $15 billion Abreu e Lima refinery to be built in Brazil's Pernambuco state in partnership with Brazil's government-run oil company, Petroleo Brasileiro, SA.
The person said the Chinese bank would participate as guarantor, but declined to provide further details.
The 230,000-barrel-a-day joint venture deal was initially struck in March 2008 but has been bogged down by delays and bickering, with both sides accusing the other of dragging its feet. Most recently on Sept. 29, Venezuelan President Hugo Chavez criticized Petrobras for stalling, saying that while his government has the required financing ready, certain elements within the Brazilian company were unwilling to let the project go through.
On October 3, Petrobras said that BNDES had approved the guarantors for the project, although the appropriate documentation still needed to be presented. BNDES also said on Sept. 29 that it received guarantees from PdVSA but was still evaluating paperwork and did not give a time frame for final approval of financing. Lacking guarantees from PdVSA, Petrobras had earlier this year pledged to go through with the project with or without Venezuelan participation.
PdVSA, which is facing a growing debt load and cash-flow problems as large amounts of its revenue get siphoned off for government social programs, is supposed to be responsible for 40% of the loan, worth $5.7 billion (10 billion Brazilian reais) from the BNDES. Petrobras is responsible for the other 60% of the loan.
According to the Estado newspaper, the China Development Bank stepped in after a previous financing scheme for the project backed by BNDES fell apart because of concerns about the consequences of the European financial crisis on Portugal's Banco Espirito Santo SA (BES.LB), or BES. As a result, Brazil's government-run bank, Banco do Brasil SA (BBAS3.BR, BDORY), withdrew its guarantees, and BES's portion of the guarantees fell to just 25%.
In turning to China for the loan guarantees, the Venezuela government is using a relationship that has rapidly strengthened in recent years as both countries work together on development projects ranging from the energy and mining sectors to housing. Chavez, who is looking to distance himself from his ideological foe, the U.S., met with Chinese leaders in Caracas in mid-September, where both parties signed a $4 billion extension to a bilateral development fund, which Venezuela says now totals around $32 billion. Venezuela says it has 137 development projects slated with China between 2013 and 2030.
In return for the capital, Chavez has pledged large sums of oil shipments to China, which has been increasing its presence across Latin America and Africa to lock in access to natural resources to fuel its fast-growing economy. Though Venezuelan officials have given various conflicting numbers of how much oil is being sent to China, most recently the Oil Ministry said it is sending 400,000 barrels a day, with plans to raise that amount to 1 million barrels daily over the next year or two. Analysts say, however, that target may be overly optimistic due to high transportation costs and concerns over Venezuela's plans to boost domestic oil production in the upcoming years.
Venezuela, which was recently certified by the Organization of Petroleum Exporting Countries for having the world's largest crude deposits, aims to raise output to 4 million barrels a day by 2014 from just under 3 million barrels a day currently.
Essar Energy has completed a 35-day shutdown of its Vadinar oil refinery in Gujarat state, India, in order to commence upgrades at the facility which are due to be completed by the year-end.
The shutdown was undertaken to tie in new units for the phase-one expansion of the facility and for the revamp of three major units related to the expansion. These are the crude oil distillation unit, the fluid catalytic cracker, and the sulfur recovery unit.
The Vadinar refinery phase-one expansion plan aims to increase refinery capacity from 300,000 b/d to 375,000 b/d and increase the complexity of the facility from level 6.1 to 11.8, allowing for processing of a larger percentage of heavy and ultra heavy crude oils into value-added products. The Vadinar phase-one upgrade project has a capital cost of US$1.85 billion and is due for mechanical completion by end-2011 with complete unit ramp-up and stabilization anticipated by March 2012.
The upgrades to the Vadinar refinery are aimed at boosting the facility's gross refining margins while increasing scale to increase the facility's competitiveness as an oil product supplier to global markets, particularly as Reliance Industries (RIL) 33-million-t/y Jamnagar refining, also in Gujarat state, has a Nelson complexity rating of 11.3 and Reliance Petroleum Limited (RPL)'s other Jamnagar facility has a huge 14.0 complexity rating. The expansion of Vadinar supports the government's policy to consolidate Gujarat's position as an oil refining hub, thereby increasing competition against Singapore.
While the expanded facility will primarily serve overseas markets given the more favorable sales margins, private refiners have also started supplying some oil products on a wholesale basis to India's state oil marketing companies during times of market tightness, reducing their own demand risks. Going forward, Essar Energy wants to carry out additional optimization efforts at Vadinar by converting the obsolete visbreaker into a crude oil distillation unit and optimizing supporting infrastructure, which is due to increase installed capacity to 405,000 b/d by September 2012.
Singapore contractors like Rotary, PEC, OKP, Hai Leck and Tiong Woon, to name just a few, will likely see some order flows following the blaze at Shell’s refinery at Bukom Island in Singapore, although in the short term, those doing maintenance work there will be affected by the refinery's shutdown, says DMG & Partners Research October 7.
The 34-hour fire at Shell which started at a pumphouse there September 28 was believed to be accidental and caused by a maintenance job.
'In the next few months, the contractors providing civil engineering, construction, equipment rental and structural steel works services will likely see some order flows... however, in the near term those doing maintenance works for the oil major will be affected with the shutdown, which will likely last at least a month,' the research firm said.
'The party found responsible may face more dire consequences... we contacted some companies to obtain more insights but they have refused to comment,' said Selena Leong and Terence Wong, the authors of the research paper.
'But the company performing the maintenance job that potentially sparked off the fire may suffer loss of status as Shell's qualified contractor, in addition to a blemished safety track record and reputational loss,' DMG said.
'This may result in loss of future business opportunities with the oil majors.'
DMG said that as there are only a handful of listed players providing maintenance services to the oil and gas sector here, it believed that most of the contractors cited, including others like Hiap Seng Engineering, Mun Siong Engineering, Tat Hong Holdings, TTJ Holdings and Yongnam Holdings, 'have some exposure to Shell'.
There will be some short-term pain in that 'companies providing maintenance services to the affected units of the Bukom refinery would likely suffer a reduction in their maintenance revenue, until the refinery is up and operating normally'.
But in the longer term, there will be a positive impact from rebuilding the affected units, DMG said.
'Although the extent of rebuilding ... is not known as yet, we think this incident may bring new business opportunities to companies providing civil engineering, construction, equipment rental and structural steel works services to the oil majors,' it said.
'Some of the beneficiaries of the rebuilding effort may include Hai Leck, Hiap Seng Engineering, Mun Siong Engineering, OKP, PEC, Rotary, Tat Hong, Tiong Woon, TTJ Holdings and Yongnam Holdings,' DMG added.
The Deputy Chairman of Vnesheconombank Anatoly Ballo participated in launching the new line of the Brod Refinery in the Serb Republic (Bosnia and Herzegovina).
Vnesheconombank participated in funding the refinery’s reconstruction. The refinery was damaged in the years of the military conflict. OJSC Zarubezhneft has been rebuilding the refinery since autumn of 2007. At present, the total amount of credit lines provided by the Bank is 328.4 mln euros.
After launching the second line, the refinery’s first stage of reconstruction ended. The new production line will make it possible to increase the refinery’s refining capacity from 1.2 mln to 3 mln tons per year. In the coming years (up to 2014) the Brod refinery is expected to move to the production of all petroleum products in accordance with Euro 5 standard. During the second stage the bulk of package equipment is to be supplied from the Russian Federation.
Also in the attendance at the ceremony were President of the Republic Milorad Dodik, Prime Minister Alexander Dzhombich, Member of the Presidential Committee of Bosnia and Herzegovina Suleiman Tikhich, heads of ministries and agencies of the Serb Republic (Bosnia and Herzegovina) and from Russia were Ambassador to Bosnia and Herzegovina Alexander Botsan-Kharchenko and OJSC Zarubezhneft Director General Nikolai Bunich.
Speaking at the ceremony Anatoly Ballo said: "This project is an excellent example of Vnesheconombank’s efforts to support Russian leading companies’ quality services exports. Four years ago it was impossible to imagine that such an advanced refinery complex would be built to replace the dilapidated old refinery".
Serbia’s President Milord Dodik stressed that we achieved the results that many considered unrealistic four years ago. And this happened due to cooperation with such reliable Russian partners as OJSC Zarubezhneft and Vnesheconombank that acted as the project’s main investor.
In accordance with the Memorandum on the Bank’s Financial Policies promotion of industrial exports and services is one of Vnesheconombank’s main lines of activity.
Finland’s Neste Oil will invest approximately 60 million euros in 2012 to improve safety at its Porvoo and Naantali refineries.
Investments will focus on further improving process, fire, and personnel safety by modernizing process automation and automated safety systems. The latter are autonomous systems that are capable of automatically taking over control of a process in the event of equipment malfunction, for example, and ensuring that operations remain safe at all times. Two process furnaces will also be replaced at Naantali, and new, safer office space for personnel will be built at Porvoo and the fire water system improved.
"Safety is a very important issue for us and one that we give constant priority to," says Jonas Liimatta, Neste Oil's Manager, Process, Occupational and Fire Safety. "It is very important that we have modern and efficient systems in place to ensure safe operations. We also give extensive and proactive safety training both to our own personnel and our contractors as part of our commitment to creating an industry-leading safety mindset at Neste Oil."
Neste Oil's new automation and safety systems will be supplied by Finnish-based Metso, with which Neste Oil has recently signed a new framework contract.
"We have worked closely with Metso in developing our systems and now continue doing so," says Liimatta.
Petroplus Holdings AG on October 20 announced that it intends to suspend next year's turnaround of the base oil complex at the Petit Couronne refinery in France, and is considering a reconfiguration of the refinery which would include a shutdown of the base oil complex.
Petroplus on informed the refinery employees that it intends to commence a formal information and consultation process related to this reconfiguration, as required under French law, before the end of the year. This potential reconfiguration would impact approximately 120 out of a total of 550 employees at the site.
Jean-Paul Vettier, Petroplus' Chief Executive Officer, said, "We continue to improve the performance of our refineries through our 3-Year Improvement Plan. But it has become clear that the Petit Couronne refinery needs more structural changes to significantly improve its competitiveness in a very difficult refining market. The reconfiguration would be a broad action plan which would result in improved reliability and cost structure, in addition to reduced working capital and capital expenditure needs. The clear target is to drastically reduce the break-even point of the refinery in the coming years."
Petroplus plans to provide further updates as this process continues.
Total is giving a new dynamic to its strategy for developing industrial and commercial activities in its refining, marketing and chemicals operations. This is in response to profound changes in its business and competitive environment and shall be accomplished through a reorganization that will create two new divisions.
The plan does not entail employee outplacement or layoffs.
The new Refining & Chemicals division will be a major production hub combining all of Total's refining and petrochemical operations, including specialty chemicals (Atotech, Bostik, Hutchinson) and fertilizers (GPN, Rosier). The division will be headquartered in Brussels and Paris, with senior management based in Brussels.
The new Supply & Marketing division will be dedicated to the global supply and marketing of petroleum products.
As a result, Total's current Downstream and Chemicals operations will be realigned to focus on two core competencies - production and marketing - in order to reinforce existing activities and strengthen prospects for growth.
"The proposed reorganization does not change Total's overall scope. We remain fully integrated, from oil and gas exploration to the manufacturing and sale of refined products and plastics. What it will do is allow us to better capture all opportunities arising from our integrated business model," said Christophe de Margerie, Chairman and CEO of Total. "It will also give our production and marketing activities a clearer vision, allowing them to improve their performance in mature markets and address specific challenges as they seek to expand, especially in growth markets. The changes concern only the organization of our production and marketing activities, and will not result in an outplacement plan or layoffs."
Integrating refining and petrochemical operations, which employ similar industrial processes, has a two-fold objective. The first is to strengthen Total's production positions in Europe through increasing value of products (raw materials, intermediates, etc.), a coherent overview of development plans and enhancing energy efficiency and reliability at production units, for instance through joint management of major turnarounds. The second is to develop large-scale integrated projects to more effectively meet demand in growth markets.
Whether integrated or not, all Refining & Chemicals sites will benefit from the internal merger, which will bring competencies, expertise, innovation capabilities and R&D resources under the same umbrella.
In an environment that is increasingly competitive, the creation of a Supply & Marketing division will shape a more aggressive organization able to pursue selective growth in Western Europe's mature markets and gain new positions in growth markets in Africa, the Middle East, the Asia-Pacific region, and North and South America.
The State Oil Company of Azerbaijan (SOCAR) by late October, plans to lay the foundation of a new oil refinery in Turkey to meet the Turkish Petkim Petrochemical Complex's needs of raw materials, SOCAR President Rovnag Abdullayev told journalists on October 5. SOCAR-Turcas is co-owner of the complex.
"At present, land work is currently underway. The process of preparing a feasibility study has been completed and negotiations are underway with the banks on financing the construction of the new oil refinery," Abdullayev said.
He said the launch of the first installation at the oil refinery will be possible within four years after the start of construction work.
The volume of investments needed to build the oil refinery will hit $4.5-$5 billion, a board member of SOCAR-Turcas group of companies Kenan Yavuz told Trend earlier.
The total capacity of the oil refinery will reach ten million tons. Oil products produced at the plant will be used to meet Petkim and the Turkish domestic market's needs.
Total investments in the construction of the oil refinery and the development of the energy sector and port logistics center will amount to $6 billion by 2015, 5.7 billion of which will be invested by SOCAR-Turcas.
Yavuz said $50 million will be invested in the development of the port logistics center. After 2015, within the second phase of the program of the petrochemical complex development, it is planned to increase production capacity from the current three million tons to six million tons.
The development program aims to achieve sales at the volume of $15 billion by 2015, and $20 billion by 2020.
The alliance between SOCAR and Turcas Petrol /Injaz Projects won a tender in 2008 to buy a 51-percent stake in chemical projects, offering $2.04 billion. Now Turkey imports 70-75 percent of its needed chemical products. Investments in the development of Petkim will reduce its imports by 30 percent.
The Petkim Petrokimya Holding manufactures plastic packaging, fabric, PVC and detergents. It is the only Turkish producer of such products and exports a quarter of its production.
South African Petroleum Refineries Ltd., a venture of Royal Dutch Shell Plc and BP Plc, plans to start a gasoline unit at its Durban refinery by November 6 following extended repairs.
“We are still on track to complete the repairs by the end of next week” at the fluidized catalytic cracking unit, Margaret Rowe, a company spokeswoman, said in an e-mailed response to questions. “The unit will be restarted thereafter.”
Planned maintenance at the refinery, which has the capacity to process 180,000 barrels of crude a day, started on August 17 for about six weeks, the refiner said at the time. Three processing units would be affected by the work, it said.
Sapref, as the company is known, was raising production following the maintenance, it said on October 14. It expected maximum capacity within days, they said a week later.
“During the process of ramping up to full capacity after the planned turnaround, a problem was encountered on one of the process units,” Sapref said in a statement on October 27. “This has necessitated the unit being taken down for repairs which are expected to take about two weeks,” it said.
“Apart from the FCCU, which is down for repairs, the refinery is running near normal capacity,” Rowe said October 31.
Uganda's President Yoweri Museveni has said that the new Hoima refinery will come onstream in 2014. Although political deadlock has essentially brought the country's burgeoning oil sector to halt, it is a clear sign that the government remains committed to the project. The construction of a Ugandan oil refinery would bring Mombasa's east-African downstream monopoly to an end.
President Museveni, said during a speech to a ruling party retreat in Jinja that 'the first oil to be refined [in Uganda] will be in the year 2014', according to an October 17 Reuters report. The refinery would be located in Kabale-Buseruka, in the Hoima district which borders Lake Albert, and is expected to reach peak capacity of 200,000-250,000 barrels a day (b/d). The plant would be supplied by the country's Lake Albert fields, which are to be developed by a consortium of foreign oil companies.
Estimates put the full cost of the refinery at US$2.05bn and its accompanying processing plant at US$2.57bn, bringing the total for the complex to US$4.62bn. In November 2010, the government announced that construction would begin in 2012. It is doubtful the 2014 completion date will be met as it is more likely the refinery will come onstream around late 2015-2016, but this latest declaration is a clear sign that the project has strong political backing and is moving forward.
First commercial oil discoveries in Uganda were made by British independent Tullow Oil in 2006 - in the Albertine basin along the border with the Democratic Republic of Congo (DRC). Tullow has said that the region could hold as much as 2.5bn barrels (bbl) of oil, although the government claims that the basin could hold as much as 6bn bbl because 40% of the acreage remains unexplored. However, this potential remains untapped following a series of tax rows surrounding Tullow's stake in the blocks. The British independent has tried to sell 66% of its stake in blocks 1, 2 and 3A to French major Total and the China National Offshore Oil Corporation (CNC), which would both take a 33% stake. The deal would be worth US$2.9bn and would pave the way for US$10bn of investment in the country's oil industry, including the development of the Lake Albert oil fields and construction of the refinery and transport infrastructure.
The government is actively pushing for the facility to be built in a bid to satisfy domestic demand, which is currently about 20,000-25,000b/d. In addition to freeing the country from its import-dependence, the refinery would allow Uganda to see gains from more valuable refined products, instead of just crude oil. The refinery is likely to start production at around 20,000b/d before capacity increases rapidly to 60,000b/d and reaches its peak at 200,000b/d.
Despite these setbacks, India's Essar Oil , which owns a 50% stake in Kenya's only refinery, has approached the Ugandan government to form a joint venture (JV) to help build the Hoima refinery and a products export pipeline to Kenya. This puts the 80,000b/d Mombasa refinery, which has thus far been the region's only refinery, in a difficult position. The plant is already set to lose its monopoly on the domestic market as Kenyan fuels marketers will be allowed to purchase feedstock from international markets starting in January 2012.
In addition to
Uganda and refineries from outside the region, the Mombasa refinery is likely to
face competition from a raft of proposed new refineries across East Africa.
These include: a 200,000b/d project in Mauritius; Tanzania's 200,000b/d Kisiju
plant; Mozambique's 300,000b/d Nacala-a-Velha and 350,000b/d Maputo refineries;
and South Sudan's 100,000b/d Gemeza and 50,000b/d Akon projects. Even within
Kenya, competition is set to grow with the proposed 120,000b/d Lamu plant.
|
REFINING UGANDA |
||||||
|
Country |
Name |
Location |
Capacity (b/d) |
Owner |
Cost (US$/bbl) |
Completion Date |
|
Kenya |
Lamu |
Lamu Island |
120,000 |
na |
20,833 |
na |
|
Mauritius |
Mauritius |
Mauritius |
200,000 |
Mangalore Refinery and Petrochemicals Limited |
10,000 |
2015 |
|
Mozambique |
Maputo |
Maputo |
350,000 |
OilMoz |
22,857 |
2013 |
|
Mozambique |
Nacala-a-Velha |
Ampula Province |
300,000 |
Ayr Logistics |
16,667 |
2015 |
|
South Sudan |
Gemeza |
Central Equatoria State |
100,000 |
na |
na |
na |
|
South Sudan |
Akon |
Warap State |
50,000 |
na |
36,000 |
na |
|
Tanzania |
Kisiju |
Dar es Salaam |
200,000 |
Noor Oil and Ind ustrial Technology Consortium |
30,000 |
2013 |
|
Uganda |
Kabale-Buseruka |
Hoima District |
200,000 |
Essar approached the government to form a JV |
23,000 |
2016 |
|
Source: BMI Global Refining Database |
Essar has committed KES90bn (US$0.96bn) for an upgrade of the low-complexity Mombasa facility. The plant has a nameplate capacity of 80,000b/d but a utilization rate of only 40%, which corresponds to a daily output of 32,000b/d. This meets 43% of domestic consumption, far short of the 60% the government expects. The upgrade would raise production to 80,000b/d and increase the plant's white-product yield. Additionally, with no upstream discoveries in Kenya, the plant could only survive if South Sudan fails to establish its own greenfield refineries which would need foreign investors that could be rebuked by its unattractive business environment.
Bashneft plans to invest US$1.2 Bln (35 billion rubles) over five years in oil refining and petrochemicals, a spokesman for the oil company told Interfax.
Bashneft plans to invest about 19 billion rubles in raising product yield from crude and production of light oil products; 9.7 billion rubles in improving the quality of motor fuel to meet the Euro 5 standard; and 6.4 billion rubles in production development and "reduction of costs and fuel consumption," the spokesman said.
"The general plan for the development of Bashneft's oil refining and petrochemical businesses is scheduled to be approved in November 2011," he said.
The largest amount of investment - 16.2 billion rubles - will go into the Novoil oil refinery in Novoufimsk; 9.5 billion rubles is earmarked for the modernization of the Ufa Oil Refinery; and 1.7 billion rubles will be invested in Ufaneftekhim.
The relatively small amount of investment in the modernization of Ufaneftekhim is due to the fact that this plant already has an oil conversion ratio of 95%, the spokesman said.
Bashneft will finance the modernization of the three oil refineries according to the schedule for each project. "All the projects calls for the construction of new installations, and consequently the delivery and assembly of new equipment," the spokesman said.
Novoil will get 7.3 billion rubles in 2011-2012 for the construction of a hydrogen plant and a complex of units for sulfuric acid alkylation and regeneration of spent sulfuric acid. The construction of a hydrocracking facility Novoil in 2011-2016 will cost 8.9 billion rubles.
In addition, in 2013 the Novoufimsk refinery will launch a short-cycle hydrogen gas absorption unit to produce highly pure hydrogen at a cost of 700 million rubles.
At the Ufa refinery, the company plans to invest 1.2 billion rubles in the construction of a gasoline hydrotreating unit in 2011-2012, and 7.6 billion rubles in the construction of a delayed coking unit in 2011-2014.
At Ufaneftekhim, Bashneft is carrying out a project in 2011-2012 to expand the capacity of delayed coking unit, and will upgrade a number of units, including hydrotreating at a cost of 1.1 billion rubles.
Ufaneftekhim plans to launch a new gasoline demercaptanization unit in 2014 at a cost of 600 million rubles.
Implementing the planned strategy for oil refining will enable Bashneft to increase its overall oil conversion ratio to 94.7% by 2016, and increase the yield of light oil products to 73% (with 49% Bashkir oil in the crude), the spokesman said.
The construction of three mini oil refineries will begin in the south Kazakhstan region of Zhambyl in 2012, a source for the Kazakh Oil and Gas Ministry told Trend on October 18. Building will take place in the Bayzak, Shu and Merke districts.
In early 2011, the first mini oil refinery worth three billion tenge ($ 1 - 147.7 tenge) was launched in the region implemented by the LLP Amangeldy Gas Processing Plant.
Plant processing capacity is more than 500 tons of raw material per day which is equivalent to an output of 80 to100 tons of gasoline, 60 tons of kerosene, 120 tons of diesel fuel and 270 tons of fuel oil. At the same time the plant works on local raw material from the Amangeldy gas condensate field or the Kumkol field next to Kyzylorda region.
According to the Kazakh ministry source, an area has been already allocated for the construction of two new mini oil refineries and this means the volume of finished products will hit one million from 500,000 tons per year. The Russian-Kazakh joint venture will deal with the construction in the Shu district.
Kazakhstan imports about 30 per cent of high-octane gasoline from neighboring Russia as the three existing oil refineries do not cover its domestic market's needs in high-octane gasoline.
Recently the Kazakh Oil and Gas minister, Sauat Mynbayev, said that due to demand he hoped to build a fourth oil refinery in 2019.
According to official statistics, the country currently has 32 mini oil refineries, but most of them lost their licenses because of poor quality products. However, the total production of mini oil refineries in Kazakhstan is about 28,000 tons of motor and 365,000 tons of diesel fuel per year. And that is less than one per cent and about eight per cent, respectively, of total production.
Iraq is driving to build new oil refineries to increase capacity by 740,000 barrels per day as its postwar economy swells, part of a multibillion-dollar program under way across the Persian Gulf region.
The Organization of Arab Petroleum Exporting Countries reported in June that Arab countries' refining capacity is expected to increase by 5 million bpd to 12.4 million in the next three years.
More than half the refineries in the region were built before the 1990s. "So refiners have had to work hard to keep up with higher global emission standards," the Middle East Economic Digest reported.
"They are also attempting to refine heavier crudes, which will account for an increasingly bigger share of production over time."
Rapidly growing populations and rising domestic demand for refined products are far outstripping the refining capabilities of these countries, the largest crude oil-producing region in the world.
This is particularly true in Iraq, where antiquated war-battered oil industry infrastructure and a serious security problem combine to form a major threat to national reconstruction.
The extent of the security dangers were illustrated by bombings that knocked out the Baiji refinery near Baghdad, with a capacity of 150,000 bpd, in February. Other refineries have also been attacked by insurgents.
The refinery expansion program is intended to reverse the global trend of having the main downstream sectors in areas of high consumption, such as the United States, Europe and Asia.
Much of the additional refining capacity will be in the gulf region, led by Saudi Arabia, the United Arab Emirates and Kuwait.
"With the huge program of investments in new refineries, upgrades and expansions, the gulf states are set to capture more value from their hydrocarbon resources," MEED reported.
"The projects will simultaneously help to cut the region's dependence on imported refined products and boost exports."
Plans to increase Iran's refining capacity are based largely on upgrading and expanding existing plants. But these are likely to be impeded because international economic sanctions imposed by the United Nations in June 2010 have scared off potential foreign investors.
Iraq's 10 existing refineries have a combined capacity of more than 900,000 bpd but actual production is usually as much as 40 percent below that.
Baghdad's master plan unveiled in 2010 was to build four refineries, costing $23 billion, at Kirkuk in the north, Karbala in central Iraq, Daura and Nasiriyah in the south. But in April the government announced plans for another three refineries, each with a capacity of 50,000 bpd.
The largest facility, costing $8 billion, will be at Nasiriyah, with a capacity of 300,000 bpd.
Like other new refineries planned across the region, Nasiriyah will include a hydrocracker unit, that breaks down the complex carbon molecules in crude oil to produce more light and medium distillates for which there is growing global demand.
The Baiji, Basra and Daura refineries are being upgraded with cracker units.
Production of light "sweet" crude, like that produced by Libya and West Africa and widely sought in the United States and Europe, is likely to decline soon.
That will leave refineries to handle heavier crude that need much more processing to produce products like jet fuel, diesel and high-grade gasoline.
The region's older refineries don't have this capability and cannot meet the domestic demand for refined products, which is growing at a rate of 6 percent a year in some Middle Eastern countries.
MEED reports that many of the new refineries planned in the Persian Gulf will be able to process heavy crude, "a key consideration given that oil will become heavier as firms have to drill deeper for it."
The gulf states have a combined refining capacity of 6.25 million bpd through crude distillation units the first step in the refining process.
All told, MEED says, "there is $250 billion worth of projects planned or under way in the gulf's downstream oil sector."
Of these, Saudi Arabia has projects worth $60 billion, the most ambitious program in the region. That includes a $10 billion refining and petrochemical complex at Rabigh, a 50-50 venture between state-owned Aramco and Japan's Sumitomo Chemicals.
The kingdom plans to add another 1.2 million bpd of CDU capacity by 2016 at plants in Jubail, Yanbu and Jizzan, each with a capacity of 400,000 bpd.
The State Company for Oil Projects (SCOP), part of the Iraqi Ministry of Oil, has awarded Axens the Basic Design and License contracts for the construction of the new refinery in Nassiriya, Iraq. Axens will supply the following process technologies for the refinery:
The refinery will have a capacity of 300,000 BPSD of domestic crude oil and will deliver high quality products mainly for the domestic market.
The contract for the mega Kuwait-Sino petrochemical project will be signed mid 2012, the Kuwait Petrochemical Industries Company (PIC)-assigned Managing Director of the project Hadi Abul announced. In an interview published in the PIC bulletin, Abul said the project would start production with the advent of 2015. The petrochemical complex is a part of an ambitious US$9 billion-joint venture with China Petroleum and Chemical Corporation (Sinopec).
The ambition plan also includes a refinery that would help take Kuwait's oil exports to China up to over 500,000 barrel per day.
Oman plans to boost capacity at its Sohar refinery by up to 50 percent by 2016 to satisfy its own rapidly rising fuel demand, the chief executive of Oman Oil Refineries and Petroleum Industries Company (Orpic) said.
Oman could spend up to $1.5 billion on the project needed to quench the thirst for vehicle fuel, part of a wider trend of Middle Eastern oil producing countries becoming significant consumers.
'The expansion project is designed primarily to meet the growing fuel demand of Oman,' Orpic CEO Musab Al-Mahruqi told Reuters in an interview.
Oman's oil consumption has more than doubled over the last decade, thanks to energy-intensive industry growth and an expanding vehicle fleet which has driven substantial growth for fuel over the last five years.
But vehicle ownership in the non-Opec oil producer remains 55-60 percent below other countries in the region, leaving plenty of room for rapid growth over the next few years, Al-Mahruqi said.
'The indicator of potential demand growth for fuels ... supports the expected growth of approximately 10 percent year-on-year growth,' he said.
Fuel demand has been soaring in the Middle East over the last few years, thanks to a petro-dollar fuelled economic boom and fuel subsidies, which have driven a spate of refinery expansions and new plant investments from Saudi Arabia to Bahrain.
Oman's Sohar refinery, operational since 2006 currently produces up to 116,000 barrels per day (bpd) of fuel while Mina Al Fahal produces some 106,000 bpd.
'We estimate an increase of 50,000 bpd to 60,000 bpd in Sohar refinery capacity,' he said. 'The target completion date is end-2015, early 2016.'
State-owned Orpic is conducting the front-end engineering design (Feed) work and plans to tender for the engineering, procurement and construction (EPC) phase in 2012.
'We are doing the pre-qualification for EPC contractors and we hope to tender some time in the first half of next year,' Al-Mahruqi said, adding that the company was aiming to start construction before the end of next year.
The details of how the expansion will be funded are still to be finalized, Mahruqi said, but will probably be a mix of bank finance and shareholder funding.
'The ratio will be up to market conditions,' he said, adding that the company would seek funding from both local and international banks.
'Oman had a very strong track record over the last 15-20 years in project finance,' he said when asked if global financial market gloom could hinder funding.
'It is going to be challenging but it should not be a project stopper,' he added. Despite surging domestic demand for fuel, Orpic hopes the refinery expansion will ensure fuel exports will continue, mostly to Asia, although how much will be available is unclear.
'By 2015-2016, our local demand will have increased because we're growing but we will still be exporting some products, Although I'm not sure if it will be less or more.' Mahruqi did not give a current export figure.
Oil storage facilities have been developing fast at the deep-sea port of Sohar, thanks to its strategic location outside the Straits of Hormuz, through which much of the world's oil is shipped.
Orpic's integrated complex includes a plant to produce industrial chemicals and it exports around 1 million tonnes of aromatics every year.
The company imports some 500,000 tonnes of naphtha annually from Vitol's Fujairah refinery to use as feedstock for its aromatics plant but has no current plans to raise naphtha imports, Al-Mahruqi said.
'We take all the naphtha that's produced in Fujairah. Vitol is operating the refinery at full capacity,' he said. 'We don't have a plan to expand aromatics... and the decision to import naphtha will always be governed by the economics of it.'
Oil giant Saudi Aramco, increasingly looking to expand in downstream activities, will raise its domestic refining output capacity to 3.5 million barrels per day (bpd) by 2016 with the start-up of new plants, an Aramco executive said on October 24.
"Soon we will see additions to this picture," Mohammed al-Omair, vice president of refining and natural gas liquids (NGL) fractionation at Saudi Aramco told an industry conference, referring to the seven refineries Aramco operates, alone and with other partners.
"We can see that total current in-kingdom refining capacity is 2.26 million bpd. With the addition of the three facilities, the capacity will have increased...in 2016 to almost 3.5 million bpd."
Omair said the additions will come from the three refineries whose development is now under way and which will have a capacity of 400,000 bpd each.
"The first is our joint venture in Jubail with Total (Satorp), it will begin commissioning in 2012. Red Sea refining in Yanbu will begin commissioning in 2014, and Jizan refinery in 2016, while each of the new refineries will be designed keeping petrochemical products such as benzene, xylene and paraxylene in mind. Sasref (Aramco-Shell Jubail refinery) is already producing benzene."
The 550,000 bpd Ras Tanura refinery alone supplies more than 30 per cent of the kingdom's fuel demand. Aramco is upgrading the refinery to produce cleaner fuels as part of a wider plan to meet environmental regulations.
The Kingdom's domestic fuel consumption has been booming on the back of rising population and economic growth. Heavy government subsidies on fuel, making the price at the pump a fraction of what it is in the global markets, has also exacerbated the demand.
Aramco also considers building three new joint venture refineries in Asia as part of plans to boost its global refining capacity by 50 per cent to more than 6 million barrels per day (bpd), the chief executive of Aramco, Khalid al-Falih, said in April. Asia is Aramco's largest and fastest growing oil market.
"We continue talks about expansions. I am sure it will yield results, but investments in the international (market) do take a lot of time before we get to see things happening in reality but these are part of the portfolio Saudi Aramco has as plans for the downstream investments," Omair said when asked about an update on investments in Vietnam, Indonesia and another refinery project in China.
Aramco operates refineries in the United States, South Korea, Japan and in China - the Fujian refining and petrochemical company (FREP).
The state-run firm plans to balance its energy portfolio by increasing exposure to downstream industries in its energy mix, while maximising its profits from existing oil and gas streams, its chief executive said this month when signing a giant petrochemical joint venture with US Dow Chemical, called Sadara.
"According to a recent study by Morgan Stanley in Europe we see that many premier companies integrate their refining products, one as much as 90 per cent. We too, within Aramco, are striving to do the same within the kingdom," Omair said, citing plans of Rabigh II and the Sadara project.
Aramco plans to use gas liquid and refined products as feedstock in its new ventures. It is raising gas and NGL output to cater for rising domestic demand for petrochemical feedstock.
International Petroleum Investment Company (IPIC) may spend $6.5bn on two oil refineries to be built in the UAE and Oman, according to documents released by the Abu Dhabi government-owned company.
The investment firm may spend $3.5bn to build a 200,000 barrel-a-day oil refinery at Fujairah on the UAE's east coast, which a recent bond prospectus posted in October on the London Stock Exchange website showed. That's an increase from the $3bn the company said it would spend on the project in a similar bond document released in March. IPIC, as the investor is known, may also go ahead with 230,000 barrel-a-day refinery at Duqm in Oman, according to the document. That facility may cost $6bn with the investment split evenly between IPIC and Oman Oil Co, the government-run energy company in the neighboring Sultanate.
Middle Eastern oil producers are investing in domestic refinery projects to meet local demand as well as evaluating export facilities that will allow them to ship fuels to growing markets in Asia. Refining crude into fuels like gasoline, diesel and jet fuel allows oil producers like the UAE and Oman to benefit from the higher value those products can fetch on international markets.
IPIC is also building a $4bn pipeline to transport 1.5m barrels of oil daily from Abu Dhabi's main onshore fields to Fujairah. The pipeline is expected to deliver its first oil in early 2012, according to the prospectus. The Abu Dhabi Crude Oil Pipeline, as the project is known, will allow ships to avoid transiting the Strait of Hormuz, the chokepoint for entry into the Gulf. The port at Fujairah can also host larger ships than those that can dock at Abu Dhabi's main oil loading port of Ruwais within the Gulf. Middle East oil-producing countries will add 5m barrels a day of refining capacity by 2018 as they seek to meet fuel demand, Deutsche Bank said in October.
The additions will account for 20 percent of the global growth in fuel-processing capacity and will boost Middle East refining capabilities by 60 percent, Soozhana Choi, an analyst at Deutsche Bank, said. Both the Fujairah and the Oman refinery projects are in the engineering and design phase. The plant in Fujairah, which will be reached by a pipeline IPIC is also building to transport Abu Dhabi crude, is set for completion in mid-2016, according to the bond prospectus. The Duqm facility, which will be designed to use UAE and Omani crudes, would be completed in 2016 or 2017, if built, the document showed.
Oman Oil and IPIC announced a plan to study the Duqm project in October 2009 without providing details on the size or cost of the facility.
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