The head of BP's refining and fuel marketing business said March 6 buyers are taking a close look at a pair of U.S. refineries BP PLC is selling as it reshapes its refining business to process crude from new North American oil basins,.

BP has said it hopes to collect some $4 billion selling refineries in Texas City, Texas, and Carson, Calif., as part of its broader push to shed $45 billion worth of assets in the wake of 2010's Deepwater Horizon disaster. The Deepwater Horizon rig was drilling a Gulf of Mexico well for BP when it exploded, killing 11 workers and causing the worst offshore oil spill in U.S. history.

"We are seeing interest," BP refining chief Iain Conn said on the sidelines of the IHS CERA Week energy conference.

BP originally said it hoped to complete all of the planned divestitures by the end of this year, but last fall pushed the target date back to the end of 2013. The company still expects to sell the two refineries this year, however, a BP spokesman said March 7.

The Carson refinery, which will be sold with BP's California fuel distribution business, including pipelines and trucks, was marketed last year and BP is reviewing offers, Conn said.

The Texas City facility, site of a 2005 fire that killed 17, won't officially be offered for sale until BP meets safety milestones put in place by U.S. regulators in response to the deaths, Conn said. Conn said BP hoped to clear those hurdles this quarter but declined to say when the auction process might begin. "Even though we've not gone to the market, we've seen a number of expressions of interest," he said.

BP has sold 10 refineries in the last 10 years, not including the two it's currently shopping, as it tries to transform its refining business into one geared toward processing heavy Canadian crude from oil sands and shale oil from northern states.

It is investing billions of dollars in its Whiting Refinery outside Chicago so the facility will be able to make gasoline and other fuels from cheap but hard-to-refine Canadian crude. BP also has plans to upgrade facilities in Washington and Ohio, which receive Canadian oil as well.

"The refineries that we're selling ... these are very good refineries," Conn said. With an oversupply of refining capacity pinching margins, facilities must be upgraded at great expense to handle a wider variety of crudes of risk failure, he said. "BP can't afford to invest in all of them at the same time," Conn said.

Conn said he believes refiners in the Atlantic Basin must eliminate up to 7 million barrels per day of refining capacity, or export its products by 2030. Without such curtailment, the market will be greatly oversupplied, he said.

"Since most of it won't be able to export, I think most of it will be under pressure to shut down," he said. About half of that shut-in capacity will be in the U.S. while the rest will be in Europe, he predicted.

Conn said that he is interested in adding refineries, "but probably only now in Asia," he said.

Total Says Port Arthur Upgrade Short Term Is Not As Profitable As Hoped

Total S.A. three years after spending billions of dollars on a big upgrade to its Port Arthur, Texas, refinery so it could refine the massive amounts of heavy crude that were expected to flood the U.S. Gulf Coast market, hasn't turned as profitable as the company expected, said Patrick Pouyanne, Total's head of refining and chemicals. However, he added, it is only a matter of time.

"It's a short-term issue," Pouyanne told reporters on the sidelines of the IHS Cambridge Energy Research Associates conference here. "It will come."

Total announced the project in 2008, at a time when the oil industry anticipated that most new crude arriving into the Gulf Coast would come either from Mexico and Venezuela or from Canada's oil sands, all much heavier than the light U.S. West Texas Intermediate crude that for decades has been the staple of the domestic refining industry. Other companies, such as Marathon Oil Corp. and Motiva LLC, also embarked on similar expansions.

But Venezuelan production, impaired by lack of investment, failed to increase, and Mexican production declined. Canada's oil sand projects suffered major delays in the midst of the financial crisis, and a TransCanada (TRP) mega pipeline that is projected to double the amount of Canadian crude arriving to the Gulf Coast has been stalled due to stiff political resistance.

At the same time, many refiners embarked on heavy crude expansions that they have been bidding up the price of what heavy crude there is, he said.

But Pouyanne said that the Keystone XL pipeline expansion will eventually be built. "I don't see how you can avoid such a project," he said. Also, Venezuela holds a huge amount of oil reserves, and production there is bound to increase over time, he said.

Pouyanne, who oversees Total's global empire of refineries and petrochemical facilities, said he has noticed a "real slowdown" in demand for petrochemicals in Europe for the last six months, as the continent has been fighting the specter of a major dip into recession due to the debt crisis. "Buyers have become very prudent," he said, adding however that the slowdown is nowhere like it was when the financial crisis broke in 2008.

In the U.S., however, "the figures are quite good," although they haven't reached pre-crisis levels, he said. He said there is a major disconnect on the perception of economic health on both sides of the Atlantic.

New Technologies Will Cut Refinery Costs to Meet New U.S. Industry Regulations

A U.S. government mandate in 2012 to reduce gasoline sulfur content will require significant investments at refineries for pre- and post-treaters, along with revamping the gasoline-making unit, an engineer said on March 19.

Refiners nationwide are reviewing the most cost-effective way for retrofitting operations to meet the upcoming "Control of Air Pollution from Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards," which will address the impact of motor vehicles on air quality and health, said technology engineer Bill Flanders with Axens.

Axens is an international provider of advanced technologies for the energy industry.

The control specifications will include tailpipe emissions standards for nitrous oxides and air toxics, and sulfur standards for gasoline, according to the U.S. Environmental Protection Agency (EPA). These regulations are pending.

The United Steelworkers union, representing oil workers, has said burdensome regulations, such as the low-sulfur gasoline rules pending, have contributed to refineries losing money and the recent shutdown of refineries on the U.S. East coast.

In the last five months, Sunoco's 175,000 bbl/day Marcus Hook Refinery in Pennsylvania and ConocoPhillips' 185,000 bbl/day Trainer Refinery in Pennsylvania have closed, along with Hess' 350,000 bbl/day Hovensa refinery in the U.S. Virgin Islands.

Sunoco also said its 330,000 bbl/day Philadelphia refinery in Pennsylvania will close by July if no buyer is found.

Flanders discussed methods for meeting these regulations with minimal investments and using existing refinery assets.

He made his presentation at the annual meeting of the American Fuels and Petrochemical Manufacturers (AFPM) in San Diego.

The primary method to reduce gasoline sulfur content is to reduce the sulfur in the catalytic gasoline, or light catalytic naphtha, produced from the fluid catalytic cracker (FCC), which is the gasoline-production unit, Flanders said. This is in addition to investing in pre- and post-treaters to strip out remaining sulfur.

The FCC contributes 30-40% of the total gasoline pool, but also contributes 90-99% of the total sulfur of the gasoline blending pool.

Refiners will attempt revamping of the units during the set turnaround periods for the FCC unit, Flanders said.

Refiners with a hydrotreating unit for vacuum gas oil, the feedstock for the FCC unit, can retrofit it for mild hydrocracking (MHC) operations with minimal investment, said Flanders.

MHC units convert 20-60% of vacuum gas oil to low-sulfur distillates and produce high-quality feedstocks for the FCC, according to Criterion Catalysts and Technologies.

Axens said an MHC cost a third of installing a new hydrocracking unit.

Refiners without a pre-treating unit should consider investing in MHC operations, Flanders said.

A post-treater can help with the fluctuations in the sulfur remaining after the pre-treaters and FCC as a result of differences in the grade of oil used at the refinery, said Flanders.

Chevron Launches $83 Mln Salt Lake City Refinery Upgrade

Chevron Corp. has launched a major effort to upgrade its crude oil processing unit at its Salt Lake City refinery.

The announcement earlier in mid-March by the giant U.S. energy company marks the third planned refinery expansion for the area revealed in recent months.

The upgrade, expected to be completed in summer 2014, is projected to cost around $83 million.

"This project will help us improve both the reliability and efficiency of our oil-processing equipment, some of which dates back to the early days of the refinery's career," said Greg Hardy, Chevron's spokesman in Salt Lake City.

This Chevron refinery began operating in 1948, shortly after the discovery of the Rangely crude oil field in Western Colorado that was an important source of feedstock for the plant.

Hardy said the upgrade will be completed in stages, which means that the refinery will remain in production while the work is under way.

Chevron isn't the only company updating or expanding its refinery operations in Utah.

Tesoro Corp. announced in December that it planned to invest $180 million to expand crude oil processing at its refinery nearby the Chevron facility. And that was followed less than a month later by HollyFrontier announcing it planned to invest $225 million over the next two years to increase production by 45 percent at its Woods Cross refinery.

Lee Peacock, president of the Utah Petroleum Association, said those investments suggest the companies are anticipating the market for their products will be growing in Utah, as well as in the surrounding states they serve.

"The tone of our state's economy is such that companies are willing to invest in Utah because they see a bright future," he said.

Tesoro and HollyFrontier have indicated their plans are to increasingly make use of the black-wax and yellow-wax crude oils that are being produced in greater quantities in the Uinta Basin in eastern Utah.

Hardy said Chevron's project won't increase the refinery's capacity -- it processes 45,000 barrels per day -- but will enable it to more easily handle a wider range of locally and nationally produced crudes, such as those from eastern Utah.

The waxy crudes come out of the ground at a consistency similar to petroleum jelly. Unlike the so-called light, sweet crudes that are popular feedstocks for refining, the high-wax varieties are thick and viscous, and usually aren't transported by pipeline. Instead, they typically are shipped by insulated tankers and must arrive at their destinations within four to eight hours so they don't solidify. If that happens, the tanker's cargo must be warmed up before it can be pumped into the refinery.

Michael Wirth, the executive who oversees Chevron's refining business, announced Chevron's plans to upgrade its Salt Lake City during a recent meeting with securities analysts in New York.

Utah Coalition Forming to Stall Refinery Expansions

A new coalition in Utah’s Davis County determined to prevent the area's pollution woes from growing -- even with expansions planned at Utah's "refinery row" -- began to take shape March 22.

Cecilee Price-Huish, president of the Davis County Community Coalition, organized the meeting at the Bountiful City Hall.

"Air quality is not political," she said. "It is not partisan. It shouldn't be polarizing."

"The refineries are major, major players in emissions," Price-Huish said. "These are big expansions. We need to be involved."

The forum at Bountiful City Hall was sponsored by the coalition, the Utah Physicians for a Healthy Environment and the Utah Chapter of the Sierra Club.

It was billed partly as an opportunity to learn about plans for the Holly, Tesoro and Chevron refineries and largely focused on describing the variety of health and safety impacts caused by the pollution that is expected to increase if the refineries are successful in making the proposed changes.

Brian Moench, founder of the doctors' group, told the gathering that an environmental accident -- a spill, a fire, a leak -- had occurred every nine days over the past 10 years at one of the five refineries on the Salt Lake and Davis county lines.

It was also discussed in detail how air pollution damages the heart, lung, brain and eyes.

"These expansions are much like a bailout for the refineries paid for by increasing the risks to you and your family," Moench said. "The safety and environmental quality issues are all interconnected. These expansion plans should be suspended."

Tesoro Corp. already has submitted its application to the Utah Division of Air Quality to invest $180 million; public comments on the expansion will be accepted through April 23.

The San Antonio-based refiner is expected to increase processing capacity at its 58,000 barrels-per-day Utah facility by 7 percent, or an additional 4,000 barrels per day.

Meanwhile, HollyFrontier has said it will invest $225 million over the next two years to increase production by 45 percent at its Woods Cross refinery. And Chevron has said it plans to spend $83 million on upgrades.

All three proposals are intended to help the refineries make use of the black-wax and yellow-wax crude oils produced in eastern Utah's Uinta Basin. And, according to the Sierra Club's Tim Wagner, the impacts of tapping into these energy sources will be felt by refinery row residents with the increased pollution.

The group also outlined goals, including a no-net-air-pollution increase policy for the state, a health study on refinery impacts and more than the current once-a-year inspections at the refineries.

ConocoPhillips Receives Multiple Bids for PA Trainer Refinery

ConocoPhillips has at least five bids for its 185,000 barrel per day Trainer, Pennsylvania refinery, according to sources familiar with the sales process on March 29.

"There is more than one bid to operate the plant as a refinery," said one source.

The other bids are to turn the refinery into a terminal to store gasoline and diesel to serve the U.S. Northeast, where refinery closures have cut operable capacity by over 25 percent so far.

The Trainer refinery was idled at the end of September after the company decided to put it up for sale.

A ConocoPhillips spokesman was unable to comment on the sales process other than to say that the company had recent interest from potential buyers.

On March 28, ConocoPhillips said it was extending the sales deadline by two months to the end of May because of new potential sales interest.

The news of renewed interest to buy the plant and run it as a refinery is good news for the region, where three refineries have closed by the end of 2011.

On March 28, the Energy Information Administration, the statistical arm of the Department of Energy, cut the baseline for calculating the region's operable refining capacity by 430,000 bpd to about 1.2 million bpd to reflect the refinery closures.

Most Northeastern refineries are designed to run only light, sweet crude oil imported from Europe and Africa, and priced at a premium to other crude oils which cuts profit margins, already down on slowing gasoline demand.

Hardest hit by the closures is the Philadelphia region, where three refineries in a 12-mile (19-km) radius are closed or slated for closure.

This includes the Trainer plant and neighboring Marcus Hook plant, a 178,000 bpd refinery owned by Sunoco Inc which closed at the end of 2011.

Sunoco also put its 335,000 bpd Philadelphia refinery up for sale. The company has said it has buying interest but said if a deal doesn't come through it will close the plant, the longest continuously operating refinery in the nation, by July 2012.

United Refining, a privately held refining company which operates a 65,000 bpd refinery in the northwest corner of Pennsylvania, has expressed interest in the facility. .

Sunoco is looking to exit the refining business where it has been losing money, the company said.

If the plant closes, refinery closures in the U.S. Northeast will reach 50 percent, according to EIA calculations, leaving the area vulnerable to price spikes and supply disruptions.

Also out of the EIA calculation of base operable refinery capacity is the 64,000 bpd Yorktown, Virginia refinery.

That refinery was sold by Western Refining to Plains All American and will be used as a storage terminal for gasoline and diesel.

HF Leaks from Texas City Refinery Alkylation Unit

Hydrofluoric acid (HF) leaked from an alkylation unit at BP Plc's 406,570-barrels-per-day refinery in Texas City, Texas on March 27, triggering alarms in the plant and warnings to area residents, company and city officials said.

No injuries were reported at the refinery, the fifth-largest in the United States, or in the surrounding community, the officials said.

"We have a small leak of hydrofluoric acid at the refinery," BP spokesman Tom Mueller said shortly after 10 a.m. local time (1500 GMT). "Water is being sprayed on it. We expect to secure the leak shortly."

Water cannons surrounding alkylation unit 3 were triggered when monitors detected the leak, Mueller said. Workers in the refinery not battling the leak were ordered to shelter in place.

The cause of the leak has not been determined, and Mueller declined to say whether gasoline production had been affected.

Hydrofluoric acid can damage skin, eyes, lungs, bones and the heart in humans. Exposure can be fatal, and HF acid can form into vapor clouds that are able to spread over large distances.

Water cannons are used to prevent a vapor cloud from forming. The HF clings to water droplets and falls to the ground. Workers trying to secure a leak wear protective clothing.

Environmental groups and the United Steelworkers union, which represents most U.S. refinery workers, have campaigned for HF alkylation units to be replaced with units using sulfuric acid in order to prevent HF vapor cloud exposure.

BP's Texas City plant was the site of the worst refinery disaster in the past decade when 15 workers were killed and 180 others injured by an explosion on March 23, 2005.

BP's term of probation for a violation of federal environmental law in the 2005 explosion ended this month.

An alkylation unit uses refining byproducts to make octane-boosting components that are added to gasoline.

The U.S. Chemical Safety Board and U.S. Occupational Safety and Health Administration are investigating an HF acid leak earlier this month at Citgo Petroleum Corp's 163,000-bpd Corpus Christi, Texas refinery.

The Chemical Safety Board called a 2009 explosion on the HF alkylation unit at Citgo's Corpus Christi plant a near-miss of widespread exposure of HF acid in a community surrounding a refinery.

ARUBA

Valero to Suspend Aruba Refining Ops

Valero Energy Corporation on March 19 announced that due to unfavorable refinery economics and the outlook for continued unfavorable refinery economics, refining operations will be suspended by the end of the month at its subsidiary's 235,000 barrel-per-day refinery in Aruba. The refinery has been operating at reduced rates because of inadequate margins resulting in financial losses.

Over the past two years, Valero has thoroughly evaluated all of its alternatives for the refinery and is now considering the possibility of operating a terminal and storage operation at the site. For the immediate future, Valero will maintain the refinery in a state that would allow a restart.

"We appreciate the diligent and incredible efforts of Prime Minister Eman and his government in helping Valero find an economic alternative that would allow continued operation of the refinery," said Valero Chairman and CEO Bill Klesse. "If it had not been for the efforts of the Prime Minister, the refinery would not have restarted in late 2010 and operated over the past 15 months. Our discussions with interested parties, including those facilitated by the Government of Aruba, will continue."

ASIA

CHINA

Kuwait Petroleum, Total Sign MoU for China Zhanjiang Refinery Project

Total on March 13 signed a comprehensive Memorandum of Understanding (MOU) with Kuwait Petroleum International (KPI) and Petrochemicals Industries Company (PIC), two wholly owned subsidiaries of Kuwait Petroleum Corporation.

The MOU relates to a targeted participation in the Zhanjiang project in China. This project consists of a planned development of a large size (300,000 barrel per day), full-conversion refinery integrated with petrochemicals and marketing, in partnership with Sinopec.

The proposed refining and petrochemicals platform will be designed to process Kuwaiti crude as feedstock and to produce high-quality refined and petrochemicals products.

"KPC is pleased to expand its cooperation with Total" declared Mr Farouk Al Zanki, KPC Chief Executive Officer, after the signing of the MOU. "Total, with its long experience in the Downstream business in China coupled with know how in Refining and Petrochemicals operations, will add value to the China project. Moreover Total and KPC's strategic objectives in Guangdong are highly aligned," he adds.

"Total is pleased to have been selected by Kuwait Petroleum Corporation as its preferred partner to participate in the project of a top-performing refining and petrochemicals platform with Sinopec in China. This agreement will be the keystone of a long-term relationship with KPC," declared Mr Christophe de Margerie, Total Chairman and Chief Executive Officer. "The project is in line with our strategy of expanding in growth markets, based on a few highly competitive and integrated platforms."

KPI, PIC and Total have agreed to form a consortium, which will potentially hold interests in two joint-ventures together with Sinopec. The MOU sets forth the agreement among KPI, PIC and Total regarding the development of the project.

INDIA

Essar Commissions New Units at Vadinar Refinery

In a statement to the Bombay Stock Exchange, Essar Oil said that it has successfully commissioned its new Vacuum Gas Oil Hydrotreating Unit (VGOHDT) and Sulfur Recovery Unit (SRU) at its Vadinar Refinery. With the development, the company is left with commissioning of Delayed Coker Unit (DCU) under the EOL's Rs 83 billion Phase I expansion project.

The company believes that the commissioning will give a boost to its capital expenditure program and will provide a substantial pick up in revenue and profitability going forward.

"The VGOHDT Unit will ensure that the refinery is able to achieve a throughput capacity of 18 MMTPA. With a capacity of 6.5 MMTPA, the VGOHDT at the Vadinar Refinery is among the largest units of its kind. It will help the refinery produce low sulfur, high octane gasoline (petrol). The unit is also capable of producing naphtha, kerosene and gas oil (diesel)," said Essar Oil, Head of Refinery, C. Manoharan.

Meanwhile, following the development, the SRU will help the refinery recover 99.9 per cent of sulfur in acid gases generated from the ARU (Amine Regeneration Unit). It plays a key role in helping the refinery meet the latest emission norms. Addition of a new SRU to the refinery configuration will also enable EOL to process sour and opportunity crudes, added the filing.

Besides, the company is also involved in an optimization project the Vadinar Refinery. This project is designed to increase the capacity to 20 MMTPA (405,000 bpd) by September 2012, helping the refinery to process over 80 per cent heavy and ultra-heavy crudes, which are lower in cost than light crude. In terms of product yield, the expanded Vadinar Refinery will have the flexibility to produce higher value, high-quality products.

INDONESIA

Indonesian Urges Kuwait to Build W. Java Balongan Refinery

The Indonesian Energy and Mineral Resources ministry has asked the Kuwait Petroleum Corporation (KPC) to build the crude oil refinery in Balongan, Indramayu district, West Java, despite the fact that not all of the import duty exemption has been given.

Oil and gas affairs director general of the Energy and Mineral Resources ministry, Evita Legowo said here on March 7 that the government hoped KPC would not resign from constructing the crude oil refinery with a production capacity of 300,000 barrels per day.

"Although the finance ministry has rejected the import duty exemption, I will ask the state-run oil and gas company, PT Pertamina to discuss the matter with Kuwait," Evita said.

The finance ministry`s Fiscal Policy agency opined that KPC`s incentive request is excessive and KPC actually has received many benefits such as the tax holiday, among others.

Pertamina and KPC had signed a Memorandum of Understanding (MoU) over the feasibility study of the Balongan crude oil refinery on August 11, 2011.

In addition, Kuwait had also agreed to supply crude oil to the Balongan oil refinery.

Nevertheless, Pertamina deserves to seek another partner to build the Balongan crude oil refinery, Evita said, adding that the government has carried out negotiation with another country regarding the Balongan crude oil refinery.

"However, I cannot announce which country has been contacted," she said.

According to her, the government itself can construct the crude oil refinery if it has enough funds.

The government hoped that an agreement to build the Balongan crude oil refinery can be reached in 2012.

Meanwhile, PT Pertamina`s spokesman, Mochamad Harun confirmed that his company continues to cooperate with Kuwait.

"We hope that the Balongan crude oil refinery will be operational in 2017," Harun noted.

Apart from the Balongan crude oil refinery, Pertamina also signed an MoU on Tuban oil refinery in East Java province with Saudi Aramco`s subsidiary, the Saudi Aramco Asia Company Limited (SAAC).

Tuban oil refinery is expected to produce 300,000 barrels of crude oil per day, of which 250,000 barrels constitute a long-term contract with SAAC, and the rest (50,000 barrels per day) cover a contract with another oil producer, Harun said.

Currently Pertamina has six crude oil refineries that process 1,031 million barrels of crude oil per day.

PT Pertamina Indonesia Refinery Contract Goes to Foster Wheeler

Foster Wheeler AG announced March 27 that a subsidiary of its Global Engineering and Construction Group has been awarded a contract by PT Pertamina (Persero) ("Pertamina"), the national oil company of the Republic of Indonesia, to provide project management consultancy services for the Residue Fluid Catalytic Cracker (RFCC) Project at the Cilacap Refinery, on the island of Java, Indonesia. Foster Wheeler will manage the engineering, procurement and construction contractor on behalf of Pertamina.

The value of Foster Wheeler's contract was not disclosed and will be included in the company's first-quarter 2012 bookings.

The RFCC project is intended to build a 62,000 barrels per day (BPD) RCC Complex, which includes a RFCC, a new LPG Merox unit (Merox is a trademark of UOP LLC), and propylene recovery and gasoline hydrotreating units. The addition of an RFCC unit should enable the refinery to increase fuel production, especially fuel-air high-octane fuels intended to meet European Union EURO IV quality specifications. Production of liquid petroleum gases is also expected to be increased by 350,000 tons per annum (TPA), and the refinery also plans to produce in excess of 140,000 TPA of propylene. The upgrade is expected to be completed in 2014.

"Key to winning this contract was our ability to manage the project from our newly-established operations in Jakarta, Indonesia, as well as our proven project management capability and our leading technical expertise in all areas of refining," said Umberto della Sala, Chief Operating Officer, Foster Wheeler AG.

MALAYSIA

Malaysia's Petronas, BASF Sign Agreement to Develop Refinery in Johor

Malaysia's state-owned oil-and-gas firm Petroliam Nasional Bhd on March 6 said that it has signed an agreement with BASF SE to form a joint venture to develop a new refinery project in Pengerang, Johor.

Under the agreement, Petroliam Nasional, or Petronas, will hold a 40% stake in the venture and BASF will hold the remaining 60%, Petronas said in a statement.

The project is part of Petronas' planned Refinery & Petrochemical Integrated Development (RAPID) complex in Pengerang, it said.

The joint venture will own, develop, construct and operate production facilities for isononanol, highly reactive polyisobutylene, non-ionic surfactants, methanesulfonic acid, and plants for precursor materials, Petronas said.

PAKISTAN

Pakistan Says UAE Willing to Start $6 Bln Khalifa Refinery Project

Pakistan's Ambassador to United Arab Emirates Jamil Ahmed Khan said UAE was willing to start its Khalifa Refinery Project in Pakistan, involving a huge amount of $6 billion investment.

"The project was lingering on due to different reasons, but in a recent Joint Ministerial Commission (JMC) of Pakistan and United Arab Emirates (UAE) in Dubai, UAE has expressed its willingness to start work on this mega project," Jamil Khan said while talking to senior journalists and FPCCI representatives at Federation House in early March.

Khan gave a comprehensive presentation to FPCCI representatives about potential of trade and investment in UAE and progress relating to recent meeting of Pak-UAE Joint Minister Commission (JMC). He said establishment of a 500-MW power project was also part of the Khalifa Refinery Project.

According to history of the project, the proposed Khalifa Coastal Refinery will be established in Khalifa Point at Hub, Balochistan, near Gaddani coastal area. It would span on 1,800 acres and will be the largest single foreign direct investment ever, if the project is materialized. The project had been put on hold several times since 2007 due to various issues, like lack of gas supply, security, poor governance and circular debt, which has affected IPIC's other investments in Pakistani energy sector.

The refinery will have a capacity of 250,000 barrels per day, equal to 13 million tonnes of petroleum products per year. The project was approved by the government of Pakistan in October 2007, but it could not be initiated due to various reasons.

Owners of the refinery will be Pak-Arab Refinery (PARCO 24 per cent) and International Petroleum Investment Company of Abu-Dhabi (IPIC 76 per cent). Pakistan's Ambassador to UAE Jamil Khan further said UAE had also extended its support to Pakistan to finalize the Free Trade Agreement (FTA) with Gulf Cooperation Council (GCC) that would prove a breakthrough in Pakistan's economic and trade ties with GCC. GCC is a member organization of countries situated in the Gulf and it is just like the European Union.

"In the upcoming third meeting, expected in April, we will try our best to achieve the task of signing FTA with GCC," he added. Once we achieve this task, Pakistan will be able to increase exports to GCC. Mr Khan said Pakistan had demanded uniformed tariff of 5 per cent on exports to GCC. At present, he said, different countries in the umbrella of GCC charge different tariffs on exports from Pakistan, ranging up to 10 per cent, excluding additional duty and tariff. He said after the signing of FTA, Pakistan is expected to get uniform tariff and may be lower than the existing tariff of 5 to 10 per cent. He further pointed out that during recent JMC, Pakistan had asked UAE officials to provide multiple visas to business for more than six months period.

He said UAE had reduced the timeframe of multiple visas from six to three months for all countries in the world, but Pakistan had demanded relaxation in this condition and more than six months multiple visa for the businessmen. Pakistan's ambassador to UAE also said during recent JMC that both countries have decided to form a joint Business Council platform to promote their economic and trade ties. Pakistan and UAE would soon nominate 10 members each for formation of the council, he added. He urged FPCCI representatives to explore trade and investment avenues in UAE that imported about $160 billion dollars goods in 2010 and exported products worth $250 billion.

Quoting an international study, Mr Khan said by the year 2020, trade flows between the Gulf region and China could soar to $350 billion (from $59 billion in 2005). Meanwhile, he said, JP Morgan estimates that the global liquidity has increased by $3.9 trillion in GCC from 2002 to 2009, of which around 50 per cent came from Asia and 40 per cent from the oil producers. He said there was enormous potential of growth in trade with GCC, especially United Arab Emirates.

PHILIPPINES

Refinery Talks in the Works with Philippine’s PNOC

Two foreign firms are looking to put up petroleum refineries in the country, with one already in talks with the state-run Philippine National Oil Co. (PNOC) for an investment site, Energy Secretary Jose Rene D. Almendras said March 7.

"PNOC is in direct negotiations with one of the two foreign firms who want to build refineries and depots in the country," Mr. Almendras said in an interview.

PNOC is offering a land deal to the foreign investors in Luzon he said.

The other company has not yet decided on a location for its refinery.

He declined to name the investors, noting only that they plan to put up refineries and depots which will process crude oil for export to Southeast Asian markets.

Mr. Almendras said the investments the planned refineries will bring "will definitely be very big."

The country can also expect to be able to buy processed oil from the refineries.

There are currently two refineries in country - one operated by Pilipinas Shell Petroleum Corp. in Batangas and the other by Petron Corp. in Bataan.

Petron began a $1.8-billion refinery expansion project last year to be able to process different kinds of crude oil.

Pilipinas Shell has not yet announced any additional investments for its refinery.

"Our plan is really to build a strategic oil reserve in the country but since we cannot do that yet we are offering the country as a strategic market location. I don't expect the foreign firms will need to find a local partner for the refinery," said Mr. Almendras.

Meanwhile, the Energy department is considering moving the deadline for bid submissions for some oil and gas exploration areas being offered in the 4th Philippine Energy Contracting Round (PECR), the cabinet official further said.

The department wants to allow interested firms some time to study new seismic data that recently came out for the areas.

"We're still discussing if we're going to delay the submission of bids for some areas but we will be writing to the interested parties," said Mr. Almendras.

He added the department will also look at the amount of the data to determine if more time will be needed by investors to digest the information.

He would not disclose which areas being offered have new seismic data.

The government is offering 15 oil and gas exploration areas under the PECR.

Around 38 companies have submitted letters of interest to bid for areas in the contracting round.

EUROPE / AFRICA / MIDDLE EAST

BELGIUM

Gunvor Grp Has Long-Term Plans for Antwerp Refinery after Purchase from Petroplus

Gunvor Group, one of the world's major independent commodity trading companies, has announced that it has successfully bid to purchase Petroplus' refinery in Antwerp.

The transaction is expected to be completed formally within 6 to 8 weeks, with the support from the local and Belgium state authorities. Gunvor has the intention to restart operations as soon as possible, following the refinery's closure in early February as a result of Petroplus' financial situation. The facility has a processing capability of more than 100,000 barrels of oil per day, and storage capacity of more than 1.2 million cubic meters.

Gunvor is committed to operating the refinery on a long term basis and all existing staff will be retained.

The purchase of the refinery is in line with Gunvor's recent infrastructure investment programmed and its stated strategy to become vertically integrated. In this context, the Antwerp refinery will become a key part of the group's existing extensive trading activities in the ARA region.

Torbjorn Tornqvist, Chairman and CEO of Gunvor Group, commented:

"We are delighted to have won the bid for what will be a significant asset for the group as we look to expand our presence and trading activities in the ARA region, as well as continuing our wider strategy of diversification from pure trading operations. We know the refinery at Antwerp well and have staff who in previous roles actually worked there. Given that, and the fact that Petroplus have invested heavily in the refinery in recent years, we are confident we will be able to integrate it fully with our trading operation to ensure it becomes a profitable and sustainable part of our infrastructure portfolio."

NIGERIA

Nigeria Gives Task Force 60 Days to Revive Local Refineries

Nigeria’s Federal Government, on March 7 gave the National Refineries Special Task Force 60 working days to revive the country’s four refineries, even as it said government would not force the producing companies to go into refining of petroleum products in order to meet local demand.

The government also disclosed that three proposed Greenfield refineries would be functional by the year 2017.

The Ministry of Petroleum Resources, Mrs. Diezani Alison-Madueke, while inaugurating the Special Task Force in Abuja, noted that government was determined to revamp the existing refineries for maximum output towards meeting local demand for products.

According to the Chairman of the National Refineries Special Task Force, Dr. Idika Kalu Idika, "I am of the firm opinion that based on our proven and potential reserves in the medium term, Nigerians will like to see at least 10 medium to large scale refineries, and smaller modular refineries that could be spread to all the zones of the Federations.

"We are fully aware of the nation's expectations from this process. Our assurance to Nigerians is that we will do our best in unraveling the issues that have bedeviled the functionality of the existing refineries. We shall also, to the best of our abilities proffer ideas and solutions in line with our terms of reference to ensure that our country goes back to self-sufficiency in the supply of locally refined petroleum products.

"We would, in line with our terms of reference, conduct a thorough technical, financial and manpower review of all the refineries, audit the finances and determine the operating capacities as a basis for recommending the financial and technical framework that raise the existing capacities to an acceptable rate, which by global standards is usually between 80 and 90 per cent of installed capacity.

Idika noted that beyond this, the task force was also "committed to the development of a framework that would not only turn around Nigeria's dependence on importation, but would go further to present a platform for the export of products to the regional market and beyond.

"We will review existing licenses granted for establishment of private refineries in a bid to assess the readiness of the operators to utilize the licenses."

We are also fully aware of the contribution of the petrochemicals subs-sector to the development of a robust production driven economy as well as provide jobs for our teeming youth population, and would work hard to resuscitate existing petrochemical industries to utilize the by-products of the refineries."

Inaugurating the National Refineries Task Force, Mrs. Alison-Madueke said, "The state of the nation's refineries, the shortfall in local production and the gradual increase in importation of petroleum products over the years has been well publicized. Even if the importation of petroleum products appears to be a solution to cover the gap between local production and consumption, it should be a temporary one.

"The best solution for the long term is to attain adequate local refining capacity to fully meet the requirements of domestic consumption. The present administration is determined to reverse the continued negative trend in the refineries' performance.

"It is for this reason that we are reaching out to patriotic Nigerians with undisputed credibility from inside as well as outside the industry to brainstorm and seek holistic solutions to re-align our refineries to global standards."

To that extent, she said, the National Refineries Special Task Force will "review the current state of the refineries vis-à-vis the domestic requirements and refine further a roadmap to grow the nation's refining capacity, both new and existing, to meet its domestic demand."

Among the terms of reference of the Special Task Force include conducting a high level assessment of the Port Harcourt, Warri and Kaduna refineries, and reviewing all past reports and assessments and produce a Diagnostic report complete with a Change Journey Map.

The task force is also expected to review the operations of the three refineries with a view to improving their efficiency and commercial viability, as well as work with a world-class firm to audit the finances of the three refineries, and produce audited accounts over the past two years ending December 31, 2011.

Other functions include the design of a template for key Production/Management-Critical Performance Indicators to be tracked on a periodic basis for ministerial review, as well as to design an automated information work bench to monitor the performance of Port Harcourt, Warri and Kaduna refineries on an online basis.

The special task force will also review all license issued for new refineries in Nigeria and assess their operational, technical, and financial readiness; seek new ideas and design financial models across the value chain for the building of adequate capacity for meeting local demand for petroleum products.

Also, it is expected to design a blueprint for public and private partnerships (PPP) to build small, medium to large-scale Greenfield refineries across Nigeria, as well as design investment models and a road map to self-sufficiency in local production or petroleum products in Nigeria; and to produce a report complete with timelines and milestones within the next 60 working days.

The Minister noted that task Force's mandate was without prejudice to government's on-going program of rehabilitation and turn-around maintenance of the Port Harcourt, Warri and Kaduna Refineries, and the building of about three Greenfield refineries.

She added that already the government has commenced the engagement of the original equipment manufacturers and competent consultants to provide a thorough technical audit of all existing refineries and provide a blueprint to refurbish the refineries to name-plate capacities, adding that the Special Task Force will be expected to review the technical audit in line with government's targets and make recommendations.

The Minister of Petroleum, Mrs. Deziani Allison-Maduekwe said government would not force producing companies in the country to go into refining of petroleum products in order to meet local demand.

Speaking with State House Correspondents, after the meeting of refineries top executives with President Goodluck Jonathan, she said attaching the building of refineries as a condition for granting future oil prospecting licenses as a way to ensure the construction of new refineries in the country, saying that such measure was not a commercially viable option.

Her words were, "For every acreage that is allocated to be attached to a refinery is impossible; for instance if you give 25 licenses, we cannot be expecting 25 refineries to be built. What we are trying to do is to rationally determine the commercial viability and the quantum of refineries that will be needed in the country over and beyond the traditional national refineries and to attract that green field investment with private equity and the least government equity involved," she declared.

Mrs. Allison-Maduekwe led top executives of the nation's existing four refineries to meet the President with a view to briefing him on efforts towards optimizing refineries' output.

The minister regretted that the nation's refineries could not meet local fuel demand due to the outmoded plants.

"A lot of crude" she said is lost "through incessant vandalism and infrastructural problems," noting that some of the refineries were out modeled and with outdated equipment and instrumentation.

The President was also briefed on the greenfield refines, turn around maintenance and governance structure and a general overview of what came out from the retreat.

The Minister remarked that in spite of the global economic downtown which ensured that refineries were making marginal profits, government would ensure that its refineries were brought to at least 80-90 percent capacity utilization range.

RUSSIA

Gazprom Neft Halts Crude Unit at its Omsk (SIOMCRUD) Oil Refinery

OAO Gazprom Neft (GZPFY) halted a crude distillation unit at its Omsk (SIOMCRUD) oil refinery for planned maintenance, according to data from the Russian Energy Ministry’s CDU-TEK unit.

The unit known as AVT-6 stopped operating on March 13 and will start on March 20, according to an e-mail today from CDU- TEK, which collates information from oil companies in Russia. The unit can process 34,671 barrels of crude a day, according to previous data from CDU-TEK.

The Omsk plant in western Siberia is Russia’s largest refinery with a capacity of 392,000 barrels a day, according to data compiled by Bloomberg.

Foster Wheeler Awarded Engineering and Material Supply Contract for Modernization of Russian Refinery

Foster Wheeler AG announced March 8 that a subsidiary of its Global Engineering and Construction Group has been awarded a contract by CJSC Antipinsky Refinery for the engineering and material supply of a new fired heater and air preheating system for the Antipinsky Refinery, Tyumen, Tyumen Region, Russia.

The value of Foster Wheeler's contract was not disclosed and was included in the company's fourth-quarter 2011 bookings.

The fired heater will be part of a new crude distillation unit being built as part of the modernization of the Antipinsky refinery. Foster Wheeler's scope of work is scheduled to be completed by the end of 2012.

This award follows a previous award by CJSC Antipinsky Refinery in 2011 for the technology license and basic design package for Foster Wheeler's Selective Yield Delayed Coking (SYDEC(SM)) technology, and the basic design package for a vacuum distillation unit. This scope of work is scheduled to be completed during the third quarter of 2012.

Foster Wheeler's SYDEC(SM) 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(SM) 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 has supplied its process technology worldwide for over 80 new cokers and has implemented more than 70 delayed coker revamps.

Russia Says Refinery Upgrade Schedule to Be Met for 2012, with Minimal Risks

The schedule for modernizing Russian oil refineries is likely to be met in 2012, but there is a slight risk that work on some units will fall behind, an Energy Ministry official told Interfax.

The oil companies assure us these risks are minimal and under control, that they'll get everything done on time," said Maxim Degtarev, head of the ministry's refining department.

Degtarev said ten units were supposed to be built and ten modernized this year, and that work on four of them had been completed. He did not say how companies that fail to modernize units would be penalized.

Last year's schedule was met in full, and one unit was commissioned ahead of time, he said.

Oil companies have undertaken commitments to modernize refineries and set these down in four-party agreements with the Federal Antimonopoly Service (FAS) and Rostekhnadzor and Rosstatndart, the state technical standards watchdogs. The parties have to report to the government on the fulfillment of programs every year, in return for which they get an extension of the deadlines for upgrading to the production of more advanced motor fuels. The government has given the FAS until April 30 to come up with proposals about sanctions for companies that miss deadlines for refinery upgrades.

Permission to sell Euro-2 gasoline will be extended until the end of 2012, Euro-3 until the end of 2014, and Euro-4 until the end of 2015. A ban on producing Ai-92 and Ai-80 gasolines has been lifted.

The government's fuel and energy commission in December last year gave Rostekhnadzor and the Energy Ministry have until April to report on fulfillment of the refinery modernization schedule. They were also asked to look at "sanctions for non-fulfillment of agreements, including the adjustment of customs-tariff measures". The proposals should be ready by April 30.

Russian Oil Companies Take Interest in Belarusian Refineries

Russian oil companies take interest in Belarusian refineries. According to the Counselor for Economic Affairs of the Russian Embassy in Belarus Viktor Balashov, Russian companies' participation in privatization of Belarusian oil refineries will depend on political will and CEC conditions.

There is currently no information on any major investment transactions in the oil field between the Belarusian and Russian companies, according to Viktor Balashov on April 2 at the V International Conference "Oil refining and export of oil products of Belarus."

He believes that oil industry in Belarus is highly profitable and shows good results of raw material processing, while the traditional cooperation between Belarusian and Russian companies are getting more and more efficient, BelTA informs.

According to Balashov, after the acquisition of Beltransgaz state-owned stake by Gazprom, the latter became one of the largest taxpayers in Belarus, ensuring unimpeded transit of Russian gas across the country. In general, the profit of Beltransgaz sale as well as the agreements, concluded in this field, will amount to $3-4 billion for the Belarusian budget, said Viktor Balashov.

The adviser to the Russian Embassy notes the new agreement between Russia and Belarus will make it possible to return to the pattern of give and take raw materials in oil refining. According to him, "the Russian and Belarusian companies have got equal rights of access to the Russian oil and its refined products."

As Telegraf previously reported, Kazakhstan has also taken interest in privatization of oil refineries in Belarus. On March 28, Kazakh Ambassador Yergali Bulegenov stated it's still early to talk about some specific projects, because these issues should be carefully studied.

In Belarus, Mazyr Oil Refinery plans to increase oil refining up to 12 million tons per year by 2015 through the implementation of major investment projects.

KYRGRYZSTAN

SOCAR Plans to Build $100 Mln Refinery in Kyrgyzstan's Chuy Province

The State Oil Company of Azerbaijan (SOCAR) intends building a new oil refinery in Kyrgyzstan with a likely location in the country's Chuy province, the Kyrgyz Energy Ministry said on March 12

According to information, the Chuy province administration has offered four parcels of land for the construction of SOCAR's oil refinery with a capacity of two million tons.

It has emerged the energy ministry had previously worked out the question of the plant's supply of electricity with the National Electric Network of Kyrgyzstan.

The Azerbaijani delegation led by the vice-president of SOCAR on processing David Mammadov was in Kyrgyzstan on March 2-4. It aimed at discussing in detail issues regarding the implementation of the project, as well as taxation and investments.

The delegation held talks in the Kyrgyz Energy Ministry with along with the participation of representatives of the Chuy province administration, National Electric Network of Kyrgyzstan, Kyrgyzneftegaz and had meetings with representatives of the country's oil traders association, the state agency for geology and mineral resources and the State Tax Service under the government.

During the meetings the Kyrgyz side provided information about the structure of the oil refining industry of the republic, a system of taxation and investment, the pricing policy, issues of export and import of petroleum products in the country, volume of oil and natural gas, gas and reserves of natural resources of the country.

Representatives of the Azerbaijani delegation brought the Kyrgyz side's attention to issues relating to the project for further development.

The agreement on the construction of the oil refinery was reached on Jan.19 at a meeting of Kyrgyz President Almazbek Atambayev and SOCAR President Rovnag Abdullayev. The oil refinery is scheduled to be commissioned in late 2013.

The minimum cost of the oil refinery, which SOCAR plans to build in Kyrgyzstan, hits $100 million.

SOCAR includes the Azneft production association (the companies producing oil and gas on and offshore), the Azerkimya industrial association (chemical enterprises) and Azerigaz industrial association (gas distribution).

SOCAR is the only producer of oil products in the country (it has two refineries on its balance sheet) and also owns petrol stations in Azerbaijan, Georgia and the Ukraine. Last year SOCAR purchase network of gas filling stations in Switzerland. SOCAR is co-owner of the largest Turkish petrochemical complex Petkim. The company carries out oil trade in various regions of the world through SOCAR Trading.

Kyrgyzstan Waiting for Baku Decision on Refinery Site

Bishkek, the largest city in Kyrgyzstan is waiting for Baku decision on the construction site of oil refinery of the State Oil Company of Azerbaijan (SOCAR) in Kyrgyzstan, president of the Association of Oil Traders of Kyrgyzstan Zhumakadyr Akeneev told Trend March, 28.

"The matter of building SOCAR refinery in Kyrgyzstan depends on the Azerbaijani side," said Akeneev.

He said during visit to the country of the Azerbaijani delegation headed by vice-president of SOCAR for processing David Mammadov a number options of sites for the construction of refineries in the south were presented.

"As soon as the Azerbaijani side chooses a place for the refinery, it can start to build and operate its own facility," said Akeneev.

He said Prime Minister of Kyrgyzstan Omurbek Babanov approved the composition of the delegation, which is expected to make soon a visit to Azerbaijan, where it will discuss a wide range of issues, including energy.

Earlier Russian Energy Minister Sergei Shmatko visited Kyrgyzstan. It was expected that, among other issues, the parties will discuss the supply of Russian oil products to Kyrgyzstan.

Earlier there was information that Russia plans to introduce a monopoly on the supply of petroleum products to Kyrgyzstan.

Akeneev noted oil supplies by Russia and Azerbaijan are not mutually exclusive.

"During the visit of Shmatko issues of supply of oil products from Russia were not virtually discussed," he said.

Supplies of oil products from Russia have not changed, and Kyrgyzstan has continued to receive them without export duties, and in the same volume, he said.

He said it is expected that Kyrgyzstan and Russia will hold talks on the matter after April 10.

"The main theme of the Russian delegation's visit was the construction of energy facilities in Kyrgyzstan, such as hydroelectric power plants, as well as the development of oil and gas fields in the country", Akeneev added.

It is planned that an agreement between the parties on this issue will be signed before April 10.

The agreement on the construction of the oil refinery was reached on January19 at a meeting of Kyrgyz President Almazbek Atambayev and SOCAR President Rovnag Abdullayev. The oil refinery is scheduled to be commissioned in late 2013.

The minimum cost of the oil refinery, which SOCAR plans to build in Kyrgyzstan, hits $100 million.

IRAQ

Japan to Provide $2 Bln Soft Loan for Iraq Basra Refinery

The Japanese government will provide a US$2 billion (roughly JPY 160 billion) soft loan for a refinery project in Iraq on the condition that the core contract goes to a Japanese firm, a top-selling business daily here reported.

The oil refinery will be part of a larger refining complex already in operation in the southern city of Basra, the Nikkei Shimbun said, adding that the aid would amount to the single largest yen loan ever extended for an Iraqi project. While the loan will cover the project's full cost, it will be extended only if the primary contract for overseeing construction is awarded to a Japanese company, the newspaper said.

The terms of the aid also require US$624 million (JPY 50 billion) of the products going into the refinery to be built in Japan. With contractor bids solicited next year, a final selection is to be made in 2014. Plant-engineering firms JGC Corp., Chiyoda Corp. and Toyo Engineering Corp. are expected to vie for the core contract, according to the report. The Organization for Economic Cooperation and Development (OECD) restricts such tied aid under its rules for development assistance, but in the case of Iraq, building the refinery through private-sector financing would have been difficult in light of the cost of ensuring adequate security.

The proposed Japanese loan was cleared by OECD members. Iraq's refineries have been ravaged by war, contributing to gasoline shortages.

Despite having some of the world's largest oil reserves, Iraq spends US$5 billion a year to import petroleum products.

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