U.S. refiners could see new opportunities as Europe's largest independent refiner and wholesaler of petroleum products shuts down three of its five refineries, analysts said.

Petroplus Holdings AG (PEPFY, PPHN.EB) announced the three closings January 6 as banks starting freezing more than $2 billion worth of the financially troubled Swiss company's credit lines. Petroplus has faced stubbornly high crude prices, stagnant demand and fierce competition from overseas refiners, which has led to net losses in every quarter except one since 2009.

The refinery shutdowns in France, Belgium and Switzerland could help U.S. crude processors fill refining gaps and grab market share in Europe. That could increase the expanding U.S. exports of oil distillates, such as heating oil and diesel, to the Continent.

Output from the combined 667,000 barrels a day of refining capacity at the shuttered refineries already has ceased, while the company's refineries in U.K. and Germany are running at half of their combined 330,000 barrel-a-day capacity, according to Petroplus Chief Executive Jean-Paul Vettier. Half of Petroplus's output is diesel according to a Bank of America energy newsletter.

Europe has felt the effects of the closures. January diesel contracts on London's Intercontinental Exchange settled at $967.50 a metric ton January 5, up 4.7% for the week, in part because of supply worries in the wake of Petroplus's shutdowns.

U.S. fuel prices have yet to see any impact from the falloff in Petroplus's production. That could start to change if the closures linger through the winter and allow U.S. refiners to stake stronger claims in the European market, said Jason Schenker, president of consultancy Prestige Economics.

"The longer Petroplus stays offline, the greater the probability for it to have a lasting impact" on U.S. refiners, Schenker said.

With Petroplus's production diminished; Europe's demand for U.S. diesel will only increase. That will likely result in higher prices as more customers compete for U.S. fuel supply, said Sander Cohen, analyst at energy consultancy ESAI Inc.

The Petroplus closures "will definitely put pressure on U.S. diesel markets," Cohen said.

American refiners already have been feeding Europe's growing appetite for heating oil and diesel. The U.S. exported a record 1.07 million barrels a day of distillates last October, the last month for which statistics are available, according to the U.S. Energy Information Agency. That's up 22% from a year before.

Europe was the destination of 48.4% of all U.S. distillate exports in October, an increase from 43.5% a year prior, according to the EIA.

The enhanced opportunity for U.S. refiners comes at a good time for companies like Valero Energy Corp. (VLO) and Marathon Petroleum Corp. (MPC). They could use extra diesel sales to Europe to offset an expected drop-off from what had been near-record level profit margins in 2011.

For most of last year, refiners with operations in the Midwest benefited from easy access to cheap oil caused by a glut of crude at the oil storage hub in Cushing, Okla. As that price advantage has shrunk, so have those refiners' profit margins.

How long European refining woes could last is still being debated, analysts said. Europe has spare refining capacity that could be brought online to make up for Petroplus's former output. However, the region struggles with old, inefficient equipment and is dependent on European grades of crude like Brent oil, which has been more expensive than the crude used by most U.S. refiners for about a year.

In contrast, Valero, Marathon Petroleum and other U.S. refiners have invested billions of dollars in equipment upgrades over the past few years to become more efficient.

KBR Announces ExxonMobil Contract for Baytown TX Project

KBR announced January 5 it was awarded a contract to provide construction services for ExxonMobil's new synthetics lubricant base stock facility to be built at ExxonMobil's refinery and chemical plant complex in Baytown, TX. When completed in 2013, the facility will produce ExxonMobil Chemical's high-viscosity SpectraSyn Elite metallocene PAO base stock.

KBR's scope of work for the Baytown plant includes site work, civil, structural, pipe, electrical, instrumentation and mechanical installation, test and checkout services. The award by Technip USA, the prime contractor responsible for engineering, procurement and construction (EPC) of this new facility, follows the construction of ExxonMobil's Flare Gas Recovery Project in Beaumont, Texas, for which KBR and Technip successfully collaborated to execute a complete EPC package.

"This contract award exemplifies KBR's ability to offer competitive, cost-effective construction services to our customers," said David Zimmerman, President, KBR Services. "We look forward to leveraging the past success experienced through our collaboration with Technip to deliver a world-class lubricant base stock facility to ExxonMobil Chemical safely, on schedule, and within budget."

HollyFrontier Announces Woods Cross Refinery Expansion & Feedstock Supply Agreement

HollyFrontier Corporation (HFC) announced January 4 plans to expand capacity at its 31,000 barrel per day ("bpd") Woods Cross, Utah refinery to 45,000 bpd with an expected completion in late 2014.

The expansion scope includes the relocation / revamp of crude, fluid catalytic cracking, and polymerization units from a subsidiary of Western Refining Inc.'s (WNR) Bloomfield, NM refinery to Woods Cross as well an expansion of the Woods Cross diesel hydrotreater and investment in associated utilities and offsites. HFC has signed a definitive agreement for the purchase of the Bloomfield units with Western Refining. HFC expects incremental yields from the expansion project to be approximately 60% gasoline and 40% diesel. The Company expects the cost of this expansion to be approximately $225 million. The Company also expects that this expansion will have a payback period of less than two years.

In conjunction with the expansion, HollyFrontier signed a 10-year, 20,000 bpd crude oil supply agreement with Newfield Exploration Company (NFX). This agreement, which commences upon completion of the expansion, will supply black and yellow wax crude oil produced in the nearby Uinta Basin region to the Woods Cross refinery, which currently has capacity to process approximately 10,000 bpd of these crudes. Upon completion of this expansion, the Woods Cross refinery will be able to process approximately 24,000 bpd of waxy Utah crudes. This expansion and crude oil supply agreement, and expected completion timeline, are subject to HollyFrontier successfully obtaining the necessary permits and regulatory approvals.

"The project to expand our Woods Cross refinery supported by the Newfield supply agreement will allow us to significantly increase earnings and production from Woods Cross. We are excited to be expanding our relationship with Newfield around this growing regional crude source. With the recent startup of the UNEV pipeline, we will have the option to market additional products from this expansion to Cedar City, Utah and Las Vegas, as well as to our traditional customers in Salt Lake City and the Inter-Mountain West," said Mike Jennings, President and Chief Executive Officer of HollyFrontier.

ExxonMobil Reports Emissions, Flaring at its Beaumont Texas Refinery

ExxonMobil on January 9 said operations at its oil refinery in Beaumont, Texas, had returned to normal following a gas compressor problem the day before.

The company said emissions of hydrogen sulfide and sulfur dioxide were routed to the plant's coker unit flare stack on January 8 in a filing to the U.S. National Response Center.

"Regarding your inquiry on Beaumont, a STEERS Report was submitted due to emissions associated with flaring when a compressor tripped. Operations have returned to normal. The Beaumont Refinery anticipates no impact to production," company spokeswoman Rachael Moore said.

The Beaumont refinery has a capacity of 344,000 bpd.

EPA Says Texas Tops GHG Data List

The U.S. EPA says Texas releases far more greenhouse gases into the air than any other state, according to federal data released January 18.

Texas' coal-fired power plants and oil refineries generated 294 million tons of carbon dioxide and other heat-trapping gases in 2010, more than the next two states - Pennsylvania and Florida - combined, the data shows.

The Environmental Protection Agency released the data by industrial facility for the first time as part of a broader effort to reduce emissions linked to global warming.

The agency collected data from more than 6,700 industrial facilities that release at least 25,000 tons of greenhouse gases into the air a year. The threshold is comparable to the emissions from burning 131 railcars of coal, the EPA said.

While industry-heavy Texas' ranking did not surprise, environmental groups said data shows the need for federal regulation of greenhouse gases. The EPA said new rules for emissions of heat-trapping gases from power plants and other major sources could be released by the end of the month.

"It highlights the need to take action, especially considering the extreme weather we have seen lately," said Luke Metzger, director of Environment Texas, an advocacy group.

The American Petroleum Institute, a leading industry trade group, said the federal data proves that there is no reason to include oil refineries in any new rules because they generate a small fraction of the nation's greenhouse gas emissions, compared to coal-fired power plants.

"Air quality continues to improve, and we're doing our part," said Howard Feldman, API's director of regulatory and scientific affairs. "The last thing we need now are more burdensome or unnecessary regulations that will create a drag on business efforts to invest, expand and put people back to work."

Texas has become a key front in the battle over federal regulation of greenhouse gases. The state, which has more facilities in the new EPA database than any other, has filed several legal challenges to block the agency from imposing the rules, but has yet to win in court.

Gov. Rick Perry and other Texas officials have said the federal efforts are based on faulty data and will harm the state's economy.

In Texas alone, 673 power plants, refineries and other large industrial facilities reported their greenhouse gas emissions to the EPA. California had the second-most facilities in the new database with 456.

Of the Texas facilities, six power plants and Exxon Mobil's Baytown refinery ranked among America's top 50 emitters of greenhouse gases, the data shows.

Luminant's Martin Lake coal-fired power plant in Rusk County was the state's leader in 2010, emitting nearly 19 million tons of carbon dioxide and other heat-trapping gases. It ranked fourth nationally.

Coal-fired power plants accounted for 61 percent of the state's greenhouse gas emissions, while oil refineries and chemical producers contributed 15 percent and 13 percent, respectively.

"This is another reality check for the state," said Elena Craft, a scientist for the Environment Defense Fund. "The data shows that power plants and refineries are mostly responsible for these emissions, and it's time for the state to accept responsibility."

Gina McCarthy, the EPA's air quality chief, said the information would help governments and industry cut emissions of greenhouse gases, just as the agency's annual inventory of toxic releases does.

The emissions data is reported by the facilities, but McCarthy said she believes it is reliable.

"Industry has done a very good job," she said. "This is robust, reliable and consistent data."

ConocoPhillips Says No Decision Yet on Demolishing PA Trainer Refinery

ConocoPhillips says no decision has been made about demolishing its refinery in Trainer, PA if the company cannot immediately find a buyer.

Denis Stephano, President of United Steelworkers Local 10-234, which represents more than 200 workers at the idled Delaware County refinery, said January 10 that the refinery's owner told labor leaders the company would demolish the plant if it is not sold by March 31.

"This is the first time the company gave us this information," Stephano said in a news release.

ConocoPhillips said in September that it would sell the refinery or shut it permanently. Rich Johnson, a ConocoPhillips spokesman in Houston, said recently that the company was focused on finding a buyer.

"If we have not identified a buyer by the end of March, we intend to permanently shut down the facility," Johnson wrote in an e-mail response to a question about rumors of the plant's demolition. "We would evaluate what to do with the equipment and property at that time."

There is a buyer's market for refineries in Philadelphia right now. The Trainer plant is one of three in the region that are on the market or will be shut down in the coming months. Sunoco owns the others, in Marcus Hook and Philadelphia. Marcus Hook was idled in December.

In addition, Sunoco is trying to sell the equipment at a fourth refinery, the Eagle Point plant in Westville, Gloucester County, which was shut two years ago. An Indian company has expressed interest in shipping the equipment overseas.

Sunoco and ConocoPhillips say they are exiting refining in the region because it is unprofitable.

ConocoPhillips idled its Trainer plant in September. Stephano said the workforce had remained on site preparing the equipment for long-term preservation.

David Erfert, refinery manager at ConocoPhillips, told a legislative hearing in Harrisburg on Tuesday that the refinery's fate was uncertain.

"We have not thought a lot about demolition and whatever options there are after March 31," Erfert told the House Veterans Affairs and Emergency Preparedness Committee.

Despite efforts of some legislators to quiz corporate officials about the decision to exit refining, the committee's chairman, State Rep. Stephen E. Barrar (R., Chester/Delaware), confined questions to safety to remain within the scope of the panel's mission.

John Pickering, Sunoco's senior vice president of manufacturing, said it "normally takes a couple of years" to clean up and dismantle a complex industrial site such as a refinery.

NPRA Finalizes Name Change to Become American Fuel & Petrochemical Manufacturers

The long-standing U.S. refining and petrochemical trade group National Petrochemical & Refiners Association (NPRA) on January 25 officially changed its name to the American Fuel & Petrochemical Manufacturers (AFPM).

“Our new name will emphasize more than ever what we stand for,” said President Charles T. Drevna. “This includes American manufacturing and jobs, proven and reliable products for your life every day, economic and national security, and benefitting consumers.”

“The name American Fuel & Petrochemical Manufacturers will better describe who we are, what we do and how we serve the American people,” Drevna continued. “AFPM [is] 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,” he said.

Early indications were that AFPM was struggling to catch on with the industry, with a large percentage of industry related comments claiming they preferred NPRA as the name.

The association marked the occasion with an event in Washington to discuss energy issues, launched a more user-friendly website and began limited advertising to increase public awareness of the new name.

The group also adopted a new red, white and blue logo.

The name change in 2012 - the 110th anniversary of the trade association - is 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.

BRAZIL

Toyo Awarded Petrobras Contract for Utilities Work at Comperj Refinery Project

Toyo Engineering Corp., in consortium with Brazilian UTC Engenharia S.A. and Construtora Norberto Odebrecht S.A., has been awarded a contract from Petrobras for utilities construction to be installed in the Comperj refinery project in Itaborai, Rio de Janeiro, Brazil.

The Toyo consortium’s scope of work is for detailed design, procurement and construction (EPC) on a lump sum contract, the company said.

The project is scheduled to be completed in 2014.

This project is regarded as prime importance by Petrobras, who will utilize heavy oil produced in local oil fields as feedstock for increasing domestic demand for light oil and petrochemical products, project officials said.

Toyo’s project experiences for Petrobras exerted in technical capability, performance and cooperation with local partners have led to customer confidence and resulted in obtaining the contract, the company said.

In addition, the water treatment facilities included in this project will be the largest ever for Toyo, and is expected to provide a boost to the expansion of Toyo’s focus on infrastructure business, according to the company.

SURINAME

Ballast Nedam Wins Civil Works Contract for Suriname Refinery Expansion Project

Staatsolie Maatschappij Suriname NV, the state oil company of Suriname, has awarded Ballast Nedam the contract for the general civil- and steel piling works for its Refinery Expansion Project. The Refinery Expansion Project will double the processing capacity at Tout Lui Faut Refinery to 15,000 barrels a day when completed.

The contract for Ballast Nedam includes the supply and installation of 373 steel piles, the processing of approximately 28,800 cubic meters of concrete, and the associated earthworks for the foundations of the expansion of the refinery. The contract for Ballast Nedam has a value of approximately € 25 million. Work on site is due to commence in April 2012 and to be completed in June 2013.

Chain integration is made possible in this project thanks to the network of specialist companies within the Ballast Nedam family. Ballast Nedam Engineering and Ballast Nedam Foundations are responsible for a significant part of the structural work.

This project supports Ballast Nedam’s strategy of focusing on integrated projects and on the niche markets industrial construction, hospitals, offshore wind turbines, secondary raw materials and alternative fuels.

Ballast Nedam has a leading position in construction and infrastructure. The company operates mainly in the Netherlands on integrated and other projects for companies, public authorities and housing consumers, in the fields of mobility, housing, employment, leisure and energy. Ballast Nedam operates internationally in various areas of expertise. Ballast Nedam supplies project, process and contract management in the development, implementation and management phases. The company also provides specialized know-how and skills, and semi-finished and finished products. Ballast Nedam is listed on NYSE Euronext in Amsterdam. The share is included in the Amsterdam Small Cap Index.

VIRGIN ISLANDS

Hovensa Announces Refinery Closure in U.S. Virgin Islands after $1.3 Bln in Losses

Hovensa LLC, a joint venture (JV) of Hess Corporation and Petroleos de Venezuela, S.A. (PdVSA) has announced the closure of its 500,000 barrels a day (b/d) St Croix refinery in the U.S. Virgin Islands. The decision to shut the complex comes after the refinery added up US$1.3bn in losses in the last three years, with no sign of improving margins in the future. Hess said it was expecting the shutdown to cost it US$525mn in after-tax charges for Q411 earnings.

Hovena said equipment will be closed-in by mid-February, although the company will continue to provide fuel to the island's Water and Power Authority until the end of June. After the shutdown, the refining complex will continue to operate as an oil storage terminal.

The St. Croix refinery has a 435,000b/d hydrotreating capacity, a 140,000b/d fluid catalytic cracking (FCC) unit, a 105,000b/d semi-regenerative catalytic reforming unit, a 55,000b/d delayed coking unit and a 37,000b/d visbreaking unit. It was due to undergo a major overhaul of its operations in Q111. In a January 2011 press release, Hess announced the shutdown of a number of older processing units on the west side of the refinery which would have cut crude distillation capacity from 500,000b/d to 350,000b/d. The partial closure, which would not have affected the plant's coker or FCC, was expected to simplify operations and increase efficiency and reliability.

The upgrade was prompted by Hovensa's long-running battle with local authorities over pollution. According to the Wall Street Journal, in September 2010, the U.S Virgin Islands' government was forced to instruct local residents to stop drinking cistern water following a gas leak at the refinery. In December 2010, students and teachers were hospitalized following exposure to fumes from the refinery, while some local residents have long complained about smoke.

Following an investigation, a U.S. Department of Justice (DoJ) spokesperson said on January 26 2011 that the company had consented to a decree with the U.S. Environmental Protection Agency (EPA) and the DoJ, agreeing to spend more than US$700mn on improving its pollution controls. The company also accepted a US$5.4mn fine for violating the Clear Air Act. After the announcement of the plant's closure, the EPA said that it would soon issue a statement on how the shutdown will affect this agreement.

In parallel to improving margins and pollution control, the upgrade also implied a long-term downsizing of the plant, as Hess cancelled planned turnarounds at the units scheduled for closure. This was another of the plant's long-standing trade-offs between scale and profitability.

The St. Croix refinery, built by Hess in 1966, had a capacity of 650,000b/d in 1974. To maximize profitability, capacity was reduced in 1981, with the conversion of the plant's first crude distillation unit (CDU) into a 40,000b/d visbreaker. Additional secondary processing units were added in 1983 and 1993, when a second visbreaker and a FCC were built. Following the establishment of the Hovensa JV in 1998, increasing volumes of heavy Venezuelan crude feedstock necessitated the construction of a coker, which began in 2002.

Despite such large-scale investment, the refinery has suffered in recent years due to operational and financial problems. Utilization has fallen sharply, from 88% in 2008 to 78% in 2010. Over the same period, the plant went from making a profit of US$277mn in 2008 to a loss of US$231mn in 2010. According to Hess, the Q410 loss from its equity stake in Hovensa was US$348mn, pushing net income for the quarter down from US$358mn in Q409 to US$58mn.

Recent years have been hard on the global downstream segment with many plants shutting down in Europe and the U.S. North East in 2011 due to high supply costs and weak demand.

Hovensa claimed the poor operating environment 'caused the closure of approximately 18 refineries in the U.S. and Europe with capacity totaling more than 2mn b/d'. However, BMI believes the wider economic situation alone fails to explain why the St Croix refinery did not manage to weather the crisis. Indeed, the plant is ideally located to source cheap crude from Latin America and then re-export it to those same booming markets or to the U.S.

ASIA

CHINA

Kuwait Petroleum, Sinopec Agree to Advance $9 Bln Refinery JV

Kuwait Petroleum Corporation (KPC) and China Petrochemical Corporation (Sinopec), agreed on January 4 to step up cooperation towards the execution of their planned US$9 billion joint venture to build a refinery and petrochemical complex in south China.

Speaking to Kuwait News Agency (KUNA) after his talks with Sinopec Chairman Fu Chengyu in Beijing, KPC Chief Executive Officer Farouk Al-Zanki said that they decided to continue dialogue and form a special team that will look into new ways to create a winning situation.

During their meeting in a cordial atmosphere, Al-Zanki and Fu also agreed to expand cooperation between the two companies in other areas and to forge a strategic alliance agreement next month when Fu will visit Kuwait.

The project with Asia's top refiner Sinopec, potentially to be the largest Sino-foreign joint venture in China, involves a 300,000 barrel-per-day refinery, a 1 million-ton-a-year ethylene plant and retail network in the southern Guangdong Province.

Kuwait will be the sole supplier of crude oil to the world-class integrated complex, to be located on Donghai Island in the southern coastal city of Zhanjiang.

With an eye to starting operations of the refinery part at the end of 2014, construction has already begun. As one of the pillars of KPC's expansion strategy for 2030, the joint venture represents a highly significant step forward in plans to expand its business in China. With a population of some 100 million, Guangdong is China's largest oil consuming province that creates a huge energy market.

At the separate meeting with Wang Yilin, Chairman of China's largest offshore oil producer CNOOC, the two sides agreed to sign a technical service agreement. Wang also sought Kuwait's enrolment in a new exploration project in South China’s nearby Yacheng gas field where Kuwait Foreign Petroleum Exploration Company (KUFPEC) has previously participated in projects. They also agree to further discuss joint exploration projects in a third country.

INDIA

Proposed Amerind India Refinery under Question

India state government officials are asking whether Amerind Petroleum Private Limited's proposed Rs 12,000-crore petroleum refinery near Visakhapatnam will be built after U.S. Exim Bank Chairman and President Fred Hochberg said after meeting Chief Minister N Kiran Kumar Reddy in Hyderabad on January 6 that the bank had only issued a letter of intent (LoI) to the AIC, a joint technical partner in the consortium, to extend financial support and that it had not approved the project yet.

"It is better not to discuss the project that has not yet been approved. Issuing LoI does not mean that the bank has granted the loan. Granting of loan will be subject to the party having sufficient equity and meeting other requirements," he explained, but did not say anything about whether Amerind would be able to meet the criteria. Hochberg was on a tour of South India and after, visiting Chennai and Bengaluru, reached here.

Amerind Petroleum Private Limited, in a joint technical collaboration with American Industrial Corporation (AIC) of the U.S., proposed to set up a petroleum refinery with an initial capacity to refine 7.50 million tonnes of crude oil per year (1.50 lakh barrels a day). The refinery is to come up in the Petroleum, Chemical and Petrochemical Investment Region (PCPIR) near Visakhapatnam.

Major industries minister J Geetha Reddy, who was to address the joint press briefing with Hochberg, did not turn up but told Express later that before the state government signed the MoU, it had a due diligence study done and contacted the US Exim Bank which said it had issued LOI.

"Even if Amerind does not get the loan and backs out, no harm will be done to Andhra Pradesh since the government's investment is zero. As per the agreement, Amerind will have to acquire land on its own and the state government will only play the role of a facilitator," she said, adding: "Till such time the company actually backs out, we consider the project as an active one. There is nothing that the state has to pursue in this case. Amerind has to mobilize money and invest in the state and it is for the company how it will pursue its loan application with the U.S. Exim Bank, she said.

Amerind Petroleum was promoted by Syed Badruddin, who hails from an aristocratic family of Hyderabad and a successful technocrat entrepreneur with 36 years of experience in the manufacturing sector in Andhra Pradesh.

He is the chief promoter and chairman of the company and the project is proposed to be set up with financial assistance from the U.S. Exim Bank.

Essar Announces Startup of Vadinar Refinery Hydrogen Manufacturing Unit

Essar Energy subsidiary Essar Oil Ltd announced the commissioning of the hydrogen manufacturing unit (HMU), a third new unit to be commissioned as part of the Phase I expansion at its Vadinar Refinery in Gujarat.

Essar Oil is planning to commission six additional units by March 2012, thus completing a Rs 8,310-crore expansion project that will increase the Vadinar Refinery’s capacity and enhance its complexity almost twofold. Capacity will increase to 18 MMTPA (equivalent to 375,000 barrels per day) from 14 MMTPA currently (300,000 bpd).

Also, the refinery complexity will reach 11.8—up from 6.1 at present.

An optimization project is also under execution at the refinery to further increase the capacity to 20 MMTPA (405,000 bpd) by September 2012. The capacity expansion, complexity enhancement and subsequent optimization will give the Vadinar refinery the capability to process over 80% heavy and ultra-heavy crudes, which are lower cost than light crudes.

In terms of product yield, the expanded Vadinar Refinery will have the flexibility to produce higher value products, including pet coke.

Lalit Gupta, MD & CEO-Essar Oil said, “The operational readiness of the Amine Regeneration Unit (ARU) and the HMU is essential to support the smooth functioning of two key expansion units, the Diesel Hydrotreater (DHDT) and the Vacuum Gas Oil Hydrotreater (VGO-HT).

The successive commissioning of the ARU and HMU within a week from each other has therefore made it possible for us to adhere to our project timelines.” The HMU helps produce and supply 99.9% pure Hydrogen gas to the DHDT and VGO-HDT for the hydrotreating process, read Essar Oil’s media statement.

The HMU at Essar Oil’s Vadinar Refinery is licensed by Haldor Topsoe and designed by UOP, one of the world’s leading licensors of technology for the petroleum refining industry.

The HMU is designed to operate on six feedstock options— natural gas, saturated refinery fuel gas, saturated LPG, hydrotreated, stabilized naphtha and a blend of saturated LPG and hydrotreated naphtha—bringing down costs and strengthening refinery margins, claimed the company. The HMU has an installed capacity to generate 130 kNm3 per hr of Hydrogen gas, making it among the largest units in the world with heat exchanger reformer technology.

MYANMAR

China Energy Company Eyes $2.5 Bln 100,000 bpd Refinery in Myanmar

China's Guangdong Zhenrong Energy Co. Ltd, an oil and commodity trader partly owned by state-run Zhuhai Zhenrong Corp, is scouting for sites in Myanmar to build a 100,000 barrels-per-day (bpd) refinery, the company's chief executive said.

The project, estimated to cost US$2.5 billion, is likely to be located in the southern port city of Dawei and built by 2015, chief executive Xiong Shaohui told Reuters.

He did not elaborate, and it was not immediately clear if the project would be built in the multi-billion dollar Dawei Special Industrial Zone, which, once complete, will be Southeast Asia's largest industrial area and a vital source of revenue for a government seeking to overhaul Myanmar's economy.

"We're inspecting for the potential sites and have tentatively selected southern port city Dawei, near the Andaman Sea," Xiong said.

Guangdong Zhenrong will partner with two Myanmar firms -- privately run Htoo Group of Companies and a military-affiliated company which Xiong didn't give a name.

The project will be totally funded the Chinese firm and Xiong said his company would have no problem footing the bill. China is Myanmar's biggest ally.

The proposed refinery is tiny by Chinese standards but could meet 60 percent of the Myanmar market's demand for refined fuel, said Xiong. Myanmar has a total refining capacity of 51,000 bpd, and it imports almost all of its domestic fuel needs.

The 250 sq km (97 sq mile), US$50 billion Dawei project will include an US$8 billion deep-sea port, an oil refinery and a petrochemical factory, Myanmar officials have said.

The project is spearheaded by Thai building contractor Italian-Thai Development Pcl and is scheduled to be ready by 2019. It is located in the Tanintharyi region of southern Myanmar on the Indian Ocean.

In January Myanmar's government abruptly halted construction of a 4,000 megawatt coal-fired power plant at the Dawei zone following a domestic outcry over its environmental impact.

That decision follows the suspension last October, also on environmental grounds, of the Chinese-led US$3.6 billion Myitsone dam, a move that stunned China but won President Thein Sein political credit among sceptics at home and abroad, who have doubted his government's commitment to reform.

Xiong said he was confident the refinery would not encounter any opposition.

"The way we run our business will be different from many other companies investing in Myanmar. We want to make inputs first," he said.

"First of all, we want to train hundreds of local workers, bring in the first-class refining technology and make sure our partners are happy working with us."

PAKISTAN

Pakistan Refiner to Deploy UOP Tech in Expansion

UOP LLC, a Honeywell company, announced January 26 that its new process technology designed to help refiners get more high-value product from each barrel of crude oil has been selected by National Refinery Limited (NRL) to maximize diesel and lubricant production in Pakistan.

UOP's Uniflex processing technology was developed to help refiners processing the bottom of the barrel, the heaviest portions of a barrel of crude also known as vacuum residue, into higher-value transportation fuels. This technology can deliver 90 percent conversion of vacuum residue to transportation fuels while minimizing by-products. Traditional bottom-of-the-barrel upgrading process technologies have only been able to convert 60 to 70 percent of vacuum residue to transportation fuels.

"Uniflex technology offers the highest conversion rate of bottom-of-the-barrel crudes to high-value products available today," said Pete Piotrowski, vice president and general manager of Process Technology and Equipment for Honeywell's UOP. "Demand for low-value products such as fuel oil that are traditionally produced from these heavy residues is stagnant. At the same time, diesel demand is growing at a rate faster than all other transportation fuels. In an integrated facility like NRL's, Uniflex process technology can help refiners close this gap and increase their profitability."

The NRL facility, which is scheduled for start-up in 2016, will produce 40,000 barrels per day of diesel fuel and 4,500 barrels per day of lube base oils.

NRL will use Uniflex technology to upgrade its heavy residue into high-value distillate products. Of particular value to NRL is the high yield of diesel from the Uniflex technology, which is nearly double that of competing residue conversion technologies. The technology will be integrated with UOP Union fining hydroprocessing solutions to process distillates into high-quality diesel fuel and naphtha into high-quality feedstock used for gasoline production.

Vacuum gas oil from the facility will also be converted to diesel and lube base oils using UOP's Unicracking technology and fuels dewaxing technology provided by an alliance between Honeywell's UOP and ExxonMobil Research & Engineering Company (EMRE). The alliance, formed in 2011, brings together EMRE technology for lube base oils production with UOP hydroprocessing solutions, which produce the high-quality feedstocks needed for lubricant production.

UOP has provided process technology and solutions to Pakistan since the 1930s when its Dubbs Cracking process technology was licensed to Attock Refinery Ltd., part of the Attock Group of companies, which also owns NRL.

NRL operates three refineries and a petrochemicals plant in Pakistan, including the only lube production facility in the region, and processes almost 2.5 million tons of crude per year.

PHILIPPINES

Foster Wheeler Announces Philippines Petron Refinery Contract

Foster Wheeler announced January 17 that a subsidiary of its Global Engineering and Construction Group has been awarded a contract by Petron Corporation (Petron) for the Petron Refinery Master Plan-2 Project in Bataan, Philippines. Foster Wheeler will execute detailed engineering and procurement services for the delayed coker unit (DCU), including the engineering and material supply of two double-fired Terrace Wall coker heaters. The DCU will have a design capacity of 37,500 barrels per stream day and is a key part of this significant refinery upgrade.

The Foster Wheeler contract value was not disclosed and was included in the company's third-quarter 2011 bookings. The award for the delayed coker heaters was included in the company's second-quarter 2011 bookings.

This award follows an earlier award for the process design package and technology license for the DCU, which will use the company's leading Selective Yield Delayed Coking (SYDEC) process.

"We are very focused on leveraging coking technology wins into larger workscopes," said Umberto della Sala, Chief Operating Officer of Foster Wheeler AG. "Coker units are complex, and we always recommend Foster Wheeler detailed engineering and critical procurement to realize the full operational benefits of our well-designed, well-constructed delayed coking unit. We believe that this award reflects Petron's confidence in the added value that we will bring to this project and in our fast-track, cost-effective execution plan."

Foster Wheeler's SYDEC process is a thermal conversion process used by refiners worldwide to upgrade heavy residue feed and process it into high value transport fuels. The SYDEC process can be designed to maximize clean liquid yields while minimizing fuel coke yields from high sulfur residues. By installing a SYDEC unit, a refinery owner is able to process heavier crudes, which sell at a discount to the benchmark light, sweet crudes, thereby allowing the owner to receive the benefit of increased refining margins.

EUROPE / AFRICA / MIDDLE EAST

ALBANIA

Foster Wheeler to Perform Albania Refinery Study

Foster Wheeler AG announced January 31 that a subsidiary of its Global Engineering and Construction Group has been awarded a feasibility study by Albanian Refining & Marketing of Oil sh.a. (ARMO) relating to the modernization of two refineries, located at Ballsh and Fier in Albania.

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

ARMO intends to modernize the existing refineries at Ballsh and Fier to restore production to the original design capacity and produce transportation fuels in line with current European Union regulations. The study is expected to be completed by mid-2012.

ARMO, a former state-owned company privatized since 2008, owns these two refineries which serve both the domestic and the Balkans' regional markets.

BULGARIA

Technip Wins Bulgaria Refinery Contract for Phase 1 Heavy Residue Hydrocracking Complex

Technip has been awarded by Lukoil Neftochim Burgas ad, subsidiary of OAO LUKOIL, a lump sum turnkey contract, worth more than EUR900 million (Technip share around EUR600 million), for the engineering, procurement and construction of Phase 1 of a heavy residue hydrocracking complex to be built at their refinery in Burgas, Bulgaria.

This contract covers the detail engineering, procurement of equipment and material, construction, pre-commissioning and commissioning of a 2.5 million tons/year vacuum residue hydrocracker based on Axens H-Oil process, as well as amine regeneration unit, sour water stripper, hydrogen production units, utilities and offsites upgrading.

Nello Uccelletti, Technip Senior Vice President Onshore stated: "We are proud to have been chosen by the Lukoil Group for this major project. This award recognizes the know-how and expertise of our teams. It also confirms Technip's leadership in the field of refining after projects such as Dung Quat in Vietnam, Jubail in Saudi Arabia, and Algiers Refinery in Algeria".

Technip's operating center in Rome, Italy will execute the contract which is scheduled to be completed by end of January 2015.

The contract follows the successful execution of the front-end engineering design completed by Technip in the first quarter of 2010, and the detailed engineering and procurement services contract won at the beginning of 2011.

FRANCE

Petroplus will Seek Buyer for Petit Couronne Refinery

Petroplus Holdings AG on January 20 announced that it will initiate a sales process for the Petit Couronne refinery and related marketing business, after an information and consultation process with the Works Councils. During this period, all other possible options will be considered.

Petroplus also announced that it is evaluating strategic alternatives for the Antwerp and Cressier refineries, including potential sales and intends to complete these processes in the coming months.

Petroplus also provided the following update in regards to operations. The Cressier refinery has been safely shut down. Labor actions at the Petit Couronne and Antwerp refineries are restricting the lifting of products. Petroplus will provide further updates to the public as needed.

Petroplus Holdings AG is an independent refiner and wholesaler of petroleum products in Europe. Petroplus focuses on refining and currently owns five refineries across Europe: the Coryton Refinery in the United Kingdom; the Antwerp Refinery in Belgium; the Petit Couronne Refinery in France; the Ingolstadt Refinery in Germany; and the Cressier Refinery in Switzerland. The refineries have a combined throughput capacity of approximately 667,000 barrels per day.

GERMANY

Shell Awards Jacobs EPCm Contract for German Refineries Project

Jacobs Engineering Group was awarded a contract from Shell to provide project management and engineering, procurement, and construction management (EPCm) services to support the company’s “Connect” project in Rhineland, Germany.

Officials did not disclose the value of the contract, which is scheduled to be completed in early 2013.

Jacobs' EPCm scope includes piping tie-ins, instrumentation, steel structures, pump stations, and other infrastructure components, the company said.

An onsite Jacobs/Shell team of approximately 50 personnel is executing the work supported by Jacobs' office in Mumbai, India.

The project involves the construction of two tunnels under the Rhine River to connect Shell's two German Rhineland refinery sites, which are 2.36 miles (3.8 kilometers) apart.

The tunnels are being developed by a specialist contractor.

Jacobs is designing and installing the infrastructure inside the battery limits (ISBL) of each refinery site to connect each facility to the tunnels.

Once completed, the Connect project should enable Shell to optimize operational synergies between the two sites.

With the facility integration, Shell expects to enhance and increase its production of clean fuels.

TURKEY

Turkey’s Investors in Petchem Feedstock Refinery Seek $4 Bln

Investors backing the construction of a refinery in Turkey that is to produce naphtha feedstock for the planned Petkim Peninsula petrochemical "supersite" are seeking up to $4bn in long-term loans to help finance the $5bn (€3.9bn) installation, the Socar Turcas Aegean Refinery joint venture said on January 18.

The joint venture, 81.5%-owned by the State Oil Company of Azerbaijan (SOCAR), had instructed Unicredit to explore potential loan arrangements with export-import credit insurance agencies of countries that are home to companies that may tender to build the refinery, it added.

Apart from the loans, the remaining cost of the refinery, to be known as the Star Refinery, would be financed by [1]SOCAR, and the other joint venture partner, Turkish fuel retailer [2]Turcas Petrol, with an equity injection of $1bn.

The [3]groundbreaking ceremony for the 214,000 bbl/day Star Refinery was held last October in Aliaga, near Izmir, on western Turkey's Aegean coast.

The refinery, scheduled to go into production in 2015, is to provide feedstock for an adjacent petrochemical supersite of [4]Petkim, the sole major Turkish petrochemical producer, which is controlled by SOCAR.

The petrochemical complex, which taking into account the cost of the refinery will be built at a cost of approximately $10bn, is [5]to be modeled on the Jurong Island industrial zone in Singapore, which includes a chemical manufacturing cluster.

Petkim intends to build up the complex to enable it to double its petrochemical output to 6.3m tonnes/year before 2018, and achieve 10m tonnes of products by 2023.

UNITED KINGDOM

Total Likely to Retain North Killingholme Refinery in UK

The chief executive of Total and owner of Lindsey oil refinery has said the French company is likely to keep the North Killingholme refinery.

Chief executive Christophe de Margerie, speaking to reporters, said a decision will be made soon. He said: "We will probably, given a lack of buyers, put the refinery back into our refining system.

"It is important these sorts of decisions are taken for the long-term. We will not close a refinery just because margins have been going down for a month."

As reported in the Telegraph, Total announced the intention to sell the 220,000-barrel-a-day facility, which employs about 500 people directly and hundreds more contractors, in April 2010.

The company cited over-capacity as the reason, but a lack of buyers has seen a line drawn under the proposal for the UK's third largest refinery. A self-imposed deadline of the new year was set by the company, with the intention of keeping the plant running should an acceptable offer not materialize.

Mr de Margerie said the situation on margins had not improved in recent times. He said: "In December, the results were once again particularly bad. In France, in Europe, even in the United States, it is not good."

In the UK petrol consumption is down nearly 2.5 billion liters on pre-recession figures. The Grimsby Telegraph understands that talks had reached advanced stages with at least two separate companies, with American and Russian interest. Operational since 1968, LOR as it is locally known, sits adjacent to ConocoPhillips on the North East and North Lincolnshire border, close to the Humber bank. It was commissioned by Total and Fina, with Total taking full control in 1999. Last summer a £200 million hydro desulphurization unit was commissioned, allowing LOR to handle crude oil of a lower quality than the North Sea's depleting riches.

LIBYA

Libya's Lanuf Refinery JV Partner Indicates Start-up 'In the Next Few Months' and Expansion

Libya's largest refinery, Ras Lanuf, will resume output within months and will be expanded to double its current capacity over four years, a joint venture partner said on January 17.

Abdul Aziz Al Ghurair's Dubai-based group set up a joint venture with the Libyan National Oil Corporation in 2009 -- the Libyan Emirati Refining Co -- to own and operate the refinery. Ras Lanuf can process up to 220,000 barrels of oil per day (bpd) and accounts for well over half of the country's total oil refining capacity. The refinery was halted during last year's uprising against the rule of Muammar Gadaffi and the reopening date has consistently been pushed back. The NOC had hoped to have the refinery back up at the end of 2011.

"We are looking at getting it to start again - in the next few months, it will start," Al Ghurair, who is part of a trade delegation from the United Arab Emirates, told reporters in the Libyan capital.

While the current focus is on getting the refinery operational again - Al Ghurair said it was "slightly" damaged during the country's civil unrest - the aim was to expand it going forward.

"We are looking to expand, to double the capacity, so once we have the expansion plan it should be doing 400,000 barrels a day," Al Ghurair, who is chief executive of Mashreq bank, Dubai's second-largest lender by market value, said. "It will take four years to complete the expansion."

Al Ghurair cautioned that the speed of the refinery's build-out would be dictated by market conditions. The UAE was the second Arab state to recognize the Transitional National Council as the legitimate government of the North African country and, along with Qatar, was the only Arab country to offer military assistance to NATO operations against former leader Muammar Gaddafi.

"What we are looking at, UAE companies, is to come and set up shop quickly," Al Ghurair said.

NIGERIA

Nigeria’s Kaduna Refinery May Ignore Turn-around Maintenance

There is uncertainty over the turn-around maintenance of Kaduna Refinery and Petro Chemical Limited (KRPC) as the original builders of the facility expressed fears to Nigeria’s Federal Government over current countrywide security threats.

Sources at the Ministry of Petroleum Resources said the original builders of the refinery were invited by the Nigerian authorities for turn-around maintenance of the three refineries in Warri, Port Harcourt and Kaduna.

Chiyoda Corporation of Japan, the original manufacturers of the KPRC have turned down the offer due to the security concerns, sources said.

Minister of Petroleum Resources, Diezani Alison-Madueke said January 17 in a statement that Nigeria will in mid-January sign a formal contract for the planned turn-around maintenance (TAM) of all its traditional refineries with their original builders.

Although, the minister assured that all the original builders will attend the signing of the contract or agreement for the TAM with officials of the Ministry of Petroleum Resources, Nigerian National Petroleum Corporation (NNPC), Daily Trust gathered that Chiyoda are isl contemplating the contract.

KPRC, located in the North-West city of Nigeria was constructed in 1980 by Chiyoda Corporation and the company also constructed all the other parts of the refinery including the Fluid Catalytic Cracking Unit, Crude Distillation Unit and Naphtha and Middle Distillate Hydro Treating Unit.

There has been sectarian violence in the city of Kaduna including a number of bomb blasts recently.

"In order to ensure that we get our refineries to 90 per cent utilization and to show Nigerians that we are serious this time around, we actually went back and brought the original contractors that built our refineries in Warri, Port Harcourt and Kaduna," the minister said in her statement.

"Already, they have given us an aggressive timetable and they have assured us that within 24 months all the three major refineries will be producing up to 90 per cent capacity utilization," she said.

RUSSIA

Alfa Laval Gets Order to Supply Heat Exchangers for Russian Refinery

Alfa Laval has won an order for compact heat exchangers from a refinery in Russia. The order, worth approximately SEK 70 million, was booked late December 2011. Delivery is scheduled for 2012.

Alfa Laval's compact heat exchangers will be used in the refinery distillation process where crude oil is preheated in different steps. They will reuse heat from the process for preheating the crude oil, resulting in a very energy-efficient solution.

"This is another example of our compact heat exchangers enabling big energy savings compared with the traditional shell-and-tube technology they are replacing," says Lars Renstrom, President and CEO of the Alfa Laval Group.

QATAR

Qatargas Signs EPC Diesel Hydrotreater Contract with Samsung for Laffan Refinery

Qatargas on January 16 signed an Engineering, Procurement and Construction (EPC) contract with Samsung Engineering Ltd. for a Diesel Hydrotreater (DHT) Unit that will treat 54,000 barrels per stream day (BPSD) of diesel, from high-sulfur into ultra low-sulfur diesel fuel, at the Laffan Refinery. The Laffan Refinery, which started production in September 2009 and is operated by Qatargas, is one of the largest condensate refineries in the world and the first of its kind in Qatar.

The contract was formally signed by His Excellency Dr. Mohammed Bin Saleh Al-Sada, Minister of Energy and Industry and Chairman of the Qatargas and Laffan Refinery Boards of Directors, and Mr. Park Ki-Seok, President and Chief Executive Officer of Samsung Engineering Ltd. Engineering Ltd., and representatives of the Laffan Refinery shareholders.

Commenting on this major project, Al-Sada said: "This project forms part of Qatar's National Vision, as laid down by His Highness the Emir Sheikh Hamad Bin Khalifa Al-Thani, for securing efficient energy supplies for the country meeting the most stringent environmental specifications, Euro 5, and contributing towards clean global energy security. The surplus production will be exported, making it the latest addition to the State of Qatar's existing export portfolio in the energy sector. The planned start-up of this project is the first quarter of 2014 at a cost of around QR 350 million."

Khalid Bin Khalifa Al Thani said: "This is a very significant milestone for our Laffan Refinery, which is already undergoing an ambitious expansion drive to double its capacity of 146,000 BPSD. I'm particularly pleased about this collaboration with Samsung Engineering for the development of this Diesel Hydrotreater Unit as it represents one of the many ways through which we continue to demonstrate our highest standard of environmental management."

Mr. Park Ki-Seok, President and Chief Executive Officer of Samsung Engineering Ltd., said: "It is a privilege to be awarded the Laffan Refinery DHT Unit project from Qatargas, the largest LNG producer in the world. We are excited to fortify this new partnership by delivering the project on time and safely. This being our first project in Qatar, Samsung Engineering is determined to make a positive and lasting impression to the client and to the country."

The DHT Unit, which is aiming to produce diesel with less than ten parts per million (ppm) sulfur content with the Euro 5 specification, will be built and integrated into the existing Laffan Refinery by 2014. The DHT Unit will process straight run Light Gas Oil (LGO) feedstock from the existing Laffan Refinery 1 (LR1) and the second planned refinery (LR2).

The DHT Unit has a processing capacity of 54,000 BPSD. Until the second refinery is operational, the DHT Unit will run at 50 per cent of its designed capacity. Occasionally, when the existing kerosene hydrotreater is shut down either for maintenance or catalyst replacement, the DHT Unit will also be able to treat the straight-run LGO from the kerosene condensate fractionation unit. The DHT Unit will be installed inside the plot of LR1, which is located in Ras Laffan Industrial City (RLIC) in Qatar.

The DHT Unit project is being developed by Laffan Refinery Company, which is operated by Qatargas. The shareholders in the joint venture include Qatar Petroleum (84%), Total (10%), Idemitsu (2%), Cosmo (2%), Mitsui (1%) and Marubeni (1%).

The Laffan Refinery, with its processing capacity of 146,000 BPSD, represents a significant achievement by the State of Qatar in the field of optimizing condensate production. Engineering work is currently being undertaken for a second condensate Laffan Refinery (LR2), which will have the same capacity and will be constructed on an adjacent plot. The DHT Unit is designed to process the LGO straight run from both refineries.

SAUDI ARABIA

Aramco, Sinopec Sign $8.5 Bln Yanbu Refinery JV Deal

Saudi Aramco and China’s Sinopec Group on January 14 signed a landmark $8.5 billion (SR32 billion) joint venture agreement to set up an ultramodern, highly sophisticated, full-conversion oil refinery in Yanbu.

Called simply YASREF, the Yanbu Aramco Sinopec Refining Co. Ltd. will begin production in the second half of 2014, processing 400,000 barrels of heavy crude a day. Saudi Aramco will hold a 62.5 percent stake in the plant while Sinopec Group will own the remaining 37.5 percent.

Saudi Aramco President and CEO Khalid Al-Falih and Sinopec Group Chairman Fu Chengyu signed the agreement at the Saudi Aramco headquarters in Dhahran.

"This is the fourth joint venture between our two enterprises," said Al-Falih. "YASREF takes its rightful place next to our two downstream companies in China's Fujian Province, and our in-Kingdom upstream joint venture, Sino-Saudi Gas Ltd.," he pointed out that Sinopec was Saudi Aramco's largest crude oil customer. YASREF will create 1,200 direct jobs and over 5,000 indirect jobs.

As Asia's largest producer and supplier of oil products, Sinopec Group brings technical and commercial expertise to the joint venture while Saudi Aramco adds value with its unparalleled strengths in resources, management and host advantage. The refinery is already under construction and will be spread over an area of 5.2 million square meters. Its giant size can be gauged from at least two facts. During the refinery's construction more than 80,000 tons of structural steel will be utilized which is enough to construct a new Golden Gate Bridge; and 430,000 cubic meters of concrete will be poured into its foundation which is enough to build two Kingdom Tower buildings like the one in Riyadh. The facility's location in Yanbu, next to two other refineries, is ideal for supplying both overseas markets and the Kingdom's fast-growing Western region.

"The various world-class local and international refining and petrochemical investments Saudi Aramco is making is proof of our firm belief that the downstream remains an attractive and profitable business," said Al-Falih. "Over the next decade, our total global refining capacity is expected to approach 8 million barrels a day as a result of this largest expansion by any oil company in the world. YASREF stands as a testament to the sound climate for foreign direct investment in Saudi Arabia, and it is yet another indicator of the attractive business opportunities this nation has to offer strategic investors," he said.

With a 37.5 percent stake in YASREF, this is the largest Chinese investment in the Kingdom. China now stands as the Kingdom's largest crude oil market, making Saudi Arabia China's primary supplier of petroleum.

McIlvaine Company,

Northfield, IL 60093-2743

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