Delta said April 30 that it would spend $150 million to acquire the Trainer refinery, which has been shuttered for six months, after receiving $30 million from the state of Pennsylvania as part of a deal to support job creation.

The airline said it would spend $100 million more to refurbish the plant to increase its output of jet fuel.

Richard H. Anderson, Delta's chief executive, said the investment was a modest one, equivalent to the list price of a new wide-body plane like a Boeing 777. The company estimated it would reduce its annual fuel expense by $300 million, once the refinery was refurbished and operating again.

To achieve similar fuel savings, Delta would have to buy 60 new-generation narrow-body planes like the Boeing 737, a capital investment that would total $2.5 billion, according to a regulatory filing.

Delta said it had also struck a three-year agreement with BP to supply crude oil to the refinery.

As part of the deal, the details of which were not released, Delta said it would exchange gasoline, diesel and other petroleum products produced at the refinery for jet fuel from other sources, like BP and Phillips 66.

Combined with the jet fuel produced at Trainer, Delta said these deals would provide 80 percent of its fuel needs in the United States. The purchase ''is an innovative approach to managing our largest expense,'' Mr. Anderson said in a statement.

The jet fuel bill at Delta, as at other airlines, has soared in recent years as prices for crude oil increased. On average, fuel accounts for about a third of an airline's operating costs, a share that has been rising for much of the past decade.

The International Air Transport Association estimated that the global airline industry's fuel bill would grow by $40 billion this year, from about $177 billion in 2011.

These rising fuel costs have led to painful restructurings for airlines in recent years, helping to push many of them into bankruptcy and spurring consolidation across the industry. The airlines have set up elaborate hedging strategies to try to counter the rising fuel costs. But the hedges backfired when crude oil prices rose or fell in unexpected ways.

Buying a refinery will not erase Delta's fuel bill. The airline will still need to buy crude oil at world market prices. But in justifying the purchase, Delta said the cost of manufacturing jet fuel had risen more rapidly than crude oil costs. It also said that demand for jet fuel and diesel, both byproducts of the refining process, had been rising steadily in recent years, while demand for gasoline was falling, adding to the pressure on jet fuel prices.

Last year, Delta spent $12 billion on fuel, about $3 billion more than the previous year, as oil prices rebounded from their post recession lows. Fuel makes up 40 percent of Delta's costs.

The company said it expected the acquisition of the refinery to be completed in the first half of 2012. The airline said changes to the plant's infrastructure were to be completed by the end of the third quarter, when jet fuel production would begin. Delta estimated that its fuel savings this year would be more than $100 million.

Analysts have been puzzled by Delta's interest in the refinery, a notoriously difficult business that is chronically unprofitable. Despite the skepticism from oil specialists, investors seem to support Delta's unusual approach. The company's shares have gained more than 10 percent since the beginning of April as word of its interest in the refinery started to spread.

The Trainer refinery is on the Delaware River, midway between Philadelphia and Wilmington, Delaware. It has a crude oil capacity of 185,000 barrels a day, and processes mainly light, low-sulfur crude oil.

Trainer has historically been geared to the gasoline market in the Northeast. But as consumption dropped and light crude oil costs rose faster than other types of crude oil, Conoco's plant has struggled.

Two refineries in the Philadelphia region - the Trainer refinery and Sunoco's Marcus Hook - and one in the Virgin Islands, accounting for half of the East Coast's refining capacity, have been shut down since September.

Delta said Trainer's jet fuel output would be 32 percent of the total daily capacity, up from 14 percent. Its gasoline production will drop to 43 percent from 52 percent, Delta said.

To assuage concerns that an airline has never owned or run a refinery, Delta said the plant would be led by executives with refining experience, including Jeffrey Warmann, who ran Murphy Oil's refinery in Meraux, Louisiana.

Rescue of U.S. Refiners after Petroplus Collapse cause European Rivals to Face Closure

More European oil refineries face likely closure as their prospects of surviving the collapse of parent company Petroplus are crushed by the reprieves for their more profitable U.S. rivals.

Of the five refineries that the bankrupt Petroplus (PPHN.S) owned, Cressier in Switzerland and Antwerp in Belgium have been sold to trading houses Vitol, in a joint venture with private equity house AtlasInvest, and Gunvor.

Decisions on the future of Coryton in Britain and Ingolstadt in Germany are expected shortly, while Petit Couronne in France got a six-month reprieve through a supply agreement with Royal Dutch Shell (RDSa.L) that expires at the end of summer.

Analysts and market observers think only one or two of these plants will escape being turned into storage facilities, putting at risk thousands of jobs around Europe.

Dozens of refiners have closed in Europe in the past decades as booming Asian economies have built new modern plants and squeezed European companies out of many export markets. Surviving European refineries are largely in the hands of oil majors and Petroplus was the last significant independent operator.

"U.S. product exports are surging, and the return to production of many U.S. east coast refineries is another nail in the coffin of European refiners," said Seth Kleinman, global head of energy analysis at Citigroup.

A surprise deal announced late last month by U.S. Delta airlines (DAL.N) to rescue the 185,000-barrels-per-day (bpd) Trainer refinery in the Philadelphia area is the most recent example of a reprieve for a U.S. refinery that was meant to close.

Carlyle, the private equity group, is in exclusive talks with Sunoco (SUN.N) to buy a 330,000 bpd refinery also in the Philadelphia area. PetroChina (601857.SS) has offered $350 million plus working capital for the 235,000 bpd Aruba refinery in the Caribbean, owned by Valero Energy (VLO.N).

"U.S. net product exports can go up another 1 million barrels per day. That is one million bpd of European refining that will need to close," Kleinman said.

Trading houses have so far bought Petroplus plants as part of a long-term expansion of their asset bases to improve their ready access to different grades of fuel and to broaden their customer base.

Having physical assets may also help them to get round proposed regulation, on both sides of the Atlantic, that will limit heavy trading of derivatives unless it can be shown to be necessary to hedge physical commodity positions.

In addition to such strategic incentives, trading houses had wrongly anticipated a big improvement in refining margins on the back of large closures of capacity in Europe and the United States from the start of this year.

At one point early this year Europe's gasoline traders were even betting on richer pickings arising from the U.S. summer driving season, despite a grim demand outlook.

Gasoline refining margins did briefly jump higher, but subsequently fell back.

With the reopening of some U.S. plants, which still face a very tough environment themselves, prospects for the sector in Europe are worsening fast.

U.S. refining margins - the premium refineries earn from processing crude into products like gasoline and heating oil - on Friday averaged $18.32 per barrel against $6.45 in Europe, according to Reuters data.

This showed how much more attractive it is to invest in the United States where feedstock crude oil is cheaper.

European margins were lower than those in Asia and the United States for all of 2011 and much of 2010.

"The U.S. has access to cheaper natural resources than Europe, where crude is more scarce," said Olivier Jakob at Petromatrix in Zug Switzerland.

He said that the trading houses' approach to the deals showed that they are tentative at best about prospects for the assets they are buying.

"Look at Vitol buying Cressier in a joint venture (with private equity house) Atlas. This shows they were not optimistic about revival of margins, or they would have bought it outright."

He said that of the five refineries Coryton, with its location near London, would be the most likely to survive in the longer term but that this may need government intervention.

Many others will probably soon be converted into storage, mirroring the fate of other European refineries over the past decade, such as the Petroplus Reichstett plant in France and Wilhelmshaven in Germany, bought by Hestya Energy from ConocoPhilips (COP.N).

"They will run them for a while to show that they gave it a try, but I would not be surprised if they get turned into storage facilities fairly soon," Maarten van Mourik, economist at trading house North Sea Group, said.

How soon will depend on how quickly traders tire of using up cash by effectively sponsoring their downstream operations.

"It's a book keeping exercise. If they have access to it, they may be able to make them profitable by supplying them with cheap crude, but then they are forfeiting profits elsewhere," Van Mourik said.

OriginOil Files Patents for Processing Oil and Gas Field Wastewater

OriginOil, Inc. developer of a breakthrough technology to convert algae into renewable crude oil, announced May 23 it has filed two patents with the United States Patent & Trademark Office describing its unique technology for processing solids in solution. The technology is expected to find immediate application in oil and gas field wastewater cleanup and going forward, markets in industrial wastewater and remediation of toxic chemicals.

According to the U.S. Department of Energy, as many as 50 barrels of water are contaminated for each barrel of oil extracted domestically. OriginOil’s patent-pending process could offer clear and immediate benefits to oil producers, including more cost efficient environmental compliance, and increased oil production yields.

Recent third party testing has shown that the Company’s patent-pending process, originally developed for algae harvesting, can separate 98% of hydrocarbons from a sample of oil well ‘frac flowback’ water. The process is designed to be the first stage in multi-step processes for cleaning and treating contaminated water from oil and gas wells.

The filed patent applications protect two of the Company’s new inventions related to this process. The first is “Solute Extraction from an Aqueous Medium Using a Modular Device.” The second is “Modular Systems and Methods for Extracting a Contaminant from a Solution.” The inventor on both applications is OriginOil’s co-founder and chief inventor, Nicholas Eckelberry.

“We believe our proprietary process may be the most efficient method available today for initially separating oil from produced water,” said Riggs Eckelberry, OriginOil’s CEO. “With these new patent filings, we not only protect our intellectual property rights, but we also extend them into conventional energy and industrial waste cleanup markets, which could be quite lucrative for the Company. We intend to compete in these immediate markets while we continue to build on our early lead in the promising algae industry.”

The company recently announced that it signed a memorandum of understanding with California-based engineering firm PACE to collaborate with oil field operators in Texas and elsewhere to improve petroleum recovery and water cleaning for re-use at well sites. PACE plans to replace the early stages of chemical flocculation and dissolved air flotation with OriginOil’s process, potentially improving the performance and scalability of on-site water recycling and reducing both capital and operating expenses.

In addition to these filings, the company also recently registered a utility patent and international application for “Monitoring Systems for Biomass Processing Systems.” The inventors are Paul Reep and Gavin Grey.

BP to Add More Than $400 Mln in Pollution Controls at Indiana Refinery and Pay $8 Mln for Clean Air Act Penalty

The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice announced that BP North America Inc. has agreed to pay an $8M penalty and invest more than $400M to install state-of-the-art pollution controls and cut emissions from BP’s petroleum refinery in Whiting, Ind. When fully implemented, the agreement is expected to reduce harmful air pollution that can cause respiratory problems such as asthma and are significant contributors to acid rain, smog and haze, by more than 4,000 tons per year.

“Today's settlement will protect the residents of northwestern Indiana from harmful air pollution by requiring state-of-the-art pollution controls,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance."BP's agreement to install fenceline monitoring, will also ensure that residents have access to critical information about pollution that may be affecting their community.”

“In this case, BP North America has not lived up to all of its obligations under an earlier settlement agreement and has committed new violations of the Clean Air Act at its Whiting refinery in Indiana,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “This settlement secures a significant penalty, requires state-of-the-art controls, and is a fair and just resolution that will address BP’s violations. We will continue to hold BP accountable and ensure that it complies with the nation’s environmental laws.”

The complaint alleges violations of Clean Air Act (CAA) requirements at the Whiting refinery in connection with construction and expansion of the Whiting Refinery, as well as violations of a 2001 consent decree with the company that covered all of BP’s refineries and was entered into as part of EPA’s Petroleum Refinery Initiative.

The settlement will lead to the installation of innovative pollution controls on the largest sources of emissions at the Whiting refinery, including extensive new controls on the refinery’s flaring devices. Flaring devices are used to burn-off waste gases. The more waste gases sent to a flare, and the less efficient the flare is when burning those gases, the more pollution that will occur. Under the settlement, BP will install new equipment that will limit the amount of waste gas sent to flaring devices in the first place, as well as implement innovative, cutting-edge controls to ensure proper combustion efficiency for any gases that are burned in a flaring device. The requirements, similar to those included in a recent settlement with Marathon Petroleum Corp., are part of EPA’s national effort to reduce emissions from flares at refineries, petrochemical and chemical plants.

In addition to the controls on the refinery’s flares, the settlement will also result in reduced emissions by imposing some of the lowest emission limits in refinery settlements to date, enhancing controls on wastewater containing benzene and providing for an enhanced leak detection and repair program. Today’s settlement also requires the Whiting refinery to spend $9.5M on projects at the refinery to reduce the emissions of greenhouse gases.

BP will perform a supplemental environmental project in which they will install, operate and maintain a $2M fence line emission monitoring system at the Whiting refinery and will make the data collected available to the public by posting the information on a publicly-accessible website. Fenceline monitors will continuously monitor benzene, toluene, pentane, hexane, sulfur dioxide, hydrogen sulfide and all compounds containing reduced sulfur.

In a statement released on May 23, the Natural Resources Defense Council, which participated in opposition to BP's crude slate expansion, said the new pollution equipment will cut emissions from the refinery's flare system by 90 percent.

The head of Global Community Monitor, which works with local environmental justice groups, said the agreement could set a precedent for refineries seeking to run Canadian tar sands crude.

"It sets a pretty high bar," said Denny Larson, head of Global Community Monitor. "For a refiner contemplating a tar sands expansion, after seeing this, they may not want to go there."

Canadian tar sands crude has become highly desired as a feedstock for refiners because it is cheaper than other crude oil grades. It is easier to obtain for U.S. refiners because of its source in Alberta.

Iain Conn, global head of BP's refining and marketing, said in March that the company had decided to make the investment in the Whiting refinery and put refineries in California and Texas up for sale because of the appeal of Canadian crude.

"We are moving to a Northern Tier refining strategy," Conn said.

Tar sands crude has drawn opposition from environmental groups because it has high levels of heavy metals, is caustic and said to produce higher levels of air pollutants. The mining of tar sands crude, which is cut from pits in Alberta, and then refined into a liquid, is also said to produce high levels of greenhouse gases.

Opposition to the use of tar sands crude has temporarily halted TransCanada's Keystone XL pipeline project to bring the oil to refineries on the U.S. Gulf Coast.

The state of Indiana, the Sierra Club, Save the Dunes, the Natural Resources Defense Council, the Hoosier Environmental Council, the Environmental Law and Policy Center, the Environmental Integrity Project, Susan Eleuterio and Tom Tsourlis also joined in this settlement.

The consent decree is subject to a 30-day public comment period and final court approval.

BP North America Inc. is a subsidiary of BP p.l.c., headquartered in London, England. The Whiting Refinery has a refining capacity of approximately 405,000 barrels per day, and is the 6th largest refinery in the United States.

Motiva Unveils Completed $10 Bln Expansion Plan for U.S Largest Refinery

Motiva Enterprises LLC on May 31 unveiled its completed $10 billion expansion of what is now the largest U.S. refinery, and one of the world's top 10, planned six years ago to serve what once seemed to be a growing appetite in the planet's hungriest fuel market.

However, a major financial crisis and increased efficiency have pushed U.S. fuel demand to 11-year lows, and experts say that the gasoline and diesel coming out of the facility will instead help strengthen the country's new role as a fuel exporter.

Motiva, a joint venture between Royal Dutch Shell PLC and state-owned oil behemoth Saudi Arabian Oil Co. (Saudi Aramco), still thinks U.S. fuel demand is strong enough to handle the refinery's output of 600,000 barrels a day and make it a profitable facility. "But clearly exports are part of that thinking," Shell's Chief Executive Peter Voser said at the opening ceremony. Markets include Latin America's booming economies, or emerging, far-off destinations such as West Africa.

The Motiva expansion, which accounts for 325,000 barrels of the refinery's daily capacity, is not only about processing more crude; it allows the refinery to process a wider variety of crude types, from Canadian heavy oil crude to Saudi sour. Such adaptability will make it one of the world's most efficient refineries, executives said.

However, it will still meet the same profitability challenges that have dogged most U.S. refiners since the financial crisis emerged. Fuel demand has fallen precipitously amid increased vehicle fuel efficiency, growing use of biofuels, and a tepid economic recovery. BP PLC (BP), Sunoco Inc. (SUN) and others are trying to sell refineries amid a dim outlook on the business.

According to Oppenheimer & Co. senior energy analyst Fadel Gheit in New York City, several Motiva company managers met with him about two years ago. Over breakfast, they commiserated that receding U.S. fuel demand was potentially turning their multi-billion investment into an albatross, Gheit recalled in an interview with Dow Jones Newswires.

"They were saying, 'Don't rub it in our faces,'" Gheit said.

Analysts said that the boost in supplies from Motiva could cause gasoline prices to sink slightly. Running the facility at the industry average of 90% of capacity would produce more fuel than the U.S. market needs.

The expanded refinery, with its Gulf Coast location in Port Arthur, will most likely add to the U.S. industry's growing export advantage, said Mark Gilman, an independent energy analyst formerly with Benchmark Capital.

"These products flows are either going to South America or to Europe," Gilman said.

Motiva's potential as an exporter underscores the U.S.'s new role as a net fuel exporter. Even though the U.S. still imports a significant portion of its crude oil, last year it became a net fuel exporter for the first time since the end of World War II, thanks to the combination of tepid domestic demand, bad refining economics in Europe, and Latin American growth.

The U.S. exported a net 840,000 barrels of fuel a day during the first three weeks of May after being a net importer for much of last year, according to the latest data from the U.S. Energy Information Administration. U.S. gasoline could reach West Africa for the first time in coming months, Bill Klesse, chief executive of refiner Valero Energy (VLO), recently at a conference.

Motiva Unveils Completed $10 Bln Expansion Plan for U.S Largest Refinery

"They were saying, 'Don't rub it in our faces,'" Gheit said.

"These products flows are either going to South America or to Europe," Gilman said.

CANADA

Imperial Oil Considers Options as Its Nova Scotia Refinery Profit Margins Lag

Imperial Oil Ltd put its money-losing Nova Scotia oil refinery on the auction block on May 17, adding to a list of plants on both sides of the Atlantic that face sale or closure due to pricy crude and falling gasoline demand.

The move comes a day after Enbridge Inc detailed a $2.6 billion (C$2.6 billion) plan to pipe cheaper Canadian and North Dakota oil east of Ontario by 2014. An Imperial executive said that is too little, too late to consider holding out with the Dartmouth, Nova Scotia, refinery.

Imperial, the Canadian affiliate of Exxon Mobil Corp, said it will consider both a sale of the 88,000 barrel-per-day plant on the Maritime province's southern coast and conversion into a storage terminal. It aims to make a decision by the first quarter of 2013, depending on response to marketing efforts, Chief Executive Bruce March said.

The company has received a few expressions of interest and plans to market the Dartmouth plant to a list it has compiled of more than 24 potential buyers in the coming months.

It is difficult to put a value on the equipment, largely because of the depressed market conditions for Atlantic Basin refining, Gilles Courtemanche, Imperial's vice president of refining and supply, told reporters at a news conference.

"You have to be realistic. There's still 10 refineries out there for sale as we speak. You have a history of 2009 to today, where of the ones that have reached a marketplace, one out of two sold and the other one shut down," he said.

Courtemanche said the refinery, like many on the Atlantic coast, has been losing money in recent years as gasoline demand dropped and as the imported oil it processes became much more expensive than North American crude, much of which is in oversupply in regions such as the U.S. Midwest and Midcontinent.

The plant processes oil from offshore Newfoundland, the North Sea, West Africa and South America.

More than 2.1 million bpd of refining capacity in the Atlantic Basin has been shut or threatened with closure over the past three years due to razor-thin margins. In Canada, Royal Dutch Shell shut its Montreal refinery and Irving Oil scrapped plans for a massive expansion of its Saint John, New Brunswick, facility.

On May 16, Enbridge signaled help was on the way when it detailed a series of moves to get Alberta and North Dakota oil to Eastern Canada, including reversing the flow direction of the 240,000 barrel-a-day Line 9 pipeline between Sarnia, Ontario, and Montreal. The move will allow refineries in the region to cut feedstock costs.

It would not, by itself, provide sufficient quantities of oil soon enough to make a large impact on Dartmouth in the short term, Courtemanche said.

The company has, however, recently gained optimism that it can find a buyer as new players have entered the market, he said.

Last month, Delta Air Lines Inc became the first U.S. airline to buy a refinery in order to control the cost of jet fuel, while private equity firm Carlyle Group was in talks with Sunoco to buy the largest refinery on the U.S. East Coast as an outlet for the surging supply of Bakken crude.

"Now, what's becoming more interesting as time goes by is the fact various people have different business structures, different business drives. Like, who would have thought that an airline company would be interested in buying a refinery more than a month or two ago?" Courtemanche said.

The Dartmouth refinery began production in 1918. It has about 200 employees and 200 contractors at the refinery and related terminals. A sale or shutdown will leave Imperial with plants in Edmonton, Alberta, and Sarnia and Nanticoke, Ontario.

Shares of the company were down 67 Canadian cents at C$41.33 on Thursday on the Toronto Stock Exchange. They earlier touched a low of C$41.29. Exxon Mobil owns 69.9 percent of Imperial.

Shell Canada Awards Maintenance Contract to Jacobs for Canadian Operations

Jacobs Engineering Group Inc. announced May 22 it received a five-year contract from Shell Canada Energy to provide main mechanical maintenance services to its Canadian operations, including the Scotford Upgrader and Manufacturing facilities near Fort Saskatchewan, Alberta; Corunna Refinery near Sarnia, Ontario; and Albian Jackpine and Muskeg River Mines near Fort McMurray, Alberta.

Officials did not disclose the contract value.

Under the terms of the contract, Jacobs is performing mechanical maintenance, including small capital project construction and turnaround activities.

NICARAGUA

Chinese Firm to Start Work on 150,000 Bpd Refinery in Nicaragua with Initial $233 Mln Investment

The long-promised plan to build a giant oil and gas refinery in Nicaragua appears to be finally taking shape.

An official from the country's state oil company, Petronic, said on April 27 that a Chinese engineering company was set to start construction on the refinery the first week of May. Petronic director Francisco Lopez said that the works would require an initial investment of US$233 million, funded with Venezuelan support.

The 150,000 barrels per day facility is to be located at Puerto Sandino, on Nicaragua's Pacific coast, 60km from the capital city, Managua. China Camc Engineering has been contracted to build this phase of the facility.

Shen Wen, vice-president of the Chinese firm, said that the storage tanks to be constructed in this phase of the project would be capable of holding over 1 million barrels of oil, and would serve as a reserve for both Nicaragua and neighboring countries.

The refinery to be named El Supremo Sueno de Bolivar (Bolivar's Supreme Dream) has been backed by Venezuela, which is the driving force behind the Petrocaribe regional oil scheme. The new refinery is planned to serve the Petrocaribe member states, according to statements made by Rafael Ramirez, Venezuelan energy and oil minister, in October 2011.

The Petronic announcement that work is to commence imminently signals a change to that, especially given the participation of China in the project, and will provide a major boost to refining capacity in Central America. That could give Nicaragua both greater energy security, and enhanced geopolitical significance in Central America. However, given that the total cost of the refinery is estimated at US$6 billon, financing will remain a challenge, casting doubt as to whether it will ever be completed.

ASIA

Foster Wheeler Signs Asian EFA with Shell for Asia Downstream Projects

Foster Wheeler AG announced May 8 that a subsidiary of its Global Engineering and Construction Group has signed an Asian Enterprise Framework Agreement (EFA) with Shell Global Solutions International B.V. ("Shell").

Under this agreement Foster Wheeler will provide engineering and project management services for Shell's downstream projects in Asia. The agreement is for a five-year period, with an option to extend for another five years. Work will be released under individual work orders, and Foster Wheeler will record bookings as work orders are received.

"The award of this long-term agreement is testament to our ability to deliver consistently world-class services while meeting specific local needs," said Umberto della Sala, President and Chief Operating Officer, Foster Wheeler AG.

"While this agreement addresses Shell's downstream investments in Asia, we believe that delivering outstanding Foster Wheeler performance may offer opportunities to extend our scope to other onshore businesses and other locations."

INDIA

Reliance Selects Philips 66 E Gas Technology for Jamnagar

Reliance Industries Ltd has selected Philips 66's E Gas Technology for its planned gasification plants at Jamnagar which is the largest refining complex in the world with an aggregate refining capacity of 1.3 mn barrels of oil per day.

By using the E Gas Technology the planned gasification plants at Jamnagar will be among the largest in the world and will process petroleum coke and coal into synthesis gas. The synthesis gas will be used as feedstock for a new chemical complex and will fuel the refinery s existing gas turbine power generation units.

Rex Bennet President Specialties and Business Development at Philips 66 said We look forward to this opportunity to work with Reliance on the largest gasification project in the world. Our EGas&trade Technology will be used to turn petcoke and coal into clean reliable energy for Reliance s refinery and petrochemical plant operations.

Phillips 66 will license its E Gas&trade Technology to Reliance and provide process engineering design and technical support relating to the gasification technology process area.

The E Gas&trade Technology has been utilized in commercial applications since 1987. It incorporates a unique gasification system design that can be applied with gas and steam turbine combined cycle power generation to produce electric power as well as synthesis gas applications for the production of hydrogen chemicals or substitute natural gas in highly flexible combinations. It is among the cleanest and most efficient commercial technologies for coal or petroleum coke based electric power generation and syngas production. It offers high system efficiencies minimized water consumption and very low emissions.

Reliance Industries Limited is India s largest private sector company on all major financial parameters with a net profit of US $3.9 bn as on March 31 2012.

IOC Sets New Timeline of Paradip Refinery Project for September 2013

Having missed the March 2012 deadline for completing the 15-million tonne per annum refinery project at Paradip, Odisha due to multiple factors, Indian Oil Corporation has now set a new timeline of around September next year for commissioning the project.

"The project was originally scheduled to be completed by March 2012. Now we are looking at a schedule of commissioning (most of the units of the refinery) by September 2013," Rakjumar Ghosh, Director-Refineries, IOC, told Express.

A mix of factors such as changes in engineering design due to deferment of petrochemicals resulting in delay in submission of detailed engineering and subsequent procurement and contract lining up by project management consultant Foster Wheeler, change in sourcing of power from Tata Power-IOC joint venture to own captive power plant, delay in supply of critical equipment from vendors, local issues etc.

The other factors that have led to the delay in commissioning of the project include imposition of an interim stay by Odisha HC on all construction activities at Hadia-Patha area on Mahanadi river since July 2011.

When completed, the refinery will have a crude and vacuum distillation unit, a hydrocracking unit, a delayed coker unit and other secondary processing facilities. The project is being constructed over 3,344 acres with IOC having already spent nearly '15,000 crore on it.

The refinery was originally planned to export at least 2.05 million tonnes of petrol and 124,000 tonnes of naphtha out of its yearly output of 15 million tonnes. But double-digit growth in petrol and diesel consumption has left very little for exports.

Paradip refinery will produce 5.97 mt of diesel, 3.4 mt of petrol, 1.45 mt of kerosene/ATF, 536,000 tonnes of LPG, 124,000 tonnes of naphtha and 335,000 tonnes of sulfur, all of which will be sold in the domestic market.

MALAYSIA

Malaysia’s Kedah State Fails to Deliver Oil Refinery Project

Chief Minister Datuk Seri Azizan Abdul Razak has admitted the Kedah state government's failure to deliver the proposed, RM36 billion Sungai Limau Hydrocarbon Hub (Sulihh) in Yan.

Azizan, however, was quick to pass the blame onto the project's developer, Merapoh Resources Corp Sdn Bhd.

He said the Selangor-based construction firm was facing technical difficulties that led to the delay of the oil refinery project, which the Pas state government had claimed as its biggest economic project in 2008.

"The developer is in the midst of resolving a few issues, including funds for the project.

"I've also learned that the developer has yet to receive approval from the National Physical Planning Council for the project.

"On our part (state government), we have made the necessary arrangements, including land acquisition for Merapoh," he said after chairing the weekly state executive council meeting at Wisma Darulaman, in May.

Azizan was asked to comment on the progress of the hydrocarbon hub, which involved the construction of a man-made island for a refinery and storage facilities.

On whether the state government had scrapped Sulihh; Azizan, who is also state assemblyman for Sungai Limau, said the project was still viable.

Earlier, at a separate press conference, state Gerakan Youth chief Tan Keng Liang urged Azizan to explain the project's delay. He claimed that the project had yet to get off the ground.

The hydrocarbon hub project, mooted by the previous Barisan Nasional state government, was known as Yan Petroleum Industrial Zone. Under the Pas state government, the project was renamed Sulihh.

Yan would be the main port of call for tankers and crude oil would be processed on the man-made island before it is transported by smaller tankers to the Far East via the Straits of Malacca.

Crude oil will be transported via a 310km pipeline that runs across Yan in Pendang, Baling, Kedah, and Grik, Perak, to a refinery in Bachok, Kelantan, before petroleum and other petrochemical products are shipped to the Far East.

PHILIPPINES

Dubai Investor Signs Agreement for New Philippines Oil Refinery

After earlier hinting that foreign oil firms were eager to set up refineries in Dubai, the Energy department confirmed that an agreement has been signed for a regional refinery hub.

"There is a listed oil firm in Dubai and we have signed a memorandum of agreement with them to lease land for refinery. The lawyers are just finalizing the terms of a contract," said Energy Secretary Jose Rene D. Almendras in a recent interview.

Mr. Almendras said the Philippine National Oil Co.-Alternative Fuels Corp. (PNOC-AFC) will be leasing out a 100-hectare property in Bataan to the firm.

The firm is not expected to partner with a local firm for its operations. Mr. Almendras said the agreement between PNOC-AFC and the Dubai firm will not extend to a joint venture.

The refinery "is meant for regional use and is patterned after the Central American concept," he said.

Mr. Almendras had said back in March there up to three foreign investors that were interested in putting up refineries and depots in the country that will process crude oil for export.

He would not name the investors due to a confidentiality agreement.

The country can expect to buy processed oil from the refineries, he said.

"The other investors are still looking for areas. They are choosing to set up shop in the Philippines because of our geographic location which is strategic so they can build a hub," said Mr. Almendras.

He would not disclose the how much the investment foreign firms looking to build refineries in the country will have but noted the amount "will be very big."

The Energy department earlier said it wants to offer the country as a strategic market location for firms.

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.

Shell has not yet announced any additional investments for its refinery but is currently studying opportunities for expansion, earlier reports show.

Philippine refineries mostly import crude oil for processing.

EUROPE / AFRICA / MIDDLE EAST

IRELAND

Phillips 66 Starts Ireland Cork Refinery Ops

May 1 marked the first day of operations of Phillips 66 oil refinery and storage facilities in Ireland. This follows a decision announced by the board of ConocoPhillips in July 2011 to create two standalone, publicly traded corporations with the separation of the company's refining and marketing, and exploration and production businesses.

Phillips 66 has two facilities in Ireland the Whitegate Oil Refinery and the Bantry Storage Facility, both in Cork. The company also operates a wholesale marketing business.

Lead executive Neil O'Carroll said: "Today, we stand ready to move forward into a promising future as one of the world's largest independent downstream companies."

The Phillips 66 Whitegate Oil Refinery is the only oil refinery in Ireland and supplies one-third of the country's transportation fuels. The refinery began operations in 1959 and processes 71,000 barrels of crude oil a day - 3m tonnes a year.

The refinery operates all year round, and employs 150 employees and up to 100 contractors.

It produces a range of petroleum products including unleaded petrol, auto diesel and central heating oils; gas oil, kerosene, and liquid petroleum gas. The refinery also produces and blends biofuels.

The Phillips 66 Bantry Bay Terminal has 1m tonnes of crude and product storage capacity.

The National Oil Reserves Agency is a major long-term customer, which makes the facility of national strategic importance.

"We have a strong heritage and enduring commitment to responsible operations, safety, environmental stewardship and reliability," Mr O'Carroll said.

LITHUANIA

ORLEN Lietuva to Start Biggest Turnaround in Its History

Oil refining company ORLEN Lietuva is starting the refinery turnaround. Fifty different modernization and maintenance projects will be implemented during the 35 days until June 3. The biggest so far refinery revamp will allow for better utilization of refining capacity, energy consumption savings and ensuring smooth operation of the process units in thefuture, reported the press-centre of ORLEN Lietuva.

The key project of ORLEN Lietuva Refinery Turnaround is the Replacement of FCC Reactor Internals, which will enhance the utilization of production capacity. During the turnaround, mechanical, electrical, instrument and insulation works, equipment and vessel inspection, replacement and revamp of pipelines and valves will be also performed in all refinery subdivisions. Installation of state-of-the-art automatic process control and emergency shutdown systems will be completed during the Turnaround. In total 1500 various types of jobs which will be performed by well over 4.000 people are scheduled for this Turnaround.

Constant investments into the refinery upgrade are essential for further modernization of the company, which is necessary to ensure its profitability in the long term. Adverse impact of the current economic environment can be mitigated only by means of higher production efficiency and lower operating costs, said Ireneusz Fafara, General Director of Public Company ORLEN Lietuva.

During the turnarounds day shift, in addition to permanent employees of ORLEN Lietuva, as many as 4,300 members of contractor organizations will be employed and 900,000 working hours are planned to be carried out during the biggest refinery overhaul so far.

One hundred seven contracts in total have been signed: seventy- eight of them with contractors from Lithuania, twenty-two from Poland and seven from Estonia, Russia, Germany and the Netherlands.

All operating processes will be shut down during the turnaround. The supply of fuels to the internal markets will be fully ensured from the previously accumulated stocks.

The previous turnaround of the refinery was performed in 2007; however its scope was not as vast as this one.

One hundred percent of the shares in ORLEN Lietuva are owned by PKN ORLEN. The largest company in Middle and Eastern Europe since the acquisition of Mazeikiu Nafta Refinery has invested 1.9 billion LTL in Lithuania. After the turnaround, which started at the end of April, is finished the total investment will exceed 2 billion LTL.

SWITZERLAND

Vitol and JV Partner AtlasInvest to Take Over Petroplus' Cressier Refinery

Dutch energy trader Vitol Group said on May 3 that Varo Holding SA, its joint venture with investor AtlasInvest, had agreed to buy Petroplus Holdings AG Swiss refinery Petroplus Refining Cressier SA together with its marketing and logistics assets in the country.

The financial details of the transaction were not made public.

Under the definitive agreement, Varo Holding is buying the refinery as well as assets including Petroplus Tankstorage AG, Oleoduc du Jura Neuchatelois SA and Societe Francaise du Pipeline du Jura, the buyer said.

Vitol President and CEO, Ian Taylor, sees the acquired assets as a significant growth source for the group, providing it with access to a quality, niche refinery and a supply chain of storage assets and wholesale marketing opportunities, he said.

Marcel van Poecke, AtlasInvest Chairman, also expressed satisfaction with the deal, saying his firm will work together with Vitol, the Swiss managers and the new employees to ensure long-term growth for the Cressier refinery.

Varo Holding plans to restart refining operations at Cressier, it said.

Completion of the deal is expected in the second quarter of this year, pending courts approvals and regulatory clearance.

Petroplus announced in January it had entered into insolvency proceedings in Switzerland, the UK, France, Germany and Belgium, after failure to strike an arrangement with creditor banks.

SOUTH AFRICA

PetroSA, China's Sinopec Partner to Build New Refinery

South Africa's national oil company PetroSA and China Petroleum and Chemical Corp. (SNP), known as Sinopec, will build a refinery that could process several hundred thousand barrels of oil a day and cost several billion dollars to construct.

PetroSA Group Chief Executive Nosizwe Nokwe said May 21 that by teaming up with the Chinese company it would enable the national oil company to complete the "mega" project, which has been in discussion since 2008 but has struggled to find sufficient funding.

China's resource companies are driving much of the country's foreign investment on the continent. In 2011, Standard Bank estimates merger-and-acquisition activity from China on the continent totaled $5 billion.

China has also become Africa's biggest trading partner and the new refinery could play a role in helping China's ambition to expand global resource trading by being a destination for crude oil.

"Sub-Saharan Africa is a growth area for oil demand," said Roy Jordan, downstream consultant at Facts Global Energy. "It will be helpful to have both crude oil production and more refinery capacity on the continent."

South Africa currently has four refineries, Jordan said. In addition, countries like Uganda have had recent oil and gas discoveries which will drive more interest in the sector, he said.

PetroSA and Sinopec signed a memorandum of understanding in September and settled the agreement to work together May 21. They will now carry out a study to finalize the details of the plant. PetroSA first announced plans to build the refinery, called Project Mthombo, in the Coega Industrial Development Zone in the southern town of Port Elisabeth in 2008. Development stalled in part because of funding issues. At the time, the company said it expected the refinery to process 400,000 barrels of oil a day and cost between $9 billion and $10 billion to build.

A spokesman for PetroSA said final capacity and cost will be determined by a study that is soon to be undertaken. The study, which will be carried out by Sinopec Engineering Incorporation, will take up to 18 months to complete. PetroSA said commissioning of the Coega refinery is scheduled between 2018 and 2020.

South Africa is an importer of crude oil, mostly from Iran and Saudi Arabia. Many refineries said they have cut Iranian crude oil imports amid international pressure.

Petrosa and Sinopec to Share Cost of Mthombo $10 Bln Refinery Project

In a milestone towards the construction of a multibillion-rand oil refinery at Coega, PetroSA and Chinese petrochemical company Sinopec formally agreed May 21 to share the cost, amounting to more than R1.5-billion, of drawing up the blueprint for Project Mthombo.

The signing of the joint study agreement at the Coega Development Corporation (CDC) offices on the outskirts of Nelson Mandela Bay was welcomed as a firm step towards the construction of a refinery in the Eastern Cape by national and provincial government officials, as well as the Nelson Mandela Bay Business Chamber.

It also cements the partnership between the two companies in constructing the $10-billion (R83-billion) refinery.

While cabinet decides whether to allow the pre-development phase to go ahead or front-end engineering design (Feed) - the companies will start with a market analysis, costing up to R5-million and taking up to six months to complete.

Thereafter, a business case for the project will be developed, which will take up to 11 months and cost about R50-million, according to PetroSA new ventures vice-president Joern Falbe.

Should cabinet give the thumbs-up for the costly Feed phase, which Falbe said would cost about R1.5-billion that would go ahead after the two former phases had been completed. The Feed would take about 10 months to complete, after which construction could begin. Falbe said the companies would be sharing the costs of the projects, as undertaken in the agreement.

Eastern Cape economic development and tourism MEC Mcebisi Jonas said the signing was "an important moment for the province".

"If you look at the history of Coega, it has been a challenging road. People would say it was a white elephant, but these occasions confirm we were right to develop a port and an industrial zone," Jonas said.

"When we started with [talks about Project Mthombo] in 2008, it all seemed like a dream."

Nelson Mandela Bay Business Chamber chief executive Kevin Hustler said Project Mthombo had "the potential to be a major catalyst for socio-economic transformation of the Eastern Cape through employment creation, up- and downstream business opportunities and the development of the associated infrastructure".

Sinopec's foreign cooperation office deputy general manager, Han Shen Deng, said the joint study agreement was "a very important part of our international strategy". The agreement followed the signing of a memorandum of understanding between the two parties in September last year.

PetroSA chief executive Nosizwe Nokwe- Macamo said the agreement signified the beginning of a long-term working relationship.

"It is our expectation that this mammoth project will be a catalyst for industrialization and economic development for South Africa, but particularly for its host province, the Eastern Cape," Nokwe-Macamo said.

BAHRAIN

Bahrain Plans $8 Bln Refinery Modernization Project

Bahrain is in the process of finalizing the implementation of the $8 billion refinery modernization plan as part of the strategy to keep the energy sector abreast with changing dynamics of growth in the country, according to a senior Minister.

Dr. Abdul Hussain bin Ali Mirza, Minister of Energy, who opened the PETROTEC Bahrain 2012, said Bahrain was looking at its refining capacity beyond 2012.

"The refinery expansion will give us a competitive advantage and better position us to capture the opportunities that future market environments may offer. This initiative has been named as the Refinery Master Plan Project. The current refinery, parts of which are 75 years old, evolved over the years and new units have been added, the last two being the hydrocracker and the lube base oil plants in 2007 and 2010 respectively. The decision was made to further upgrade the refinery. The investment, depending on final capacity and configuration is currently estimated to be in the range of $8 billion. The new upgraded refinery will be able to meet the quality of the products demanded by the markets of the future, will meet the environmental standards, and will be designed to world class energy efficiency standards," the Minister said.

"On the petrochemical front, our flagship company, GPIC, which is a true model of fruitful cooperation between three Gulf countries represented by Saudi Basic Industries Corporation (SABIC), Petrochemical Industries Company (PIC) of Kuwait and nogaholding of the Kingdom of Bahrain have had a history of outstanding achievements on all fronts and are planning to expand their capacity in the future at an estimated cost of $1.5 billion."

" With a vision towards the future, we in Bahrain have also taken steps to complement our energy supply sources by planning to implement two pilot projects in the renewable energy area, namely two plants generating 5 Megawatts of electricity each, based on solar and wind technologies. And I am pleased to announce in this conference that one hour ago we signed a Memorandum of Understanding with Petrosolar to start execution one of these these pilot projects. Once the trials with the pilot plants will be successful, we expect that this form of complementary power generation will become a mainstay on the Bahrain generation landscape," he added.

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