Phillips 66 will spend up to $1.5 billion in capital in 2012, mainly to increase the amount of crude its refineries take from the North American Mid-continent region, the company said August 1.

Refiners in the U.S. are working to bring more crude oil from south Texas, North Dakota and other regions to their refinery gates. A boom in U.S. oil production, led by advances in drilling technology, has made such crude oil cheaper than that imported into coastal regions.

"We're looking at pipeline, rail, truck and barge--any way we can get advantaged crude there," Phillips 66 Chief Executive Greg Garland said during a call with investors.

Phillips 66 is bringing crude oil from the Mississippi Lime shale formation to its 198,000-barrel-a-day refinery in Ponca City, Okla. It also bought 2,000 rail cars to bring Mid-continent crude the East and West Coasts, and potentially other refineries in between.

Phillips 66 will also expand the export capacity of its refineries to about 220,000 barrels a day by 2013, Mr. Garland said. With U.S. fuel demand stagnant, refiners are growing sales of diesel to Europe and gasoline to Latin America. The company exported 90,000 barrels a day of fuel in the second quarter, Mr. Garland said.

Due to Drought Conditions U.S. Lawmakers Ask EPA to Lower Refineries Ethanol-Production Mandate

More than a hundred Republicans and Democrats in the U.S. House of Representatives are calling on the federal government to reduce its production mandate for corn-based ethanol in an effort to bring down prices for the grain, which has become much more expensive for livestock producers during the drought that grips much of the country.

As a result of the drought, "corn prices have risen dramatically over the past few weeks and are likely to remain at record highs," the lawmakers said in a letter to be sent to the Environmental Protection Agency. "This means literally billions of dollars in increased costs for livestock and poultry producers, and food manufacturers."

"To continue to have 40% of the U.S. corn crop going into ethanol production is very questionable policy," Mr. Bryant said. Ethanol trade groups dispute that figure, saying ethanol production is using 16% of the U.S. corn crop.

The letter follows a petition filed with the EPA in August by representatives of the U.S. livestock industry, asking the agency to halt the ethanol mandate for a year.

The EPA, under the authority of the Clean Air Act, has the authority to temporarily halt or reduce the mandate for ethanol production that is required by the federal Renewable Fuels Standard. The agency, which denied a petition by Texas Governor Rick Perry in 2008 to reduce the mandate, said it will only issue a waiver if the mandate is shown to "severely harm the economy of a state, region, or the United States."

Dave Warner, a spokesman for the National Pork Producers Council, said the coalition of livestock groups filed its petition, but haven't received a response yet from the agency. EPA officials were unavailable for immediate comment.

The letter from House members will be sent soon, a House aide said. The National Chicken Council lauded the letter from lawmakers and urged the EPA to exercise the authority Congress gave it to reduce the ethanol mandate.

The Renewable Fuel Standard requires about 15 billion gallons of ethanol, mostly derived from corn, be blended into gasoline this year.

Swine, chicken and turkey producers are scrambling to find the feed they need, the industry groups said, while the government continues to force about 40% of the U.S. corn crop into ethanol production. Cattle mostly graze on pastureland and are fed hay for most of their lives before they begin to consume corn- and soy-based feed shortly before slaughter.

"Drought is out of our hands and is absolutely unavoidable; however, the ethanol mandate is not and must be stopped," said J.D. Alexander, president of the National Cattlemen's Beef Association and a cattle rancher. But ethanol proponents say the industry can't be blamed for the drought and there will be plenty of corn for all who need it. "Higher corn prices facing livestock and poultry users is a result of Mother Nature, not ethanol," said Tom Buis, chief executive of the ethanol production group Growth Energy. "To try and blame the ethanol industry is disingenuous and absurd."

Mr. Buis and Bob Dinneen, chief executive of the trade group Renewable Fuels Association, put up a staunch defense of the industry at a Washington briefing, saying markets will sort out the problem.

"There's no reason to waive this program," Mr. Dinneen told reporters. "You'd just be rewarding refiners when they can meet their obligation in any case. The marketplace will ultimately figure out how to ration demand."

The ethanol industry will consume about 4.8 billion bushels of corn this year, according to the latest U.S. Department of Agriculture forecast, and farmers are expected to produce about 13 billion bushels.

Chevron’s Richmond Refinery Fire Out and Markets Brace for Impact

A large fire at Chevron Corp.'s Richmond, CA refinery has been extinguished, and California drivers brace for the impact that a prolonged outage could bring to gasoline and diesel prices in the state.

Chevron spokesman Lloyd Avram said that the main fire was extinguished, and that safety officials allowed "a small controlled burn," a safety measure intended to reduce the escape of pollutants into the atmosphere. The company didn't provide an update on production at the 245,000-barrel-a-day facility, which is the largest in the San Francisco Bay Area and accounts for nearly 10% of the refining capacity in the U.S. West Coast.

Paul Sankey, an analyst with Deutsche Bank, wrote August 7 that the refinery is likely to be out for several months, and could translate into a 20 cent per gallon bump in California gasoline prices, some of the highest in the country. Regular unleaded gasoline in the state averaged $3.859 per gallon, above the national average of $3.634 per gallon, according to the AAA. The premium traders paid for Los Angeles Carbob gasoline delivered in September versus October Nymex gasoline jumped 10 cents per gallon.

The fire broke out on August 6 at a crude distillation unit, which was also leaking petroleum, Chevron said all its employees and contractors were safely accounted for; three employees suffered minor injuries and were treated at the refinery, the company said.

Chevron has shut No. 4 CDU, where the fire broke out, but a spokesman declined to discuss operations at the other parts of the plant. The fire caused the refinery to emit large clouds of sulfuric acid and nitrogen dioxide, the company said in a filing.

The Richmond refinery runs crude from Alaska and the Middle East, a company spokesman said. Its effect on global oil markets "will depend on the length of the closure. If long, then of course it backs out more crude," spilling unexpected supplies into the prompt market and driving down spot premiums, weakening the market structure, a Singapore-based crude oil trader said.

On August 1 Chevron had reported an incident at the same refinery, when it reported a flaring event to California state environmental regulators after a compressor failure caused a release of sulfur dioxide and hydrogen sulfide. Chevron said at the time that the refinery would continue to supply products to its customers.

Power Outage Begins Flaring Chain Reaction at Three Texas Refineries

A rare power outage at the MarkWest Javelina plant August 11 led to a backup of offgases at each of the three refineries that feed it, causing simultaneous flaring at all the local plants.

Flaring at the Javelina plant continued for about three hours, burning all the gas already in its pipelines, essentially destroying the gas the company normally would profit from, said Kevin Thompson, the plant's area manager.

MarkWest collects the offgases from Flint Hills, Citgo and Valero, processes and sells the gas, he said. An estimate of the value of the gas burned throughout the day was not immediately available.

"When it's a sudden shutdown like it was today, a hard shutdown, it was instant and caused the safety release devices to be activated," Thompson said. "Of course, this is not a normal action. It's very abnormal to have power interruptions in a facility. When it's a scheduled shutdown we'll back that gas out slowly, to have a more controlled event."

In those cases, the gas is refrigerated and turned into a liquid for storage, Thompson said. Because the refrigerators also were nonoperational, the gas could not be saved, only burned. He did not know the last time the plant had lost power.

AEP serves the local plants with high voltage power, which each plant then converts using its own on-site substation, AEP spokesman Andy Heines said.

AEP officials and MarkWest employees were working to determine the initial cause of the outage and which company was responsible.

"The root cause of the initial power outage, we don't know. AEP experienced some outages as well. We are working with them to try to determine the cause, but we're certainly not blaming AEP for it," Thompson said.

MarkWest is among the top 20 power consumers in the state, Thompson said, so the plant is not equipped with generators capable of supplying that amount of power.

When the power went out, valves closed at MarkWest, prohibiting the refineries' offgases from entering the building, Thompson said. In response, the backup prompted flaring at the individual plants, which is a safety response to ensure the gas does not remain inside the plant. The Texas Commission on Environmental Quality sent workers to determine if there was any threat from the flaring, and Thompson said they concluded the community never was in any danger.

MarkWest's flaring went on longer because there was more gas at that plant.

A large fireball could be seen from as far away as Robstown and Corpus Christi and Thompson said intermittent flaring went on after the initial three-hour period but the plant expected to be operational by Saturday, August 11.

A later second power outage affected the midtown area when an electrical cable burned out at the Morris Street substation.

The two events originally were believed to be part of the same outage.

"It could be a completely different outage, unrelated. With MarkWest they have their own electrical system within their plant," Heines said. "We just deliver high voltage to them. Sometimes it's on their side ... it's a different type of outage, really, so the large industrial customers take it from there."

AEP workers manually replaced the cable at the substation.

BP Agrees to $2.5 Bln Sale of Carson Refinery to Tesoro

BP PLC said August 13 it has agreed to sell its Carson refinery in southern California and related marketing assets to Tesoro Corp. (TSO) for $2.5 billion, as part of its $38 billion asset-sale plan intended to at least partially repay costs stemming from the Deepwater Horizon oil rig explosion and refocus the company after the subsequent Gulf of Mexico oil spill.

The all-cash deal brings BP closer to its goal to at least partially cover the huge cost of the deepwater well blow-out in the U.S. Gulf of Mexico that in 2010 killed 11 and unleashed the worst offshore spill in U.S. history.

The cash deal includes $1.3 billion for oil inventories at the site, based on current oil prices. The move comes days after BP said it had agreed to sell two natural gas processing plants and pipelines in Texas to Eagle Rock Energy Partners LP (EROC) for $227 million in cash, taking total divestments up to $26.5 billion since the beginning of 2010.

The agreement would also allow the U.K. oil giant to continue selling its crude oil to the refinery without having to worry about turning it into fuel in a state where stringent environmental regulations make refining a tough business, said Sam Margolin, an analyst with Dahlman Rose & Co.

"All in, considering that they still maintain their crude sales and don't have to compete for refining capacity in the long term, it's a good deal for them," Mr. Margolin said.

Aside from Carson, BP has sold 10 refineries in the last 10 years as it seeks to transform its refining business into one geared toward processing heavy Canadian oilsands crude and shale oil from northern states, where a bounty of cheap crude is boosting refiners' profits.

BP also seeks to sell its huge Texas City, Texas refinery, the site of a lethal explosion in 2005. The company is now in discussions with potential purchasers of the 475,000 barrel-a-day facility, and a deal is likely to take place before the end of the year as planned, said Iain Conn, chief executive of BP's global refining and marketing business.

"Together with the intended sale of Texas City, this will allow us to focus BP's operations and investments exclusively on our three northern-U.S. refineries," and their associated marketing businesses, which have access to better-priced crude feedstocks, Mr. Conn said. These refineries are in Indiana, Washington State and Ohio.

Last month, BP took a charge $2.68 billion in its second-quarter earnings because it expected to sell the two refineries for less than their holding value on its balance sheet.

Subject to regulatory and other approvals, Tesoro will close the deal for the 266,000 barrel-a-day refinery near Los Angeles, its associated network of pipelines and storage terminals, and the ARCO-branded retail network in southern California, Arizona and Nevada by the middle of 2013. The sale also includes BP's interests in associated cogeneration and coke calcining operations.

The deal doubles Tesoro's refining operations in California, making the San Antonio-based company the second largest refiner in the state after Chevron Corp.

Although most refiners say the state's stringent environmental regulations make doing business there difficult, Tesoro's purchase would bring the number of its California refineries to three, accounting for 60% of the company's total refining capacity. Shares for the company soared recently 10% to $39.05.

Tesoro Chief Executive Greg Goff called the deal "transformative" for the company. The Carson refinery shares a fence line with Tesoro's 97,000 barrel-a-day Wilmington refinery, allowing Tesoro to combine the two into one facility and realize about $250 million in cost savings by 2015, Goff said during a conference call.

"That's real money," said Fadel Gheit, senior energy analyst at Oppenheimer & Co. "This is a major coup for Tesoro."

Tesoro said it has identified about $1 billion in pipeline and other logistic assets connected to the Carson refinery that it can sell to its master limited partnership Tesoro Logistics LP within 12 months of the refinery deal closing.

Combining the two refineries will make them efficient enough to meet the state's increasing air quality standards, Mr. Goff said.

U.S. Appeals Court Vacates EPA Cross-State Pollution Rule

A federal appeals court August 21 vacated the Environmental Protection Agency's latest rule limiting soot and smog-forming air pollution that crosses state lines.

The U.S. Court of Appeals in the District of Columbia said the rule affecting power plants "exceeds the agency's statutory authority" and sent the rule back to the EPA to revise. The decision was backed by two judges on a three-judge panel that heard the case. A third judge dissented.

The decision stops the clock on the EPA's Cross-State Air Pollution Rule, a set of regulations that limit emissions of nitrogen oxide and sulfur dioxide--a key component of acid rain. The rule was a revision of a Bush-era regulation that set state-by-state limits on the pollutants in an effort to keep them from blowing across state lines.

The same appeals court suspended the rule in late December, a few days before it was set to take effect early this year, bolstering the confidence of some states and power companies who argued that the rule is heavy-handed and illegal.

The indefinite suspension of the Cross-State Air Pollution Rule is a victory for utilities and other companies that own aging coal-fired power plants and have sought to weaken or postpone federal air pollution limits. But the reprieve may not be enough to protect those plants from fierce market forces and a separate set of EPA pollution rules that together could force many aging coal plants to shut down.

A U.S. natural gas production boom, coupled with slow demand growth, has driven down natural gas and power prices to historic lows, making coal expensive by comparison and giving gas-fired power plants a competitive edge. The EPA Cross-State Air Pollution Rule and a second set of regulations that limit emissions of mercury and other toxic substances from power-plants has increased pressure on coal plants, particularly older, less efficient plants that emit more pollution than newer plants.

American Electric Power Co. (AEP), which owns a large fleet of coal plants in Ohio and neighboring states, has installed pollution control equipment at several of its plants and the company plans to shut down about 6,000 megawatts of aging coal plants over the next few years. The driving force for those plans is the EPA's Mercury and Air Toxics Standards rule, finalized last year, which requires power plants to cut mercury and other emissions by 2015.

AEP spokeswoman Melissa McHenry said it was too early to say how the August 20 court ruling would affect AEP's plans. The company is focused on complying with the mercury rule, which "has a significant impact on our fleet of coal-fueled power plants and is driving much of the capital investment that we need to make at our facilities," Ms. McHenry said.

The August 21 court decision is good for owners of older coal plants in Texas, which the court found should have lower emissions limits, but it won't help companies that operate cleaner gas-fired and nuclear power plants, or coal plants with pollution-control equipment, said Julien Dumoulin-Smith, an analyst at UBS AG.

Energy Future Holdings of Texas is likely to benefit from the decision, but the ruling is negative for gas-fired power-plant operator Calpine Corp., nuclear-power giant Exelon Corp. and companies that already have cleaned up their coal fleets, such as FirstEnergy Corp., PPL Corp., Public Service Enterprise Group Inc. and NRG Energy Inc., Mr. Dumoulin-Smith said.

It was unclear how the court ruling might help Edison Mission Energy, a unit of California-based Edison International, which was the first to sue the EPA to block the Cross-State Air Pollution Rule. Edison Mission owns about 45 power plants across the U.S., including six aging coal plants in Illinois that will need to install costly pollution-control equipment or be shut down to comply with both state pollution limits and the federal mercury rule.

But those plants have been losing money for more than a year, as wholesale power prices have plunged to historically low levels, driven by low natural-gas prices and relatively weak demand, while coal prices have gone up.

Edison Mission lost control of the unprofitable Homer City coal-fired power plant in Pennsylvania after the company was unable to make a lease payment under a complex sale-leaseback agreement with a unit of General Electric Co. and other property owners.

Edison Mission filed the lawsuit on behalf of Homer City, which the company is still operating until GE finds another operator, said Douglas McFarlan, a spokesman with Edison Mission unit Midwest Generation.

Edison is overseeing construction of pollution-control equipment at Homer City to comply with the Cross-State rule. GE is financing the project, which has been estimated to cost about $700 million. Edison sued the EPA over the Cross-State rule, not to block the emissions reductions themselves, but in a bid for more time to comply, Mr. McFarlan said.

"We weren't arguing whether additional emissions reductions are appropriate over time, but we vigorously opposed the timeline," Mr. McFarlane said.

Edison Mission has been working to restructure $3.7 billion of debt and has been negotiating with bondholders in hopes to avoid bankruptcy, Edison International executives said last month.

In June, Standard & Poor's cut its credit rating for Edison Mission to "triple-C," or eight notches below investment grade, from "triple-C plus," saying it expected lower cashflow that would likely increase the business unit's risk in refinancing.

During oral arguments in April, the EPA and its backers--which include other states and power companies along with environmental and public health groups--argued that the rule follows the directions laid out by the same court in previous cases.

The court said that the Bush-era version of the interstate pollution rule remains in effect until the agency revises it.

Chevron May Have to Replace Parts of Richmond Refinery Unit

California inspectors have not closely assessed the damage sustained by a crude distillation unit in Chevron Corp.'s (CVX) Richmond refinery, but they suspect the oil giant may have to make time-consuming replacements of some of the unit's parts, a local inspection official said August 14.

"A good part of that section will be have to be replaced," said Randy Sawyer, Chief Environmental Health and Hazardous Materials Officer for Contra Costa County. "They won't have to replace the whole unit, but sections will have to be repaired and fixed for sure."

Replacing or extensive repairs to the crude unit could keep the refinery at minimal operations for months. BP PLC (BP) kept its Cherry Point refinery in Blaine, Wash., down for three months after a fire in February broke out at that facility's crude unit. Motiva Enterprises PLC, a joint venture between Royal Dutch Shell PLC (RDSA) and Saudi Arabia Oil Co., said it would take at least six months to restart its refinery in Port Arthur, Texas, after a June accident at the crude unit there.

A lengthy outage could have major impact on gasoline prices in California. The 245,000 barrel-a-day Richmond refinery is the third largest in the state and the largest in the San Francisco Bay area. The August 6 fire broke out hours after a leak was discovered in the crude unit, the first step in the oil refining process and a critical component of refining operations. The blaze lasted for hours, causing noxious emissions that sent hundreds of people to the hospital complaining of respiratory and eye problems. Bay Area spot gasoline prices on August 13 were commanding a 25 cent premium over September Nymex gasoline.

Chevron has not given any kind of time frame as to when the crude unit can be restarted.

Mr. Sawyer said that Chevron employees and state and federal regulators cleared the area around the damaged site to assess any structural damage and ensure that all potentially dangerous crude and chemicals are out of the system.

The U.S. Chemical Safety Board, an independent federal agency that inspects industrial chemical accidents, would seek to assess whether a particular pipe connected to the crude unit may have been corroded, said Daniel Horowitz, the board's managing director. According to Mr. Horowitz, a Chevron inspection in November turned up evidence of corrosion in another, nearby pipe, which was replaced at the time.

"We'd like to see that pipe removed and have tests done on it," Mr. Horowitz said. Chevron declined to discuss the possible causes of the fire, saying inspectors have not been able to get close enough to the damaged equipment yet.

Valero‘s Aruba Refinery to Become Terminal

Valero Energy Corporation announced September 3 that it will further reduce operations at its Aruba Refinery and reorganize the site as a refined products terminal.

"We believe that Aruba has the assets to compete as a world-scale crude and refined products terminal," Valero Chairman and CEO Bill Klesse said in a press release.

"With both deepwater berths and smaller berths, the terminal will have the flexibility to load the very largest crude ships," continued Klesse. "In addition, the scale and mixture of tankage will permit commercially attractive storage opportunities for our customers. Aruba's proximity to growing markets and its business-friendly political environment make it an ideal location for our new terminal operations."

Converting the Aruba Refinery to a terminal will "require a considerably smaller workforce," Valero stated in its announcement. The company did not specify to what extent it will trim its headcount at the facility, but it anticipates the reorganization and workforce reductions will conclude before the end of the year.

Valero noted that "A fair and reasonable arrangement will be presented to those employees not selected to be a part of the terminal operations," stated the company, which will provide those individuals with employment transition assistance.

In March of this year, Valero suspended refining operations at the Caribbean facility. It has maintained the refinery in a state that would allow a restart, keeping its employees on the payroll pending the decision announced Monday. In the near term, Valero will continue to maintain the refinery in this state should a prospective buyer step forward.

Operating as a terminal, the facility will continue to supply jet fuel, gasoline, diesel and fuel oil on Aruba. In addition, Valero will engage in third-party terminal services. Also, the company expects to remain a "significant employer" in Aruba as well as make improvements to the facility and dock and tankage upgrades.

"We will continue to work with Prime Minister Eman and his government in this effort," Klesse said. "Our discussions with interested parties, including those facilitated by the Government of Aruba, will continue, and if successful may result in the suspension of the workforce reduction. We greatly appreciate the continued efforts and support from the Prime Minister and his government."

Valero acquired the 235,000-barrel-per-day refinery in 2004. The facility processes lower-cost heavy sour crude oil. According to Valero's website, the facility employs approximately 780 individuals.

U.S. Gulf Coast Refinery Status after Isaac

As of 12 p.m Central Daylight Time (CDT) September 2, two refineries in Isaac's path with 439,500 barrels per day of capacity were shut down. According to the U.S. Department of Energy (DOE), this figure represents six percent of total Gulf Coast capacity.

At midday Sunday, September 2, four refineries with a total of 730,500 b/d were in re-start mode. Also, five refineries capable of processing nearly 1.5 million b/d of crude oil were running at reduced rates.

On Friday August 31, DOE entered into an agreement to loan Marathon Petroleum Co. 1 million barrels of sweet crude from the Strategic Petroleum Reserve (SPR). DOE stated the crude oil will be loaned from the SPR under short-term contractual agreements and will be returned to the reserve when supply conditions normalize.

Below is a list of status updates for refineries affected by Isaac. Information in the table is derived from company and government reports.

Status of Refineries Affected by Tropical Storm Isaac

as of 12 p.m. CDT Sun., Sept. 2, 2012

Pascagoula / Mobile Region

Chevron

Pascagoula, MS

330,000 b/d

Reduced Output

Shell

Saraland, AL

80,000 b/d

Reduced Output

Lower Mississippi River Region

Alon

Krotz Springs, LA

83,000 b/d

Reduced Output

Chalmette Refining (ExxonMobil/PDVSA)

Chalmette, LA

192,500 b/d

Shut Down

ExxonMobil

Baton Rouge, LA

502,500 b/d

Reduced Output

Marathon

Garyville, LA

490,000 b/d

Reduced Output

Motiva

Convent, LA

235,000 b/d

Restarting

Motiva

Norco, LA

233,500 b/d

Restarting

Phillips 66

Chase, LA

247,000 b/d

Shut Down

Placid Refining

Port Allen, LA

57,000 b/d

Restarting

Valero

Meraux, LA

125,000 b/d

Shut Down

Valero

Norco, LA

205,000 b/d

Restarting

Note that Valero's Meraux refinery was shut down for reasons unrelated to Isaac. Also, Chevron reported that its Pascagoula Refinery is temporarily running at a reduced rate. The company stated the output has been reduced for precautionary reasons only as the ship channel and marine transportation return to normal. Click here for the U.S. Department of Energy's list of refinery, pipeline and gas processing plant outages as a result of Isaac as of noon CDT Sunday, Sept. 2.

CANADA

B.C. Businessman Proposes $13 Bln West Coast Refinery

A self-described quiet environmentalist and businessman in British Columbia is proposing to build a refinery in Canada, something that hasn't been done in 30 years.

The proposal, only a plan on paper at this time, will put a wrinkle in the controversial Enbridge Northern Gateway pipeline plan that is buckling under mounting opposition in B.C.

David Black is known mostly for his 150 newspapers in Canada and the U.S.

Black said he feels compelled to, when asked why he's planning to enter the refinery business at a time when licenses are rarely granted and refineries throughout the U.S. east coast are closing,

Black, 66, calculates it would cost a couple of million for the environmental assessment process, money he will front himself.

He hopes to find investors for his project, which he says will be a safer environmental option than shipping heavy crude overseas.

"We want to take all the oil from the pipeline, the idea is not to ship any heavy crude off-shore," he said.

Black announced in Vancouver on August 17 that he's starting his ambitious project by filing for the environmental assessment process that could take two years to complete. The $13-billion refinery would be dependent on the Northern Gateway pipeline shipping into Kitimat, B.C., oilsands heavy crude oil from northern Alberta.

If approved, the refinery will be the first built in Canada since the Shell refinery was built in Edmonton in 1983.

Black thinks he could run a refinery more cheaply than one in China because he intends to ship modules from off-shore via cargo ships to the coastal locale of Kitimat and have the pieces put together in B.C.

He expects it will take 6,000 workers over five years to build the refinery. Once built, the refinery would employ about 3,000 full-time people.

Kitimat Mayor Joanne Monaghan, who listened to the press conference, said the announcement was a great day for her community of about 10,000 residents, 650 kilometers northwest of Vancouver.

"We support projects that will add value to our natural resources," she said. "This project will change the face of the Northwest."

However, Art Sterritt, executive director of Coastal First Nation, warned Black at the announcement that going ahead with an environmental assessment to seek approval from the province to build the refinery is a step that should be taken only after more consultations with the region's First Nations.

"You're proposing to put a refinery in an area with very limited air supply and polluting that area even more so," he said.

"I suggest if you really want to do business in the North, you have to talk to First Nations before talking to environmental assessment."

Black said his proposed refinery is a pragmatic approach that will create thousands of jobs and multiple spin-offs jobs and removes the threat of offshore pollution from a heavy crude oil spill because transportation of refined fuels such as gasoline, kerosene and diesel - which all evaporate - is much safer.

BRAZIL

Venezuela Investment to Assure 2014 Brazil Abreu e Lima Refinery Launch

Venezuela is prepared to invest sufficiently to assure the opening of a jointly operated oil refinery in Brazil within the foreseen timetable, Venezuelan President Hugo Chavez said August 2.

Speaking to reporters following a ceremony marking the acceptance of Venuezuela into the Mercosur customs union, Mr. Chavez said his government expected the Abreu e Lima refinery in Brazil's northeastern state of Pernambuco to begin operations in 2014 at a production capacity of 230,000 barrels per day.

"We're resolving some problems, but there's no doubt the refinery continues as planned," the president said.

The refinery effort was launched during the government of former Brazilian President Luiz Inacio Lula da Silva, but has suffered delays amid difficulties by Venezuela's state-oil company Petroleos de Venezuela SA, or PdVSA, to assure financing for its portion of the project. The company has been given until November to come up with loan guarantees for the project for Brazil's BNDES National Development Bank.

Mr. Chavez said the entrance of Venezuela into Mercosur would facilitate projects such as the refinery as well as trade throughout the region.

"The entrance of Venezuela represents a leap forward for Mercosur," he said. "No doubt it will strengthen the entire market."

Speaking earlier in the afternoon, Brazilian Trade Minister Fernando Pimentel said Brazil's government planned to send a delegation to Venezuela at the end of August to negotiate increased trade of oil and other products.

"Venezuela offers many products that could be important for the Brazilian industrial chain and Brazil also has many products to offer Venezuela," Mr. Pimentel said. "It's going to take some time before Venezuela is completely integrated into Mercosur but we're going to work so that trade between the countries increases quickly."

COLOMBIA

Ecopetrol Selects Axens’ Hydrocracking and Coker Naphtha Hydrotreating for Its Columbia Refinery

In order to enhance its processing capabilities of local heavy crudes while increasing clean fuels throughput, Ecopetrol has embarked into the modernization of its Barrancabermeja refinery (PMRB Project).

The site is located in the Santander department of Colombia. As part of this reconfiguration, Ecopetrol has selected Axens technologies for Hydrocracking and Coker naphtha Hydrotreating units. The 80,000 BPD Hydrocracker will process a blend of straight-run vacuum gasoil and cracked gasoil in order to produce high quality middle-distillates and to improve the FCC feed quality.

The 14,000 BPD Coker Naphtha Hydrotreater will produce feedstock suitable for petrochemicals. The refinery is already equipped with Axens Prime-G+ and Prime-D Hydrotreating technologies for low sulfur gasoline and ultra-low sulfur diesel production.

VENEZUELA

Major Fire and Explosion at Venezuela's Amuay Refinery

Authorities looked to put out a fire caused by an explosion at Venezuela's largest crude refinery August 26 that killed dozens in the country's deadliest oil industry accident.

Government officials said the 640,000 barrel-a-day Amuay refinery could be restarted in two days once the blaze was extinguished and the area deemed "secure."

Crews battling the fire, which broke out following a likely gas leak explosion that killed 41 people and injured over 80 more; were dealt a setback by shifting winds overnight.

At least one official at the local oil industry union questioned the government's stance that the plant could resume operations in just a couple days.

"A lot of what [the government is] saying I think is damage control...it's all political," said Ivan Freites, a local union leader. "The workers say it's probably going to take a lot longer. Right now the damage is incalculable."

Officials from state oil monopoly Petroleos de Venezuela, or PdVSA, didn't give an assessment of damage but said that the flames had been contained to two storage tanks in the southernmost section of the refinery. The facility is part of the larger Paraguana complex, located in the northwestern coastal state of Falcon, with a total refining capacity of roughly 950,000 barrels-per-day.

Rafael Ramirez, who doubles as oil minister and PdVSA chief, said that the refining area of the facility wasn't damaged or at risk and that the country had enough stored fuel and alternate facilities to meet domestic demand.

"We have 10 days of inventory of product," Mr. Ramirez said from near the site and added that Venezuela's remaining refineries had a capacity of 735,000 barrels-a-day of fuel.

"Take confidence in the men and women of the new socialist PdVSA," said Jesus Luongo, general manager of the Paraguana Refining Center.

Jesus Luongo, general manager of the Paraguana Refining Center said under a worst-case scenario, it would take "a couple of days" for the blaze to burn itself out if firefighters were unable to douse the flames. Such a strategy wouldn't endanger the surrounding facility, he said. Mr. Luongo added that fire crews had resumed engaging the blaze at one of the storage tanks August 26.

Officials estimate that more than 200 homes in the area were affected by the blast and 33 families displaced.

Residents of the Ali Primera zone, along the refinery's southern end saw many windows and roofs collapse from the shockwave.

"The place looked like a war zone," Ramon Guerra, a Punto Fijo resident who had helped in the rescue effort, said of the National Guard compound.

President Hugo Chavez, who in recent days had been focusing on development in the oil industry amid a hotly contested battle for re-election, declared three days of mourning and expressed his condolences in a written statement.

Mr. Chavez has opened an investigation into the blast and has encouraged the nation to resist attempts to exploit the tragedy. During the contentious campaign, the fiery president has often warned of ambiguous plots--without offering details--by the U.S. and Venezuela's political opposition to destabilize the country in an attempt to keep him from capturing a third six-year term in office.

The explosion comes at a time when many analysts believe Mr. Chavez is fighting his toughest electoral fight ever. The 58-year-old incumbent, who remains the favorite to win, has been losing ground to the youthful contender in several local polls. In recent days, Mr. Chavez has apparently sought to match the door-to-door campaign of Henrique Capriles and had hit the campaign trail while primarily focusing on the development of the oil industry.

ASIA

CHINA

Rosneft and China’s CNPC Hold Negotiations to Boost Investments in $5 Bln Tianjin Refinery

Russian state oil major Rosneft and China National Petroleum Corporation (CNPC) are holding negotiations to increase the investment appeal of the project to build an oil refinery in the Chinese city of Tianjin, Russian Energy Minister Alexander Novak said in an interview with China's Xinhua news agency and People's Daily and with Interfax.

"The technical and economic conditions for this project are now being negotiated. Negotiations are also being held on improving the investment appeal of this project, including developing the depth of processing and development of petrochemicals," Novak said.

He said Rosneft and his ministry are studying the possibility of increasing oil shipments to China, which China has requested. "The Chinese side has raised the issue of possible additional supplies of oil to China. Rosneft and we are considering this issue. Negotiations are proceeding constructively," Novak said.

He said three options for boosting the oil shipments to China are being considered. "The construction of the second phase of the Eastern Siberia - Pacific Ocean oil pipeline is being completed this year, which will make it possible to increase shipments to the Far East to 30 million tonnes. True, some of this crude will go to Russian Far Eastern oil refineries and will replace supplies that are now hauled by railroad. 15 million tonnes will go to Kozmino.

Within the context of relations with Chinese partners, various options are being considered, including the expansion of the capacity of the Skovorodino-Mohe pipeline from 15 million tonnes to 30 million tonnes. The option of shipments from Kozmino by pipeline or tanker is also being considered. No final decisions have been made yet, various negotiations are being held," Novak said.

He also recalled that Rosneft and China are discussing options for expanding cooperation in geological exploration, including projects such as Magadan 1 and 2, and in the Irkutsk Region.

The agreement on the feasibility study for the construction of the refinery in Tianjin was signed in 2010 within the context of the Vostok Petrochemicals joint venture (49% owned by Rosneft and 51% by CNPC), and a ceremony was held for the laying of the foundation stone for the future refinery.

The refinery is expected to process 13 million tonnes of oil per year, including 9 million tonnes of Russian crude. Crude will be shipped by tanker to the port terminal in Tianjin and then travel by pipeline the remaining 42 km to the refinery. The light oil products yield is expected to be more than 80% at the new plant. The target markets for the oil products are Northern China and the Central Plains region (including Beijing, Tianjin, and the provinces of Hebei, Shanxi, Henan and Shandong), as well as the coast of Eastern China.

Investment in the project was expected to total $5 billion. The refinery was supposed to be completed by 2015.

The companies are also considering building a chain of filling stations under the joint venture.

SINGAPORE

Singapore Reduces Sulfur Content Limits for Diesel, Gasoline

Singapore will move towards cleaner fuel and reduce sulfur emissions from cars and industries by 2014 in a bid to keep up with global changes, the country's National Environment Agency said.

As the number of vehicles in the world grows, boosted by surging numbers in Asia, several nations have stepped up the adoption of standards to cap sulfur emissions in recent years, including China, India and Thailand.

With the new directive, Singapore will be on par in terms of sulfur standards with Japan, South Korea and Australia for diesel but still lag these countries for gasoline.

Refineries in Singapore will have to supply cars and industries diesel with a sulfur content of less than 10 parts per million (ppm) from the current minimum of 50 ppm by July next year.

For gasoline, they will have to supply less than 50 ppm sulfur by October 2013, from the current minimum sulfur content of 500 ppm.

The environment agency said in a release that it will work with refineries to improve their processes and decrease their sulfur dioxide emissions.

"Power stations are also working towards cleaner fuels for their energy needs in order to lower their sulfur dioxide emissions," the agency said. "As the power stations and industries switch to the use of cleaner fuels to reduce sulfur dioxide, there will also be a reduction in other pollutants."

Currently, Singapore consumes about 23,000 barrels per day of gasoline and about 40,000 barrels per day of road diesel, an industry source said.

Refineries in Singapore are investing heavily in sulfur-removing capabilities to meet the new fuel specifications, and are expected to be ready by 2014, traders said.

But the upcoming lower sulfur measure on gasoline is unlikely to affect the way contract prices are assessed by oil pricing agency Platts.

"The current sulfur content traded is 500 parts per million (ppm) and Platts will consider revising it if the industry pushes for it," said a Singapore-based trader.

"But I doubt there will be an eager push to change the current specifications because the (Southeast Asian) region is still predominantly using 500 ppm gasoline."

Singapore is an exporter of gasoline and diesel.

The impact on diesel is also expected to be minimal as refineries already supply the greener 10 ppm sulfur diesel to petrol stations.

"Singapore's actual demand is pretty small, so the (move) won't have a major impact," an industry source said.

EUROPE / AFRICA / MIDDLE EAST

EU

EU Crackdown on Marine Fuel Pollution for Ships, Refineries

A European crackdown on pollution from ships will require billions of dollars worth of investment by shipping firms on filter technology and by refineries on upgrades to produce cleaner fuels - burdens they can ill afford.

The shipping industry is already struggling due to poor global demand and overcapacity, which have pushed freight rates to unprofitable levels for many operators. European refineries are under pressure from high crude costs, cheap refined product imports and weak demand.

To comply with new European Union laws, shipping companies now face extra costs of $3.2-$13.6bn (¤2.6bn to ¤11bn) to switch fuels or to fit exhaust filters that would scrub out the sulfur in marine fuel oil.

The new rules require that the sulfur content in shipping fuels fall to 0.1 percent from one percent by 2015 in "sulfur emission control areas" in the Baltic, North Sea and English Channel. In other EU waters, they will be limited to 0.5 percent sulfur by 2020, in line with global International Maritime Organization rules.

EU rules have already forced ships to cut sulfur emissions in harbors.

Burning cleaner marine diesel would be a quick fix that would meet the requirements, but it currently trades at a $350 per tonne premium to fuel oil, which has 1 to 3.5 percent sulfur content and which most ships use.

What's more, Europe is structurally short of diesel, and its older, less complex refineries cannot retool to produce more diesel without significant investment and lengthy shutdowns.

Switching back and forth between fuels as ships enter the low-sulfur zones could damage a ship's engines, according to Sigurd Jenssen, director of Exhaust Gas Cleaning at engineering firm Wärtsila Environmental Solutions.

Another option is for ships to use exhaust filters or "scrubbers" to prevent the sulfur in fuel oil from entering the environment. It transforms the harmful gaseous oxides into neutral sulfates, which can be dumped in the sea.

Scrubbers resemble big car exhaust systems and range in price depending on the size of the engine. A scrubbing system for a 14 megawatt engine of a 150,000 tonne suezmax oil tanker would weigh over 22 tonnes and for a 55MW engine around 86 tonnes.

Lindsay Sword, a senior analyst at Wood Mackenzie, expects scrubbing to become fairly standard on ships.

"It's not a really proven and well used technology yet, but we cannot see how the refining industry globally would be able to cope otherwise," she said.

"What would they blend into their existing fuel oil pool to get the sulfur content down from 3.5 percent? It would need something very low sulfur. It just would not make any economic sense for them to do it."

The technology has passed regulatory hurdles and is starting to be used. Scrubber-maker Hamworthy, a UK subsidiary of Finland's Wärtsila, sold its first systems for commercial use at the start of this year. Its main competitor, Sweden's Alfa Laval, has also recently sold its first systems.

GERMANY

Gunvor Group Starts Operations at Former Petroplus Ingolstadt Refinery

Gunvor Group Ltd has commenced operations at the former Petroplus refinery in Ingolstadt, Germany, having completed the acquisition of the refinery assets and relevant marketing activities. All regulatory and merger control approvals have been obtained. The official closing date was on August 23, and the first crude vessel has already discharged to supply the refinery.

The German entities, which will retain all of their more than 400 employees, will be named Gunvor Raffinerie Ingolstadt GmbH; the refinery's German marketing arm will be Gunvor Deutschland GmbH, and will continue to serve the markets in Southern Germany und Upper Austria—restoring important fuel supply and competition to the land-locked area.

"Gunvor is proud to welcome Ingolstadt's workforce to our growing and diverse family," said Gunvor Group Ltd CEO Torbjorn Tornqvist. "We intend to build upon the good and enduring customer relationships, and enlarge our trading activities in Germany and the Alpine region. Gunvor has a long-term perspective for the Ingolstadt facility."

The refinery in Ingolstadt is among the most efficient refineries in Europe thanks to its skilled and highly experienced employees, as well as continuous investment in maintaining its assets in excellent condition. It also has strong local connections in Bavaria, one of the biggest growth regions in Germany.

The production capacity amounts to approximately 100,000 barrels per day. Depending on the product (bitumen, mogas, diesel, heating oil) the refinery served 20-30 percent of the market in Bavaria and the connected regions. The Transalpine (TAL) pipeline, which originates in Trieste, Italy, supplies crude oil to the refinery.

For Gunvor, one of the world's largest independent commodity traders, the acquisition of the Ingolstadt refinery and the connected marketing activities is the first step to establishing a presence in Germany. Gunvor also strengthens its European market position, adding to its current refinery investment in Antwerp, Belgium.

Refineries complement Gunvor's trading function, which can create greater operational efficiency across the supply chain. Gunvor is leveraging its expertise and excellent relationships with crude suppliers to gain access to the types of crude oils processed at its refineries.

SOUTH AFRICA

South Africa’s Sapref and Natref Refineries to Prepare for Cleaner Fuels Upgrades

At least two South African crude oil refineries, Sapref in Durban and Natref in Sasolburg, are in line for modifications in anticipation of the country's move towards cleaner fuels.

The government wants to introduce clean fuels with effect from July 2017. Environmental health and air quality improvement are the main motivations.

But the move will require oil companies that own crude oil refineries to modify them. This could see companies digging deeper into their finances for the upgrades. SA's crude oil refineries are Sapref, the Engen refinery (also in Durban), the Chevron refinery in Cape Town and the Natref refinery.

Sapref said it would be carrying out modifications to several existing units and build two new process units. Sapref spokeswoman Cindy Govender said on July 30 detailed engineering work was expected to take place next year and construction is planned to start in 2014 and should be completed mid-2017.

Sapref is a joint venture between Shell SA Refining and BP Southern Africa, and is the largest crude oil refinery in Southern Africa, with thirty-five percent of SA's refining capacity. It processes 24,000 tons of crude oil a day. “Although we will have a few more units to operate (during the modification), refinery operations will not change significantly.” Ms Govender said. “The design phase still has to be completed and at this stage budgets are still being finalized.” she said.

Sasol, majority owner of the Natref refinery, said on July 30 it could spend about R5bn for its portion of the refinery in the period between 2014 and 2017.

In line with the two specifications, certain infrastructure changes would be required to further reduce the level of sulfur in petrol and diesel, and to reduce levels of benzene in petrol,”Sasol spokeswoman Jacqui O'Sullivan said. Natref is a joint venture between Sasol and Total.

Review Set for South Africa’s Mthombo Refinery Project

South Africa’s Energy Minister Dipuo Peters has recommitted government's support for Project Mthombo, the much- awaited PetroSA oil refinery at Coega.

In reply to a question from an ANC MP August 20, Peters said state-owned oil company PetroSA - and its potential partner, the Chinese state-owned group Sinopec - were reviewing the business case for the construction of a new refinery at Coega.

Organized business in the Eastern Cape believes Mthombo has the potential to be a major catalyst for socio-economic transformation of the province through job creation.

Peters said her department was still committed to Project Mthombo.

She said the review of the business case included aspects such as the size of the refinery, the schedule and the related costs.

Peters also said such an infrastructure project would create a "massive number of jobs" during construction and sustain increased levels of economic activity during operations.

On electricity, Peters said inflation would be among the criteria used to determine future electricity tariffs.

In a written reply to a parliamentary question posed by the Democratic Alliance, Peters said she would ensure inflation-based pricing was part of the overall tariff structure for the next multiyear electricity price determination.

"The pricing policy covers all the issues that must be taken into account when dealing with tariff determination, including the rate of returns as well as associated economic impacts. Inflation does get considered in the pricing methodology," her reply stated.

Peters said a study of South Africa's competencies, capabilities and needs for the proposed nuclear build program had been submitted to the International Atomic Energy Agency (IAEA).

Replying to a question from DA MP Lance Greyling, Peters said such a self-assessment report was required by the IAEA, and its findings would be made known once the process was completed.

In terms of the 2010 Integrated Resource Plan, the government plans to build between six and eight nuclear reactors that would eventually generate 9600MW of power.

Peters says government is still behind Project Mthombo

NIGERIA

Nigerian Commissions Refinery in Southeastern Anambra State

Anambra State, on August 30 joined other oil producing states following the official commissioning of the Orient Petroleum Refinery, OPR, built by the Anambra State Government.

The refinery initiated by the Chinwoke Mbadinuju administration which also constituted its Board of Directors led by former Commonwealth Secretary-General, Chief Emeka Anyaoku, is located in Aguleri-Otu, Anambra East Council area of the State.

Oil was first struck in the location about 45 years ago by the multinational company, SAFRAP, now Total Plc. OPR which will soon start full scale refining at the commissioning of the refinery section in a few months time is a 55,000 bpd.

The President commended the Anambra State Government for initiating the project and seeing it to completion in spite of the numerous issues encountered at inception.

Former governor of Central Bank of Nigeria (CBN), Professor Charles Soludo said that with Orient Petroleum, the state was going through transformation in the area of economic and social development.

RUSSIA

Russian Natural Resources Watchdog Suing Gazprom Refinery for Environmental Policy Violations

The Inter-District Environmental Prosecutor's Office, together with the Central Federal District Department of Russian natural resources watchdog Rosprirodnadzor, uncovered violations of environmental protection law during inspections at the Moscow Oil Refinery, which is part of Gazprom Neft, the Moscow city prosecutor's office reported on its website.

The regulators have established that "the natural environment is polluted by oil-containing products in excessively high concentrations on the territory of the refinery and outside of it."

As a result of the inspections, the prosecutor's office submitted a statement of claim to the Lyublinsky District Court of Moscow with the request that the enterprise be obligated "to restore the disturbed conditions of the environment with its own funds."

In addition, the Rosprirodnadzor's Central Federal District Department has issued a resolution in relation to the oil refinery imposing an administrative penalty under Article 8.2 of the Code of Administrative Offenses of the Russian Federation (failure to comply with environmental, sanitary and epidemiological requirements when handling wastes from production and consumption or other hazardous substances), in the form of a 150,000-ruble fine.

Interfax has not yet obtained information from the Moscow Oil Refinery or Gazprom Neft.

The Moscow Oil Refinery provides for roughly 40% of the Moscow area's petroleum product needs. Its installed capacity is 12.15 million tonnes of crude a year, and it turns out about 10 million tonnes of fuel a year.

In April, the Moscow Oil Refinery transitioned to producing Euro 4 standard high-octane gasoline. At the moment, the refinery is implementing a modernization program for its production capacities, which is aimed at improving the quality of its petroleum products, increasing refining depth and raising production and environmental efficiency. Gazprom Neft will invest 130 billion rubles in the refinery's modernization by 2020.

KUWAIT

Kuwait to Proceed with $14.5 Bln Al-Zour Refinery

Kuwait National Petroleum Company (KNPC) said it is going ahead with its long-delayed plan to build the Middle East's largest oil refinery despite political tensions that have stalled many economic development plans.

The government expects to announce next month the winner of the Al-Zour refinery's project management and consultancy (PMC) contract, a senior executive at KNPC told Reuters.

"The bids have been submitted and now we are in the evaluation phase...I expect the result to be out in August," the executive, who declined to be named under briefing rules, told Reuters.

Five international engineering firms submitted bids for the PMC contract, industry sources told Reuters: U.S.-based Foster Wheeler and Fluor Corp, Australia's WorleyParsons, France's Technip and British-based Amec. The executive and a spokesman for KNPC declined to comment on the names of the bidders or the size of the contract.

Other contractors were due to prequalify by August 7 in order to bid for the project's engineering, procurement and construction (EPC) contracts, the industry sources said.

If it goes ahead, the Al-Zour project could have an impact well beyond its monetary value, helping to restore confidence in Kuwait's economic management and the government's ability to get things done. The project, originally planned a decade ago would provide fuel for power generation and water desalination facilities and export any excess, is estimated to cost around $14.5 billion. The refinery would process 615,000 barrels per day, coming online in 2018; it would exceed the capacity of the Middle East's largest refinery, Saudi Arabia's 550,000 bpd Ras Tanura plant.

But Al-Zour and many other plans have been held up by years of conflict between the cabinet, which is chosen by a prime minister who is appointed by the emir, and the National Assembly over allegations of corruption and mismanagement.

Kuwait Awards Amec, Foster Wheeler for Refinery/ Clean Fuel Projects

Kuwait has awarded British engineering company Amec Plc and U.S.-based Foster Wheeler consultancy contracts for its new refinery and clean fuel projects, al-Rai newspaper reported on August 31.

The U.S. $14.2 billion (4 billion dinar) al-Zour project aims to build the Middle East's largest oil refinery while the 4.6 billion dinar clean fuel project plans to upgrade and boost capacity at existing facilities. Both have faced delays due to political instability.

The tenders committee awarded the contracts on August 30, Kuwait's al-Rai reported, citing unnamed sources. The value of the contracts amounts to around 2 percent of each of their total budgets, it said.

Sources told Reuters last month that five international engineering companies had submitted bids for the project management and consultancy contracts. Apart from Foster Wheeler and AMEC, Fluor Corp, Australia's WorleyParsons and France's Technip were in the race.

State-owned Kuwait National Petroleum Company (KNPC), which is running the two projects, is working on a list of contractors and will award further tenders in the first few months of 2013, al-Rai reported. Korean, U.S. and Italian companies are showing interest, according to the newspaper report. Last month sources told Reuters that other contractors had to prequalify by Aug. 7 if they were to bid for the project's engineering, procurement and construction (EPC) contracts.

If it goes ahead, the al-Zour project could have an impact beyond its monetary value, helping to restore confidence in Kuwait's economic management and the government's ability to follow through on major projects. Kuwait is a member of the Organization of Petroleum Exporting Countries (OPEC).

The al-Zour project, originally planned a decade ago, aims to provide fuel for power generation and water desalination facilities and will allow Kuwait, one of the world's biggest oil producers, to export any excess.

The refinery would process 615,000 barrels per day, coming online in 2018. It would exceed the capacity of Saudi Arabia's 550,000 bpd Ras Tanura plant, the Middle East's largest refinery.

OMAN

Nine Bidders on Shortlist for Oman Refinery Contract

Top international engineering companies are among nine groups of bidders shortlisted for a $1.2-billion contract involving the expansion of Oman's flagship refinery at Sohar, according to the Oman Observer.

In contention for the engineering, procurement and construction (EPC) contract are Technip, the France-based provider of project management, engineering, and construction services for the oil and gas industry; TecnicasReunidas (TR), a leading Spanish engineering firm specializing in the design and construction of industrial plants of all types; Korean construction conglomerate Hyundai Engineering; and the joint venture of Indian engineering giant Larsen & Toubro (L&T) and GS Engineering of South Korea.

Also in the fray is the partnership of Petrofac, the London-headquartered international provider of integrated facilities services to the hydrocarbon and petrochemical industries, and South Korean engineering and construction conglomerate Daelim. Fellow Korean engineering corporation Daewoo has teamed up with global petrochemicals firm Lurgi to bid for the contract.

Among other contenders are Japanese engineering corporation Chiyoda, which has joined hands with Seoul-based industrial contractor Samsung Engineering, Korean firm SK Engineering, and Japanese industrial contractor JGC.

The expansion, estimated to cost in the range of $1.5 to $1.8 billion, is being overseen by Oman Oil Refineries and Petroleum Industries Company (Orpic), a wholly government-owned integrated refining and petrochemicals entity.

Orpic oversees the management of Oman's two refineries at Mina Al Fahal and Sohar, as well as the aromatics and polypropylene plants at Sohar industrial port.

The upgrade will add around 60,000 barrels per day (bpd) of new capacity to Sohar Refinery's present processing capacity of around 116,000 bpd of crude and long residue.

The newspaper added that the shortlisted bidders were invited to a site visit at the end of last month. The site visit was also expected to provide an opportunity for the bidders to have any technical queries about the EPC package answered by the client's representatives.

Also envisaged is a delayed coker unit (DCU) designed to minimize excess low value bitumen production and increase the production of high value products like LPG, naphtha and diesel.

WORLDWIDE

KBR, Shell Global Solutions Expand Hydroprocessing Tech Alliance

KBR and Shell Global Solutions International B.V. on August 8 announced the expansion of their hydroprocessing technology alliance. In addition to hydrocracking and hydrotreating, KBR will also market, sell and provide technology and design packages for Shell Global Solutions deep-flash, high-vacuum unit distillation and thermal conversion technologies worldwide.

Refinery operators want to improve their distillation performance to optimize their assets, minimize their expenditure and capital investment, and debottleneck their operations. Refiners can use deep cut vacuum distillation to maximize the recovery of distillate from residue. Also, with the falling demand for residue fuel oil, refiners can use thermal conversion technologies to convert the bottom barrel to higher value products.

"The expansion of the alliance underscores our success to date and allows us to deliver a much broader refinery scope of value-focused technology," said John Derbyshire, President, KBR Technology. "The addition of these technologies enables us to better address refiners' long-term needs for margin improvement, while continuing to meet environmental requirements."

"Our early successes demonstrate that refiners value the synergies between KBR's technology and engineering experience and Shell's operating and catalyst experience," said Sueleyman Oezmen, Vice President, Refining and Chemical Licensing, Shell Global Solutions International B.V. "The expansion of our alliance illustrates our long-term commitment to providing high quality, innovative technology to the refining industry."

Shell Global Solutions is affiliated with Shell's catalyst companies which innovate and sell catalysts through a network that includes Criterion Catalysts & Technologies, Zeolyst International, CRI Catalyst Company and CRI KataLeuna.

McIlvaine Company,

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