dec 06 update

The fire occurred when a pipe fitting burst in a crude oil processing unit at a Citgo refinery in Romeoville. Citgo filed the lawsuit against a Barberton, Ohio-based parts manufacturer in 2003 to recover repair costs and lost profits.

In awarding the damages November 6, a Cook County jury determined that the Babcock & Wilcox Co. was 45 percent responsible for the accident. Jurors also ruled that Unocal Corp., the previous owner of the refinery, was 40 percent responsible for the fire.

Citgo was assigned 15 percent of the blame.

Babcock & Wilcox will "have to pick up the whole ticket" because it was assigned 25 percent or more of the blame, said Citgo attorney Randy Donato.

"We appreciate that the judicial system ruled in our favor in this important case," said Jeff Rutter, a spokesman for Houston-based Citgo, which is a subsidiary of Venezuela's state-run oil company Petroleos de Venezuela SA.

Babcock & Wilcox attorney John Donley said the company will appeal the verdict. He said that in 1982 the company told Unocal the fitting was defective and needed to be replaced.

Firefighters from more than 15 communities helped put out the Aug. 14, 2001, blaze, which burned for several hours. The unit where the fire occurred processed 165,000 barrels per day at the time, Citgo has said.

An investigation showed the pipe fitting, which was manufactured by Babcock & Wilcox, was made of the wrong kind of metal.

When Unocal sold the refinery to Citgo in 1997, the sales contract stipulated that Citgo accepted all responsibility for the plant, Donley said.

Alon Reduces Feed to Texas Refinery SRU

Alon USA Inc. reduced the feed to the sulfur recovery unit at its 70,000 barrel-per-day refinery in Big Spring, Texas, on th morning of November 7 after a portion of the unit shut down, according to a notice filed with the state pollution regulation agency.

The SRU's scot unit went after the mix chamber flame scanner went down, according to the notice filed with the Texas Commission on Environmental Quality.

McDermott to Appeal Citgo Verdict

McDermott International Inc. said it will appeal the $387 million jury verdict rendered against one of its subsidiaries, The Babcock & Wilcox Co.

The case brought against Houston-based McDermott by Citgo Petroleum Corp. and PDV Midwest Refinery LLC, filed in Illinois, involves claims for damages in connection with the manufacture and sale in 1981 by a former B&W division of a pipe fitting that allegedly caused an August 14, 2001, fire at a refinery in the Chicago area.

Pursuant to a settlement agreement reached in December 2005, B&W paid $7.5 million to the plaintiffs, and limited its additional exposure to the plaintiffs to a maximum of $42.5 million, only be payable after all appeals of the Citgo action and claims against B&W's insurance broker and applicable insurers have been exhausted.

In awarding $387 million to the plaintiffs, the jury apportioned liability of 45 percent to B&W, 15 percent to Citgo and 40 percent to Unocal Corp., the prior owner of the refinery.

Houston-based Citgo had sought approximately $550 million in damages and a finding of full liability on the part of B&W.

Valero Priced out of New Refinery Buys

After the Premcor sale, the price range for a U.S. refinery was thought to be between $10,000 and $15,000 per barrel. The bidding on the Lyondell refinery, which at that time was a joint venture between Lyondell and Citgo Petroleum Corp., reset the price range.

Lyondell ended up canceling the bidding for the refinery and bought out Citgo's minority interest in the plant.

The new $20,000 price will affect U.S. refiners' strategic planning even if they aren't bidding for a new plant, said Douglas Terreson, managing director for Morgan Stanley.

Share values for independent refiners like Valero are closer to $10,000 per barrel, Terreson said.

"With the replacement value for refineries at $20,000 per barrel and shares trading at $10,000 per barrel, the refiners may be involved in some strategic actions," Terreson said in a speech. "Management buyouts may not be out of the question."

While mergers are possible, most refiners will likely continue share buyback programs to boost stock values, he said.

Louisiana may get New Refinery via Kuwait

Gov. Kathleen Blanco is going to Kuwait to try to nail down a new refinery project for Louisiana that would be the first new oil refinery built in the United States in 30 years.

Blanco is on a trade mission to Kuwait, Japan, China and Taiwan, during which she will sign an agreement for a $1 billion Synfuel plant announced last year for Ascension Parish, in addition to the possible refinery deal.

"We don't have any scheduling details yet," she said.

The addition of the Kuwait trip indicates an agreement may have been secured to build a new oil refinery, which would have an enormous economic impact on the state.

Kuwait is interested in building a new U.S. refinery, costing about $4 billion. Louisiana is one of the sites under consideration for the refinery.

"The governor is interested in pursuing all leads that might bear fruit for Louisiana," said Deputy Chief of Staff Kim Hunter Reed. "Obviously, this is an enormous opportunity."

Colorado Firm vies for $750 Million Iraq Refinery Job

James Prall, president and CEO of Colorado Industrial Construction Services Co. in Wheat Ridge, points to an area in Kurdistan in northern Iraq where his company is competing with two other firms to build a new oil refinery. The refinery, slated for completion in mid-2009, would increase Iraqi oil output by 20 percent. The small Wheat Ridge engineering firm is waiting to hear whether it will win a $750 million contract from the Iraq Oil Ministry to design and construct one of the first new refineries in that country in more than 30 years.

If Colorado Industrial Construction Services Co. is successful, it would create 250 new engineering jobs in Colorado and hire 1,500 construction workers in Iraq, president and chief executive James Prall said November 8.

CICSCO is competing for the job against two companies based outside the United States. Prall said he expects the Iraq Oil Ministry to make a decision soon.

Iraq has struggled to capitalize on its sizable oil reserves. The oil ministry has shed hundreds of employees suspected of selling fuel on the black market and has fought continuous attacks on fuel tankers and pipelines.

The Colorado firm, which employs 70 people, got this far through relationships in Iraq forged by a U.S. Army commander and a former U.S. ambassador to Bahrain.

The project, known as the Koya Refinery, would be built in Kuysanjaq, Iraq, roughly 60 miles northeast of Kirkuk, the center of oil fields in the country's northern Kurdistan region. The refinery would be scheduled for completion in mid-2009.

Iraq needs the new refinery to reduce the $200 million it spends each month to import refined oil products to meet its own domestic and industrial needs, Prall said. The country operates at only half of its refining capacity of 700,000 barrels per day. The new refinery would handle 70,000 barrels daily, boosting Iraq's refining by about 20 percent.

The bidding process for the three-year contract started 15 months ago and initially involved 17 companies. Three firms remain, including CICSCO. The other two finalists are OGI Group in Calgary, Canada, and DPS Bristol Ltd. in Bristol, England.

All three companies are working on other projects in Iraq and have partnered with Iraqi firms to complete construction.

Prall declined to name the Iraqi firm with which CICSCO has partnered but said it is headed by a man who earned a master's degree in electrical engineering from North Carolina State University.

"Many of the Iraqis leading projects this big were educated in the United States and respect what we know how to do here," Prall said.

CICSCO, which counts Belgium Brewery and Gatorade among its customers, has handled projects for the biotechnology, food and beverage, petroleum and pharmaceutical industries. CICSCO developed business connections in Iraq thanks in large part to its vice president of marketing, Eryth Zecher, a U.S. Army commander who has served in Iraq on and off since the United States' invasion in 2003. Zecher was unavailable for comment.

"By awarding contracts like this, Iraq gets the best of both worlds," Zakhem said in a statement. "American advanced technology, guidance and management designed to be built with local resources ..."

Why would Iraq officials want to entrust such an important project to a relatively small and unknown firm such as CICSCO?

"The reason initially given to us when we started looking at this is that they didn't want to put themselves in the position of doing business with companies that were bigger than the government and would tell the government how to do business," Prall said. "They were looking for smaller, more flexible and more agile companies. That's us."

The Iraq refinery is relatively small in size and price, and scheduled for completion on a speedy timeline compared with refinery construction in North America, said Steve Douglas, spokesman for Suncor, which recently spent $400 million to upgrade its 90,000-barrel-per-day refinery in Commerce City.

If a refinery the size of the proposed Koya facility were built in North America, Douglas said it likely would cost more than $1 billion and take almost a decade to complete, in large part because of government regulations and permitting.

"We are held to certain standards in North America that might not prevail in other parts of the world," Douglas said.

Exxon’s, Torrance CA Refinery Reports Alkylation Unit Upset

Exxon Mobil Corp.'s 150,000 barrel-per-day Los Angeles-area refinery in Torrance, California, told state public safety agencies that a alkylation unit upset triggered flaring November 14, according to the notices.

An Exxon spokeswoman was not available to discuss operations at the refinery

Exxon was overhauling the hydrocracking unit at the refinery the previous week, the company has said.

Motiva Receives Air Permit for Proposed Port Arthur Refinery Expansion

An agreement between Shell Oil-Saudi Refining joint venture Motiva Enterprises and environmental activists ends opposition to a Texas refinery's proposed expansion, Motiva and activists said on November 14.

Under the agreement, Motiva will make an initial endowment of $2 million to a foundation providing health care and spurring economic development in impoverished sections of Port Arthur, Texas, where Motiva is considering nearly doubling the refining capacity of its 325,000 barrel per day (bpd) refinery.

Port Arthur-based Community In-Power & Development Association Inc. (CIDA) agreed to halt its opposition to the expansion as part of the agreement, which will give the group a seat on the foundation's board.

CIDA, aided by national environmental organizations, had planned to oppose the permit Motiva must gain from the Texas Commission on Environmental Quality before it can begin expanding the refinery to 600,000 bpd in crude oil throughput capacity.

A Motiva spokeswoman said the company had long sought ways to invest in sections of the community that were hardest-hit when Hurricane Rita roared through the town on the Texas-Louisiana border in September 2005.

"It is a win-win situation for everyone to have this agreement," said Motiva spokeswoman Sue Parsley.

Motiva's board is expected to take a final vote in early 2007 on the expansion project, which would make the Motiva refinery one of the largest in the United States.

Chevron Seeks Permit to Expand Pascagoula Refinery

Chevron Corp said on November 13 it is seeking an environmental permit from state regulators to expand gasoline production by 15 percent at its 325,000 barrel per day refinery in Pascagoula, Miss.

The company said it filed an application with Mississippi Department of Environmental Quality for permission to build a major gasoline production unit, along with other minor units, at its largest refinery in the United States.

The new units are expected to increase gasoline production at the refinery by about 15 percent, or about 18,000 bpd.

The company said the new CCR unit -- which will continuously regenerate catalyst used to convert low octane components into higher-octane stocks -- will replace two 30-year old reformers.

"The CCR project will increase the Pascagoula Refinery's ability to provide reliable supplies of gasoline to key markets in the Eastern United States," said Roland Kell, manager of the refinery, which is located on the U.S. Gulf coast.

Chevron said approval for the project from the state of Mississippi and the company's board would run concurrently. If approved, construction of the project would likely begin during the first quarter of 2008.

The company is already in the process of another expansion to raise its gasoline-making fluid catalytic cracking unit's capacity by 10 percent. Work is on track to be finished at the end of 2006.

Since early 2005, U.S. refiners have planned to add about 1 million bpd to current capacity of about 17.4 million barrels.

Presently, about 355,000 bpd of expansions are already on the books but rising costs of labor and materials are expected to delay some projects, according to some analysts.

Murphy Oil Moving its New Orleans Exploration and Production Office to Houston

Murphy Oil Corp. announced November 15 that it is closing its New Orleans exploration and production office and moving it to Houston.

Murphy spokeswoman Mindy West said she expects the New Orleans office to close sometime next year.

The approximately 250 employees at Murphy Oil's refinery in Meraux will not be affected by the closing, she said.

With most of the oil industry migrating to Houston, "keeping another office in New Orleans that's just a few hundred miles away just doesn't make sense," she said.

Management changes also played a role in the shutdown. Instead of having multiple people in charge of exploration and production operations, there will be just one working from the Houston office.

David Wood will be promoted from international exploration and production operations to executive vice president with responsibility for worldwide exploration and productions operation effective Jan. 1, West said.

Murphy is expected to produce between 95,000 and 100,000 barrels of oil each day this year with a similar production forecast for 2007, according to the company's Web site. The Meraux refinery produces 125,000 barrels of refined petroleum for distribution in the Gulf Coast market each day, the Web site said.

Murphy Oil hasn't been the only energy corporation to leave the city of New Orleans.

On Nov. 1, Dominion Resources Inc. announced plans to sell most of its natural-gas exploration and production assets to reduce debt and focus on other long-term, low-risk business ventures. It is unknown how the decision will affect the roughly 300 Dominion employees working in New Orleans and offshore.

Western Refining Shuts Processing Unit in Texas for Repairs

Western Refining (WNR) has shut a processing unit at its El Paso, Texas, refinery in order to replace equipment after a malfunction caused several hours of emissions November 15, according to a filing with a state environmental agency.

A plugged pressure relief device associated with the light ends unit caused the emissions and needs to be replaced, said the report to the Texas Commission on Environmental Quality. Replacement of the pressure relief device requires that the light ends unit be shut. The light ends unit recovers light material as useful products, such as propane, from the gases being directed to the fuel system.

The refinery has a crude-processing capacity of about 117,000 barrels a day, and produces primarily light transportation fuels, including gasoline, diesel and jet fuel.

Kuwait, Louisiana Sign MoU to Study Building Refinery in U.S.

Kuwait and Louisiana of the United States on November 12 signed a Memorandum of Understanding to study establishing a refinery in southern U.S., Kuwait News Agency reported.

Kuwaiti Energy Minister Sheikh ali al-Jarrah said in a news statement that the MoU stipulated setting up a joint team to examine the viability of the proposed project.

"This MOU establishes Kuwait's strong interest in Louisiana as a viable site for the first greenfield crude oil refinery in the U.S. in 30 years," Blanco, Louisiana Governor, was quoted as saying.

The size of the refinery and its cost were to be determined in future and both sides have agreed to meet again whenever needed to boost overall cooperation and to serve mutual interests.

Kuwait Petroleum Corporation's (KPC) Managing-Director for International Marketing Jamal al-Nouri said his country has received many offers to build a refinery in the U.S. except Louisiana.

He also said that Louisiana's officials have offered his company a bundle of incentives and facilities to establish the refinery in cooperation with a number of strategic partners.

Kuwait, an oil-rich Emirate, is also studying plans to build a multi-billion-dollar refinery and petrochemical plant in China and might enter India's refinery sector, too.

Pipe Repairs at BP's Texas City Refinery

Repair work on a pipe with a pinhole leak at BP PLC's Texas City, refinery was slated to last until November 21, according to a report filed with state environmental regulators.

The leak occurred November 16, when inspectors measuring the depth of a pit in the pipe accidentally pushed the measuring device through the pipe wall, according to the report. Emissions associated with the leak necessitated the report to the Texas Commission on Environmental Quality.

Refinery workers installed a temporary clamp to minimize the leak, but the clamp did not stop the leak entirely. A new, permanent clamp is being designed, and will be installed when built, according to the report.

The report did not say whether the leak was impacting production at the refinery. At full rates, the refinery has the capacity to process 463,000 barrels a day. Currently, the refinery is running about 247,000 barrels a day as it gradually restarts from a long-term shutdown.

BP U.S. Refinery Review Panel Delays Report

A commission set to report on BP PLC's five U.S. refineries has delayed the release of its report until next month.

The commission had expected to release its report on Nov. 29 but set a new date of Dec. 19.

"The complexities involved with compiling the type of voluminous report that panel members intend to release require a few additional days of preparation," the commission said in a press release issued November 20.

BP formed the Independent Safety Review Panel to assess process safety management across its U.S. refineries, following an urgent recommendation from the U.S. Chemical Safety and Hazard Investigation Board in the wake of a March 2005 explosion at BP's Texas City refinery.

The 11-member panel is led by former U.S. Secretary of State James Baker III. The group has traveled to BP's refineries in Washington, California, Texas, Ohio, and Indiana to conduct public meetings and interview employees.

CANADA

Canada”s Ultramar to Build $235 Million Pipeline

Ultramar Ltd. expects to start construction on a 240-kilometre pipeline connecting its 215,000-barrels-daily oil refinery at Quebec City to its Montreal storage terminals next fall, president Jean Bernier said after speaking to the Board of Trade of Metropolitan Montreal November 7.

This is a year later than originally planned when the project was first announced early in 2005, and the cost has risen from $200 million to an estimated $235 million by the time it goes on stream in 2008-2009. Regulatory hearings are expected in March.

Shell Studies New 200,000 bpd Ontario Refinery

Shell Canada Ltd. is exploring the possibility of building Canada’s first refinery in more than two decades, the company’s chief executive said November 23.

The refinery proposal is a small part of a larger $4-billion capital budget the company unveiled for 2007, about 50 per cent higher than last year.

Shell has set aside $50 million to determine the viability of a new heavy oil refinery near Sarnia, Ont., to process up to 200,000 barrels a day from its growing oilsands production.

“We’re examining the potential to maximize the value from our growing oilsands production in Alberta by expanding our manufacturing base in Ontario,” Clive Mather, Shell Canada’s CEO, told a media gathering.

“It’s a market where demand for light oil is growing, and it’s part of our strategy to harness the integrated value from the oilsands.”

The company has put together a 40-person team to work on preliminary engineering, assess environmental impact and undertake a public consultation plan.

Mather said it is still too early to determine how much a greenfield facility would cost, but a decision to go ahead could come within the next two to three years. If built, it would be Canada’s first refinery since Shell built Scotford near Edmonton in 1984.

The company continues to look at adding upgrading capacity in Alberta, but Mather said “right now I’m more attracted to the Ontario solution.”

Martin Molyneaux, FirstEnergy Capital Corp.’s managing research director, said he isn’t surprised Shell would look east to build a new refinery as opposed to striking a joint refining venture with an American partner — a la EnCana Corp. and ConocoPhillips’ $15-billion deal last month. “Shell doesn’t do joint venture refining,” he said. “Everybody in North America is wrestling with how to capitalize on the growing volumes of heavy oil, bitumen and even synthetic oil coming out of Western Canada.”

David Aldous, Shell’s senior vice-president of refined products, said building a new plant makes more sense than reconfiguring an existing refinery. “It allows you the opportunity to build a pacesetter refinery from scratch,” he said.

Of Shell’s total capital program, $2.45 billion will go to expanding Alberta oilsands operations in Fort McMurray and Peace River.

The first stage of the AOSP expansion is projected to add 100,000 barrels per day (bpd) to the project’s existing capacity of about 150,000 bpd. In addition, Shell is targeting 50,000 bpd from in-situ projects near Peace River by 2008.

A further $1.1 billion will go to traditional exploration and production, particularly for unconventional natural gas development in the Foothills. Shell’s tight gas program is targeted to flow 100 million cubic feet per day by the end of the year and Mather said future efforts would include coal bed methane and shale gas.

Although he wasn’t surprised at the refinery announcement, FirstEnergy’s Molyneaux said the $4-billion tally came out of the blue, particularly the amount devoted to the AOSP expansion. “That’s aggressive all right,” he said. “It will take a lot of doing to spend that kind of money.”

An even bigger question, he added, is how Royal Dutch plans to integrate its North American business units after concluding a $7.7-billion buyout of minority shareholders some time next year.

Meanwhile, Western Oil Sands Inc., Shell’s 20 per cent junior partner in the AOSP, said it would spend $715 million in 2007 with $655 million allocated to funding its share of the expansion costs.

“We see tremendous opportunity and growth potential ahead of us and our capital spending program reflects our commitment to our key growth initiatives,” said Jim Houck, the company’s president and CEO.

Series of Outages at Nova Scotia Power cause Refinery Sutdown

Nova Scotia Power Inc. had no immediate explanation for the spate of outages that occurred November 23 and 24 in sections of Dartmouth and downtown Halifax.

The largest outage, forced Imperial Oil to shut down its refinery in Eastern Passage. The blackout caused the release of some extra gas. However, no levels of harmful toxins were detected in surrounding areas, the fire department said.

"There was a toxic vapor alarm that sounded, which indicated there were some vapors in the air," Imperial Oil spokesman Alan Jeffers said. "There was no need to evacuate the building."

Shortly afterward, black smoke poured out of the refinery’s flare tower and drifted across the harbor.

"That flare is really a safety valve. If you’ve got surplus product you’ve got to get rid of, that’s what goes up the flare and is burned off. It is a way to safely release hydrocarbons if you’ve got some kind of process upset Mr. Jeffers said.

Getting the plant up and running will likely take several days or more, he said.

Mr. Jeffers couldn’t estimate how much the electrical system glitch will cost the company.

BRAZIL

Petrobras-Pdvsa Refinery Cost up to $ 2.8 Billion

A refinery that will be built in Brazil by Brazilian Petrobras and state-run oil holding Petróleos de Venezuela (Pdvsa) will need an investment of USD 2.8 billion instead of USD 2.5 billion, as established in the initial sketch, the Brazilian state company reported.

"The volume was recently revised due to the growing cost of materials and services, particularly steel," Petrobras said in a press release about the business status with the Venezuelan Government.

Petrobras CEO José Sergio Gabrielli accompanied Brazilian President Luiz Inácio Lula da Silva in a visit to Venezuela November 13.

The two oil companies are discussing the organization of joint ventures to execute oil agreements on refining, prospecting and production of oil and natural gas.

The new refinery property of Petrobras and Pdvsa will be located in the Brazilian state of Pernambuco. The foundation stone was placed on December 16th, 2005.

COSTA RICA

Costa Rica to Compete for $7 Billion Regional Refinery

The government of Costa Rica announced its intention November 23 to compete for the hosting of a refinery plant for the Central American region that is scheduled to process 360,000 barrels of crude oil a day.

The Costa Rican government's aspiration was made public by Environment and Energy Minister Roberto Dobles, who pointed out the interest for the zone of Puntarenas, Central Pacific, to be chosen for the construction of the refinery plant.

Before December 10, the Costa Rican Executive should present the support of its proposal to the Meso American Energy Integration Program (PIEM), an organization formed by Central American nations, Mexico, the Dominican Republic and Colombia, Dobles said.

Sources of the Central American press said Panama and Guatemala expressed their wish to support the project, whose host will be chosen by July 2007

If Costa Rica fulfils its objective, the facility, valued at 7 billion dollars, would be located in the municipality of Barranca, province of Puntarenas, 62 miles west of San Jose, and would start working starting in 2012.

ASIA

INDIA

Punj Lloyd Wins Contracts for IOC's Refinery Project

Punj Lloyd Ltd has announced that it has secured two contracts for Indian Oil Corporation's refinery project being implemented at its complex at Haldia (West Bengal). The Contracts awarded are on EPC basis for the Hydrocracker (capacity 1.7 MMTPA) and Hydrogen Generation Unit (capacity 70,000 TPA). The combined value of both the orders is Rs 1,163 crore. The value for the Hydrocracker contract is Rs 864 Crore while contract for Hydrogen generation unit is valued at Rs 299 crore, the scope for both the packages entails engineering Procurement, Construction and Commissioning on a single point responsibility basis.

The Hydrocracker turnkey contact is the largest EPC contract for a process unit awarded to the Company and will also make the Company the first Indian Company to execute a hydrocracker project on an EPC basis. With this, the Company has joined the select league of global EPC contractors to work on a Hydrocracker unit on an EPC basis. Hydrocracker is one of the complex process units in refinery with pressures and temperatures like 250 bar and 300-350 deg C respectively.

The project for the hydrocracker unit is scheduled to be completed in 33 months while that for hydrogen generation unit is scheduled to be completed in 24 months.

Commenting on bagging prestigious contracts from IOCL, Mr Atul Punj, Chairman of Punj Lloyd said, "Punj Lloyd has come a long way ever since it bid for the mechanical construction of its first hydrocracker project at Mathura refinery. This IOCL contract will give Punj Lloyd the opportunity to exhibit its expertise as both the projects are complex in nature in terms of technicality involved and in terms of execution".

With this, the order backlog for the group is Rs 12,590 crore. This is the total value of unexecuted orders as of September 30, 2006 and new orders received to date.

IOC's Assam Refinery Polluting Brahmaputra issued “Show-Cause Notice”

The Pollution Control Board of Assam has served a show-cause notice to the Indian Oil Corporation (IOC) for discharging toxic effluents into the Brahmaputra and making it unfit for human consumption and threatening aquatic life.

PCBA Chairman J L Dutta said that the board has analyzed effluent samples from the IOC's Guwahati Refinery outlet and found that the discharge contained highs concentration of bio-chemical oxygen demand (BOD), total suspended solid (TSS), oil and grease, phenolic compounds and sulfide.

"The refinery has been seriously violating the prescribed limits set by Central Pollution Control Board and Union Ministry of environment and forests. Discharging this type of effluents into the Brahmaputra has highly polluted the water becoming a severe threat to the existence of aquatic lives", Dutta said.

A show-cause notice has been served on the refinery asking why appropriate action should not be taken against it, he added.

The oxygen content in the water is about five times less and oil and grease three times more than the normal level which was life-threatening as the water was used for drinking.

IOC's Technical Services Manager P Phukan said that the refinery has received the notice and it had informed the PCBA that it was modernizing its effluent treatment plant and the project was expected to be completed by January, 2007.

RIL to Restart Fire-hit Unit by End of the Month

Reliance Industries Ltd on November 6 said it is likely to repair and restart the fire-damaged secondary oil processing unit at its Jamnagar refinery by the end of November.

The Jamnagar refinery's one of the vacuum gas oil unit, which removes sulfur from oil products, was shut on October 25 after a fire broke out.

Prasad said there has been no production loss due to the fire and the refinery was producing LPG at its normal capacity of 7,200 tonnes per day.

The fire had no impact on major equipments. The company had earlier stated that it was utilizing capacity at a second hydrotreater to ensure stable production.

Rajasthan seeks MPs Help for Refinery Nod in Barmer District

The Rajasthan government has sought help from the MPs of the state in setting up of a refinery in Barmer district that has hit some 'technical roadblock'.

Minister for Mines L.N. Dave has written a letter to all MPs seeking their intervention so that the project comes up at the earliest.

'Any further delay at this juncture in commercial production and setting up of the refinery would have an adverse impact on the economic growth of western Rajasthan,' Dave wrote in the letter.

He said Cairn Energy had made significant oil discoveries in the state and also found reserves of about 480 million tonnes of crude oil.

If the project comes up in Barmer, it would lead to the overall economic development of the district by providing employment opportunities to the local people, he said.

'But for proper harnessing of the resources, it is desired that a wellhead refinery is established in Barmer,' Dave wrote.

Mangalore Refinery and Petrochemicals Limited (MRPL), a subsidiary of Oil and Natural Gas Corporation (ONGC) was selected by the union ministry of petroleum and natural gas for establishing the 7.5 million metric tonnes per annum (MMTPA) wellhead refinery.

But recently ONGC said the project was not economically viable due to adverse quality of the crude in the region.

Dave said the ONGC's inference was contrary to the report of a committee constituted by the central government, which had given a report that the processing of crude at the Barmer wellhead was a viable option.

He requested all MPS of the state to support the issue both in and outside the parliament and urged them to apprise Prime Minister Manmohan Singh and Petroleum Minister Murli Deora for an early solution to the standoff.

ULFA Rebels Blow up World's Oldest Refinery Pipeline in NE India

Separatists November 13 blew up an oil pipeline of the world's oldest operating refinery in India's restive northeastern state of Assam, officials said.

A police spokesman said militants triggered a powerful blast at a pipeline of the state-owned Indian Oil Corporation (IOC) near Makum in Tinsukia district, about 520 kilometers east of Assam's main city of Guwahati.

"The blast tore apart the pipeline carrying high speed diesel and there has been a massive oil spillage reported from the site", Wasik Rahman Borbora, a senior IOC official, said by telephone from its headquarters at Digboi in eastern Assam.

The pipeline transports oil from the world's oldest operating Digboi refinery, established in 1901.

Oil experts and firefighters were on way to the blast site, located in a thickly forested area.

"We have shutdown the pipeline although normal operations at the refinery were on. The immediate task is to repair the pipeline", the IOC official said.

Police blamed the outlawed United Liberation Front of Assam (ULFA) for the blast.

Essar’s Vadinar Refinery Goes on Stream

Essar Oil has started operations at its long-delayed Vadinar refinery with a trial production of 7.5 million tonnes per annum of crude, which will gradually go up to 10.5 million tonnes per annum.

The Rs 10,826-crore project has the capability to produce petrol and diesel for use in India as well as international markets. LPG, naphtha, light diesel oil, aviation turbine fuel and kerosene will also be produced. The project has been designed to handle a diverse range of crudes — from sweet to sour and light to heavy.

Commenting on the commissioning, Essar group chairman Shashi Ruia said, “We are delighted at the commissioning of the refinery at a time when India is strengthening its presence in global markets and integrating with the global economy.”

Globally, the refinery business is going through a super cycle with projects operating at over 98% capacity utilization. There has been little addition to refining capacities in the past three years and new projects are not expected to come up before the end of ’08.

HPCL to Set Up Third Refinery in Punjab

Hindustan Petroleum Corporation (HPCL) has announced that it would be setting up a refinery in the northern state of Punjab.

This will be the third refinery of the company. The annual refining capacity will be 9 million tonnes by 2010.

HPCL has two existing refineries - one in the western city of Mumbai and one in Visakhapatnam (Vizag) in southern India. The combined annual capacity of the two is 13 million tonnes.

The unit would process heavy and sour crude, and involve an initial investment of USD 3.08 billion, sources said.

The company is investing Rs 90 billion to double the capacity of its Vizag refinery, and adding a petrochemicals complex in the same location, also at a cost of Rs 90 billion.

It also plans to invest Rs 30 billion in domestic and overseas exploration and production.

Engineers India has been appointed as project management consultant for the new refinery to be built at Bathinda in Punjab, sources added.

HPCL is also in talks with a number of companies, including Oil India, to rope in a strategic partner, sources added.

PAKISTAN

UAE to Build $5 Billion Oil Refinery in Pakistan

International Petroleum Investment Co, owned by the government of Abu Dhabi in the United Arab Emirates, has received approval from Pakistan's government to build a $5 billion oil refinery at Hub in the southwestern province of Balochistan.

The refinery, which will be Pakistan's biggest, will have the capacity to process 300,000 barrels of oil a day, Ashfaque Hasan Khan, an economic adviser to the government said.

The proposed refinery will help Pakistan meet demand for oil products, which is expected to grow 5 per cent annually to reach more than 18 million tons by 2010.

The country has five refineries producing 11.2 million tons of oil products a year.

Pakistan imports about 85 per cent of the oil its uses, half of which arrives as refined products, according to the US Energy Information Administration.

International Petroleum, which will own 75 per cent of the refinery, will start building the processor next year and complete it by 2010, Khan said.

Pak Arab Refinery Co, owned by the Pakistan government, will have a 25 per cent share.

Abu Dhabi’s IPIC to Invest $5 Billion Pakistan Refinery

Abu Dhabi's International Petroleum Investment Company is to invest $5bn in a refinery project in Pakistan, according to the local WAM news agency. The refinery, which will generate a number of job opportunities, will have a capacity of around 200,000 to 300,000 barrels a day. The IPIC board is currently discussing several new projects both in the UAE and abroad.

EUROPE / AFRICA / MIDDLE EAST

CZECH REPUBLIC

Czech Refinery Changes Polish Stand on Odessa-Brody Pipeline

The Premier of Poland said he is in favor of utilizing the Odessa-Brody pipeline to deliver Caspian oil to the Kralupy refinery located in the Czech Republic. Such a proposition has been forwarded by Ukraine's head of government Victor Yanukovych. It must be recalled that such a concept had already been presented by Pricewaterhouse Coopers some years ago. The company's experts advocated a three phase construction of the pipeline. The first two stages where to be routed in a manner to allow servicing Czech, German and Austrian refineries through already existing networks. The third stage, to be constructed, would transport oil to the major Polish refinery centrally located in Plock. It belongs to PKN Orlen, Poland's fuel giant.

Prime Minister Jaroslaw Kaczynski voiced satisfaction with the renewed proposition on the Odessa-Brody pipeline. He pointed to clear Polish interests in the initial stages of the project, still before the completion of the new stretch in Poland. The refinery in Kralupy is linked with the Unipetrol group which has been bought by PKN Orlen. This comes in line with Polish strivings for diversification of imported oil and gas to become less dependent on Russian deliveries, said Prime Minster Kaczynski.

'It is obvious we have to do this because of economic considerations. But equally important are security factors, which sometimes require departing from strict economic principles. Poland cannot afford being blackmailed.'

The Ukrainian proposition is meeting these Polish expectations half way, figuratively and literally. Przemyslaw Jaron, Eastern policy expert from the Center for International Affairs in Warsaw, says Poland has developed a more pragmatic approach towards the Odessa-Brody project in general after the purchase of Czech Unipetrol by Polish PKN Orlen.

'We would also like to buy Mazaikiai in Lithuania. Of course this changed the point of view towards different issues, like Odessa-Brody. But the fact is that energy, oil and gas security are one of the most important issues for Poland. The Odessa-Brody pipeline will remain one of the most important projects to be finalized as soon as possible, both for Poland and Ukraine.'

LITHUANIA

EU Regulators Clear takeover of Lithuania's Mazeikiu Refinery by Poland's PKN Orlen

European Union regulators on November 6 approved the acquisition of the Lithuanian oil refinery Mazeikiu Nafta by Polish oil company PKN Orlen, saying the takeover would not hurt competition in European markets.

PKN agreed in May to pay US$2.3 billion (€1.81 billion) for a 83 percent stake in Mazeikiu Nafta, but a fire at the refinery and the rupturing of the main crude oil supply pipeline have fueled speculation that the Polish company may pull out.

On a visit to Lithuania on November 6, Polish President Lech Kaczynski said PKN would not renege on the deal.

In a statement, the European Commission said the companies did overlap in some markets for sales of gasoline and diesel, but judged that these "would not give rise to competition concerns."

THE NETHERLANDS

Exxon Mobil says Antwerp Refinery Shut for Maintenance

Exxon Mobil Corp.'s 275,000 barrel a day refinery in Antwerp has shut down operations for planned maintenance, the company said.

The entire Antwerp refinery would be offline for "about a month" for a routine turnaround period, said company spokesman Nikolas Baeckelmans.

The maintenance will involve equipment inspections and facility improvements, he added.

Oil products traders in Northwest Europe said the shutdown was "already known in the market," but not confirmed by the company until November 3.

Interbulk Signs Deal with Mourik to Market Oil Refinery Catalyst Equipment

Interbulk Investments PLC said it has signed a collaboration deal with Dutch reactor services company Mourik International to market Interbulk's Cleancat catalyst changing system to Mourik's existing customer base throughout the world.

Interbulk, a global logistics company, said the new system, developed by its unit CleanCat Technologies, uses a stream of pressurized air to load, and vacuum to unload, the catalyst in oil refinery reactors.

Interbulk said this deal follows its first commercial contract for the CleanCat system at ExxonMobil's Fawley refinery.

UNITED KINGDOM

Severed Cable Halts Grangemouth Refinery for Weeks

A tradesman accidentally cut through a live cable, sending sections of the Grangemouth refinery and petrochemical complex near Falkirk into automatic shutdown.

Production at part of the refinery has been stalled since the incident took place at the beginning of November.

The accident happened in a section of Grangemouth known as G4, an ethylene plant in the heart of the site which forms part of a series of sections with an ethylene production capacity of one million tonnes a year. It is used to produce the feed materials used by the other chemical plants.

Staff at Grangemouth tried to recommission the section, but it was believed it might not be back up and running until the end of November. The stalled production has had an impact across the site.

The Grangemouth facility produces around 10 million tonnes of fuel a year. The site was sold last autumn to Ineos, a UK chemicals group, by BP as part of a £5.1bn deal. It employs around 1300 permanent staff and 700 contractors.

Though previously at the center of criticism over its environmental and safety standards, Ineos last month announced the plant is to become involved in the production of biodiesel.

Ineos is set to create a £70m plant at Grangemouth, with the help of £9m from the Scottish Executive. The project will help safeguard existing jobs and create a further 20 posts.

A spokesman for Ineos said the company did not comment on day-to-day operations at Grangemouth, but the HSE confirmed that its officials were investigating an incident at the refinery.

A spokesman for the union Amicus said the incident was of "obvious concern," and said it was prepared to work alongside the HSE and Ineos in an attempt to ensure safety was paramount.

TURKEY

Universal Petroleum Interested in Setting up a Refinery in Turkey

Universal Petroleum of Vietnam, an oil and natural gas company, has conveyed its interest to the Energy Market Regulatory Authority (EPDK) for setting up a refinery in Turkey.

10 to 15 mln ton capacity refinery project of the Vietnamese company would cost an estimated amount of US $2.5 billion.

The company is a new addition to the list of applicants for a new refinery in Turkey, after Turkey’s top gas retailer Petrol Ofisi A.Ş., Çalık-Indian Oil consortium, Lukoil of Russia, and KazMunaiGas of Kazakhstan.

Universal Petroleum CEO Masamichi Tokai has conveyed the company’s demands to the EPDK in a letter such as a site with a sea link.

For the company’s interest in a refinery investment in Turkey to turn into reality, the company must file a detailed application at the EPDK.

AFRICA

Capacity of Africa's Refineries Quoted at 64 Million tpy

The president of African Refiners Association, Mr. Joel Dervain, said the installed capacity of Africa's 29 petroleum products refining plants is 64 million tons per year as against the consumption level of 60 million tons.

Dervain from Ivory Coast said the initiative to form the association arose out of the need to urgently take steps to arrest the dwindling performance of most refineries in the continent.

He said annual consumption of refined petroleum products in Africa currently stands at 60 million tons while most of the refineries are finding it difficult to produce at installed capacity.

He said out of the 26 refineries that are members of the association, three are out of function while the others are faced with different kinds of operational problems.

BP.N sees repairs to a pipeline at its giant Texas refinery lasting until Tuesday, according to a notice filed on Sunday with the state pollution regulation agency.

The leak began on Thursday when an instrument testing the depth of a defect in a sour fuel gas line pushed through the side of the pipe creating a pinhole leak, according to the notice filed Sunday with the Texas Commission on Environmental Quality.

BP evacuated 800 non-essential workers at the refinery in Texas City, Texas, on Thursday because of the leak, but the 460,000 barrel-per-day (bpd) refinery continued to operate.

A clamp was placed over the hole, but failed to shut off the leak. A specialized clamp is being made to close the leak, according to the notice.

LIBYA

EIL-Punj Llyod Make Joint $1.6 Billion Bid for Revamping Refinery in Libya

State-run Engineers India Ltd and its private partner Punj Lloyd have made a 1.6-billion dollars joint bid for revamp of the Azzawiya refinery in Libya.

"We are the sole bidder and expect a decision in next couple of months," EIL Chairman and Managing Director Mukesh Rohtagi said here.

Azzawiya is owned by Libya's state-run National Oil Corp and currently processes 100,000 barrels per day. The Libyan government plans to increase capacity at the refinery to 122,800 barrels per day, work for which is expected to begin early next year.

Rohtagi said EIL and Punj Lloyd are equal partners in the consortium that bid for the engineering, procurement, construction and management contract.

"We are supposed to operate the refinery for a period of 6-months after completion of the expansion to stabilize it. The refinery will be then handed back to the Libyan company," he said.

Azzawiya Oil Refinery Company, a subsidiary of Libyan National Oil Company, is implementing its revamp and modernization program.

The Azzawiya Oil Refinery (ARC), the second largest oil refinery in Libya, is considering the installation of a new residual fluidized catalytic cracker unit; Methyl tertiary butyl ether (MTBE) facilities and an additional sulfur treatment plant.

This is part of Libya's 3.5-billion dollar program aimed at modernizing its refinery infrastructure over the next 5 years.

NIGERIA

NNPC says Kaduna Refinery TAM Contract to Cost $54 Million

The Nigerian National Petroleum Corporation (NNPC) on November 22 said it would carry out the Turn Around Maintenance of Kaduna Refinery and Petro-chemicals Company Limited in March 2007 at the cost of $54 million.

The Corporation's Group Executive Director, Refining and Petro-chemicals, Engr. Abubakar Ya'radua said the organization has estimated the cost and duration of the project at 45 days and $54 million respectively.

"The TAM contract will cost about $24 million and we have procured materials worth $30 million, bringing the total to about $54 million", he said.

According to him, the refinery would be shut down for 45 days for the main repairs, while another 60 days would used to work on the its Fluid Catalic Cracking Unit (FCC). Kaduna Refinery has an installed capacity of over 100,000 bpd and was established to process crude oil into refined petroleum products and manufacture linear Allcyl Benzene tins and drums for domestic consumption and export.

It has in the last nine months been under partial closure, since damage by militant youths in the Niger Delta to the Chanomy Creek pipeline supplying crude oil to the plant. The last TAM was performed on it five years ago, when Total handled the maintenance of the facilities.

The management of the corporation is also considering inviting experts in some African countries to participate in the handling of the maintenance work at the refinery.

"NNPC is considering inviting personnel of some sister African countries under the auspices of African Refiners Association (ARA) to take part in conducting the Turn Around Maintenance for Kaduna refinery", Ya'radua also said. He disclosed that "the intention is to encourage synergy among ourselves and to tap from each other's experience in the spirit of African brotherhood", adding that the corporation is right now processing the details for the award of the TAM contract.

He said the decision to undertake the repair will not in any way affect government's privatization of the NNPC subsidiary, saying part of the cost of the maintenance would be paid by whoever emerges core investor under the privatization program.

The NNPC scribe explained that the privatization program was going to be like a joint venture where the corporation is to retain 49 per cent equity on behalf of government while the core investor takes the remaining 51 per cent.

TANZANIA

Tanzania Government to Build Refinery & Dar-Mwanza 1,220 km Fuel Pipeline

Tanzania has signed a one-year MoU with Noor Oil of Qatar for constructing an oil refinery plant and a 1,220 km pipeline from Dar es Salaam-to-Mwanza.

If the pipeline project is successful, the investor is thinking of extending it to Burundi, Rwanda and Uganda in the future. Ms Stergomena Tax Bamwwenda, the Deputy Permanent Secretary at the Ministry of Planning ad Economic Empowerment, said that talks were at an advanced level. "We hope to reach a mutual agreement in the next two to three months," Ms Tax-Bamwenda said. "Our experts and investors are currently finalizing the project ownership structure that should have local participation as well".

The experts are drawn from the ministries of Planning; Energy and Minerals, Foreign Affairs, Finance, Justice and Constitutional Affairs, Tanzania Investment Center(TIC) and Tanzania Petroleum Development Corporation(TPDC). She said that the Qatar oil company wants to invest about US $ 2.0 billion in the refinery and pippline that would be implemented concurrently. "After reaching an agreement the investor will have six months to carry out social, environmental and economic impact assessments before the implementation," Ms Tax-Bamwenda said.

ZIMBABWE

Iran to Launch Zimbabwe's Oil Refinery

Iranian experts have been appointed to re-launch the only oil refinery of Zimbabwe, which stopped operation 40 years ago.

The decision was made following a recent visit to Tehran by Zimbabwean President Robert Mugabe.

The refinery had originally been made to refine imported oil from Iran, but its operation came to a halt after the world community imposed sanctions on the then government of Rhodesia.

At present, Zimbabwe imports all its needed oil products from South Africa.

Also during Mugabe's visit to Tehran, Iranian officials agreed to provide Zimbabwe with direct financial aids and cooperation in the agriculture and energy sectors.

Harare, in return, has authorized Iran to explore and excavate her mines.

RUSSIA

Russia’s Alrosa Seeks Financing for Building $225 Million Oil Refinery

Alrosa Co. Ltd, Russia’s diamond mining monopoly, intends to complete the bidding process to attract financing to build an oil refinery and related infrastructure at the Irelyakh oil field in the Republic of Sakha (Yakutia) for ZAO Irelyakhneft.

ZAO Irelyakhneft holds the license for production of hydrocarbons at the Irelyakh oil field which is located near the main production sites of Alrosa.

An oil refinery that will produce a wide range of oil products required to support Alrosa’s production activities is planned to be built within 3 years.

The total capital investment is estimated at $225 million. So far, 8 large international banks have submitted their bids.

IRAN

Iran’s Private Sector to Build Oil Refinery in Mazandaran

Iran’s private sector will start the construction of an oil refinery in the northern province of Mazandaran, Ali Faraji, the head of the Board of Directors of Mazandaran Oil Refinery Company said.

The refinery is to be built between the cities of Neka and Behshahr, he added, while explaining that the feasibility studies of the project plus tank(s) design have finished.

Site selection operations have been completed, and environmental assessments are currently underway, he added.

Faraji went on to say that the crude oil required for the refinery will be supplied from Azerbaijan Republic, as previously signed Baku contract mandates. He added that Iranian embassy in Baku has facilitated the signing of the contract.

Also, a memorandum of understanding (MOU) has been inked with German Siemens on establishment of a joint venture for the refinery, he noted.

ISRAEL

Kazakhstan may Bid for Haifa Refinery

Kazakhstan is interested in buying the oil refinery in Haifa, Israel, the central Asian country's deputy prime minister said in Haifa the first week of November.

The Haifa refinery is scheduled to be privatized in 2007. During Israel's most recent privatization tender of an oil refinery, for the Ashdod facility, foreign entities complained of being shut out of the tender process.

Kazakh Deputy Prime Minister Karim Masimov "said his country is also interested in taking part in the infrastructure corridor project between Turkey and Israel, which has recently picked up speed," according to a report in an Israeli business magazine.

Earlier, Masimov told Israeli Deputy Prime Minister Shimon Peres that a $1 billion Kazakh oil fund will invest millions of dollars in Israel.

Kazakhstan's proven oil reserves in 2005 totaled 39.6 billion barrels, or about 3.3 percent of the world's total, according to BP's Statistical Review of World Energy 2006.

Last year, the country produced 1.3 million barrels of oil per day, according to the BP data. Kazakhstan says that it will increase its oil production capacity to 3.5 million barrels a day by 2015.

The country recently reached an agreement with Azerbaijan to transport oil from Kazakhstan through the Baku-Tbilisi-Ceyhan oil pipeline. Opened this summer, the BTC pipeline brings Caspian Sea region oil from the Azeri capital of Baku to Turkey's Mediterranean coast. In addition to giving the central Asian countries unprecedented access to Europe, the BTC pipeline also brings oil just a few hundred miles from Israel's doorstep.

Israel has a history of good relations with Turkey, Kazakhstan, and Azerbaijan, and buys much of its oil from the Caspian Sea region.

KUWAIT

Part of Kuwaiti Refinery Shut Down after Explosion

Part of an oil refinery shut down after an explosion was expected to be up and running in about three days, the Kuwait National Petroleum Company said November 6.

The November 4 explosion in the heavy oil unit at the Shuaiba refinery cut production from 200,000 barrels a day to around 120,000 barrels a day.

The heavy oil unit was shut down and other units were temporarily closed as a precautionary measure.

Mohammed al-Ajami, spokesman for the state-owned company, said all units except for the heavy oil unit, which produces 25,000 barrels a day, would be working within three days. He could not say when the heavy oil unit would be repaired.

No one was injured in the accident at Shuaiba, the smallest of Kuwait's three refineries, and terrorism was not suspected.

The other refineries and stored reserves have covered from the refined oil shortage due to the explosion, al-Ajami said.

Kuwait pumps some 2.6 million barrels a day. Its three refineries have a combined refining capacity of 915,000 barrels a day.

Fire-hit Kuwait Oil Refinery Back to full 200,000 bpd Capacity

A Kuwaiti oil refinery shut down by a fire at the beginning of November has resumed operations at its full capacity of 200,000 barrels per day (bpd), officials said.

"The refinery of Shuaiba resumed full operations on November 17 after repairing a unit that was affected by fire," Hussein Ismail, head of the refinery, told a press conference.

Shuaiba, the smallest of three refineries in oil-rich Kuwait, was shut down after the fire broke out in its heavy oil unit on November 4.

The fire caused no casualties and the material damage was very limited, Ismail said. Most other units had resumed operations earlier, he added.

Kuwait’s KNPC Plans Shuaiba Refinery Shut down and Upgrade of Two More

Shuaiba together with the other two refineries of Al-Ahmadi and Mina Abdullah have a combined production capacity of 920,000 bpd. They are all run by state-owned Kuwait National Petroleum Company (KNPC).

KNPC plans to upgrade the latter two at an estimated cost of three billion dollars and then shut down the ageing Shuaiba refinery.

KNPC chairman Sami al-Rasheed told the news conference that the upgrade project was approved by the Supreme Petroleum Council and the company expects to invite bids by September of next year.

The project is expected to be completed by August 2011, he said.

Kuwait also plans to build a state-of-the-art refinery with a capacity exceeding 600,000 bpd at a cost of $6.3b.

Eleven international oil companies have been prequalified for the project and tenders were invited earlier this year.

The prequalified companies include Technip Italy, Foster Wheeler Italiana, and South Korea's GS Engineering and Construction Corp and SK Engineering and Construction Co.

They also include Korean Hyundai Engineering and Construction Co., US Stone and Webster International Inc. and United Arab Emirates-based Petrofac International Ltd.

The refinery will be built in Al-Zour area, some 100 kilometers south of the capital near the border with Saudi Arabia.

The companies were supposed to submit their offers by August this year, but the deadline has been extended several times and the final deadline now is early December.

Accordingly, the process of awarding and signing the contracts has been delayed till next March, Rasheed said.

It was not immediately known if this will have an impact on the construction of the refinery which was slated for completion by early 2010.

After its completion, Kuwait will have a total refining capacity of around 1.4 million bpd.

Kuwait sits on 10 percent of the world's oil reserves and currently produces 2.5 million bpd of crude oil.

OMAN

Oman Refinery Upgrade to be Completed in April

Oman Refinery Company (ORC) will increase its throughput capacity by 25 per cent to 106,000 barrels per day by April, an ORC official said.

Officials had previously said the $320 expansion project would be completed by February.

'The refinery is now producing at a capacity of 85,000 bpd and this will be raised to 106,000 bpd as from next April,' ORC CEO Adil Abdulaziz Al Kindy told the Oman News Agency.

'With the increase in production capacity at Oman Refinery Company and the start of operations at Sohar Refinery, the needs of the domestic market will be met in full and the surplus production from the two refineries will be exported,' he added.

Kindy did not say whether Sohar Refinery had already started up. ORC officials said last month the new oil refinery was expected to start commercial operations at the end of October after resolving some 'operational hiccups.'

Sohar, Oman's second refinery, has a crude unit with a capacity of 116,400 bpd and a residue fluid catalytic cracking unit with a capacity of 75,260 bpd.

On Oct 17, traders said Sohar issued its first residual fuel tender, offering 1.725 million barrels of straight-run atmospheric residue for January to March 2007 loading.

Oman Trading International, a trading venture set up by Oman Oil Co. and international energy trader Vitol, has signed a five-year deal with ORC to take output from Sohar.

But ORC, which operates the refinery, has said Sohar no longer plans to export the bulk of production due to domestic demand. Sohar will produce propylene, LPG, straight run naphtha, unleaded gasoline, aviation fuel, diesel, fuel oil and sulphur.

The refinery is expected to process exclusively Omani crude and residue, cutting the non-Opec producer's oil exports.

SAUDI ARABIA

Saudi Aramco and ConocoPhillips Plan to Build $6.6 Billion Oil Refinery in Yanbu

London, Asharq Al-Awsat- Saudi Aramco and ConocoPhillips have hired Saudi Arabia's Riyad Bank and Citigroup as consultants in an effort to help finance the construction of a joint-venture refinery, the estimated cost of which is approximately $6.6 billion.

Although reports on November 5 confirmed plans to sell $1 billion of Islamic bonds to help finance the project, the figure has yet to be confirmed or agreed upon. Based on the size and scale of the project it is expected that various sources of financing will be considered and looked into to develop a 400,000 barrel-a-day capacity refinery in on the city of Yanbu. Decisions will be made in April on the conditions for bond sale, Inam Ghazali, senior corporate finance officer at Riyad Bank said.

The biggest challenge is determining the physical asset that will underlie the sukuk, Ghazali said on the sidelines of an Islamic finance conference in Doha.

"If you launch a project, the asset is not yet there during the construction phase, so there's no underlying asset," Ghazali said, without giving more details about the planned sale.

Islamic bonds are generally backed by physical assets that pay bondholders rent or dividends rather than interest. Islam bans the receipt of interest, equating it with usury.

Saudi to Boost Refining Capacity by more than 1 Million bpd and $150 Billion Investment

Saudi Arabia is aiming to boost refining capacity in the kingdom by more than one million barrels a day and a new plant on the Red Sea will help it reach the goal, a Saudi oil adviser said.

To ensure its place as a major supplier of much-needed transport and heating fuels by early next decade, Riyadh will spend billions. Overall investment of $150 billion in oil, gas and petrochemicals has been budgeted for the next five years.

'We are in the process of becoming a major refining centre to the world,' Ibrahim Al Muhanna, adviser to Saudi Oil Minister Ali Al Naimi, said on the sidelines of an energy conference.

The aim is to have total refining capacity of more than three million barrels per day in Saudi Arabia, he said.

Riyadh has moved fast to show it is determined to tackle a worldwide refining crunch that helped drive US oil prices close to $80 a barrel this summer.

The kingdom has already struck deals worth $12 billion to build two new refineries -- one with France's Total at Jubail on the Gulf coast, the other with US ConocoPhillips in Yanbu on the Red Sea.

The export facilities will churn out 800,000 bpd of products by the end of the decade.

Muhanna said plans are also in the works for a third refinery in Jizan on the west coast.

Details of the facility will be revealed after the ministry of oil completes its study.

Saudi Aramco now has five domestic refineries with a combined capacity of around 1.4 million bpd.

Its two domestic joint-venture refineries, with ExxonMobil in Yanbu and Shell in Jubail, boost capacity at home to more than 1.9 million bpd, making Saudi Aramco one of the largest refiners in the world.

The Saudi oil adviser was confident the world's growing thirst for fuel would justify Riyadh's ambitious refining target. He saw demand for oil continuing to grow at an annual rate of around 1.1 million bpd.

Muhanna disputed the assumption of some major consuming governments that high oil prices would stunt economic growth in importing nations.

'Our observation is that this has not happened,' he said. 'This year, the countries with the highest economic growth are largely net importers such as China and India.'

To bolster its position as the world's top exporter of crude and build its standing on gas, Saudi Arabia will spend up to $80 billion over the next five years on rigs, refineries, wells and processing plants, a senior Gulf source said.

That investment covers Riyadh's long-standing plan to expand crude oil production capacity to 12.5 million bpd by 2009 from a current level of 11.3 million.

Some $70 billion will be spent on petrochemicals during the five-year period. Riyadh now supplies eight percent of the world's petrochemicals and aims to increase its market share to 15 per cent next decade, Muhanna said.

Saudi Aramco nears Agreement with Dow on Refinery

Saudi Arabian Oil Co., or Saudi Aramco, is in the final stages of formulating a memorandum of understanding with Dow Chemical Co. to build an estimated $15 billion refinery and petrochemicals complex at Ras Tanura, a company executive said November 19.

"We are in the final stages of signing an MoU," said Fayez al-Sharef of Aramco's Ras Tanura Integrated Refining & Petrochemical Project department.

The agreement is expected to be signed "early next year" and will then be followed by a full joint-venture agreement between the two companies, Sharef said on the sidelines of the Saudi Energy Forum in Dammam.

Aramco, the world's largest oil company by production, plans to float a 30% stake in the Ras Tanura complex in an initial public offering in 2007, Sharef said.

The Ras Tanura project, set to come on stream in the second quarter of 2012, will integrate Aramco's existing Ras Tanura refinery with a new petrochemicals complex on the oil-rich kingdom's Gulf coast.

The project will require up to $15 billion of debt financing, Sharef said.

Oil companies including Aramco are seeking greater integration of refining and petrochemicals production to benefit from economies of scale, and to diversify their product portfolio.

Aramco will make a decision on the size and timing of the IPO once early engineering has been completed next year.

The facility will comprise ethylene and naphtha crackers, a high olefin fluid catalytic cracker, aromatics and chlor-alkali units and produce more than 300 different products, making the project the largest industrial complex in the Middle East.

SYRIA

Syria, Iran, Venezuela Sign Preliminary Agreement to Establish 140,000 bpd Petroleum Refinery in Syria

Syria, Iran and Venezuela have signed a preliminary agreement to establish a petroleum refinery in Syria capable of processing 140,000 barrels a day, Syria's official news agency reported.

The memo was signed by Syria's deputy oil minister Hassan Zeinab, his Iranian counterpart, Mohammad Nematzadeh, and Roberto Delgado, general-director of oil refineries in Venezuela, SANA said.

It quoted Syrian Oil Minister Sufian Allaw as saying that the parties agreed to form a joint committee of technicians from the three countries to implement their memorandum of understanding.

Allaw said the refinery would help "boost the national economy in Syria and ensure the necessary oil derivations for local consumption." He did not elaborate.

UN envoys fail to find agreement about IranSyria's oil production has declined over the past decade. In 1996, it peaked at 590,000 bpd, dropping to some 365,000 bpd of crude in 2005, according to the U.S. Energy Information Administration.

Venezuela's relations with Iran and Syria have strengthened under President Hugo Chavez, who views the Middle Eastern nations as important allies in his efforts to build what he calls "a multi-polar world" no longer dominated by the United States.

Chavez visited Syria last August and delegates from the two countries signed 13 political and economic agreements.