feb 07 update

Suncor Energy (U.S.A.) Inc. announced January 10 that the diesel hydrotreating unit at its Commerce City refinery was returned to full production capacity on January 5, 2007.

The diesel hydrotreating unit was taken off line during a controlled shutdown on December 15, 2006 due to a failure in the unit's furnace. This unit reduces sulfur content of diesel fuel in order to meet Ultra Low Sulfur Diesel (ULSD) requirements.

BP’s Refinery Leak Delays Production

BP said a gasoline leak delayed the resumption of output from a unit of the Texas City oil refinery that has been closed since Hurricane Rita in 2005.

The leak will be repaired and steps to restart the unit will resume “in a few days,” Neil Chapman, a spokesman for BP in Galveston, said January 11 in a phone interview.

The unit produces about 60,000 barrels a day of high-octane gasoline and jet fuel.

BP began refitting and inspecting its Texas City production units after the threat of Hurricane Rita forced it to shut the entire refinery in September 2005, Chapman said.

Some production resumed at the end of last year's first quarter. Crews are also installing new equipment to prevent recurrence of a March 2005 explosion at the complex that killed 15 people.

Hess Corporation’s Port Reading Refinery Temporarily Shut Down

Hess Corporation said a small fire in a pump occurred in January at its Port Reading, New Jersey refinery, which manufactures gasoline and heating oil for markets in the Northeast. The fire was quickly extinguished by plant personnel and there were no injuries. The refinery has been temporarily shut down while inspections and repairs are performed.

Outage at Aromatics Unit of ConocoPhillips Refinery

A brief outage occurred at the aromatics unit at ConocoPhillips' (COP) Sweeny 229,000 bpd oil refinery in Texas. The unit went off line for several hours in early January, when an oil switch on a main transformer failed, resulting in the loss of power to the unit. Emissions from flaring necessitated reporting to the Texas Commission on Environmental Quality (TCEQ). Power was restored and the unit brought back on line three hours later.

EPA's New Rules for Industrial Cooling Water Intakes Allow Loophole for Costs

Delaware has emerged as an early test site for changing national rules on industrial cooling water intakes.

The Environmental Protection Agency recently overhauled rules for cooling water intakes at power plants and larger industries. But the agency opted for case-by-case, state-level reviews of factories and small utility intakes instead of across-the-board standards.

In Delaware, regulators are working to update long expired plant wastewater discharge permits, including some that have remained on pending lists for up to 15 years.

"There are going to be a lot of eyes, a lot of attention paid nationally, to the first permit requirements" under the new rules, said Kevin C. Donnelly, water resources director for the Department of Natural Resources and Environmental Control.

State officials said they will urge owners of power plants to install systems that drastically reduce the amount of water needed to cool the plants.

But federal regulators agreed to give larger power plants a chance to avoid requirements for cooling towers or other costly systems that reduce water use and damage to fisheries -- if they can prove the systems are too costly.

Up for action in Delaware this year are two of the five highest-volume cooling water users on the Delaware River: Conectiv's Edge Moor power plant and the Delaware City refinery. Also in line for approval are massive intakes at the Salem nuclear power complex in New Jersey, the nation's largest power plant water-user. Those three are believed to destroy billions of fish, fry, eggs and other aquatic life every year.

The discharge permit for the Delaware City refinery ran out in 2002 but was extended pending action on a renewal application. A consultant for the plant's owner claimed the refinery has "no significant impact" on fish.

Conectiv's permit for the Edge Moor plant discharge expired in 2003. State officials recently described fish protection upgrades offered in the utility's current permit proposal as inadequate.

NRG's Indian River power plant cooling water permit expired in 1992, but that case is likely to linger, DNREC officials said, amid disputes over the threat from heated water discharges.

But reducing the fish losses at the plants is "essential" to a recovery of the Delaware Bay's long-stressed ecosystems, said DNREC Secretary John A. Hughes.

Some environmental groups are calling on DNREC to open its review process now to allow public participation as they come up with draft permits.

But allowances built in to the permitting process, critics say, could give industries leeway to avoid tougher requirements.

"The giant loophole in the EPA's regulation is the reasonable-cost loophole," said Alan Muller, who directs the environmental group Green Delaware. "The cumulative impact of all this is an ecological disaster. But the regulatory process allows the fish exterminators to defeat the system one permit at a time."

Shell Sells L.A. Refinery to Tesoro for $1.63 Billion

Royal Dutch Shell Plc said on January 29, it was selling its Los Angeles refinery and related assets to Tesoro Corp., as the oil major further reduces its exposure to the refining industry.

Separately, Tesoro said the purchase price was $1.63 billion, plus the value of oil inventory at closing. Chief Executive Bruce Smith said the purchase would give the company earnings growth even as it faces flatter gasoline margins.

Tesoro plans to spend a total of at least $1.1 billion on improvements and maintenance at the refinery over the next five years.

The deal also includes 250 service stations in and around Los Angeles and San Diego as well as supply agreements.

Shares of Tesoro, which also reported fourth-quarter earnings that more than doubled before the market's opening, rose about 5 percent. It expects to complete the deal in the second quarter of 2007.

The sale follows Shell's decision to put its three French refineries and a refinery in the Dominican Republic up for sale.

The market for refineries has been strong in the past two years — after two tough decades for the industry -- as refining margins have firmed.

Other oil majors, including BP Plc and Chevron Corp., are also shedding refineries, a move analysts interpret as a sign that they think the "golden age of refining" of the past two years is coming to an end.

Even with the recent refining resurgence, oil companies make much more money from extracting oil than processing it.

Shell's Wilmington refinery, located south of Los Angeles, is a 100,000-barrel-per-day heavy, sour crude refinery. Heavy, sour crude is denser and has more sulfur than benchmark light, sweet crude oil.

Tesoro has been acquiring refineries on the U.S. West Coast since 1998. The purchase basically completes the company's long-running strategy of building up its refining presence in the region, Tesoro CEO Smith said in an interview.

"We think it's probably (going to be) a flatter margin environment, but this positions our shareholders to benefit from something besides pure commodity upside," he said.

"What's really attractive from this is we get immediate earnings growth from the synergies and then we get future earnings growth from a couple of projects" at the refinery, he said.

Tesoro expects to generate $100 million in earnings before interest, taxes, depreciation and amortization (EBITDA) in the first year from the refinery.

It plans to spend $325 million to $350 million over the next five years to improve reliability and increasing capacity at Wilmington, a process that is projected to boost annual EBITDA by $125 million to $150 million, Smith said.

An additional $375 million to $400 million would pay for improvements to meet regulations on nitrogen oxide, wastewater and flare gas emissions.

The company also expects to spend about $80 million per year on regular maintenance of the refinery.

Lehman Brothers served as Tesoro's financial adviser for the transaction.

Tesoro also said that it would buy 140 retail sites located primarily in California, a terminal located in New Mexico and select sites in other states from independent marketer USA Petroleum for $277 million, plus the value of inventory.

Tesoro said it has signed a long-term agreement to operate the Shell service stations under the Shell brand name. It would continue to operate the USA Petroleum stations under their existing brand name.

Feds Begin Probe of Valero Refinery Fire Site

Federal investigators arrived at Valero’s refinery January 29 to sift through the remains of a pump house that caught fire the day before.

Meanwhile, the centerpiece of the refinery’s production remained offline as a result of the blaze.

Company spokesman Fred Newhouse said Valero’s own investigation team had not determined what sparked the fire that sent a large black plume into the Texas City skyline. No one was seriously injured during the incident.

The fire broke out January 28 at a pump facility that feeds hydrocarbons into Valero’s fluid catalytic cracking — cat cracker — unit. Newhouse said the 83,000 barrel per day cat cracker remained offline January 29.

As a result of the shutdown, several other units that are downstream of the cat cracker were also offline or were producing at considerably reduced rates, Newhouse said.

Valero vice president Mary Rose Brown said, in addition to the cat cracker, the refinery’s alkylation unit was also offline.

Those shutdowns will result in a loss of more than 100,000 barrels per day of product from the refinery.

It would be at least three weeks before any of the offline units would be operational again, Brown said.

Newhouse said that an earlier release of safety valves at the refinery’s saturation gas unit was not related to the fire even though it is in the same part of the refinery as the pump house that caught fire. Valero reported to the Texas Commission on Environmental Quality that a series of pressure release valves opened and released hydrocarbons starting about 6:30 a.m. January 28.

Those safety valves, which are connected to two flares, continued to release hydrocarbons until almost 6 p.m. January 28 according to records filed with the TCEQ. There was no indication in Valero’s filing as to what caused the overpressure situation on that unit.

Oil Refineries to Test RFID Sensor Tags

MachineTalker, a maker of active RFID tags designed to serve as wireless network nodes, has partnered with Sense-Comm Technology, a developer, distributor and integrator of wireless sensor networks, to test a network of intelligent RFID-enabled tags at several large oil refineries. The companies are hoping the system will provide an easier method to collect and automatically act on a variety of critical information from tanks, machinery and other equipment out in the field.

The system uses iRFID (Intelligent Radio Frequency Identification) active tags with integrated on-board sensors for measuring temperature, battery level, vibration, light and other conditions. The tags operate at 900 MHz, communicating via a proprietary air-interface protocol. When in proximity with other iRFID tags, they automatically form a wireless mesh network to communicate sensor data amongst themselves. Operators can access and program the iRFID via a Java application-programming interface (API).

"The best way to view this is that we have developed an approach where a wireless device with a processor in it can be used as a proxy, or representative, to whatever it is attached to," says Roland Bryan, MachineTalker's president and CEO. "It is an intelligent device that, if attached to a shipping container, could have a shipping manifest, as well as sensors, monitoring the container."

The iRFID tags are sealed in a plastic encasement measuring 8 inches by 2.3 inches by 1 inch. Using a built-in whip antenna to transit and receive RF signals, the devices provide a communication range of 200 meters in free (unobstructed) air. A group of iRFID tags transmitting signals within range of each other can form a wireless mesh network allowing for continuous connections and reconfiguration by "hopping" from node to node. Depending on how the devices are implemented, one can be configured with an access point able to communicate with other data systems, via either Wi-Fi or wired networking protocols.

Sense-Comm is designing three different pilots using the i-Sense Talker, a version of the iRFID tag containing sensors different from those embedded in the iRFID tag. This is being done for three separate refineries, says Mikell Becker, the company's president, though he declines to name the refineries, which have asked not to be identified at this juncture. All three pilots are slated to commence in March.

In the first pilot, scheduled to be held at a Houston refinery, the i-Sense Talkers will incorporate sensors reliant upon radar technology to sense the level of oil in two groups of tanks consisting of five tanks apiece. An i-Sense Talker device will be deployed on each of the 10 tanks, with every group communicating via an access point affixed to a small building or input-output (IO) point. According to Becker, the Houston refinery has more than 200 tanks, with such facilities containing IO points scattered throughout. These IO points serve as mini control rooms that collect data from numerous field controls and relay that data back to a central control room used by the refinery to monitor its operations.

Fluid levels in tanks are frequently monitored by a mechanical gauge that must be manually checked. At other times, the levels are collected by dipping a wired sensor down into the tank. Neither solution is optimal, however, Becker says. "Because these are very hazardous areas, it is very expensive to do this with wires, or manual checks," he explains.

In the second pilot, at a refinery in Northern California, the i-Sense Talkers will include motion sensors to monitor the vibration levels of large cooling fans used in the oil-refining processes.

The goal, says Becker, will be to check the vibration metrics collected by the sensors against others representing optimal vibrations stored in the i-Sense Talker's memory. "Anytime there is an excursion outside of that range," Becker states, "[i-Sense Talker] will take an action, such as someone being notified. If [the measurement] is radical enough, the device could turn off the fan,"

The third pilot, currently in development at yet another refinery, will monitor and facilitate the mixing of different crude oil levels during the formation of gasoline, using either a sensor that monitors fluid viscosity, or one able to track fluid levels. "This third pilot is still in discussion as to what sensors and processes to use," says Becker.

All three pilots are slated to run for three months; then be expanded to include additional RFID-based sensors, as well as possibly tighter integration with the refineries' distributed control systems. "Safety is a very critical issue," Becker agrees. "If you were to have to shut down a process, it [could] cost hundreds of thousands or millions of dollars an hour, so everything has to be tested and retested vigorously before you let a machine-to-machine process take over."

North Dakota Lawmakers Consider Oil Incentives

Oil producers in North Dakota lost twenty million dollars last year not because they couldn't find oil, but because they couldn't get the oil they had to refineries that desperately needed it.

North Dakota legislators talked about possible solutions in January including a state-owned oil refinery.

Also on the table...working out deals with other states to help move the oil, and considering incentives for private businesses to build or expand refineries.

Lynn Helms with the State Oil and Gas Division says a refinery is one solution of many that have been discussed to help the oil industry in the state.

Legislators in Bismarck said it's time to look into the situation - especially with President Bush in his State of the Union asking all of us to consider ways to reduce our dependence on foreign oil.

(Sen. Joel Heitkamp, (D) Hankinson) "America needs oil. We have it. Are we getting enough of what we have out to it at the price we could be getting for it? That alone begs a study, what can be done?"

(Lynn Helms, ND Dir. of Mineral Resources) "At our peak during the crude oil situation last March we had 30,000 barrels a day in the Williston Basin that didn't have a home. That was the reason prices got discounted so deeply. If you were going to build a 30,000 barrel a day refinery it would cost 400 million dollars."

Helms said that in addition to the high cost, refineries are difficult to get built.

As an example, he said two refinery projects have been in the works for ten years in the US that still don't have the necessary permits.

CANADA
Headwaters Inc. Ponders Canada Refinery

Headwaters Inc., Utah’s South Jordan-based energy company whose shares are listed on the New York Stock Exchange, is contemplating building a crude oil refinery in Nova Scotia.

The company said it is still in the "preliminary stages" of investigating the project. "For a project like this to come to fruition it would take seven years or more to complete," Headwaters spokesman John Ward said. "And we haven't even selected a site or done any of the major engineering work."

Headwaters late last month created a new business unit - Headwaters Heavy Oil - to deploy a technology that it maintains can greatly improve the efficiency of refineries that use "heavy oil" as a feedstock for the production of gasoline and other petroleum products.

Ward said if the refinery gets built in the Canadian east coast province, it will utilize that heavy oil upgrading technology at its core.

The last oil refinery built in Canada was Shell Canada Ltd.'s Scotford plant, which opened in 1984.

"Scotford was built to use synthetic crude [recovered from oil sands deposits] as a feed stock," said Janet Annesley, spokeswoman for Shell's Oil Sands Division.

Ward said the permitting process to build a new oil refinery in Canada clearly spells out the steps that a company must go through to get government approval.

"The process is more transparent [than in the U.S.]," he said. "Here you never know who might step forward and try to sue you" to stop the refinery from being built.

Headwaters' technology was initially developed by the Alberta Science and Research Authority and the Alberta Research Council. It uses a catalyst to treat the dregs left over after crude oil is refined.

It can take that leftover material, much of which normally could be used only for asphalt and roofing shingles, and economically break it down so it can be used to produce additional gasoline and other fuels.

Headwaters chief executive Kirk A. Benson last year said the technology could have a major impact on the world's supply of refined petroleum products.

"If we can get most of the refineries to adopt this technology, it would be the equivalent of discovering a new oil field capable of producing 500,000 barrels per day," he said. "It is a pretty staggering number, given that right now there are only 14 known oil fields in the world capable of producing that much crude on a daily basis."

Talk Continues on East Coast for Second, $5 Billion-$7 Billion Irving Oil Refinery

Talk among federal politicians may be of a greener nation, but on the East Coast a race to build carbon-dioxide emitting oil refineries is set to take off.

Within weeks, Irving Oil is expected to announce if it will seek environmental permits to build a second, $5-billion to $7-billion refinery in Saint John, N.B., by 2012.

Kevin Scott, the project director for the company, said as the company builds a liquefied natural gas facility at a site a few kilometers east of the city, it’s ready to start the approval process on the mega-project that would produce 300,000 barrels of oil a day.

"It’s where we are as a company in term of our life cycle. We’re ready for another step," he said in an interview.

"We’ve got customers who are growing their petroleum demand based on their economy and transportation fuels. It’s all those things lining up for us to be comfortable to be pursuing this as a growth opportunity."

The proposal, like others springing up in the region, is driven by voracious demand for Canadian gasoline in the U.S. northeast, and the fact eastern cities are closer to the trans-Atlantic flow of crude oil supply than they are to Houston.

"Location, location, location and when added with entrepreneurial spirit, we’ll see the oldest incorporated city in the Dominion of Canada becoming the major energy hub for the northern Atlantic region of North America," predicts Ian Doig, the editor of the oil and gas newsletter Doig’s Digest, in his most recent issue.

Meanwhile, expansion of production facilities have also been proposed in Placentia Bay, N.L., where Altius Resources Inc. and European investors have spent $7 million studying the viability of a second refinery in the Southern Head area.

There’s also talk of expansion within several years at an existing 105,000-barrel-a-day refinery at Come by Chance, 150 kilometers west of St. John’s, acquired by Harvest Energy Trust last year.

"We are marching ahead with the concept that product upgrading is still viable," Jacob Roorda, the trust’s vice-president of corporate affairs, said in an interview. "That’s just Phase 1. We could look to expanding this facility very easily."

At the Strait of Canso region, energy services company Headwaters Inc. of Utah has been making inquiries on locating a refinery in the area.

"We, in Canada, are being identified as the refinery location for the U.S. northeast," said Roorda.

He estimated refining margins are in the range of $6 to $7 per barrel, a spread three times what it was a decade ago.

Michael Gardner, a consulting economist in Halifax, said one of the attractions is that environmental hearings are less onerous in Canada than those in the United States.

"Why Canada? Part of that is to do with the long lead time to get through environmental hearings in the U.S.," he said.

However, others see environmental and financial obstacles that could yet emerge to stifle the mega-project plans.

Though the provincial Liberal government in New Brunswick is friendly to the project, residents who live in the shadow of the existing refinery have "strong" concerns about air pollution, says Roly MacIntyre, the local member of the legislature.

Scott said Irving is ready for the process but it’s too early to debate questions of air pollution and greenhouse-gas emissions, saying such matters will be dealt with in hearings.

However, he conceded that carbon-dioxide emissions will go up.

CARIBBEAN

CB&I Awarded $75 Million Refinery Expansion Project in Caribbean

CB&I has been awarded a contract for a refinery upgrade project at a Caribbean oil refinery. The award, which was booked in the fourth quarter, is valued in excess of $75 million.

CB&I’s scope consists of EPCM and fabrication services associated with the revamp and expansion of the refinery’s fluid catalytic cracking unit (FCCU), along with an 11,500 barrel per day grassroots liquefied petroleum gas (LPG) Merox unit. The upgrade is part of the refinery's gasoline optimization program.

Mechanical completion is scheduled for 23 months from time of award. The project work force is expected to peak at more than 1,000 workers.

DOMINICAN REPUBLIC

Dominican Foreign Minister to Seek Refinery in Meeting with Saudi Officials

Dominican foreign minister Carlos Morales Troncoso will travel to Saudi Arabia to lobby for a new oil refinery in the country that faces fuel shortages.

According to his office, Morales Troncoso was scheduled to meet with Saudi oil minister Ali Naimi in February. A date has not been set, but the meeting would take place immediately after a February 1 trip to Washington to discuss Haitian affairs with U.S. State Department officials.

Dominican officials have been pushing for a refinery in hopes of ending fuel shortages, lowering prices and becoming a transshipment point for oil to other Western Hemisphere ports, including the United States.

Fuel prices are high in the Dominican Republic, where regular gasoline sold for $3.62 per gallon during the month of January.

Saudi Arabia holds over 260 billion barrels of proven oil reserves, a quarter of the world's total. The Saudi trip is the latest in a series of Dominican attempts to boost relations with Middle Eastern countries.

President Leonel Fernandez hosted the Saudi ambassador to the United States for an official lunch at the national palace in November, and he was expected to travel to Qatar to discuss expanding an existing AES Corp. facility in the Dominican Republic to use as a transshipment point for liquefied natural gas, the ministry said.

The Qatar trip, which was postponed earlier this month, has not been rescheduled.

NICARAGUA

Chavez Promises 150,000 bpd Oil Refinery for Nicaragua

Venezuelan President Hugo Chavez says his country will build an oil refinery in energy-starved Nicaragua.

Mr. Chavez said that Venezuela will be a minority partner in the planned refinery, which he expects to process up to 150,000 barrels of oil a day. He said Nicaragua will have the right to export any surplus oil after the country meets its energy needs.

The Venezuelan leader added that the income from any surplus could help Nicaragua wean itself from International Monetary Fund loans.

Venezuela's proposal adds to a previous promise to build electricity generating plants and factories in Nicaragua.

These projects mark the first steps of a trade pact Nicaraguan President Daniel Ortega signed with Venezuela, Bolivia and Cuba. Mr. Chavez established the initiative known as the Bolivarian Alternative for the Americas, or ALBA, to counter a U.S.-backed free trade deal.

Mr. Ortega's return to the presidency 17 years after he was voted out of office gives President Chavez a left-wing ally as the Venezuelan challenges U.S. influence across Latin America.

The Nicaraguan leader says he hopes for increased trade with all countries, including the United States.

2. ASIA

CHINA

Emerson to Automate Hydrotreating Unit in China's Dalian Refinery

Emerson Process Management announced that it has been chosen to automate a1.5 million tons per year hydrotreating unit in a refinery in Dalian, China. The refinery is owned by Dalian West Pacific Petrochemical Co. Ltd., better known as WEPEC, a joint venture between Sinochem, PetroChina and Total.

Strong project management and engineering execution capabilities, along with the leading edge technologies of Emerson’s PlantWeb® digital plant architecture were key to the selection. This is the first PlantWeb installation in the refinery that had previously standardized on other older automation technology. Startup was scheduled for October 2006.

The refinery is one of the few locations in China currently able to process sour crude. This hydrotreater modernization investment is the second phase in a five-year plan to upgrade the refinery facilities to increase crude oil processing capacity from 8 to 10 million tons per year (Mtpy), equal to 160,000 to 200,000 barrels per calendar day (bpcd).

“Our growing economy requires investment in expanded refining capabilities,” said Xia Yi, Chief Instrument Engineer at WEPEC. “We needed state-of-the-art automation for our expansion to insure our capital investments operate at peak efficiency. We’ve evaluated the PlantWeb digital plant architecture, with the DeltaV™ digital automation system, to be the best to assure improved field device management and give us superior production efficiency.” The current investment includes three DeltaV systems for the hydrocracker (1.5 Mtpy), diesel hydrotreating (2 Mtpy), and hydrogen production units (60000 Nm3) units.

PlantWeb digital automation technologies being used at the WEPEC refinery include the DeltaV system, AMS™ Suite: Intelligent Device Manager, Rosemount® smart temperature and pressure transmitters, and DeltaV OTS operator training solution.

“Emerson best met all the requirements for leading-edge technology on this project,” commented Richard Wei, Business Director of Process Systems & Solutions, Emerson Process Management China. “In addition to having refinery expertise, the company offered an advanced technological solution for the hydrotreater facilities. Emerson also was able to bring full engineering and service support to the construction site.”

Emerson will provide on-site support and service for the WEPEC refinery, according to Xia Yi of WEPEC. The project is being managed and implemented by Emerson China, which has strong local engineering and project management skills, complemented by strong service support.

INDIA

Sandvik Wins Major Pastillation Plant for Refinery

Reliance Petroleum has confirmed a major order for a Sandvik steel belt-based Rotoform pastillation plant for its huge Jamnagar refinery complex in Gujarat, Western India.

Reliance Industries currently operates an oil refinery and petrochemical complex at Jamnagar, processing 650,000 barrels per stream day (650 KBPSD) of crude oil, and producing LPG, naphtha, gasoline, kerosene, diesel, sulfur, coke, polypropylene and a number of aromatic products, including paraxylene, orthoxylene and benzene.

The company is now preparing to boost capacity through the Jamnagar Export Refinery Project (JERP), providing additional crude distillation and associated secondary conversion facilities, and almost doubling capacity to over 1,200 KBPSD.

The order includes eight Sandvik Rotoform HS (high speed) pastillation systems, complete conveying, storage and loading facilities as well as the control system.

Start-up of the plant is scheduled for February 2008 and, once fully operational, Jamnagar will be the largest refinery of its kind in the world.

This is the biggest single order for the Rotoform HS pastillation system since its launch in September 2005.

The development of this high speed system offers solidification capacities up to twice those of the previous Rotoform system.

It is an upgrade of the standard Rotoform 3000 and an additional member of the Sandvik Rotoform family.

The key difference between the HS model and the standard Sandvik Rotoform 3000 is the size of the shell that deposits the molten sulfur on to the belt.

The use of a 250 mm diameter shell, as opposed to an 80 mm depositor, reduces the centrifugal force on the droplets.

This means the system can be operated with higher capacity and speed while still delivering a pastille with a regular, hemispherical shape.

Alongside its high solidification capacity and low capital investment/operational costs, the other main reasons for selecting the Rotoform HS solution were the ability to deliver a product quality to SUDIC specification, its low environmental impact (minimum H2S emission) and a low offloading temperature for the solidified sulfur.

IOC Doubles Panipat Refinery Capacity

The Indian Oil Corporation (IOC) announced January 12 the doubling of its Panipat refinery capacity to 12 million tonnes at a cost of Rs 4,300 crore.

Finance Minister P Chidambaram, Petroleum Minister Murli Deora, Haryana Chief Minister Bhupinder Singh Hooda were present at the function here to dedicate the expanded capacity of the refinery to the nation.

With this, the refinery capacity of IOC group companies goes up to 60.2 million tonnes per annum, the largest share among refining companies in India, IOC Chairman Sarthak Behuria said.

The project executed at a cost of Rs 4,300 crore, comprises of Crude and Vacuum Discalation units, Hydro Cracking Unit, Delayed Coking Unit, Diesel Hydro Treating Unit and Hydrogen Generation Unit.

Sarthak Behuria said with this expansion, Panipat Refinery would produce Euro III and Euro IV grade petrol and diesel.

The refinery would cater to the petroleum needs of Haryana, Punjab, Jammu and Kashmir, Himachal Pradesh, Chandigarh, Uttaranchal, Rajasthan and Delhi.

"Additional crude for the capacity expansion is being made available to the Panipat refinery through the recently commissioned Mundra-Panipat Pipeline," he said.

Making a foray into petrochemicals, IOC has already set up a world class PX/PTA plant in the Panipat refinery. Further, it is setting up a naphtha cracker and downstream polymer unit in the refinery at an estimated cost of Rs 14,000 crore.

The naphtha cracker complex will be commissioned in 2009. Behuria said Panipat Refinery is currently being expanded from 12-15 million tonnes.

"Work on this project has already been started and the project is expected to be commissioned on 2009," Behuria said.

Reliance to Invest $15 Billion in Gujarat

India's top private refiner Reliance Industries Ltd. plans to invest 670 billion rupees in creating energy infrastructure in the state of Gujarat, its chief, Mukesh Ambani, said on January 12.

Ambani said in addition to a $6 billion refinery, already under construction in a special economic zone in the state, Reliance would set up a polypropylene plant, and a coal and lignite gasification project.

There would also be a port, city gas distribution projects and a natural gas pipeline.

Reliance, which is also the world's top polyester producer, is setting up a 540,000 barrel per day (bpd) refinery through its subsidiary Reliance Petroleum Ltd. next to an existing 660,000-bpd unit in Gujarat's Jamnagar.

"Apart from this, we intend to firm up our initiatives in agriculture and farming," Ambani said at an annual investors meet organized by the Gujarat government.

Shares in the company closed 3.5 percent higher at 1,340.10 rupees in a strong Mumbai market.

"Reliance's investment in Gujarat alone will generate direct and indirect employment opportunities for approximately 200,000 people," Ambani said.

Reliance has a market cap of nearly $40 billion.

Essar Plans Major Investments

The Essar group is planning to invest Rs 10,500 crore in a special economic zone (SEZ) at Hazira, augment steel manufacturing capacity to nine million tonne and expand its refinery at Vadinar.

"Our investments in the SEZ at Hazira will be over Rs 10,500 crore," Essar group chairman Shashi Ruia said January 12.

He said the group has been approached by major automobile groups like Nissan and component manufacturers like Manineto to set up facilities at the Hazira SEZ.

Ruia also said international petrochemical giants had evinced interest to set up base at its SEZ at Jamnagar.

Foster Wheeler Awarded Contract for World-Scale Refinery and Petrochemicals Complex in India

Foster Wheeler Ltd. announced January 25 that two subsidiaries in its Global Engineering and Construction Group, Foster Wheeler Energy Limited and Foster Wheeler India Private Limited, have been awarded services contracts by Indian Oil Corporation Limited (IOCL) for the Paradip Refinery Project, which is expected to be one of the largest integrated refinery petrochemicals complexes in India. This world-scale facility, comprising a new export refinery and petrochemicals complex, will be built in Orissa State.

The terms of the contracts were not disclosed, and the projects will be included in the company’s first-quarter 2007 bookings.

Foster Wheeler’s scope includes the front-end engineering design (FEED), preparation of cost estimates and the overall project strategy, and supervision of early works on site up to financial investment decision for the refinery, which is expected in mid-2008.

The planned new refinery, with a crude processing capacity of 15 million tonnes per annum (TPA), will include a fluidized catalytic cracking unit, an aromatics complex and a polypropylene unit. The new complex will ultimately produce 700,000 TPA of polypropylene, 1.2 million TPA of paraxylene, 600,000 TPA of styrene monomer, along with 10.5 million TPA of refined petroleum products. This award also includes a detailed feasibility study for Phase 2 of the development, the Paradip Naphtha Cracker Project.

“Foster Wheeler is very pleased to be awarded this strategically important project,” said Steve Davies, chairman and chief executive officer, Foster Wheeler Energy Limited. “This award reflects our in-depth expertise in refining and petrochemicals and in the successful integration of refining and petrochemicals production. We have been active in the Indian market for over seventy years and it remains a very important market for Foster Wheeler. We look forward to working with IOCL to deliver a high quality FEED which meets or exceeds our client’s expectations.”

Essar, Eastman to Invest $125 Million in Refinery

Indian firm Essar plans to invest $125 million with U.S.-based Eastman Chemicals to set up an oxo chemical plant in Vadinar.

This would be our first step in the value chain integration of Essar's refining business, said a company official. The two companies have inked an agreement to set up a joint venture for a 150,000-ton-a-year oxo aldehyde plant and its derivatives.

Oxo aldehyde is a byproduct of the crude-oil refining process and is used in manufacturing products like coatings and paints, solvents and plastics, said a local media report.

Eastman Chemicals specializes in oxo and oxo derivatives, which are part of the company's performance chemicals and intermediates segments, the official said.

Entry into this business would enhance potential of Essar Oil Refinery from where main feedstock propylene would be supplied for oxo and oxo derivative complex. “We look forward to world-level oxo chemicals plant at Essar's refinery at Vadinar in western province of Gujarat”, said Anshuman Ruia, director of Essar group. He said both companies have already undertaken a study report to explore the potential opportunities for the proposed project. They said the plant is expected to go online in three or four years.

Essar has invested $3.1 billion in its 10.5 million-ton Vadinar refinery that is set to become operative in March this year.

MALAYSIA

Foster Wheeler Awarded EPC Contract for Refinery Project in Malaysia

Foster Wheeler Ltd. announced January 24 that its subsidiary, Foster Wheeler E&C (Malaysia) Sdn. Bhd., part of its Global Engineering and Construction Group, has been awarded a contract by Malaysian Refining Company Sdn. Bhd. (MRC), a joint venture between PETRONAS and ConocoPhillips, for the basic design engineering package and the engineering, procurement and construction management for a debottlenecking/revamp project at MRC’s PSR-2 Melaka Refinery in Malaysia.

The Foster Wheeler contract value was not disclosed and the project will be included in the company’s first-quarter 2007 bookings.

“This award reflects our in-depth technical expertise in refining, our revamp experience, and our reputation as one of the leading EPC contractors in the industry,” said Aziz Ali, director, Foster Wheeler E&C (Malaysia) Sdn. Bhd. “In addition, we have an extensive knowledge of this refinery, having been MRC’s front-end engineering design contractor and project management consultant for the original PSR-2 facility, which was completed in 1999. We look forward to building upon our close working relationship with MRC and are committed to delivering a successful project which fully satisfies our client’s business objectives.”

The debottlenecking and revamp project is expected to permit MRC to increase the overall refinery throughput from 130,000 to 175,000 barrels per day. This project includes the revamp of the hydrocracker unit, significant modifications to the internals of the vacuum distillation and crude distillation units, the installation of additional heat exchangers, and modifications to other process units and associated offsites and utilities.

PHILIPPINES

Shell may Expand 110,000 Bpd Philippine Refinery

Pilipinas Shell Petroleum Corp, a unit of Royal Dutch Shell Plc has not closed the door on future expansion of its 110,000-barrel per day refinery in the Philippines, a senior official said on January 26.

Ed Chua, chairman of the Shell group in the Philippines, said his firm might be able to reconsider the project in two to three years.

“What is definite is that we will not be able to push through at this point in time with the major investment that we were considering,” Chua said.

“The problem is; when we look at the budget, the actual cost is 40 percent higher and the reason behind that is that right now, all over the world, there is a huge demand for services, raw materials, equipment, so it does not make sense,” he said.

Chua said that a planned initial public offering of Pilipinas Shell hinged on the expansion of its refinery. Earlier Shell said it had decided to stop studying an expansion to its refinery in Tabangao, Batangas, near Manila, due to increased costs.

Last year Shell executives had initially estimated the cost of the expansion at between $1 billion and $1.5 billion. “What we will do is just to wait for the market to cool down. Maybe that will take two to three years, and after that, then that is the time we will revisit (the expansion plan),” Chua said.

In the meantime, Chua said his company was studying options on how its refinery would meet stricter fuel standards to comply with the Philippines’ Clean Air law.

Earlier this month, the Philippines passed another law requiring refiners to blend biofuels produced from local crops such as sugar and coconuts with gasoline and diesel as part of an effort to reduce the country’s reliance on expensive imported crude.

“I would hope that we will continue to upgrade, but this is not yet final,” Chua said, adding the initial cost of the upgrade was estimated at $100 million to $200 million. Petron Corp, the Philippines’ largest refinery with a capacity of 180,000 barrels of oil per day, has spent $100 million on upgrading its facilities to produce cleaner fuels.

The company owned 40 percent each by the government and Middle East oil giant Saudi Aramco, is also spending another $300 million for new refinery units to expand capacity of its petrochemical products. Shell put its refinery business in the Philippines under review after rival Caltex (Philippines) Inc closed its 72,000- bpd refinery in the country in late 2003 and converted the facility into a storage depot for petroleum products.

VIETNAM

Vietnam, Belgium Firms to Develop $150 Million Oil Refinery

Northern Hai Phong-based tissue paper maker Hapaco has entered into a cooperative agreement with the Belgium IPEMNV Energy Group to develop a massive oil refinery in the city Dinh Vu Industrial Park.

The project for the 1 million ton per year facility is estimated to cost US $150 million.

Germany SACHESEN bank agreed to invest 85 percent of the required financing via an arrangement by the German investment consulting firm Evagor Gmbh Ltd, which inked an agreement with Hapaco to develop the project.

The rest would be sourced from Hapaco and IPEMNV.

Under a proposal submitted to the government for approval, the refinery will use Vietnamese crude oil supply of around 20,000 barrels per day when it is put into operation by 2010.

Despite being Southeast Asia's third largest crude oil producer with average daily output of around 350,000 barrels, Vietnam still relies entirely on oil product imports as it lacks refineries.

Recently the petroleum industry has seen numerous foreign oil firms expecting to invest in an oil refinery.

Bank TuranAlem (BTA), a leading Kazakh banking and finance group, plans to build an oil refinery in the central Binh Dinh Province with an annual capacity of 3-5 million tons.

Earlier last year the Hong Kong General Chamber of Commerce signed an agreement with the local government to build a $450 million oil refinery in the Nhon Hoi Economic Zone.

But with there being no subsequent action from the Hong Kong side, the local government is looking for other investors to step in and replace them.

Several foreign firms including Russia's Techno Star have sought to build smaller refineries with investment of under $500 million nearby Vietnam’s oil base.

Experts forecast that Vietnam would likely turn a net importer of crude oil by 2015 when all of its three planned refineries become operational and demand for crude rises.

Vietnam's crude output may increase by almost 80 percent over the next few years, demand for refined products such as gasoline and diesel can be expected to strongly rise as the country's economy expands. That may lead Vietnam to import crude oil.

Vietnam's first refinery, Dung Quat, is due to come on-stream in 2009, with another two to follow by 2015.

$300 Million French Loan Approved for Dung Quat Refinery Project

The French bank BNP Paribas will loan US$300 million towards the Dung Quat Oil Refinery project in the central province of Quang Ngai.

In Decision No 99/QD-TTg, signed on January 22 by Deputy Prime Minister Nguyen Sinh Hung, the Government approved the foreign financing and designated the Ministry of Finance to execute the loan agreement with BNP Paribas.

The loan would have a term of 13 years, including a three-year grace period.

The Dung Quat Oil Refinery, being built by PetroVietnam at a total cost of $2.5 billion, is currently under construction at the Dung Quat Economic Zone in Quang Ngai Province.

Designed to handle a maximum capacity of 6.5 million tonnes of crude oil per year, the plant is expected to be online by 2009, when it is expected to meet around 40 per cent of the country’s demand for refined petroleum products, including petrol, propylene, liquefied petroleum gas, kerosene, and diesel fuel.

The consortium constructing the Dung Quat refinery is led by the Technip Group of France and includes the Japanese engineering giant JGC Corporation and Spain’s Tecnicas Reunidas.

3. EUROPE / AFRICA / MIDDLE EAST

GERMANY

Oil Reaches German Refinery Hit by Cut-off

One of two German refineries hit by the suspension of Russian oil deliveries started receiving supplies again January 12 after Russian pipeline monopoly Transneft resumed pumping.

A spokesman for the PCK refinery in Schwedt said crude oil from the Druzhba (friendship) pipeline through Belarus started reaching the processing facility on the morning of January 12.

Supplies had been interrupted since January 8 when Transneft stopped pumping operations because of a dispute between Moscow and Minsk on shipment fees.

The Russian company resumed the flow of oil amid continued talks between Russian and Belarusian negotiators on oil pricing.

The second German refinery that processes Russian oil is located in the town of Leuna, Poland, Ukraine, Slovakia, the Czech Republic and Hungary were also hit by the cut-off.

HUNGARY

Mol Refinery Taps Hungarian Oil Reserves

Hungary was going to allow Mol to tap government oil stockpiles to supply its 161,000 barrel a day Százhalombatta refinery in central Hungary.

Economy Minister János Kóka made the announcement after Russian state pipeline operator OAO Transneft in January shut down its Druzhba (Friendship) pipeline, which was moving 1.4 million barrels of oil a day, claiming that Belarusian President Alexander Lukashenko's government was stealing crude. That halted deliveries to Poland and Germany, followed by Slovakia, the Czech Republic and Hungary.

Mol, Hungarian Oil and Gas company, was to immediately begin to draw 15,000 tons of crude a day for seven days, enough to supply its Százhalombatta refinery, the company's largest plant, the Hungarian government said. The countries cutoff by the shutdown of Druzhba, Russia's main export pipeline, are now tapping stockpiles to avoid shortfalls.

IRELAND

Shell E&P Ireland Welcomes EPA Decision on Gas Refinery Facilities at Bellanaboy, Part of the Corrib Gas Project

The January announcement by the Environmental Protection Agency of its decision to grant a license to Shell E&P Ireland Limited for the gas refinery facilities at Bellanaboy has focused the spotlight on the north Mayo gas saga.

The preliminary decision by the environmental body to grant an Integrated Pollution Prevention Control License gives a potential green light to the €200 million facility and was welcomed by Shell and Corrib Gas Partners, which includes Statoil, Marathon and the Pro Gas Mayo Group. However, the proposed license contains more than 85 individual conditions relating to the environmental management, operation, control and monitoring of the planned refinery.

Furthermore, there is a 28-day public consultation period during which objections or requests for oral hearings can be lodged with the EPA. It is expected that Shell to Sea will submit a request for a hearing.

The spokesperson for Shell E&P Ireland Limited, Mr John Egan, welcomed the decision of the EPA and re-affirmed Shell’s commitment to ‘build and operate a world-class facility at Bellanboy in partnership with the local community’ while also stating that ‘all decisions around the Corrib Gas project are taken with due concern for the protection of the environment’.

However, Dr Mark Garavan, spokesperson for Shell to Sea, said that the remit of the EPA is far too narrow, focusing only on ‘pollution emissions’ and not taking any account of the total effects of the whole project on the north Mayo area.

“One of our concerns is for Carrowmore Lake, which is located a short distance from the Bellanboy site. Furthermore, the EPA does not take into account the total effect of the proposed Shell development, which includes the actual building itself, the operational aspects of the refinery and, finally, the pipeline itself. Our primary concern is for the cumulative effect of this whole project on the area and we will continue to campaign on this issue,” said Dr Garavan.

The announcement by the EPA paves the way potentially for Shell to continue to develop its facility and will provide for the processing of 9.9 million cubic meters of natural gas per day that will be exported to the Bord Gáis Éireann distribution network.

The EPA said it is satisfied that the emissions from the refinery, ‘when operated in accordance with the conditions of the proposed license, will not adversely affect human health or the environment and will meet all relevant national and EU standards’.

Meanwhile, Mayo County Council’s Project Monitoring Committee for the gas terminal at Bellanaboy held its first meeting of 2007 on January 17. The meeting dealt with updates on development work at the terminal site, environmental issues and community issues and heard submissions from Mayo County Council Community and Enterprise section, Bord na Mona and the North West Regional Fisheries Board.

Three firms vie for Ireland’s 70,000 Bpd Whitegate Oil Refinery

Three companies have emerged as possible buyers for the Cork-based Whitegate Oil Refinery, the sale of which was announced by its owner Conoco- Philips in January.

The European oil business, Petroplus Holdings — which is listed on the Swiss stock exchange and owns oil refineries in Switzerland, Belgium and England — is understood to be the favorite to take over the ownership and running of Whitegate, which is being valued at between €300 million and €380m.

Canadian company, Irving Oil has also been mentioned as a potential bidder — the company has, apparently, considered the possibility of buying the Cork operation on a number of occasions over the last decade.

The other name in the frame is that of Topaz, the company which now owns both the Shell and Statoil businesses in Ireland. Irving was also, reportedly, one of the bidders for the Statoil operations here, so could be keen on buying in Ireland still. Topaz’s network ownership here — through Shell and Statoil — means that it could end up buying the majority of oil produced by the Whitegate refinery.

Petroplus is keen to expand its European oil refinery assets and in its chief executive Thomas D O’Malley, the Irish-American businessman, has an individual who knows all about Whitegate.

He was head of Tosco-Philips (which later merged with Conoco) in 2001 when the Irish government sold Whitegate and the Whiddy Oil Terminal, on behalf of the Irish National Petroleum Company, to the American company for €117m. Petroplus is believed to have already held informal negotiations with Conoco-Philips with regard to Whitegate and is understood to be preparing a bid for the business.

The company, which employs around 1,100 people, floated in Switzerland last month, raising more than $2.4 billion (€1.84bn) in the process. Management wants to double the size of the business within the next three years, so is extremely eager to grow via acquisition in the short term.

Whitegate’s foreseeable future is secure whatever the outcome. The refinery is capable of producing more than 70,000 barrels of oil per day and made an operating profit of $47m in 2005 on a turnover of $1.7bn.

As part of any takeover deal, it must remain operational as a fully commercial entity for at least 15 years, which means any new owner could not close it down.

Conoco-Philips gave no reason, as to why it wishes to sell Whitegate — which supplies Ireland and numerous European markets. It does, however, intend to keep ownership of the Whiddy Oil Terminal in Bantry Bay.

TURKEY

TÜPRAŞ Awards Contract for Refinery Improvements to Foster Wheeler

New Jersey-based U.S. company Foster Wheeler's İstanbul-based subsidiary Foster Wheeler Bimaş Birleşik İnşaat ve Mühendislik has been awarded an engineering, procurement and construction management services contract by TÜPRAŞ (Turkish Petroleum Refineries Corporation) for the Gasoline Specification Improvement Project (GSIP) at the İzmit Refinery in northwest Turkey. The terms of the contract award were not disclosed. This project includes a new fluidized catalytic cracker gasoline desulphurization unit, a benzene reduction unit, offsites, utilities and interconnections, and oxygenates storage and handling systems.

The project is planned to be commissioned in the fourth quarter of 2008, and will be executed by Foster Wheeler Bimas, with specialist support from its Milan-headquartered parent, Foster Wheeler Italiana.

UNITED KINGDOM

Royal Dutch Shell Reviewing some Refinery Assets for Possible Sale

London and The Hague based Royal Dutch Shell PLC said January 12 it would conduct a “strategic review” of some refinery assets, an indication it may sell them.

The assets include the Petit-Couronne and Reichstett-Vendenheim refineries and the Berre-l'Etang refinery site complex in France, with a combined capacity of around 300,000 barrels per day, and the Yabucoa plant in Puerto Rico, which has a capacity of 79,000 barrels per day, Shell said.

Shell is also reviewing operations in the Dominican Republic, where it owns a 50 percent stake in the 30,000 barrels per day Refidomsa refinery.

“The assets we're reviewing are important to their markets, and in fact a number of parties have approached us with an interest in purchasing them as going concerns,” Rob Routs, head of Shell's refining arm, said in a statement.

“We're looking closely at how these assets can generate best value for our shareholders. This review is part of our ongoing strategy to streamline and concentrate our ... portfolio,” he said in the statement.

Shell said that any sale would require regulatory approval, and that it would update the market “on these strategic reviews as they are concluded.”

Swiss Petroplus to Buy BP’s Last UK Refinery

Switzerland-based Petroplus Holdings AG announced February 2 that it had agreed to purchase the Coryton refinery from refining giant BP Plc for around $1.4 billion.

The Swiss company said the deal includes the bulk terminal adjacent to the 172,000-barrel-a-day refinery in southeast England, besides BP's bitumen business in the UK. BP said the sale would enable it to improve the operations and efficiency of its other European refineries. The refinery being sold was the last owned by BP in the UK. Petroplus Holdings, backed by buyout firm Carlyle Group, expects to fund the deal through a mix of equity and debt. The Swiss firm said the acquisition will boost its oil processing capacity by 55%.

NIGERIA

IOC Proposes Greenfield Refinery for Nigeria, Bidding for oil Blocks

The Indian Oil Corporation (IOC) has disclosed plans to set up a Greenfield refinery in Nigeria and also bid for equity participation in one of the state-run refineries, as part of wider plans to secure a veritable source of energy supply.

IOC has also indicated interest to participate in the development of one of the Liquefied Natural Gas plants scheduled to come on stream before the close of the decade.

Dr. Edmund Daukoru, Minister of Energy, made the disclosure after a meeting with his Indian counterpart, Murli Deora, in India, where he attended an energy conference earlier in the year.

"We have proposed IOC to set up one of the four new grassroots refineries of 200,000 barrels per day capacity being planned to increase processing of domestic crude oil to 70 per cent from 40 per cent. IOC is interested in taking up the refinery that is being put up for sale."

Nigeria is also seeking investments from Indian firms in exploration and invited companies like OIL India and Gail India to participate in the bidding for some oil blocks that will come up in February.

"Our team would visit Nigeria soon to look at the possibilities discussed by the ministers. The Port Harcourt refinery is being put up for sale by the Nigerian state government. We had previously proposed to set up a six-million tonne refinery in Edo state of Nigeria, provided we are allocated an oil block. Our proposal still stands and we would be interested in building one of the four new refineries being planned by Nigeria, if we get an oilfield," IOC chairman, Sarthik Behuria, said.

Nigeria is considering increasing the term contract to sell crude oil to IOC to 3 million tonnes per annum from the current 2 million tonnes.

Nigeria also wanted Indian companies to invest in fertilizer and power plants, gas pipelines and transport infrastructure. Daukoru said Nigeria may consider allocating oil blocks on a nomination basis, that is, without going through the bidding process to an Indian company.

Previously, it had allocated two blocks to ONGC-Mittal Energy on a nomination basis and may extend the same dispensation to either IOC or OIL. In the past year, India and China have forged a new alliance in the energy sector, one in which both India and China require security for exponentially growing domestic demands. One time rivals for control of fields in Angola, Nigeria, Kazakhstan, and Ecuador, India and China agreed, in January 2006, to cooperate on overseas acquisitions.

The agreement grew out of their co-ownership of a Sudanese field and their cooperative bid for fields in Syria. These joint pursuits are knitting together the interests of Asian state-owned oil and gas behemoths ONGC in India, and CNPC and CNOOC in China.

With the rapid growth of these economic ties in areas critical to both countries' development, the India-China relationship has set off on a completely new path. It is this new course that the US, concerned about a worldwide scramble for energy resources, would be watching carefully.

RUSSIA

‘Rosneft’ Selects a Site for New Oil Refinery in Primorsky Krai

‘Rosneft’ prepared a declaration on its intentions to build up an oil refinery in the Primorsky Krai of the capacity of 20 million tons of oil per annum, reports Sergey Bogdanchikov, President at a press conference in Vladivostok.

The company has selected a site located new Yelizarov's Cape, 3-4 km far from the future port of shipment in Kazmino Bay.

ARMENIA

Gazprom considers Oil Refinery project in Armenia near Iran

A spokesman for the Armenian president confirmed that Russian energy giant Gazprom was considering a project to build an oil refinery in southern Armenia near the Iranian border.

"I can confirm that Russia's Gazprom is considering the possibility of building an oil refinery in Armenia," Viktor Sogomonyan said, adding that negotiations were in the initial stage.

He said Armenian President Robert Kocharyan had discussed the project during his visit to Russia in January. Russian President Vladimir Putin said after the talks that Russian mobile operator VimpelCom, aluminum company RusAl and Gazprom would double their investment in the Armenian economy to $1.5 billion.

UKRAINE

Kazakhstan Proposes to Ukraine to Build New Oil Refinery

The government of Kazakhstan offered the government of Ukraine a proposition to jointly build a new oil refinery powering three million tons of oil per year, Kazakh Ambassador to Ukraine Amangeldy Zhumabayev said in an interview.

“We are interested in building an oil refinery jointly with Ukraine. This is important now in the view of Ukraine’s accession into the WTO,” he said. The article stated that the new oil refinery project will become the main issue for discussion during a visit of Kazakh President Nursultan Nazarbayev to Ukraine. The visit is scheduled for February 2.

The press office of the Ministry for Fuel and Energy confirmed that the Kazakh party offered the joint investment project. “We welcome investments to Ukraine. But our state will not take part in the building of the refinery. Our position is that it must be a non-governmental commercial project,” the Ministry’s official Mikhailo Gryshchenko noted.

According to experts, two years and $8 billion are needed to build the new refinery. They consider the new oil refinery will be headed for European markets.

Ukraine has six oil refineries of total power at 51.11 mln tons per year. According to the Antimonopoly committee of Ukraine, Odesa refinery (Lukoil), Lysychansk refinery (THK-BP) and Kremenchug refinery (Tatneft) control 66% of Ukraine’s petrol market and 51% of diesel oil market.

Kherson and Odesa refineries are under reconstruction now. Market experts believe that after modernization of Lysychansk, Odesa and Kherson refineries Ukraine may face a surplus of oil processing facilities.

IRAN

India's Essar $2 Billion Refinery Steps into Breach of Iranian Fuel Shortage

Essar, the Indian industrial conglomerate, is in talks with NIORDC, Iran's state-owned oil refining and distribution company, to construct a new $2 billion oil refinery to help breach the Iranian fuel shortage.

Parsian Refinery 2 Gas Production Hits 20 MCM per Day

Production capacity at Parsian Refinery 2, southern Iran, will reach 20 million cubic meters of gas a day starting mid January, the project manager said.

Current production of 8 million cubic meters (mcm) per day is scheduled to hit 20 mcm the middlle of January, Sohrab Qasemian told Petroenergy Information Network (PIN).

“The refinery’s production capacity is increased in order to meet growing domestic consumption as well as exporting more gas to Turkey,” he added.

He further said that the refinery will touch its final production capacity, 37.5 mcm per day, in the near future.

Parsian Refinery 2 is fed by Homa, Shanol, and Varavi gas fields. Parsian 2 and Parsian Refinery 1 are downstream part of a project to develop Homa, Shanol, and Varavi fields. The project was awarded to the Iranian Central Oil Fields Company (ICOFC) in 2004.

ICOFC is an affiliate to the National Iranian Oil Company (NIOC), in charge of onshore oil and gas projects in central regions of Iran.

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