In an effort to control spending, Marathon Oil Corp. (MRO) has delayed a project geared toward running cheap grades of crude oil at its Detroit refinery.

The project, first announced after the company acquired Canadian oil producer Western Oil Sands in 2007, would enable Marathon to process cheap sludgy grades of crude oil from Alberta, Canada, in its Detroit refinery.

"We have factored in a slowdown of the project into our 2009 plans," Chief Executive Clarence Cazalot told analysts.

Houston-based Marathon had planned to begin construction on the $1.9 billion project in the spring of 2008.

The company is reevaluating its engineering for the project, in an effort to trim costs, according to Gary Heminger, who runs Marathon's refining operations. "We believe we can optimize the project construction schedule," he said. The company has delayed the project to consider cutbacks, but may ultimately complete the project more expeditiously, because of efforts to tighten the construction schedule, Heminger said.

The company is reconsidering the project simultaneous with an effort to review the possibility of splitting itself into two entities. If the board of directors decides to approve such a split, Marathon's oil-sands assets would be separated from its refining assets. The board is expected to decide on the split during the fourth quarter of 2008, Cazalot said.

Valero Places Port Arthur 45,000 bpd Coker Expansion Project on Hiatus

Valero Energy Corp. announced they were placing the construction of a 45,000 barrel-per-day coker expansion project at the Port Arthur Refinery indefinitely and delay improvement projects at other sites due to cost and economic uncertainty. The refinery will continue, however, with their 50,000 barrel-per-day hydrocracker.

A company press release read Valero was scaling back spending by 33 percent this year and cutting its 2009 budget.

"You can expect us to maintain our balanced approach by investing in growth projects, paying off debt, buying back stock and increasing dividends, but clearly we intend to hold much more cash than in the past," Bill Klesse, Valero chairman and chief executive said.

Valero held a groundbreaking this summer for the $2.4 billion project that would hire 2,000 construction workers at its peak. The project's cost will be scaled down to $1.6 billion to build the hydrocracker.

Husky Energy to Proceed with $2 Billion to $3 Billion Lima Expansion

Husky Energy, the Canadian-based owner of the Lima Husky Refinery, released its third quarter earnings report in October, unveiling earnings of $1.27 billion in the third quarter of 2008. That's an increase of 65 percent from the company's $769 million earnings in the same quarter last year.

Record oil prices and the company's deals in Canada and the United States helped push Husky's total earnings for the first nine months of 2008 to $3.5 billion, compared with $2.1 billion in the same span of 2007. Cash flow from operations was $5.6 billion.

The strong earnings and cash flow translate to good news for the Lima Refinery. When Husky purchased the refinery in 2007, President and Chief Executive Officer John C.S. Lau committed to spending $2 billion to $3 billion to convert the plant to process the heavy crude drawn from the company's Canadian fields. The company's healthy balance sheet means those plans are a go, Lau said.

"Husky's strong earnings and cash flow allow the company to finance its current capital program, redeem debt and accumulate cash, positioning the company for further investment opportunities," Lau said. "Husky's focus on financial discipline in respect of costs and project execution over the years has positioned the company to perform well in these volatile financial and commodity markets."

The company has completed the conceptual stage of reconfiguring the Lima Refinery and is moving forward with more detailed plans, according to spokesman Grahm White. There is no timeline for when the work will be completed.

"We're in quite good shape so at this time everything is going ahead as normal. Other than that, there's really nothing new to report," White said.

Despite the financial growth, the company has actually decreased production for the year. Third quarter production dropped 4 percent, from 369,000 barrels of oil equivalent in 2007 to 355,900 this year. Total crude oil and natural gas liquids production for 2008 was 256,200 barrels per day, compared with 266,500 barrels per day in 2007.

A variety of issues contributed to the decrease in production, including crude supply disruptions associated with hurricanes Gustav, Hanna and Ike and a shutdown for turnaround at its Toledo refinery.

Proposed AZ Refinery Passes Land Use Hurdle for Refinery Site

Arizona Clean Fuels has inched one step further toward reality with approval by the Yuma County Board of Supervisors to grant a land use amendment for the proposed refinery site in eastern Yuma County.

The approval paves the way for the company to now seek rezoning of the site between Avenues 48E and 50E north of Interstate 8. Arizona Clean Fuels proposes to build a refinery there to produce 150,000 gallons of fuel a day for regional distribution.

The amendment to the county's comprehensive land use plan designates the site for heavy industrial use, a step that was required before rezoning can be sought.

Supervisors unanimously approved the new designation after some straying into what would ultimately be issues when the case does come up for rezoning.

The land use amendment process is just to determine the land use for a site, while rezoning will get into such issues as water, site configuration and safety measures.

Supervisor Casey Prochaska, who represents the east side of the county, made the motion to approve the amendment. She said that everything she has heard from area residents and farmers has been favorable to the planned refinery and that it is considered a good use of the land.

Supervisor Tony Reyes said that with any project of the magnitude of the refinery, there will be pros and cons and a number of concerns. However, he felt it was important to let Arizona Clean Fuels move to the next step.

"This is a very important project for the county," he said. "I personally would like to see it move forward."

While voting for the amendment, Supervisor Lenore Lorona Stuart promised she would have a lot of questions when Arizona Clean Fuels comes back to the supervisors with a rezoning request.

In the past, Greg Ferguson, board chairman, has opposed the refinery out of environmental concerns. However, he, too, cast a yes vote for the amendment.

This was the second time around for Arizona Clean Fuels to come before the supervisors with a land use amendment request. The first time was in late 2004 for the site first selected for the refinery.

After moving through the land use process, receiving an air quality permit from the Arizona Department of Environmental Quality and obtaining title to the property, Arizona Clean Fuels chose to move to an alternate site a couple miles to the east following a legal challenge by the Quechan Tribe over the environmental and cultural assessment of the original site.

Glenn McGinnis, president and CEO of Arizona Clean Fuels, has assured the supervisors that the planned refinery would be "the cleanest facility of its type" with additional controls planned as he goes through the application process for a reissuance of the air quality permit.

That wasn't assurance enough for Cary Meister, conservation chairman for the Yuma Audobon Society, who urged the board to deny the land use amendment.

He said the refinery will not reduce the nation's oil crisis, but it would negatively impact the area's environment and be a public health and safety risk. An additional concern, he said, is that the Barry M. Goldwater Range is the preferred route for a pipeline to carry crude oil from Punta Colonet to the refinery.

That also bothers Tom Manfredi, community planning officer for Marine Corps Air Station Yuma. At this time, he said, the part of the range considered for the pipeline is not used by airplanes to drop anything such as ordnance.

He said one concern he has is the plan to dig a 10-foot-deep trench to put the pipeline underground, another is to construct a road alongside it and a third is the use of helicopters to monitor the pipeline. In addition, he said, the pipeline would preclude use of that portion of the range for any bombing training in the future.

McGinnis responded that while that route is the preferred one because it would be the shortest, straightest line, it is not the only route being considered for the pipeline.

Arbitrator Rules Pasadena Refinery Deal with Petrobras America Valid

An arbitrator has ruled that Transcor Astra Group SA's deal to sell its 50% stake in a Pasadena, Texas, refinery to the U.S. unit of Brazilian state-run energy giant Petroleo Brasileiro (PBR) is valid, Petrobras said in a statement October 31.

"If the decision is maintained, Petrobras America Inc. and its affiliated companies will hold 100% of the company," Petrobras said. The sales price Petrobras will pay for the 50% stake in Pasadena Refining System held by Astra will be determined later, the company added.

Petrobras said the decision by the International Centre for Dispute Resolution was handed down Oct. 24.

According to Petrobras, the two companies were working together to transfer all operational, financial and managerial responsibilities for the refinery to Petrobras America. Petrobras acquired its current 50% stake in the refinery, which processes about 100,000 barrels a day, from Astra in 2006.

Astra filed a $787 million suit on July 1 in the Southern District Court of Texas, alleging that Petrobras agreed to purchase Astra's remaining 50% stake in the refinery for more $787 million in December 2007. According to the suit, Petrobras then attempted to back out of the deal. The deal was ready to close in March 2008, but wasn't completed because Petrobras demanded ongoing participation by Astra, Astra said. The two companies subsequently entered arbitration to resolve the dispute.

Valero Cuts FCC Feed at Pt. Arthur Refinery

Valero Energy Corp cut the flow of feedstock to a gasoline-producing fluidic catalytic cracking unit at its 325,000-barrel-per-day (bpd) Port Arthur, Texas, refinery on November 12, according to a notice filed with state pollution regulators.

"The unit experienced a swing in feed causing flaring," according to the notice filed with Texas Commission on Environmental Quality. "Feed to the unit was cut back until the unit became stabilized."

Husky Says Lima Hydrocracker Maintenance adds Throughput Capacity

Husky Energy Inc. said November 13 that recently-ended maintenance increased throughput by 5,000 barrels per day at the hydrocracking unit at its 160,000 bpd Lima, Ohio refinery, but the actual capacity of the unit was not expanded.

Husky said that by "de-fouling" the 20,000 bpd unit, throughput capacity was increased.

"We are anticipating that this regular maintenance of the hydrocracker may eventually increase overall flow-through of the refinery by 5,000 bpd, but it is not accurate to call this an "expansion," said Graham White, a spokesman for the company. "It is a normal result from this type of maintenance." he added.

Work on the unit began around October 18 and was completed in about 3 weeks.

Whiting Refinery’s $3.8 Billion Project Moves Forward Despite Lower Crude Prices

Whiting / BP is moving full speed ahead with the Whiting Refinery's $3.8 billion project to process heavy Canadian crude oil from Alberta tar sands despite the recent downward spiral in the price of crude.

The project was announced in 2007 when crude oil was selling at more than $60 a barrel. But as crude oil prices dropped, concern about the feasibility of the project rose.

Several oil industry analysts have said that with oil in the $50-per-barrel range, some operations on the tar sands could become unprofitable. That's not the case with the Whiting Refinery project, BP corporate spokesman Scott Dean said November 17.

"Basically, we test all our major projects against a number of different scenarios including crude oil prices," Dean said. "This is a long-term project, and we take a long-term view. We analyzed the project at above and below that ($60 a barrel) number."

Crude oil closed at a 22-month low of $55 a barrel November 17.

The Whiting project won't begin producing until 2011, Dean said.

"If you look at history, you'll see the world continues to demand more both conventional and nonconventional forms of energy, including crude oil and natural gas," he said. "Traditional volumes of oil and gas won't fill the demand. We base our plans on this long-term view."

Ron Planting, analyst for the American Petroleum Institute, said even though the price of oil affects certain projects, he doubts any companies based projects on the peak crude oil price of $145 a barrel.

"Oil prices are very volatile, and companies know they're going to go up and down. And they plan on those viable for the long-term period," Planting said. "(BP Whiting Refinery project) will help diversify our North American fuel supply."

BP has said, the four-year Whiting project is expected to help the country reduce its reliance on the oil supply from the Middle East by allowing BP to refine heavy Canadian crude from the oil sands of Alberta -- where an estimated 1.4 billion barrel reserve awaits.

Currently, 10 percent of the nation's fuel supply is being imported because the U.S. refining capacity lags the amount it consumes. The project would increase Whiting gasoline production by 1.7 million gallons a day, BP officials have said.

As of now, 400 contractors are working on the project, a number that will increase by 1,000 in 2009, Dean said.

Big West Oil Refinery is Normal after Rupture

Big West Oil LLC, a unit of Flying J Inc., said its North Salt Lake City refinery in Utah is normal after a propane line linked to an alkylation unit ruptured November 18.

Process rates on the gasoline octane-boosting unit, reduced after the incident, have been restored, Joel Elstein, the refinery manager, said.

The Utah plant can process 30,000 barrels of oil a day, U.S. Energy Department data show.

Tesoro Plans Los Angeles Refinery Flare Work

Independent West Coast refiner Tesoro Corp. planned to tie-in the main flare header to a new flare gas recovery system at its 100,000 barrel per day Los Angeles refinery on November 17 and 18, a spokeswoman said.

"No unit operations or refinery throughputs will be affected," Sarah Simpson, Tesoro's vice president for corporate communications, said in a statement.

Tesoro warned Los Angeles pollution regulators of potential flaring from the refinery while the tie-in is being done.

Marathon fined $157,000 by OSHA

Marathon’s Texas City refinery and Houston operations were slapped with a $157,500 fine November 19 for a dozen serious safety violations.

The Occupational Safety and Health Administration said the fine was the result of a six-month investigation that began at the company’s Texas City refinery. The inspection was part of the agency’s National Emphasis Program.

OSHA said it found 12 process safety management violations it deemed serious. Those violations included shortcomings in the company’s evaluation of contractors, failure to inspect process equipment, including emergency safety valves, and failure to implement a safety instrument system.

A serious violation is one with the potential to cause death or serious injury that the company should have known to take measures against.

In addition, Marathon was cited four times for violations it had been previously cited for but did not address. The company was cited for failing to maintain accurate process safety information and inspection records for critical valves and emergency shutdown systems.

The agency did not specify which violations were specific to the Texas City refinery.

Exxon Restarting Baytown, Texas, Coker after Delayed Maintenance

Exxon Mobil Corp was in the process of restarting a flexicoker unit at its 567,000 barrel-per-day refinery in Baytown, Texas, after planned maintenance work that was delayed by Hurricane Ike, a spokesman said November 18.

"We are completing the turnaround work and are in the process of beginning a restart of the flexicoker," Russ Roberts, a spokesman for the refinery, told Reuters.

He declined to give the capacity of a unit, which is essentially a coker using proprietary technology, or to provide an estimate on how long it would take the unit to reach full rates.

The work began around two weeks after Hurricane Ike hit the Texas coast on Sept. 13, causing the shutdown of several refineries, including Baytown, he said.

"We were planning and preparing to start the turnaround before the hurricane ... Ike delayed the start of the work," the spokesman said.

ConocoPhillips Reports Maintenance on Borger, Sweeny ESPs

ConocoPhillips plans maintenance starting November 18 on the fluid catalytic cracker electrostatic precipitators at its 146,000 barrel-per-day Borger, Texas refinery, according to its filing with state regulators.

"Unit 29 precipitators (ESPs) are scheduled for maintenance from Nov. 18 to Dec. 2. During the maintenance, the opacity and particulate emissions may be high," ConocoPhillips stated in the filing with the Texas Commission for Environmental Quality.

The refinery, which is owned by Canadian oil sands producer EnCana Corp and ConocoPhillips, has been running at reduced rates as work on other process units including the coker continue, a ConocoPhillips spokesman said recently.

In a separate filing, the company said it will begin work on November 19 on the gasoline-making fluid catalytic cracker unit's electrostatic precipitator at its 247,000-bpd Sweeny, Texas oil refinery.

"The FCCU's electrostatic precipitator rapper manufacturer recommends adjustments of one set of rappers and work will begin tomorrow at 9:30 a.m.," it said in the Sweeny filing.

"All efforts will be made to operate the FCCU electrostatic precipitator in accordance with the refinery maintenance procedures," it added.

Company officials were not immediately available to comment on the latest filing.

2,000 Gallons of Gas Spills from Texas Refinery

More than 2,000 gallons of gasoline spilled November 28 from a tank at an eastern Texas oil refinery where a November 21 explosion and fire killed one worker and injured five.

The unleaded gas from Delek Refining Ltd. spilled into a creek, where firefighters set up a foam barrier to try to stop the spread. No injuries were reported.

Tyler Fire Department Chief Joey Wiggins said firefighters cleared the area after residents reported a strong gas smell. The refinery was closed at the time of the spill because Occupational Safety and Health Administration investigators are still trying to determine the cause of the Nov. 21 explosion and fire.

Delek was cited February 19 by OSHA for safety violations that included failing to ensure valves were properly configured and an inability to show structures followed blast resistance guidelines.

Spokeswoman Susan Morgenstern said the company had no further details on the spill.

The refinery, which employs about 270 people, has a capacity of 60,000 barrels per day and is the 94th-largest oil refinery in the U.S., according to the U.S. Department of Energy.

CANADA

Flint Energy Services Wins $50 Million Contract at Shell Canada's Scotford Complex

Flint Energy Services Ltd announced November 20 that its 50 per cent owned joint venture company, FT Services, has been awarded a contract with an approximate value of $50 million over its two-year term to provide turnaround management and execution services to Shell Canada Limited (Shell) at the Scotford Complex, Fort Saskatchewan, Alberta.

"FT Services was chosen for the contract due to our world-class asset management capabilities currently used by existing clients across Canada," said Andy Mackintosh, President and CEO, FT Services. "This is FT Services' first Edmonton-based contract which is significant both as a strategic growth center and our third prestigious client in the Canadian oil and gas industry," he added.

With staffing currently underway, the agreement commenced effective November 1, 2008. This is a performance-based, risk and reward type of contract based on achieving performance targets set with Shell. FT Services will implement the One Team approach, where all companies involved, including the client, work as one team to achieve a common goal of operational excellence.

Bill Lingard, President and Chief Executive Officer of Flint Energy Services said, "We are very pleased to have been selected by Shell Canada for this work at the Scotford Complex. This demonstrates FT Services' business model offers significant value to our customers."

BRAZIL

Petrobras to Make Decision on New $30 Billion Refineries at Year End

Brazilian state-run energy giant Petroleo Brasileiro (PBR) will make a concrete decision on the construction of two premium fuel refineries in December, the company's downstream director said November 4.

Petrobras' Paulo Roberto Costa told a local news agency that the final decision on the $30 billion refineries will be included in the company's 2009-2013 strategic plan, which was delayed until December.

"Only then are we going to have something definite," Costa said.

Costa, however, was adamant that construction of the two refineries - which will export high-quality diesel and jet fuel to the U.S. and Europe - will go forward.

"They are not going to be canceled," Costa said.

According to Costa, the ongoing global financial crisis has caused Petrobras to move cautiously in evaluating its investment plans. Two refineries currently under construction, the Comperj petrochemical complex in Rio de Janeiro and the Abreu e Lima refinery in Pernambuco, were guaranteed to be built, Costa said.

Petrobras is in the midst of an effort to expand its refining capacity to 3.6 million barrels a day by 2015. The company currently processes about 1.9 million barrels a day.

COLOMBIA

KBR to Upgrade FCC Unit at Colombia Refinery

KBR has announced that it was awarded two contracts by Refineria de Cartagena S.A. ("Reficar") to provide technology licensing and related services to upgrade its Cartagena refinery's fluid catalytic cracking (FCC) unit. Reficar is a joint venture between Ecopetrol S. A., the national oil company of Colombia, and Glencore International AG.

KBR will provide proprietary licensed technology as well as detailed design engineering and procurement services for the project. Work on the project is expected to begin immediately.

"Since 1967 KBR has partnered with the Colombian refining market, delivering solutions in the downstream and FCC technology markets," said John Quinn, President, Downstream for KBR. "We look forward to once again demonstrating our expertise in this market to successfully deliver technology and design within a complex refinery revamp project."

The Cartagena Refinery is located in the industrial zone of Mamonal of the Cartagena Bay, 30 minutes to the west of the Cartagena city on the northern coast of Colombia. Its location creates a strategic advantage because the Refinery has access to the Gulf Coast and Caribbean markets by the Atlantic Ocean, as well as to the center of the country market by river through the "Canal del Dique" and by existing pipelines.

Foster Wheeler Wins Major Refinery Upgrade Contract in Colombia

Foster Wheeler Ltd. announced November 14 that two of its subsidiaries, Foster Wheeler USA Corporation and Process Consultants, Inc., part of its Global Engineering and Construction Group, has been awarded a front-end engineering design (FEED) and project management consultancy (PMC) contract by Ecopetrol S.A. for the Barrancabermeja Refinery Upgrade Project in Colombia.

Foster Wheeler will include the FEED award, approximately 30 percent of the total contract value, in its fourth-quarter 2008 bookings. The full PMC scope will not be booked until the project is approved to proceed into the engineering, procurement and construction phase.

The project will increase refining capacity from 250,000 barrels per stream day (BPSD) to 300,000 BPSD, add heavy crude processing capability, and provide a processing configuration to meet the projected 2013 Colombian clean fuels product specifications. The scope includes the following new units: a crude unit, delayed coker, hydrocracker unit, coker naphtha hydrotreating unit, hydrogen unit, sour water strippers, amine regeneration unit, and sulfur recovery unit, plus associated utilities and offsite units. The project will also include revamps to the diesel hydrotreater, gasoline hydrotreater and dismantling of two existing atmospheric and vacuum distillation units. In addition, the contract includes the procurement of long-lead items.

"Foster Wheeler is pleased to be working with Ecopetrol on this major upgrade," said Troy Roder, chief executive officer of Foster Wheeler USA Corporation. "This award demonstrates Ecopetrol's confidence in the quality of our team, our in-depth refinery expertise, and our ability to execute large, complex projects. We look forward to building an excellent working relationship with our client's project team."

"Foster Wheeler has developed an innovative project execution strategy to expand our refining productivity in line with our strategic objectives," said Jose J. Pinto, the client's Refining and Petrochemical Project Manager.

COSTA RICA

China's CNPC Signs Costa Rica Refinery Deal

China National Petroleum Corp (CNPC), the parent of PetroChina, said it has signed an agreement with Costa Rica's state-run Refinadora Costarricense de Petroleo (Recope) for a joint venture refinery.

The deal was signed during President Hu Jintao's visit to Costa Rica, CNPC said in a statement.

The 25-year agreement calls for the expansion of the Moin refinery in Costa Rica and the launch of feasibility studies for a new refinery with an annual capacity of 10 mln tons.

After the expansion, Moin's crude processing capacity will rise to 3 mln tons from the current 1.2 mln.

No financial details were provided. The venture represents CNPC's first oil and gas venture in Costa Rica, it added.

ASIA

CHINA

PetroChina may Set up 200,800 bpd Refinery in Chongqing

PetroChina Co Ltd, the country's largest oil and gas producer, is reportedly planning to set up a refinery with daily processing capacity of 200,800 barrels in southwest China's Chongqing Municipality, sources reported, citing a local newspaper report.

According to an official with the Changshou Chemical Zone in Chongqing, PetroChina has completed the feasibility study and environmental research of the project.

The project now waits for the approval from the State Council, said the official, adding that the new project is also expected to boost the automobile, textile and steel industry in the zone.

Earlier this year, PetroChina was approved to build an oil refinery with annual processing capacity of 10 million tons in northeastern Liaoning province.

INDIA

HPCL-Mittal Energy Promoted Refinery at Bathinda to Start by 2011

The Rs. 18,900 crore Guru Gobind Singh Refineries Ltd (GGSRL), being commissioned at Bathinda by a HPCL-Mittal Energy Ltd JV, is expected to be operational by February, 2011 instead of 2012 said an official release issued November 19 by a visiting high level delegation of GGSRL led by CEO Prabh Das in a meeting with Punjab Industry Minister Manoranjan Kalia .

Prabh Das assured the minister that the orders for the critical equipment required for the project had already been placed. He said that the implementation of the project would be monitored by the top management periodically to ensure its completion within the stipulated time frame.

The 9 mn metric tonne per annum refinery would be a zero bottoms, energy efficient, environmentally friendly, high distillate yielding complex refinery that would be producing clean fuels and 80 units of polypropylene by processing heavy and acidic crudes, the release said.

During the course of the meeting, the minister said that the project, which would make Bathinda one of the major petrochemical hubs in Asia, would generate adequate employment in Punjab besides, realizing massive economic and vocational synergies for the region.

The refinery would also produce high value added products such as polypropylene, food - grade hexane and solvents in addition to LPG, naphtha, petrol, diesel aviation, fuel etc.

Larsen & Toubro Wins Major Refinery Order from India

Larsen & Toubro has secured a major order valued over Rs. 700 crores from HPCL – Mittal Energy Limited (HMEL), a joint venture of Hindustan Petroleum Corporation Limited and Mittal Energy Investments. The project order involves setting up two 44000 TPA capacity Hydrogen Generation Units (HGU) for HMEL's grassroots refinery in Bathinda, Punjab. The plant will be designed for operation with 'straight run naphtha' and DHDT naphtha as feed stock. The 9 million tonnes per year refinery will generate products that meet EURO IV specifications.

The order for the HGU has been awarded to L&T on a Lump Sum Turnkey basis, affirming customer confidence in L&T's integrated capabilities to execute critical sections of refineries. Denmark-based Haldor Topsoe has been selected by HMEL as the process licensor.

L&T's scope of work includes residual process design, detailed engineering, procurement, supply, transportation, storage, fabrication, inspection, construction, installation, testing, mechanical completion, pre-commissioning and commissioning.

The order was won by the Chemical Plants Business Unit of L&T's Engineering & Construction Division. Secured against competition from global EPC contractors, the HMEL order augments L&T's long track record in the mid and downstream hydrocarbon sector. Over the years, L&T, India's largest technology, engineering and construction company, has executed critical sections of several refineries in India, South East Asia and the Gulf on a complete Engineering-Procurement-Construction basis. Recently, L&T completed a lube base oil project in Malaysia. The refineries in India and abroad have conformed to exacting hydrocarbon quality requirements, while meeting stringent delivery schedules.

The HMEL refinery order is among the number of orders won by L&T recently in key growth sectors of the economy, including infrastructure -- airports, ports and mass rapid transport systems for cities. In addition to the hydrocarbon sector -- upstream and mid and downstream -- L&T's Engineering & Construction Division has engineered, manufactured and delivered world-class plant and equipment for power stations and cement and allied machinery projects.

THAILAND

Thai Refiner Delays Expansion Due to Financial Crisis

Thai refiner and petrochemical firm IRPC is reviewing a $1.5 billion investment plan and has delayed a refinery expansion to 260,000 barrels per day due to the global financial crisis, its chief executive said.

IRPC is one of the first to shelve expansion plans in Asia since crude oil prices began falling in July.

The tumble in global crude prices from records above $140 a barrel in July to around $60 has also prompted IRPC to cut its run rate by 10,000 barrels per day to about 160,000-170,000, Chief Executive Piti Yimprasert told Reuters.

"We have to review our plan because it's not easy to finance the project," Piti said, adding another factor was that refinery profit margins were under pressure from falling oil prices.

"All refineries should suffer from huge stock losses after the sharp drop in crude prices. It's not only stock losses from crude, but also includes refined oil products," he said.

The company is one-third owned by top energy firm PTT PCL. Analysts expect IRPC to report a net loss of as much as $126 million (4.4 billion baht) in the July-September quarter mainly due to stock losses caused by falling crude prices.

The financial turmoil has put pressure on the global economy and energy demand, and it could take two or three years for the world economy to recover and oil demand to improve, Piti said.

"We are in a recession. What worries me is that it's probably just the beginning. If the world is like an ocean, our country is like a small ship. We have to go more carefully to sail through the crisis," he said.

Domestic oil consumption is expected to fall 30 percent from current levels. Another factor weighing on demand is the government's promotion of alternative fuels such as liquefied petroleum gas and natural gas for vehicles, he said.

IRPC, which had no major shutdowns this year, expected to produce 170,000-180,000 bpd in 2008, down from 189,000 bpd in 2007, he said.

Next month, the company expects to finalize a $286 million (10 billion baht) loan from domestic banks for smaller projects such as a power plant, Piti said.

"We are concerned that the system will run out of cash. We want to make sure we have enough cash," he said.

IRPC, which also operates olefins and aromatics petrochemical plants, will decide in the next two months whether it will go ahead with its $70 million plan to expand plastic pellet capacity, he said.

IRPC, formerly Thai Petrochemical Industry, was Thailand's largest corporate debt defaulter after collapsing under a mountain of foreign debt in the 1997/1998 Asian economic crisis.

It has focused on improving efficiency and cutting costs since it completed a $2.7 billion debt restructuring in 2006.

Piti declined to give a specific earnings forecast for this year. But he said if oil prices remained stable at $50-60 a barrel, refineries could start to recover from December.

At 0737 GMT, IRPC shares were down 6.31 percent at 2.08 baht while the main Thai index was 2.55 percent lower.

So far this year, the stock has fallen 66 percent, underperforming a 54 percent drop for the overall market.

EUROPE / AFRICA / MIDDLE EAST

FRANCE

Total Cuts Gonfreville Refinery Run 10 Percent

French oil major Total has reduced runs at its Gonfreville refinery by 10 percent, industry and trade sources said on November 19.

The sources did not specify when the run was reduced.

The sources said the run cut was meant to reduce gasoline due to weak import demand from the United States.

One industry source also said the refinery in France has shut some units related to making gasoline.

The Gonfreville refinery, a complex plant, has the capacity to process about 328,000 barrels of crude oil per day.

A Total spokesman declined to confirm the run cut, saying "it is business as usual."

The spokesman was unable to confirm at what capacity the plant is currently operating.

Some oil traders said the run cut at a complex refinery came as surprise because it is normally only simple plants that reduce operation. They also said weak gasoline demand was cutting into oil refiners' profits.

Gasoline's value to crude oil has remained negative and many refiners are seeing losses by making the motor fuel, due to weakening demand amid global economic slowdown.

The futures and derivatives markets suggest gasoline may remain cheaper than crude oil for at least several months. Gasoline, traditionally, is the more profitable product.

Other refiners, which have reduced runs due to weak margins, include Petroplus simple plant at Teesside in the UK.

GERMANY

Aker Solutions Wins German BP Refinery Contract

Aker Solutions has been awarded a five year framework contract by Deutsche BP AG for the provision of engineering and construction management services at its Erdol-Raffinerie Emsland (BP - Lingen) production facility in Germany.

Norbert Kleine-Eggebrecht, Business Unit Leader at Deutsche BP, said: "The added value created from the improvement projects will serve to increase capital efficiency and support the implementation of our capital and revenue expenditure plans over the next five years."

"Aker Solutions' experience of working with BP at Gelsenkirchen and in other long-term alliance contracts positions us well to build upon our knowledge of local site processes and, to ultimately deliver quality services and capability," said Johan Cnossen, President, Aker Solutions' process business.

"This agreement provides the foundation to build a successful, long-lasting working relationship built upon mutual co-operation. Our common goal is to achieve continuous improvement. And, through our Project Execution Model and proven technology experience, we look forward to supporting BP Lingen in achieving its targets," he added.

Typical projects will cover expansion projects; revamp; support for HSE management, turnaround management and permitting; plus implementation of environmental legislative requirements; debottlenecking; as well as maintenance-driven projects. Project scope will extend across option development, feed studies, engineering, construction management and commissioning support.

The refinery first commenced operation in 1953, and its crude oil refining capacity today totals around four million tpa. Output consists mainly of petrol and diesel, jet fuel, light heating oil, chemical precursor products for regional consumption and for customers based both in Germany and in the neighboring Netherlands. The company's products are sold via BP, ARAL and BP Refining & Petrochemicals GmbH.

Aker Process GmbH is the legal entity responsible for the execution of the contract.

BP-Lingen, which belongs to a group of fuel refineries with substantial processing depth, makes petroleum products from crude oil and other feed stocks. Additionally this modern refinery has been configured to be well suited for the production of petrochemical intermediate products. It is considered one of Europe's leading conversion refineries. The refinery's nominal crude oil processing capacity is approximately four and a half million tons annually, of which approximately one-forth is German Inland crude, mainly from the oilfields in the surrounding Emsland region.

THE NETHERLANDS

Shell Dutch Refinery to Restart after Maintenance

Royal Dutch Shell was expected to restart oil units at its Pernis refinery in the Netherlands on November 18 if there are no further delays, trading sources said.

Shell shut three refining units, including one crude distillation unit (CDU), in mid-September for planned maintenance, which was to be completed in early November.

But earlier this month, the trading sources said the restart of the CDU, which can process about 200,000 barrels of crude oil per day, was delayed by two weeks to November 17.

Normally, oil traders consider a one day delay as minor, with little impact on the market.

Shell declined to comment.

The total capacity of Pernis is 412,000 bpd and it is the largest oil refinery in Europe.

A fluid catalytic cracker at Pernis, which was unexpectedly shut in late September for a mechanical problem, would be restarted around the same time, the trading sources said.

Shell Says EU Carbon Plan may Harm Pernis Refinery’s Global Competitiveness

European Union plans to tighten carbon trading rules after 2012 risk damaging the global competitiveness of Royal Dutch Shell's Pernis refinery, a Shell executive said. Rob Routs, Executive Director of Downstream (oil products and chemicals), said the oil major was concerned about the consequences for Europe's biggest oil refinery if the EU pursued its plans without the United States and China on board.

"We're asking Brussels for a level playing field," Routs said in an interview with Dutch daily Het Financieele Dagblad.

"If our refinery in Pernis will have to pay for every tonne of CO₂, while that is not the case for our competitors in the United States or China, then that damages the competitive position of Pernis."

The EU is working on a deal to fight climate change, which includes proposals to force carbon dioxide (CO2) emitters to buy permits for their greenhouse gas emissions from 2013 at auction.

The European Commission aims to tighten the carbon emissions trading scheme (ETS), the bloc's central tool to protect the climate, as part of EU efforts to cut greenhouse gas emissions by 20 percent by 2020.

Routs emphasized that Shell's 412,000 barrels-a-day Rotterdam-based refinery remained one of the company's flagships. But he said the firm had still not made a final decision on a plan to modernize the plant.

The company has said it plans to shift the focus of Pernis towards wider exports and away from traditional markets, and that it is considering investing €1 billion ($1.3 billion) in the refinery over the next five to seven years.

ANGOLA

KBR Wins Angola Refinery FEED Contract

KBR announced on November 5 that it has been awarded a contract by Sonangol, E.P. to provide front-end engineering and design (FEED) work for its Lobito refinery, located in Lobito, Angola.

The contract award marks an important milestone in Sonangol's progress towards its goal of building and operating a grassroots refinery facility in Angola. The Lobito facility will process heavy crudes and reduce the need to import petroleum products in the area. Work is expected to begin immediately.

"KBR is a market leader in the sub-Saharan region, and we look forward to providing our expertise in petroleum refining to help Sonangol reach its goals," said John Quinn, President, Downstream, for KBR. "Building on our long-standing relationship with Sonangol on the Lobito project, KBR is committed to designing a world-class grassroots refining facility in Angola."

LIBYA

Foster Wheeler Wins Libya Refinery Contract with Total Facility Cost Investment of $4 Billion

Foster Wheeler Ltd. announced October 30 that its Milan-based subsidiary Foster Wheeler Italiana S.p.A., part of its Global Engineering and Construction Group, has been awarded a contract by Zwara Oil Refinery Company Limited (ZORCO) for consultancy and project management services for a planned new 200,000 barrels per stream day crude oil refinery at Mellita, near Zwara, in the Great Socialist People's Libyan Arab Jamahiriya. ZORCO is a project company in which Tamoil Africa Holdings Ltd. holds the equity.

Foster Wheeler scope under the contract includes the optimization of the refinery configuration, the selection of the licensors and the front-end engineering design (FEED), including preparation of a cost estimate. Foster Wheeler will also prepare the tender documents for the engineering, procurement, construction (EPC) phase, will assist ZORCO in selecting the EPC contractor(s) and will act as project management consultant during the EPC phase.

Foster Wheeler's contract value for the study and FEED phase will be included in the company's fourth-quarter 2008 bookings. The remainder of Foster Wheeler's project scope will not be booked until the project receives approval by ZORCO to proceed into the EPC phase. The refinery is planned to be completed in 2014.

The planned new facility, with an estimated total investment cost of about $4 billion, includes a state-of-the-art facility aimed at producing premium quality gasoline, jet fuel and diesel with minimal fuel oil production, and related utilities, offsites and marine facilities.

"We are indeed extremely pleased to be awarded this prestigious contract by ZORCO," said Marco Moresco, chief executive officer, Foster Wheeler Italiana. "We have strong roots in Libya and we look forward to leveraging our in-depth refinery expertise to build on the excellent working relationships established in the past."

"This is a flagship project in North Africa requiring deep technical knowledge, experience and flexibility," said Ali Shamekh, chairman, ZORCO Ltd. "We are very pleased to award the contract to Foster Wheeler Italiana and we will join forces for the successful implementation of the Project."

MOZAMBIQUE

Shell Global Solutions to Conduct Study for 350,000 bpd Mozambique Refinery

The Mozambican company Oilmoz, which plans to build an oil refinery in the southernmost district of Matutuine, has signed an agreement with Shell Global Solutions, part of the Shell energy group, to carry out a configuration and feasibility study for the refinery.

According to an Oilmoz press release received by AIM, This study should help Oilmoz arrive at "an optimum configuration for the refinery, keeping in view the future projected demand/supply scenario and environmental regulations."

Shell will also draw up a "Basis of Design" for the refinery, which is intended to produce 350,000 barrels of refined fuels a day. This will form the basis for the development of design packages for the refinery construction project.

The releases cited Ed Daniels, the sales and marketing Vice-President of Shell Global Solutions, who said "Our mission for Oilmoz is to enable a robust and sustainable operation, from day one, with world-class performance. We know from our history of projects like this the importance of a safe implementation, a smooth start-up, assurance of integrity and reliability of the assets for a sustainable production over the life cycle of the project."

The Oilmoz chairperson, former foreign minister Leonardo Simao, said "We believe in Shell Global Solution's expertise and long-standing experience in similar large projects. We look forward to building this relationship and are certain that Shell will help us achieve operational excellence."

Further discussions between Oilmoz and the Shell Group are under way, including on the supply of crude oil, management and know-how, and technical advice throughout the project.

SOUTH AFRICA

S. Africa’s Engen Closes Refinery after Fire Causes $4.92 Million in Damages

South Africa's Engen crude oil refinery will be shut for three to four months after a fire destroyed the main processing unit, causing damage of about $4.92 million, a spokesman said November 14.

"It could be anything from three to four months," Herb Payne told Reuters.

"I don't know when we will have a better estimate of the time as a lot of it relates to sourcing of equipment from abroad."

Payne said the cause of the fire was still unknown. "Official investigations are still proceeding, but we reckon it was mechanical," he said.

The refinery in Durban on South Africa's eastern coast, which has a capacity of 135,000 barrels per day, was shut after fire broke out at the plant and burned for three hours before being put out.

The ``hot crude unit'' was ``partially damaged'' and the ``units that are still on line will be shut down over the coming days,'' spokeswoman Tania Landsberg said. Fixing the damage will take months, she said.

South Africa imports about 13 percent of its refined fuel needs because it doesn't have enough refining capacity. State- owned oil and gas company PetroSA has announced plans to build a 400,000 barrel a day refinery in response to government calls to cut dependence on imported fuel. Fuel demand is growing between 4 percent and 5 percent annually.

``In the short-term, with the country's 20-day strategic stocks, it will be fairly easy to make sure we don't run out of fuel,'' Cornelis van der Waal, head of energy research at Cape Town-based consultant Frost & Sullivan, said by telephone. ``There might be some tightness in supply in the medium term, but in the longer term, if they act quickly'' there should be no negative impact, he said.

Finding fuel that meets with South Africa's emission quality standards may also prove difficult, he said. The weakening global demand may make it easier to find additional fuel from the Middle East and Singapore, he said.

Engen provides about 20 percent of South Africa's refined fuel and has sufficient supplies to last two weeks, said Landsberg. The refinery also had a fire at its storage tanks in November last year.

Petroliam Nasional Bhd, Malaysia's state-owned oil company, owns 80 percent of Engen.

South Africa's largest refinery, also in Durban, is a joint venture between BP Plc and Royal Dutch Shell Plc.

RUSSIA

Ryazan Oil Refinery Commences Euro-5 Diesel Production

Ryazan Oil Refinery Company, a closed joint-stock company incorporated in TNK-BP, started output of diesel fuel of class Euro-5 with a sulfur content of no more than 10 ppm. According to TNK-BP, this fuel meets the latest worldwide ecological standards.

This product was first put out on October 7, and the first lot was supplied to customers on October 16.

A total of 85,000 tons of this new diesel fuel was produced in October 2008, and 144,000 tons will be produced in November.

Implementation of the project for reconstruction and upgrade of production facilities for production of diesel fuel with improved ecological characteristics began a little more than a year ago. Investments into this project amounted to approximately $50 million.

"Ryazan Oil Refinery Company is one of the first oil refineries in Russia and the only company of TNK-BP capable of producing Euro-5 diesel fuel. For European customers, this fuel is a high-quality product complying with all worldwide quality requirements," says the report of the company.

IRAN

Iran Gives 80 Percent of Refinery to Foreign Investors

On the basis of an approval by the Islamic Consultative Assembly [the Majlis], the private sector will contribute to 80 percent of the building of a refinery in Khuzestan.

The contractor of the refinery in Khuzestan said that US$3.5 billion will be invested in the building of the refinery. He said over $2.8 billion dollars of the investment will come from the private sector.

Zali [the contractor of the refinery] said the priority for the building of the refinery would be given to foreign investors because they bring foreign currency to the country, and added: The refinery, with the capacity of 180,000 b/d, will be constructed and fed with very heavy crude oil from Azadegan and Yadavaran oilfields.

He said the refinery was being built to refine ultra-heavy oil and produce petrol, jet fuel and diesel oil, and added: The refinery would be built in an area of 500 ha in three years.

IRAQ

Iraq Opens New Oil Refinery to Meet Growing Demand

Iraq has opened a new oil refinery in the southern province of Qadisiyah to meet increasing demand.

The refinery's senior engineer, Hussam Ali Jalmod, says the refinery opened November 14 and planned start-up production a few days later.

He says the plant's initial capacity is 10,000 barrels per day. It plans to double that by mid-2009.

Iraq has the world's third-largest oil reserves, totaling 115 billion barrels. But it suffers acute refinery shortages following years of U.N. sanctions and war.

The country currently refines just over 400,000 barrels per day at three main refineries and handful of smaller ones.

Qadisiyah province is 80 miles, or 130 kilometers, south of Baghdad.

SAUDI ARABIA

Economic Downturn Unlikely to Affect Saudi Aramco Mega-Projects

The current global economic downturn will not impede Saudi Aramco mega-projects, Khalid G. Al-Buainain told a group of 300 energy industry professionals. In fact, a slowdown may actually have benefits from the standpoint of easing tight construction supplies.

Al-Buainain, Saudi Aramco's senior vice president of Refining, Marketing and International, made the remarks during a recent meeting of the Society of Petroleum Engineers.

"When it comes to our new crude-oil increments and gas expansion projects, the impact of the present economic turmoil will be minimal," he said. "By and large, our upstream projects are self-financing, or 'corporate financed,' meaning that we are not reliant on the banks or credit institutions to finance our expansion programs. However, the need to bring in additional volumes of oil in a contracting market will be examined carefully."

Saudi Aramco, he said, will continue to support the Kingdom's position as the world's swing producer. "Of course, we already possess substantial spare crude-oil production capabilities, in keeping with the Kingdom's longstanding commitment to maintain 1.5 to 2 million barrels per day in spare capacity," he said.

Softening demand means an extra cushion for project timetables and more flexibility in production, he added.

The company also is involved in several joint ventures with international partners, from export refineries to petrochemical projects, and Al-Buainain expressed optimism that they will be unaffected by the current global economic situation.

"I can tell you that our partners are still highly committed and anxious to see these projects move forward. I think it is realistic to say that financing these mega-projects through borrowing in a tight credit market will be a challenge," he said. "However, because of the uncertain nature of the global financial crisis, it is really too early to tell what sort of fallout there will be for the funding of these projects." He added that the economic viability of the projects is not in question.

The construction boom in the Middle East might cool off because of the slowdown in credit, putting Saudi Aramco in a more advantageous position. "Declining commodity prices that are a byproduct of the global economic slowdown will help to reduce the estimated price tags of these projects, as the cost of materials like steel and copper falls sharply."

Equipment and qualified personnel are also likely to be easier to obtain as other projects in the region are canceled or delayed, both in the industry and in the construction and infrastructure sectors. "As a result, short-term project economics may actually benefit from the current financial turmoil, and companies with a lot of cash will come ahead," Al-Buainain said.

He noted that Saudi Aramco has always based its operations on the long term. "The day-to-day noise generated by the markets doesn't matter very much when it comes to Saudi Aramco's project portfolio."

He said the cyclical nature of the oil market should surprise no one. "Short-term market volatility is nothing new to our industry; as the well-known energy analyst and historian Daniel Yergin has said, 'Cycles of shortage and surplus characterize the entire history of oil.' … These chronic boom-and-bust cycles are why successful petroleum enterprises view their activities as a marathon rather than a sprint, and why the oil business is not for the faint of heart or the short of breath. In fact, given the long lead-times involved in petroleum industry projects, we may actually be poised to catch the bounce as the global economy recovers, energy demand picks up, and our new facilities come on-stream."

Al-Buainain said most forecasts predict fundamentals that call for increasing volumes of energy for a continuously developing world.

"Even if the global economic recovery proves to be some way off, the only way these investments don't make good business and economic sense over their useful life spans is if you believe that rising economies like China and India will cease to grow, that the billions of people living in those markets will no longer want to enjoy a more prosperous and affluent lifestyle, that they are not interested in providing greater economic and social opportunities for their children, and that overall energy demand will somehow decrease even as the total population of the planet increases."

ConocoPhillips, Saudi Aramco to Delay 400,000 bpd Yanbu Refinery

The Houston energy giant and Saudi Aramco were set to build a 400,000 barrels-per-day export refinery at the Yanbu Industrial City after forming an equal-ownership joint venture in May 2006.

In May 2008 the two companies said they would begin solicitation of bids and site preparation work.

The bidding process now has been moved to the second quarter of 2009. The companies will continue joint engineering, start-up planning and other preparatory activities during the delay.

“ConocoPhillips remains committed to working with Saudi Aramco to complete the Yanbu Export Refinery Project,” Jim Mulva, chairman and chief executive officer of ConocoPhillips, said in a statement. “We believe that this short delay will allow the markets to adjust from the current uncertainties and provide a stronger basis for the long-term success of the refinery.”

SAUDI ARABIA / BRAZIL

Halliburton on Track with Manifa, Other Projects

Halliburton Co's national oil company clients, including Saudi Arabia's Aramco and Brazil's Petrobras, have so far not changed their 2009 spending plans with the oilfield services firm, company executives said.

In April, Halliburton said it had been awarded a three-year contract to help develop Saudi Aramco's massive $9 billion Manifa offshore project. The field is expected to have a peak capacity of 900,000 thousand barrels of oil per day, with first production targeted for 2012.

But a swoon in crude oil and natural gas prices has sparked talk that the project will be delayed or even canceled, a notion that Halliburton dispelled.

"The (Manifa) project is going, and we have not heard from Aramco anything different," Ahmed Lotfy, president of Halliburton's Eastern Hemisphere business, told Reuters on November 19.

Still, U.S. analysts who attended Halliburton's recent investor meeting said the company indicated the project would now be drilled over a longer period of time, a move that will likely pinch the company's 2009 revenue.

At Manifa, Halliburton has been contracted to help Aramco drill 93 wells offshore Saudi Arabia.

In Latin America Halliburton said national oil company customers Petrobras, Venezuela's PDVSA and Mexico's Pemex were also on track.

"It's one of our largest growth regions," Jim Brown, president of Halliburton's Western Hemisphere operations, said of Latin America. "Their 2009 plans have not changed at all at this point."

Halliburton said in January that it had won a three-year, $683 million contract from Pemex to manage the drilling and completion of 58 onshore wells in southern Mexico.

The sharp selloff in commodities and fallout from the global financial crisis, have prompted energy companies to adapt a more cautious stance on exploration and production spending.

Halliburton Chief Executive Dave Lesar said that he expected some speculative drilling projects to be delayed a year or two, and major projects that have already been started to proceed as planned.

McIlvaine Company,

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