A U.S. judge on October 7 said she lacks legal authority to rewrite BP Plc's proposed $50 million plea agreement with the U.S. government to resolve criminal liability for a deadly 2005 Texas refinery explosion despite victims' assertions that it is too lenient.

Nearly a year after a U.S. unit of London-based BP agreed to the largest U.S. criminal environmental fine ever paid, U.S. District Court Judge Lee Rosenthal is weighing victims' challenge to the plea deal stemming from the blast at BP's Texas City refinery that killed 15 people.

Victims accuse BP of failing to comply with orders by U.S. regulators to install new safeguards at the refinery, and say victims can claim $102 million in losses -- both reasons for Rosenthal to rewrite the plea deal or reject it outright.

"Unless the court acts, it is highly probable that more people will be killed," said David Perry, an attorney representing the victims.

"I can't make that plant safe," Rosenthal said, holding that she can only accept or reject BP's plea deal as written.

BP said $93 million of victims' monetary damage claims are based on future earnings losses that are an unreliable measure and should not be counted. BP has a "carefully crafted, carefully designed schedule" for safety improvements at the plant, said Carol Dinkins, an attorney representing BP.

Rosenthal did not indicate when she would rule, and is reviewing the deal after a U.S. appeals court ruled in May that it violated victims' rights because surviving victims were not consulted until after the deal was struck.

If she accepts victims' claims and rejects the deal it would be a significant setback for both BP and the Justice Department.

U.S. Justice Department attorneys said BP has complied with safety directives from the U.S. Occupational Safety and Health Administration and state regulators and urged Rosenthal to approve the deal.

However, Daniel Dooher, a federal trial attorney, insisted that "the United States is not here to defend BP on any level."

"BP can take care of itself," Rosenthal replied.

Rosenthal said she wished she had the legal authority to rewrite the deal to require BP to spend money to "meet or exceed every regulation" at the plant -- site of the deadliest U.S. industrial accident in more than a decade.

But the judge said her legal authority "does not include rewriting or trying to strike a better deal than the parties have presented."

The March 23, 2005, explosion happened when a cloud of volatile hydrocarbon vapor ignited around portable work trailers after being released by an octane-boosting unit during a restart.

BP has accepted responsibility for the blast and set aside more than $2 billion to settle lawsuits.

NACE Report Reveals Refinery Corrosion Causes $12 Billion Lost Profit

Petroleum remains the largest source of energy for the United States, and the nation's refineries represent nearly a quarter of the global production. In response to the rising cost of petroleum and the impact of corrosion on our infrastructure, NACE International released a gap analysis report on refinery corrosion.

The "Petroleum Refinery Gap Analysis" cites the benchmark 2002 Federal Highway Administration (FHWA) and NACE-sponsored study, "Corrosion Costs and Preventive Strategies in the United States," which estimated that corrosion costs refineries $3.7 billion annually. Of this amount, plant turnarounds, or outages for maintenance, cost $1.4 billion.

The cost of corrosion also impacts refineries' production capacity and profitability. The gap analysis report estimates profit loss ranging from $2 billion to $12 billion for ceasing production to perform maintenance.

After a review of 82 corrosion issues unique to the refining industry, the gap analysis report identified four specific technology needs for the industry, which, if addressed, will directly reduce these costs.

The four technology gaps identified in the report include corrosion knowledge management, corrosion prediction and modeling, corrosion damage assessment, and new materials. Identified within these gaps is the need to invest in corrosion prevention strategies, modeling and monitoring tools that predict corrosion rates, updated standards, and corrosion-resistant coatings.

"Though efforts to manage corrosion are performed at the operations level, executive levels of management may not fully realize the implications of corrosion until they see the bottom line," said Tony Keane, Executive Director of NACE International. "This report quantifies the costs of corrosion to help financial decision makers justify corrosion mitigation programs. By minimizing corrosion, U.S. refineries can sustain or increase the current production of petroleum products to meet the escalating global demand, reduce costs, and minimize lost profit."

The complete "Petroleum Refinery Gap Analysis," commissioned by the NACE Technical Coordination Committee (TCC), is available at www.nace.org/gapanalysis. A summary of the 2002 report, "Corrosion Costs and Preventive Strategies in the United States," is also available on the NACE Web site at www.nace.org/corrosioncoststudy.

NACE International is a professional association dedicated to promoting public safety, protecting the environment, and reducing the economic impact of corrosion. Established in 1943, NACE International has more than 20,000 members worldwide and offers technical training and certification programs, sponsors conferences, and produces industry standards, reports, publications, and software.

One Old, One New U.S. Oil Refinery Plans in the Works

The United States hasn't built an oil refinery on a new site in more than 30 years, but a pair of projects eyeing out-of-the way corners of South Dakota and Arizona are slowly working their way up to the big leagues.

The journeyman is Arizona Clean Fuels Yuma, a $3 billion, 150,000-barrel-a-day refinery first pitched for the middle of the Arizona desert more than a decade ago. Officials who have worked through years of siting, permitting and financing delays are now hoping to have the plant up and running by 2012.

The rookie is the Hyperion Energy Center, a $10 billion, 400,000-barrel-a-day facility looking at a tract of pristine farmland in southeast South Dakota for operation in 2014.

Both want to process thick, high-sulfur crude extracted from the Alberta oil sands of northern Canada into gasoline and diesel, but they face an uphill battle as the refining industry typically grows through expansion.

"It's been more cost-effective to expand than to build new, and it makes sense because you have a lot of the existing infrastructure in place," said Cindy Schild, refining issues manager for the American Petroleum Institute.

But the shift toward tar sands oil could create a niche opportunity - especially at a Midwest site reasonably close to the Canadian border - to streamline the movement of crude and refined products, said Mary Novak, managing director of energy services for Global Insight.

"And it's probably a very limited opportunity, which is why like one refinery might make it," Novak said.

Dallas-based Hyperion Resources found its opportunity in southeast South Dakota, which is close to major markets, rail and highway transport and an abundant water source, the Missouri River. The privately owned company also touts South Dakota's "excellent business climate."

Hyperion, with the help of South Dakota economic development officials, spent about a year courting support from city, county and business leaders as it sought to have Union County rezone nearly 3,300 acres of farmland for its facility.

Realizing an oil refinery would face strong "not in my backyard" opposition from the rural precincts around the site, proponents campaigned hard for a June referendum in the state's more populated southeastern tip by touting the promise of 1,800 permanent jobs.

The argument resonated well in North Sioux City, once the corporate and manufacturing home to computer-maker Gateway Inc. until an industry-wide slump in the early 2000s led to significant job cuts. Voters there approved the rezoning request by a 73 percent margin, and support was even higher, 81 percent, around the wealthy planned community of Dakota Dunes.

Those numbers led Hyperion to a 58 percent election-night victory, and the company now has its sights set on final approval of an air quality permit application given initial approval by the South Dakota Department of Environment and Natural Resources.

Preston Phillips, a Hyperion executive, said that its application contains many self-imposed restrictions and that the refinery will rank among the cleanest and most environmentally friendly in the world.

Getting that permit would be a huge step, Novak said, as local support and an air quality permit are a refinery project's biggest hurdles.

"The rest of the permitting process is probably a little bit easier," she said.

That's typically true, said Denny Larson, a California-based environmental advocate working to clean up U.S. oil refineries, but he expects the Hyperion project to receive more federal scrutiny than usual.

In permitting a refinery, a state agency must require certain Environmental Protection Agency floor protections as required under the federal Clean Air Act, and Larson believes that process is being rushed.

He said it's no accident Hyperion picked South Dakota, which has never had a refinery nor developed a regulatory structure.

"Expect things to go rapidly at the South Dakota level, but then there's going to be challenges and lawsuits that are going to slow things down," Larson said.

Kyrik Rombough, natural resources engineering director for the state environmental agency, said although South Dakota has never permitted an oil refinery, it regularly deals with emission and air toxin issues. He said that, as with any new industry seeking a permit, it just takes a little more time to research and get familiar with terminology and operations.

"We have engineers and scientists on staff that can review it," Rombough said. "They understand the concepts. It just takes a little more time to get familiar with that and then move forward."

Valero Reveals FCC Snag at McKee Refinery

Valero Energy Corp's gasoline making fluid catalytic cracker at the 170,000 barrel-per-day McKee, Texas refinery was "operating at minimum safe and stable throughput limits" after a power cable failure, the company said in a filing with state regulators on October 15.

A company spokesman was not immediately available for comment.

Interline Resources' NorthCut Refinery Begins Operations

Interline Resources, which owns 75 percent stake in NorthCut Refining, has announced that the refinery has begun operations. The refinery is located 20 miles north of Douglas, Wyoming in the Powder River Basin.

The refinery has been designed to make use of 5,000 barrels per day of local crude oil supplies and to provide products needed in local markets.

A spokesman for Interline Resources, said: "The first deliveries of crude oil to the refinery site began on October 11, 2008. This has been a long-awaited event for the NorthCut team.

"Difficulty in obtaining operating credit and delays in securing a gas line connection necessary for furnace operation put us behind schedule, but we are now postured to see production results."

Hydrodec Opens Ohio Refinery for Reusable Transformer Oil

Hydrodec on Oct. 7 officially opened the nation's first sustainable transformer oil refinery in Canton, Ohio, where it will produce SUPERfine™--the world's first sustainable and reusable transformer oil. The 8-million-gallon-per-year capacity plant will recycle spent transformer oil and convert it into new SUPERfine transformer oil that can be used (and re-used) by utilities across the country. The 22,000-square-foot plant will initially provide up to 35 family-wage jobs.

Transformer oil insulates and cools transformers, which are used for switching electrical supply from low to high voltage for transmission over long distances and back again.

"We estimate that each year more than 400 million pounds of carbon dioxide are generated from the secondary use of used transformer oil," said John Cowan, president of Hydrodec North America. "With SUPERfine oil, Hydrodec hopes to get that number down to zero. Best of all, in the process, we help utilities save money, help increase our energy independence and create jobs here in Canton."

Hydrodec chose Canton because it is centrally located, within 500 miles of the largest utility users in the country, and has a favorable environment for businesses.

Currently, most used transformer oil is sold to waste oil companies, who then re-sell it for a variety of uses, including: home heating oil, bunker fuel, low-cost diesel fuel, cutting oil, cheap hydraulic oil substitutes, or as fuel for cement kilns. Regardless of the secondary market, however, virtually all of this used oil is eventually burned, releasing thousands of tons of carbon emissions and often other harmful contaminants, such as polychlorinated biphenyls and other persistent organic pollutants into the air.

Hydrodec's proprietary technology addresses this issue by converting used transformer oil into a chemical contaminant-free product that meets and usually exceeds all industry standards. It can be recycled again and again, giving utilities a sustainable, recyclable, reliable resource.

The company will sell the recycled oil directly to utilities for use in existing transformers as well as to transformer manufacturers and oil suppliers, who will use it in new transformers.

Tesoro Refinery's Flare Notification Delayed

A malfunction during a flaring operation October 14 at the Tesoro Golden Eagle Refinery near Martinez sent a large chemical flame into the air.

County hazmat officials were informed of the flaring 25 minutes after it had started because a county employee driving past the refinery spotted the flaring and contacted Tesoro, said Steven Morioka, assistant director of the Contra Costa County Hazardous Materials Office.

“We shouldn’t have to call them. They should be calling us,” Morioka said.

The flaring began when a flare gas compressor failed, making the flame normally visible at the top of the stack much larger than normal, although no dangerous material was released into the air.

A formal notification from Tesoro did not come for about 45 minutes, Morioka said, and the county will investigate why it was not notified in a timely manner as required by law.

In May, the refinery reached a settlement with the Bay Area Air Quality Management District related to air quality violations. The company agreed to pay a $1.5 million civil penalty, and to undertake several capital improvement projects and upgrades.

The Tesoro Refining and Marketing Co. had been accused of failing to inspect tanks and equipment, air pollution releases that resulted from equipment malfunctions, and administrative and reporting violations.

California County Will Support $700 Million Big West Refinery Expansion

Kern County planners have recommended approving the Big West of California refinery expansion after a last-minute analysis showed the use of a controversial chemical there is safe.

After consulting with refining experts, planners said the occasional use of a low concentration of hydrofluoric acid at the facility should be allowed to continue. However, they suggested any other use of the chemical at the facility be prohibited.

"We feel this is a safe process," said Kern County Planning Director Ted James. "We've concluded the use of this acid at such as low (concentration) is appropriate."

The $700 million expansion was scheduled to go before the Board of Supervisors for final approval.

Big West's hard-won support for the project hung in the balance recently after it was revealed that a solution containing 1 to 5 percent HF is used to service the facility's injection wells.

Big West had initially proposed to use pure HF in the expansion but faced major opposition from community groups and politicians due to its hazards.

In pure form, HF poses serious risk due to its ability to vaporize when spilled, forming a toxic cloud that can spread to surrounding areas. In recent weeks, the company agreed to an alternative expansion plan that doesn't use the chemical.

After learning that a low concentration of HF was already in use at the facility, Supervisor Mike Maggard called a press conference and accused Big West of not being "truthful enough" with the public.

Big West officials said the HF solution is used by a contractor that services wells at the refinery a few times a year. Unlike pure HF, the diluted form cannot vaporize and form a toxic cloud.

"It really is a totally different kind of HF acid use because it's only 5 percent and it's in an aqueous solution," said Big West Health, Safety and Environmental Director Bill Chadick.

Kern County Environmental Health Director Matt Constantine confirmed that the risks of aqueous HF were not as serious as pure HF.

Still, county planner Lorelei Oviatt said Big West should have been up front about the chemical's use. Oviatt said she repeatedly asked refinery officials if HF is in use or being tested at the facility and they said no. Under state environmental review laws, the public had a right to know about the chemical's use, she said.

"We rely on (Big West) to tell us about their project," Oviatt said. "They didn't understand the extent to which they needed to describe what they do so we could tell that to the decision-makers and the public."

Chadick said the environmental review process doesn't require the company to conduct risk assessments on every chemical it uses. Because of the low risk of aqueous HF, the company didn't think it was worth the effort to analyze its dangers, he said.

Maggard said October 20 that he remained concerned about Big West's ability to communicate important issues to the community. He plans to propose additional measures to ensure the company acts transparently.

"The issue for me was never the fact that the diluted mixture is not manageable," Maggard said. "The issue is they need to fully cooperate and disclose when we make inquiries of them."

Safety-Kleen, Motor Oil Recycler Plans $15 Million Expansion of Refinery in East Chicago

Motor oil recycler Safety-Kleen is planning a $15 million expansion to boost the production capacity of its East Chicago refinery.

Company officials announced October 20 that they expect the expansion to increase the plant's annual production capacity 16 percent, from 60 million gallons in 2006 to 70 million gallons.

Safety-Kleen is North America's largest recycler and re-refiner of used motor oil, collecting more than 200 million gallons of used motor oil annually.

Company CEO and President Frederick J. Florjancic Jr. says the expansion is a response to the growing need to recycle and extend the life of oil products. By re-refining the used oil it collects, he says Safety-Kleen prevents the emission of about 300,000 tons of greenhouse gasses each year.

Flint Hills Awards Jacobs Diesel Desulfurizer Contract

Jacobs Engineering Group Inc. announced October 21 that it is performing engineering, procurement, and construction services for Flint Hills Resources' new diesel desulfurization unit in Corpus Christi, Texas.

Officials did not disclose the contract value. The cost for the overall project, which includes the construction of the desulfurization unit, is estimated to be more than $250 million.

The diesel desulfurization unit will provide Flint Hills Resources with opportunities to upgrade low-value products into high-value products such as ultra-low sulfur diesel. The construction project is expected to take 18 months to complete.

In making the announcement, Jacobs Group Vice President Jim Stewart stated, "We are delighted to expand our relationship with Flint Hills Resources to include this diesel desulfurization project. This extends our long history of providing engineering, procurement, and construction services. We are excited to support Flint Hills Resources in meeting the growing demand for ultra-low sulfur diesel in Texas."

New Hydrogen Plant to Serve Baton Rouge Refinery

Air Products on October 20 announced a long-term supply contract and plans to construct a new world scale hydrogen production facility, which will be connected to Air Products’ extensive Louisiana Hydrogen Pipeline Network, to serve ExxonMobil's Baton Rouge, Louisiana refinery and additional customers in the region. The facility is expected to be on-stream in March 2010.

“We are very pleased to expand our global business relationship with ExxonMobil. Air Products takes great pride in its production facilities and hydrogen supply reliability, and this project will enable us to demonstrate the added value of our expanded Louisiana Hydrogen Pipeline Network,” said Alex Masetti, vice president, North America Tonnage Gases for Air Products. Air Products’ most recent collaboration with ExxonMobil included hydrogen production facilities brought on-stream in 2006 in Baytown, Texas and Joliet, Illinois.

“This will become the third world-scale hydrogen facility Air Products has built in the Mississippi river corridor in four years, joining the Convent facility which came on-stream in 2006 and the Garyville facility which will come on-stream in 2009. This newest expansion of our infrastructure in Louisiana continues to build upon our multi-source hydrogen network with over 650 MMSCFD of capacity, which provides enhanced flexibility and supply reliability to our customers,” said Thomas Wendahl, manager - Tonnage Business, East Gulf Coast Area for Air Products. Supplying global refiners with hydrogen to make cleaner burning transportation fuels is one of the top growth businesses for Air Products.

Air Products has the largest hydrogen pipeline network in the U.S. Gulf Coast. Air Products' Gulf Coast pipeline network extends from the Houston Ship Channel in Texas to Lake Charles, La., and from Baton Rouge to Norco, La., and east of New Orleans. This pipeline network provides highly reliable hydrogen supply to approximately 50 refinery and process industry customers.

Air Products’ hydrogen facility at Baton Rouge will be the 30th plant to be built through the global alliance between Air Products and Technip. This alliance continues to provide the worldwide refining industry with competitive technology and world-class safety. Technip provides the design and construction expertise for steam reformers while Air Products provides the gas separation technology. Air Products, through its extensive operating network, and Technip, from its large reference base, also bring effective operational and engineering knowledge to “design-in” high reliability and efficiency. The plants are operated and maintained by Air Products under long-term agreements with customers.

Suncor Energy CEO Predicts Failure of Some U.S. Oil Refiners

Some U.S. refiners may be forced to shut plants and go out of business in coming months as declining demand aggravates narrowing fuel-production margins, said Suncor Energy Inc. Chief Executive Officer Rick George.

U.S. oil refiners will also sell facilities, George said during an October conference call with investors and analysts.

``There will be some real fire sales,'' said George, who leads the world's second-largest oil-sands producer. ``We should actually see some U.S. refiners shut down. Some of the weaker refiners should go out of business.''

Calgary-based Suncor isn't interested in buying refining assets now because prices probably have farther to fall over the next two years, George said. Suncor has trimmed its 2009 capital budget by 33 percent to C$6 billion ($4.8 billion) and slowed construction at its Voyageur project.

``Some of these assets are going to look a lot cheaper'' in the future, George said. Suncor, which has lost half its market value this year, is ``not for sale,'' he said.

The margin from processing crude into fuels such as gasoline and diesel tumbled 60 percent this year to $4.31 per barrel, based on benchmark futures contracts traded in New York.

Syncrude Canada Ltd., a joint venture led by Canadian Oil Sands Trust of Calgary, is the biggest oil-sands producer based on 2007 annual output.

A Standard & Poor's index of oil refiners that includes San Antonio-based Valero Energy Corp. and Tesoro Corp. plunged 74 percent this year, on course for the worst performance since at least 1995.

Exxon Mobil Baytown Refinery Reports Flaring

Exxon Mobil reported intermittent flaring at its Baytown, Texas, refinery but said production impact was minimal, according to a government filing.

The report to the Texas Commission on Environmental Quality said the event involving the delayed coker unit began October 26 and predicted it would end by October 31. It said customer needs were being met.

BRAZIL

Technip gets $100 Million Contract from Petrobras

Technip the Paris provider of engineering and construction services for the oil-and-gas industry, received a more than $100 million contract under which Petrobras will charter the Normand Progress for two years.

The pact includes related services, and Petrobras the Brazilian integrated oil company -- took a two-year option on the ship as well. Petrobras will use the Normand Progress to install and retrieve flexible pipelines offshore Brazil at depths of as much as 2,000 meters (6,561 feet), Technip said in a statement on October 22. The vessel is owned by Solstad, the Skudeneshavn, Norway shipping company, and operated by Technip under an agreement.

CUBA

New Investments in Cuba’s Cienfuegos Oil Refinery

The Camilo Cienfuegos refinery, located in Cuba’s central Cienfuegos province, will soon have a new 50,000 cubic meter tank, as part of a group of a series of new investments.

This deposit will increase the refinery´s storage capacity, which already has four 20,000 cubic meter tanks under construction, reported the Juventud Rebelde newspaper.

Julio Sanchez Gil, director of the Expanding Project of the PDV-CUPET joint venture, explained that as part of the fitting-out of this great-capacity tank they already finished the outer part wrapping and sandblasted it and added the first layer of paint.

Sanchez Gil announced that the planks will arrive next December as well as other supplies and accessories for all the new storage system. The placing of the 4 shorter tanks means the transportation of around 5,000 cubic meters of sand and gravel.

These investments play a key role in the country's economy, which needs to increase its oil storage capacity, an issue emphasized by the Cuban Minister of the Basic Industry, Yadira Garcia, in a recent visit to the refinery.

Sanchez Gil also explained that the assembly of the second part of the smart system of the refinery will start soon, with 54 chambers, as well as the starting up of new boilers, the building of a central dining room and a 64 room building for workers.

This refinery should close in October with over 16 million barrels processed.

ST. LUCIA

Hess Denies Plans to Build $5 Billion St. Lucia Refinery

Hess Corp., amid a decision to cut the company's capital expenditure program for next year, said it currently has no plans to build a $5 billion refinery on the Caribbean island of St. Lucia.

"While we have the option to build the refinery in St. Lucia, we have no current plans to do so," Hess Chairman and Chief Executive John B. Hess told analysts during a conference call.

Hess's statement came just days after a member of the St. Lucia government said the New York-based firm, which operates a transshipment facility on the island, was likely to build the refinery.

"Quite a substantial amount of money has been committed to the feasibility studies, and the studies undertaken so far conclude that there will be no problems putting in the refinery," Guy Joseph, St. Lucia's communications and works minister was quoted as saying.

Earlier, Hess said it will reduce its 2009 capital expenditures budget due to the current uncertain economic environment. The company did not detail the amount of the budget, saying it would provide more details in January.

VENEZUELA

Venezuela’s PDVSA Awards JGC Refinery Modernization Contract

Venezuela's state-owned Petroleos de Venezuela SA (PDVSA), as part of its on-going Siembra Petrolera plan, has signed an agreement with JGC Corp. to form a strategic alliance aimed at improving the country's refining capacity.

In particular, the accord with JGC will foster the development of Venezuela's refining projects, especially those involving the conversion of heavy oil, according to Asdrubal Chavez, PDVSA refining, commerce, and supply vice-president.

JGC was involved in the construction of the Cerro Negro heavy crude upgrader in the Orinoco belt, and the Japanese firm also is completing basic engineering for an expansion at the Puerto La Cruz refinery.

The PDVSA announcement follows several earlier ones concerning financial arrangements for the projects.

In September, Venezuela said it signed a $1.2 billion loan with the Japanese Bank for International Cooperation.

According to Oil Minister Rafael Ramirez, who doubles as president of PDVSA, the loan will enable modernization of two refineries: at El Palito and Puerto La Cruz.

The amount of Japanese financing for the two projects is considerably lower than PDVSA had earlier hoped for. In May, PDVSA made an unsuccessful bid for $3.5 billion in credit from Japan's Sumitomo Corp. and Itochu Corp.

"For the expansion of the El Palito and Puerto La Cruz refineries we're using technology…for deep crude conversion. For this we need specialized equipment manufactured overseas, and that's why we've secured the Japanese company financing," Ramirez said at the time.

The hoped-for accord was similar to a $3.5 billion loan PDVSA obtained in February 2007 from Marubeni Corp. and Mitsui & Co. as an advanced payment for oil shipments to be made later in the year.

The Japanese funds were provided to PDVSA via two special purpose companies established in the Netherlands by Marubeni and Mitsui: Yucpa Finance and Caribe Financing Co.

PDVSA was expected to repay that loan through sales cash flow generated by its crude oil and petroleum products. The first oil exports to Japan—20,000-30,000-b/d of oil and petroleum products—were expected to begin by mid-2007.

In July, Venezuela's El Universal newspaper reported that rising costs and rising oil prices had led PDVSA to "realign its Siembra Petrolera investment plan up to 2012."

According to information provided by PDVSA to Banco Central de Venezuela, the firm now plans to invest $78.116 billion in 2007-12, an increase of 40 percent over the $56 billion calculated for the same period in 2005.

The paper said that 2008 is "the main" year for investment within the plan, with a total outlay of $15.671 billion planned. That amount includes $4.102 billion for production, $3.91 billion for natural gas, and $2.276 billion for refining.

Also included are investments of $2.249 billion in support and management, $1.253 billion in joint ventures, $1.154 billion in former operating agreements, $336 million in joint ventures stemming from old exploration risk agreements, $323 million in exploration, and $68 million in new Faja del Orinoco joint ventures.

Under the plan, according to El Universal, PDVSA will invest $11.481 billion in 2009 and $15.055 billion in 2010.

In October, PDVSA began construction of the 100,000-b/d Santa Ines refinery, one of four domestic refineries either under way or planned. The others include the 50,000-b/d Caripito refinery, a 200,000-b/d refinery in the state of Zulia, and a 400,000-b/d refinery at Cabruta.

ASIA

BANGLADESH

Bangladesh's 30,000 Bpd ERL Refinery Closed for Maintenance

Bangladesh's state-owned Eastern Refinery Limited (ERL) closed on October 21 for two months for major maintenance, a senior official said.

The country's lone refinery, with a capacity of around 30,000 barrels per day, supplies refined oil to three state-owned oil firms -- Padma, Meghna and Jamuna -- to distribute across the country.

"We had to go for a major renovation work from today after two years and the production will remain suspended for nearly two months," said Rezaul Alam, managing director of the ERL.

"There should be no dearth of oil in the country during the maintenance period as preparations have already been made to ensure smooth supply," he said.

The 40 years old ERL in the Chittagong port city has a capacity to refine 1.5 million tonnes of crude oil and it has asked for a $300 million loan from the Jeddah-based Islamic Development Bank to expand its capacity to 4.5 million tonnes.

The ERL also refines condensates, collected from the country's natural gas fields, to petrol and diesel. Bangladesh's present condensate production is 5,000 barrels per day.

Bangladesh imports between 3.4 million and 3.8 million tonnes of fuel every year, including about 1.5 million tonnes of crude oil, officials said.

CHINA

Second Big Refinery May be on the Horizon for China’s Beibu Bay

Chinese Premier Wen Jiabao said on October 4 that the Beibu Bay region in Southwest China's Guangxi Autonomous Region would build another 10-million-ton refinery when conditions were right, said China National Petroleum Corporation (PetroChina Group).

PetroChina Group is building a 10-million-ton refinery in Qinzhou City of the region now. The two refineries are expected to make petrochemical industry a pillar sector in the region and drive development of the region, said the premier while visiting the Qinzhou refinery.

Besides, the Qinzhou Port economic development zone can focus on developing petrochemical business, but should make the business centralize in bases and operate on a large scale and intensively, said the premier.

PetroChina Group started building the project with a total investment of CNY 15.3 billion last December. The project is expected to start running in the first half of 2010, producing 7.6 million tons of gasoline and diesel oil every year.

Moreover, a PetroChina Group insider said that the oil giant was likely to build another big refinery in Southwest China or, more likely, in Guangxi Autonomous Region.

CNOOC's Huizhou $146.3 Million Oil Terminal Port Approved

China's top offshore oil firm CNOOC has received official approval to build a crude and oil products port in the coastal city of Huizhou, near the company's first refinery, local government said.

The terminal, costing $146.3 million (some 1 billion yuan), would help support chemical and refining enterprises in the Pearl River Delta region, the report said.

The facility will include one 300,000-tonne crude terminal and four 5,000 tonne berths for crude and oil products, the Guangdong National Development and Reform Commission said in a statement posted on its website.

Investment will come from China Offshore Oil Refining Corp and its parent state-owned CNOOC. It did not detail when construction on the terminal would start.

CNOOC, also the parent of listed CNOOC Ltd, accounts for 35 percent of the total investment.

The approval would further boost the firm's effort to move into the downstream market and become an integrated energy group.

The company is preparing for a slightly delayed startup of its first oil refinery, a 240,000 barrel-per-day plant in Huizhou, in 2009, CNOOC's general manager Fu Chengyu said in late September.

MONGOLIA

Japan Supports Mongolia’s First Refinery for $1.2 Billion

Mongolias Mongolsekiu LLC and Toyo Engineering Corp. have formally submitted plans to the Mongolian mines and energy ministry for construction of the country’s first refinery, a 44,000 b/d facility to be built at Darhan near the border with Russia.

The total cost of the joint venture project, held 60 percent by Toyo and 40 percent by Mongolsekiu 40 percent, is estimated at more than $1.2 billion, with the costs largely to be underwritten by the Japanese government and the Japan Bank for International Cooperation.

Construction is expected to begin next spring, and a pilot plant is expected to start operating in first-half 2010. The completed refinery will work at full capacity from June 2012.

"When it starts working, the refinery should relieve Mongolia of its stifling dependence on foreign fuel," Mongolian state media said.

VIETNAM

Vietnam's First Refinery to Start Test Run In February

Vietnam's first oil refinery will start trial runs from February next year at 60 percent of its designed capacity, helping the south Asian nation curb fuel imports at a time when global prices have surged to record levels.

The $2.5-billion Dung Quat Refinery will use domestic crude oil for the test run, which is expected to last more than six months, Truong Van Tuyen, head of the project's board, told Dow Jones Newswires.

"We will raise the test run capacity gradually from 60 percent of designed capacity during the test period," Tuyen said.

Tuyen said he expects the test run to be as short as possible so that the refinery can start commercial production early.

The refinery, which is being built in Quang Ngai province, 885 kilometers south of Hanoi, will process 3.5 million tons of crude oil during trial, the Vietnam News Agency reported, citing PetroVietnam sources.

When fully operational in late 2009, the refinery will have a capacity of processing 6.5 million tons of crude oil a year, or 130,000 barrels a day, the news agency said.

The refinery is designed to process sweet oil from Vietnam's offshore Bach Ho Oil Field, or a mixture of 5.5 million tons of Bach Ho crude and 1 million tons of Middle East sour crude a year.

PetroVietnam is in talks with BP Plc (BP) and Royal Dutch Shell Plc (RDSB.LN) to import 30 percent of the crude needed for the refinery, the news agency said.

It said Bach Ho crude is selling at good prices in the international market, so importing cheaper crude to replace part of the input will be more economical.

Vietnam currently meets all of its fuel requirement from overseas. In the January-September period, the country imported 10.47 million tons of petroleum products valued at $9.75 billion, up 10.2 percent on year in volume and 82.9 percent in value.

EUROPE / AFRICA / MIDDLE EAST

BULGARIA

Lukoil to Spend $1.2 Billion on Bulgarian Refiner

Russian oil major Lukoil plans to invest $1.2 billion in its Bulgarian refinery Neftochim Burgas by 2014 and boost crude oil processing to 10 million tonnes a year, a Neftochim spokeswoman said October 10.

"Neftochim's investment program stands at $1.2 billion for 2009-2014," said the spokeswoman, quoting Lukoil Chief Executive Vagit Alekperov, who visited Bulgaria recently.

Neftochim plans to process 7.2-7.3 million tonnes of crude this year, she said.

FRANCE

Exxon May Shut 28,000 Bpd Gasoline Unit at French Oil Refinery

Exxon Mobil Corp., the world's largest oil company, plans to shut a gasoline-making unit at the smaller of its two French refineries for repairs early next year, an official with knowledge of the work said.

A fluid catalytic cracker at the Fos plant on France's south coast will close in January for a month, the official said, declining to be identified because he isn't allowed to speak publicly about the work. Associated units will also be taken off line, he said.

Exxon's spokeswoman in Paris, Sylvie Sanders, said she isn't authorized to comment on plant shutdowns.

The FCC unit can handle 28,000 barrels of oil a day, about a quarter of the refinery's 119,000-barrel-a-day processing capacity, according to data compiled by Bloomberg. FCCs process vacuum gasoil into higher-value gasoline or lighter crude products.

Gasoline for immediate loading in Amsterdam-Rotterdam- Antwerp, Europe's trading hub, soared to an all-time high of $1,192 a metric ton in July after refinery maintenance curtailed output and record oil prices boosted fuel production costs. Spot gasoline has since declined to $663 a ton, Bloomberg data show.

Exxon has a 233,000-barrel-a-day refinery at Gravenchon in Normandy, northern France, according to the company's Web site. The two plants combined account for 20 percent of the country's fuel needs.

The Irving, Texas-based company will shut units including a 34,000-barrel-a-day FCC at Gravenchon in the first quarter of next year, an official said in January.

Refining margins, or the profit from turning a barrel of oil into fuels such as gasoline and diesel, have almost doubled in northwestern Europe, rising to $8.04 a barrel in September from $4.13 a barrel in August, the Organization of Petroleum Exporting Countries said in a recent report.

Refiners along the U.S. Gulf Coast earned as much as $22.90 a barrel last month, compared with $6.16 in August, as they restarted plants that had shut before hurricanes Gustav and Ike swept through the region, according to the report.

POLAND

Technip Awarded a New Contract for the Gdansk Refinery in Poland

Technip has been awarded by Grupa Lotos a lumpsum contract, worth approximately 70 million, for the refinery in Gdansk, Poland.

The contract covers engineering and procurement services for a new solvent deasphalting unit. The unit will have a feed capacity of 180 tons per hour.

Solvent deasphalting: extraction process in which heavy gas oil is dissolved in a solvent and heavier matter is separated as asphalt. Feedstock for solvent deasphalting can be atmospheric resid or vacuum resid or a mixture of both.

Technip's operating center in Rome, Italy, will execute the contract. This is the third contract assigned to Technip by Grupa Lotos over the last year, confirming the outstanding collaboration between the two companies.

Present in 46 countries, Technip has operating centers and industrial assets (manufacturing plants, spoolbases, construction yard) on five continents, and operates its own fleet of specialized vessels for pipeline installation and subsea construction.

CHAD / NIGER

China’s CNPC Breaks Ground on Chad, Niger Refineries

State-owned China National Petroleum Corp (CNPC) in October broke ground for new oil refineries in Chad and neighboring Niger, as the company boosts its ties with resource-rich countries in Africa.

The refineries will be the first in each of the landlocked African countries, which remain desperately poor but have seen their state incomes surge during the resource boom of recent years.

Chad struck oil in 2003, pumping it from southern oil fields via a 1,000-km (620-mile) pipeline through Cameroon. Niger has cashed in on soaring prices for its uranium exports, breaking a French mining monopoly to attract more foreign investors.

China has become a key investor in both countries.

CNCP struck a $5 billion deal with Niger's government in June to pump oil from the Agadem block within three years and build a 2,000-km pipeline to export it. Niger's southern neighbor, Nigeria, is Africa's top oil producer.

The deal, which included a $240 million (127 billion CFA franc) signature bonus, also bound CNCP to build Niger's first refinery, for which Niger President Mamadou Tandja recently laid the foundation stone, state TV reported.

"We hope this will signify Niger joining the industrial revolution and mark the beginning of our energy independence," Niger Prime Minister Seyni Oumarou said in a speech at the ceremony. The speech was shown on television.

The refinery, 950 km east of Niger's capital Niamey in Ganaram, will be able to refine 20,000 barrels of oil a day -- exceeding the country's current consumption of around 7,000 barrels. It is projected to take three years to build.

Across the border, CNCP also laid the foundation stone for its new refinery in Chad's capital N'Djamena.

The refinery is due to start refining 20,000 barrels a day (BPD) from 2011, rising later to 60,000 bpd. Chad currently produces 140,000-160,000 bpd of crude, which is all exported, and it has to import all its fuel requirements.

The Chad refinery plans include a power station which will provide around 20 MW of power to the capital, N'Djamena, increasing the country's installed capacity by approximately two-thirds, according to data from the U.S. government's Energy Information Administration.

NIGERIA

Nigeria’s Kaduna Refinery Shutdown Again

The Kaduna Refinery and Petrochemical Company (KRPC) has been shut down over shortage of crude oil arising from the vandalizing of pipelines that supply crude to the refinery between the Warri and Auchi axis.

The refinery was shut down October 11, barely six months after it resumed production last March after it suffered two years of inactivity due to the same reason, pipeline vandalizing.

General Manger, Corporate Affairs of the Nigerian National Petroleum Corporation (NNPC), Levi Ajuonuma, who confirmed the closure while speaking with the publication THISDAY, explained that his corporation is making alternative arrangements for the supply of crude to the refinery pending the time that the repair work to the pipelines would be completed.

The damage to the pipelines took place at the end of September and President Umar Musa Yar'Adua promptly approved the sum of N700 million for repair work of the affected facilities.

Ajuonuma disclosed that already the Kaduna refinery has been slated for Turn Around Maintenance (TAM), which would commence on November 5, 2008 and last for 45 days. He said the refinery would be handed over to the contractors on November 5, while actual work on the maintenance would commence on November 15 and end on January 15, 2009.

Commissioned in 1980, the Kaduna Refinery, which is one of the three refineries in the country, including Warri and Port Harcourt has a refining capacity of 110,000 barrels of oil per day. It is the only refinery among the three that was established for processing crude oil into refined petroleum products in addition to producing Linear Alkyl Benzene (LAB) as well as tins and drums for domestic consumption and export.

Before the recent shutdown, the refinery was operating at between 60 to 70 per cent installed capacity.

In July, the lube section of the refinery, which was shut down ten years ago as a result of some constraints ranging from inadequate electricity, nitrogen and steam resumed production.

Designed to refine only foreign crude, the lube section which processes asphalt, and waxes among other products came on stream two weeks before the activation of the refinery's Fluid Catalytic Cracking Unit (FCCU) aimed at driving the refinery to its optimally installed production capacity.

SOUTH AFRICA

PetroSA Defends its Coega Refinery amid Concerns of Surplus Capacity

State-owned oil and gas company PetroSA on October 9 came out in defense of its planned R40bn crude oil refinery in Coega, near Port Elizabeth, amid concerns that it could drive existing refineries out of business.

PetroSA's wisdom of building a 400,000-barrel-a-day plant came under scrutiny at an oil summit in Midrand.

Speaking at the summit, Shell SA planning and strategy manager Leon Lizamore said PetroSA alluded to a possible surplus in refining capacity when the PetroSA facility came on stream in 2014. This, he said, could force PetroSA to direct the surplus capacity into the South African market, threatening the survival of existing refineries.

He said surplus capacity from the Coega refinery could be enough to replace an entire refinery or prompt the existing refineries to run at reduced levels. But PetroSA vice-president for new ventures Joern Falbe threw the gauntlet back at the company's critics.

"They (other refiners) will take themselves out of business. They must upgrade their facilities. PetroSA is being globally competitive," Falbe said. New crude oil refineries being built in other parts of the world would raise the level of competition on crude oil and push the market to clean fuels, he said. PetroSA has said that the facility will meet clean fuels specifications.

Maurice Radebe, of Sasol Oil, said there had been strong growth in liquid fuels demand in recent years. The supply and demand balance indicated that SA would continue to rely on imports "for a number of years to come". Without investment in refineries, a long-term shortfall was expected. Radebe said demand for the inland market was estimated at 16,3-billion liters a year, while production capacity was estimated at 9,9-billion liters a year, leading to a shortfall of 6,4-billion liters a year.

The minerals and energy department and private sector players have called the two-day summit to, among other things, discuss the pricing regime of petroleum products, logistical and related infrastructural investment requirements, security of supply, the role of the state, as well as alternative sources for energy .

Minerals and Energy Minister Buyelwa Sonjica said that despite recent weakening, the crude oil price was still high "in both real and nominal terms, compared to the figures of 1998."

She said when the department released the white paper on energy in 1998, the crude oil price was about $10 a barrel. This year it peaked at about $147 a barrel.

South Africa’s Coega Refinery License Granted

South Africa’s State oil and gas company PetroSA has been granted a manufacturing license for its planned R101.4 billion oil refinery at the Coega Industrial Development Zone outside Port Elizabeth.

The granting of the license is seen as a significant milestone in the development of the 400 000 barrel-per-day refinery, dubbed Project Mthombo.

"The awarding of the license demonstrates [the] government's commitment to, and confidence in, PetroSA's capacity to provide a feasible, sustainable and commercially viable solution to the liquid fuels supply challenges facing South Africa," PetroSA Chief Executive Officer (CEO) Sipho Mkhize said.

The granting of a manufacturing license - carried out by the Controller of Petroleum Products, a unit of the Department of Minerals and Energy - is subject to certain normal business conditions, such as a permit to operate from the environmental authorities.

Mr Mkhize said the project was of strategic importance to South Africa's economic development aspirations.

Expected to be the biggest on the African continent, the refinery will come on stream in 2014 and is expected to create over 25,000 direct and indirect jobs around the Port Elizabeth area.

"The Coega refinery does not only address security of supply," he said. "It also provides a strategic new energy hub in addition to the present Durban crude supply chain, while presenting a major economic growth opportunity for an underdeveloped region of South Africa."

The granting of the license comes shortly after PetroSA appointed international financial services group HSBC as financial advisor, while the company added that it would be awarding an engineering contract for the refinery shortly.

Petrosa Makes Push for Coega-Gauteng Pipeline

South Africa’s state-owned oil and gas company PetroSA has once again made a strong case for a fuel products pipeline from Coega to Gauteng, saying the facility would benefit SA.

PetroSA has been mulling over a feasibility study for a pipeline that could transport refined petroleum products from its planned 400,000- barrels-a-day refinery at Coega to inland markets.

That would be in addition to the R11,2bn multiproduct fuel pipeline from Durban to Gauteng that transport and logistics group Transnet is building. The pipeline is due for commissioning in 2010.

"We need to co-ordinate the investment in pipelines in SA. We need to work closely with Transnet," Jorn Falbe, PetroSA vice-president for new ventures midstream, said.

Falbe said Transnet was a key partner in the integration of logistics in the planned refinery. The logistics, he said, included port investments, pipelines and rail infrastructure.

"The two pipelines can be complementary. While the Durban-to-Gauteng pipeline is a highway, the Coega-to-Gauteng facility can have several hubs at different cities," he said.

Falbe said the $11bn Project Mthombo was not dependent on the Coega-Gauteng pipeline "although (the pipeline) is a further optimization ... We definitely see the benefits of a second pipeline".

The PetroSA refinery, due for commissioning in 2015, is seen as central to the government's efforts to ensure security of supply of liquid fuel products. The project is expected to lower the country's import bill and to significantly reduce SA's dependency on imported vehicle fuels as demand increases.

Falbe said half of the refinery's capacity - about 200,000 barrels a day - would be geared towards the South African market.

The rest, he said, would be exported to sub-Saharan markets, where PetroSA would compete with refineries in the Middle East and India.

Falbe said the increased capacity in SA could threaten the survival of inefficient refineries that had been supplying the sub-Saharan market.

Oil multinational Shell said recently PetroSA's decision to increase the refinery's capacity from 250,000 barrels a day to 400,000 barrels a day could hurt existing refineries, resulting in reduced output and even closure.

Falbe said the Coega facility would be globally competitive.

He said the refinery's configuration was in line with global standards and would have lower sulfur, benzine and petrol content.

Commenting on the effect the global financial turmoil would have on the project, Falbe said HSBC, PetroSA's financial adviser on the project, had assured the company the project was viable "because it is world-class and strategic".

RUSSIA

Local Petroleum Refinery to be Built in Primorye Region of Russia

As the result of a regional meeting, Sergey Bogdanchikov, the president of “Rosneft” and Sergey Darkin, the governor of Primorsky, plan to build a petroleum refinery around Cape Elizarov, in the Nakhodka suburban area. The refinery would process about 20 million tons of oil per year and output gasoline, diesel oil, reduced fuel oil and other petrochemical products.

The planning process for the refinery is already started and would be finished in May 2009. Construction is expected to begin in October 2009. The refinery is to start in 2013; the output volume is 10 million tons of oil per year for a start.

There is a plan to build a residential community for invited specialists involved in the building process. The petroleum refinery will reportedly develop the city’s economy and its infrastructure.

IRAN

Kazakhstan Considers Refinery in Iran

Kazakhstan is considering a proposal to buy an operating oil refinery in Iran or constructing a new one there, Lyazzat Kiinov, deputy energy and mineral resources minister, has said.

"We have received a proposal from them (the Iranian side - Interfax-Kazakhstan). There are two options - an operating oil refinery or constructing a new one," he told journalists on the sidelines of a conference as part of KIOGE-2008 [Kazakhstan International Oil and Gas Exhibition] in Almaty October 9.

The deputy minister also added that the Kazakh side had yet to make a decision.

ISRAEL

Oil Refineries Ltd. Okays $670 Million Hydro-Cracker for Haifa

Oil Refineries Ltd., Israel's largest oil refiner, announced October 22 that the Board of Directors of the Company approved the establishment of a hydro-cracking unit at the Haifa refinery, for a total investment of $670 million (including an investment of $37 million approved by the Board in November 2007 in order to advance the project), as part of the Strategic Plan adopted in November 2007. The Unit, whose primary products will be Diesel Oil and Kerosene (Jet Fuel Oil), will be built to produce 25,000 barrels per day and is expected to be operational during 2011.

The Board of Directors instructed the Company's management to complete the organization of the credit facility through the 'Export Credit Agency', under which the Company will receive required financing to acquire the main equipment components from oversees' suppliers, as well as to move to receive additional required credit, from various sources, for the funding of the project. The Company already raised part of the required financing for the strategic plan in December 2007.

Yossi Rosen, Oil Refineries' Chairman of the Board: "This decision to establish a Hydro-Cracker is one of the focal points of Oil Refineries' strategic plan. The Unit is expected to substantially contribute to our profitability and serve as a driving force for the Company, as part of the Company's planned expansion and core-business enhancement process, under the auspice of its shareholders. The Hydro-Cracker will be built to meet the most stringent environmental protection standards serves as an additional stage in the Company's Strategic plan to protect the environment will enable Oil Refineries' to manufacture cleaner and more environmentally friendly products."

Rosen added that "This decision serves as a clear vote of confidence of the major shareholders in the Company's ability to undertake and finance the projects in particular, and to the Israeli economy, as a whole, at this time. The Board of Directors reached the decision despite the turmoil in the global markets given their long term vision and strong belief in the success of the project. The project's completion will contribute to the employment in the region, and to the country as a whole."

Yashar Ben-Mordechai, Oil Refineries' Chief Executive Officer added: "Upon activation, the Hydro-Cracker will enable us to produce higher added-value products with each barrel of oil, therefore substantially increasing the complexity of the Haifa refinery. The unit will increase our flexibility in terms of ability to choose the raw materials and product slate, better adapting them to the changing markets. This large scale project leverages the Company's technological expertise and financial strength. There is no doubt that the current project will contribute to strengthening the Israeli economy as a whole and the Haifa Bay Area in particular."

SAUDI ARABIA

Riyadh Refinery Enlists New Weapon against Corrosion

Saudi Aramco industrial facilities often take a beating. Fouling and scaling reduce heat transfer in exchanger tubes and cause corrosion in pipes. That can lead to a loss of production as unplanned shutdowns become necessary to fix leaking equipment.

Standard methods of chemical treatment reduce fouling and corrosion, but their effects can be limited. So Riyadh Refinery is pioneering a new technology by the Merus Company.

The technology resolves cooling-water issues and provides a state-of-the-art technique to eliminate fouling and to clean fouled equipment. That, in turn, saves the time and money that would have been required to descale fouled equipment and, in some cases, replace it.

Riyadh Refinery introduced the technology early in 2007 by piloting field tests in four cooling-water exchangers that had a troublesome history of fouling. After six months, one exchanger was opened and found to be remarkably clean.

To better understand the technology, a little chemistry lesson is in order: All substances in nature consist of molecules of several atoms that are in constant motion with their own unique oscillations. The Merus unit measures those oscillations and responds with interfering oscillations.

The result is that the physical properties of the substance change, making it more soluble, which carries the substance away, rather than depositing it on vessels and pipes. Lime, for instance, does not solidify as quickly and is continuously flushed out.

Implementing the technology saves an average cleaning cost of $3,500 per exchanger and improves equipment performance by 10 percent to 15 percent.

"We are now working to further pilot this technology in hydrocarbon applications," said senior mechanical engineer Abdullah M. Al-Harbi, who brought the technology to Saudi Aramco.

Shaheen to Lead Saudi Aramco, Total JV

The Board of Directors of Saudi Aramco Total Refining and Petrochemical Company approved the appointment of Salem H. Shaheen to the position of president and CEO of the company at its first meeting held in late September in Manama, Bahrain.

The meeting was presided over by the chairman of the Board of Directors, Samir A. Al-Tubayyeb.

The company also previously announced that it is planning to offer Saudi nationals 25 percent of the company shares in an Inititial Public Offer (IPO), on the premise that the two founding partners will each retain 37.5 percent of the equity.

Saudi Aramco and Total Company of France inked the partnership agreement necessary for the establishment of their joint venture on June 22, 2008, in the presence of HE Ali Al-Naimi, Minister of Petroleum and Mineral Resources during the Jiddah Energy Meeting.

These agreements were regarded as a significant step for initiating the construction works of a world class refinery, based in Madinat al-Jubail al-Sina'iyah (Jubail Industrial City) in the Eastern Province of Saudi Arabia, with a refining capacity of 400,000 bpd.

The refinery, scheduled to go on stream by the end of 2012, will process heavy crude oil and convert it into high quality refined products that meet the highest international specifications. Products will include diesel fuel, aircraft fuel, gasoline as well as petrochemical products such as paraxylene, aromatic gasoline and propylene. Saudi Aramco and Total will share the marketing of the refinery products.

This important project will allow further expansion and diversification of Saudi Arabia's refining and petrochemical industry infrastructure and creation of more employment opportunities within the Kingdom.

Jubail Industrial City was selected as the site of the refinery due to its proximity to the heavy crude oil supply system and other vital facilities such as King Fahd Industrial Port, the desalination and power plants and the residential area.

McIlvaine Company,

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