feb 09 update

GE Oil & Gas has been awarded a contract to provide gas turbines for the Motiva Port Arthur Refinery Expansion Project, which will create the largest refinery in the United States and one of the top 10 in the world. This will mark the first U.S. installation of the Frame 6B generator packages manufactured by GE Oil & Gas.

The GE Frame 6B gas turbines for this expansion are rated at 42.1 megawatts each and will be used to power a variety of refinery processes. The units were produced at GE Oil & Gas facilities in Florence, Italy and have arrived on site in Texas.

GE Oil & Gas' Frame 6B gas turbine-generator offers proven reliability and is one of the most versatile and widely used gas turbines ever manufactured, with more than 900 units in service worldwide.

"The large power capacity of Frame 6B gas turbines, plus our ability to customize the gas turbine packages to meet the specific needs of the Motiva refinery expansion, was key to our winning this contract," said Claudi Santiago, president and chief executive officer of GE Oil & Gas. "Motiva wanted a solution that was engineered to order, reducing the need for future modifications onsite."

The Frame 6B's strong performance record is another capability, as the refinery's Gulf Coast location is susceptible to hurricanes and having a reliable supply of energy onsite was important. The GE gas turbines will be equipped with dry low emissions technology, which will help Motiva reach its goal of reducing emissions by mitigating the emissions produced during the combustion process.

Climate Rules Creates Uncertain Outlook for Most Refiners

The specter of stringent U.S. regulation of greenhouse-gas emissions adds another layer of uncertainty for struggling refining companies looking to expand their U.S. plants.

In the past year, refiners have contended with weak profit margins as demand for their products has declined. Analysts have projected that the sector will likely see bankruptcies in 2009 as small, inefficient refiners are forced to close. Some of the companies' financial woes may be compounded by carbon regulations that make operating and expanding plants more costly.

While the Bush administration has granted refiners a brief respite from carbon regulations, new rules are expected under the administration of Barack Obama that may force refiners to cancel expansion projects or, at worst, shutter some refineries.

"Midnight" rules issued by the Bush administration may temporarily lessen the burden on some refiners. Environmental Protection Agency Administrator Stephen Johnson issued a memo Dec. 18, saying large-scale expansions of facilities could be permitted without considering carbon dioxide emissions. This memo, despite opposition from environmental groups, could give permitted projects a distinct advantage.

"It is a good time to submit permits under the Clean Air Act," said Rich Alonso, an attorney with Bracewell & Giuliani in Washington. "To the extent that you delay a permit application by two years, you may have to deal" with carbon regulations, said Alonso, whose firm represents oil refiners.

During the past year, most large refiners have postponed or canceled expansion projects because of tepid oil demand and tight lending conditions. However, a few companies are proceeding with large-scale projects.

Marathon Oil Corp. and Motiva, a joint venture between Saudi Aramco and Royal Dutch Shell PLC, are undertaking two of the most aggressive expansions at Gulf Coast refineries. Each company plans to grow its facilities to rank among the biggest in the nation. In the Midwest, BP PLC and ConocoPhillips (COP) are adding units to their refineries to run larger volumes of sludgy, cheap Canadian crude oil.

The largest projects under way will add a total of more than 600,000 barrels a day of new capacity by 2012, and will allow refiners to increase their ability to process heavy grades of crude oil.

While these extensive projects are going forward, independent refiners like Valero Energy Corp., Tesoro Corp., and Sunoco Inc. have cut spending plans for 2009. Some integrated oil companies, which also have extensive U.S. refining networks, have also cut capital spending. Chevron Corp. canceled a project to boost the capacity of a fluid catalytic cracking unit at its Pascagoula, Miss., refinery.

Postponing these efforts may be prudent in the short term but could leave the companies vulnerable to tougher regulations down the road. The companies all have long-range expansion plans for their U.S. plants. Philadelphia-based Sunoco, in particular, has an aggressive slate of capital projects planned for five or more years out. The company plans to increase diesel production at its refineries in Pennsylvania and New Jersey, and add equipment to process heavy grades of crude oil at its Toledo, Ohio, refinery.

But refiners say the murky future of carbon regulations makes it difficult to consider future laws when prioritizing expansion projects.

"We're very unclear as a company what we're going to be looking at, so it's hard to make a judgment," said Joe Gorder, executive vice president of marketing and supply for Valero Energy Corp. "There's so many other factors that impact projects and capacity expansion that we know and can see."

These more tangible factors are necessarily prioritized, he said. Valero's decision to postpone the installation of diesel-making units at refineries in Texas and Louisiana was due to current economic conditions, he said.

Companies able to invest to keep up with changing regulations are likely to be the most successful, said Kevin Book, an analyst with FBR Capital Markets Corp., an Arlington, Va., investment bank and brokerage.

"I think there's an advantage in terms of modernity to having the capital available to make these efficiency improvements," he said. Companies that are unable to keep up may be forced to retire their plants, in a repeat of the raft of U.S. refinery closures that followed implementation of amendments to the Clean Air Act in the 1990s.

"You had a round of refinery closures, where plants were deemed uneconomic," said Ann Kohler, an analyst with New York investment bank Caris & Co. Refineries with a combined capacity of more than 1.6 million barrels a day closed between 1988 and 2002, largely due to an inability to comply with environmental regulations. This represents about 10% of today's total refining capacity. "The same would hold if you're looking at another round of the industry going through significant investment to meet regulatory requirements."

FBR's Book said the integrated majors may have the financial wherewithal to salvage an upside from new climate regulations. "We may be entering a world where the majors win the climate game by being greener on a competitive basis than some of the overseas providers and the small business refiners," he said.

Big West Refinery Lays off 55 Workers due to Bankruptcy Filing

About 55 contracted workers at Big West refinery have lost their jobs because of problems stemming from the plant owner's recent bankruptcy filing, a union official briefed on the situation said January 8.

The laid-off workers were doing upgrades and maintenance work, said the official, Ed Huhn, secretary-treasurer of the local chapter of United Steelworkers of America, which represents many employees at the Rosedale Highway refinery in Bakersfield, Calif.

Last year the plant employed about 150 part-time workers in addition to some 200 full-timers. Huhn said no salaried workers were affected by the cutbacks.

The refinery's Ogden, Utah-based owner, Flying J Inc., did not respond to requests for comment.

A company that Huhn said provided some or all of the now-dismissed contracted workers, Total Western Inc., declined to comment on the layoffs, and instead referred calls to a lawyer who could not be reached for comment.

Since Flying J's Chapter 11 bankruptcy reorganization filing Dec. 22, Big West has had trouble buying enough crude oil to continue operating. Some oil companies large and small have stopped selling to the refinery, saying they want to be paid promptly for past and future shipments.

A company spokesman said that the plant had ceased operating for 10 days of maintenance work, a move some say was done earlier than planned and may have been forced by the oil supply problems.

Shell spokeswoman Alison Chassin denied that the company is holding up refining activity at Big West. She said the company's pipeline is one of two that bring oil to the refinery, and that the other one would be "equally available to supply a majority of the oil" to the plant.

Moreover, she said Shell's pipeline normally supplies the refinery with no more than about 10,000 barrels of oil a day, which represents only about 20 percent of the refinery's needs, depending on its operating level.

And at any rate, she said, the payment terms requested by Shell, which she declined to discuss, are not extraordinary.

"We believe the terms we have been negotiating have been extremely reasonable given Flying J's bankruptcy status," Chassin said.

Big West provides about 2 percent of California's gasoline and 6 percent of its diesel under normal circumstances. It can process a maximum of about 65,000 barrels of oil daily, but can run on as little as about 35,000.

Local petroleum executives said January 7 that the plant was continuing to sell regular unleaded gasoline produced prior to the shut down, but that it has run out of diesel and premium gas.

ExxonMobil Shuts Torrance Refinery Fluid Catalytic Cracker for Few Weeks Maintenance

Exxon Mobil Corp said on January 9 it has shut down key processing units, including the fluid catalytic cracker, at its 150,000-barrel-per-day refinery in Torrance, Calif., for "few weeks" of planned maintenance.

"The FCC, the hydrotreater, the alkylation unit, one of the flare devices and one sulfur recovery unit are down for maintenance, but the crude unit is not down," Carolin Keith, a spokeswoman for the refinery, told Reuters.

Earlier, a source familiar with the refinery operations said the crude unit of the Los Angeles-area refining complex was included in the planned maintenance work which was expected to last to the end of this month.

Keith did not provide specifics on the duration of the maintenance work but added: "Officially we're saying it will be a few weeks."

An oil trader told Reuters that the gasoline-making FCC unit, which has a capacity of about 100,000 bpd, was expected to be down until mid-February at Torrance.

Cavitation Technologies Files Patent to Increase Efficiency of Refining Crude Oil

Cavitation Technologies, Inc. (CTI) an engineering and manufacturing company focused on becoming the worldwide leader in the sales of nano technology-based cavitation systems has filed a patent for rapid modification of crude oil.

It is proven that cavitation in fluids provide superior mixing and may significantly accelerate rates of chemical reactions and processes. By applying this concept to oil refining industry the company said that it was able to increase the efficiency of refining crude petroleum to gasoline, kerosene, diesel, jet fuel and other valuable hydrocarbon-based products.

According to the company, it has developed a unique concept and created the efficient flow-through hydrodynamic cavitation device that does not have an equivalent in the market. The technology is very robust; it allows the prompt alteration of both physical and chemical properties of crude oil and petroleum products. The developed cavitation generator can be used as a feed injector/mixer and can be easily coupled to a fluid catalytic cracking unit (FCCU) or any other refining facility to maximize the refinery's profitability.

"We look forward to productive collaboration with a number of the oil mining and refining companies. Oil refining is a multi-billion dollar industry and we are very excited to become part of it. We are certain that our systems will increase profitability by cutting refining costs, saving energy, and increasing efficiencies," said Roman Gordon Chairman and CEO of Cavitation Technologies. "During our testing 5 to 15% more diesel and gasoline was produced from the same barrel of crude oil using our technology."

Crude oil is converted into many useful products. One barrel of crude oil gives the following percent yield: gasoline 46.7%, fuel oil 28.6%, jet fuel 9.1%, petrochemicals 3.8%, coke 3.5%, asphalt and road oil 3.1%, liquefied gases 2.9%, lubricants 1.3%, kerosene 0.9%, and waxes 0.1%. Cavitated oil increases the output of light fractions at lower temperatures. Cavitation heats crude oil, disrupts its matrix, and improves API gravity and viscosity by 10 -15%.

The process breaks down hydrocarbons and facilitates their fragmentation which results in creation of more valuable by-products. There are several potential benefits of using cavitation on crude oil such as, but not limited to: Reducing energy consumption by minimum of 10%, facilitates cracking of hydrocarbons and increases gasoline/diesel yield by 5-15%, reduces sulfur content, raises octane number in the straight run benzene and diesel fractions, and facilitates separation of water from the petroleum. For instance, in our trials, oil cavitation in the absence of hydrogen gas has increased the Br-number (ASTM D1159-07) by 6-16%.

Although CTI is focused on applying its technology to modular, turn-key solutions to the biodiesel industry, the company recognizes potential commercial applications for nano-based cavitation technologies in markets such as water sanitation, alcoholic beverage instant aging, milk pasteurization and homogenization, chemical processing, water - diesel emulsion, crude oil enhancement, and pharmaceuticals. The company is

Feds Launch Utah Refinery Blast Probe

Federal investigators on January 15 began looking into a Woods Cross refinery blast that left four workers with critical injuries.

A team from the U.S. Chemical Safety Board arrived to begin interviewing witnesses about the explosion January 12 at Silver Eagle Refinery. The team already has filed an "extensive" records request, said board spokesman Daniel Horowitz.

The board has no authority to issue violations or fines against particular companies, Horowitz said; rather, they look for causes and solutions so that similar incidents do not happen at other facilities.

The Occupational Health and Safety Administration has been conducting its own investigation into the blast. It is not Silver Eagle's first scrutiny by OSHA: The company has received 23 violations and been assessed $12,300 in fines, according to records on the OSHA Web site. Thirteen of those violations were deemed "serious" -- that is, they posed direct threats to workers, said Utah OSHA Director Louis M. Silva.

Of the five refineries operating in Utah, two have more violations and fines on record: Flying J, with 36 violations and more than $51,000 in fines; and Holly Refinery, with 33 violations and more than $91,000 in fines. Among the Mountain States, Silver Eagle has the fourth highest number of violations.

However, Silva said, the number of violations does not necessarily indicate how unsafe a workplace is.

OSHA regulators have not determined what caused the explosion at Silver Eagle, or whether any violations will be issued, Silva said.

Two Silver Eagle employees and two contractors were critically burned in the blast.

All four were standing about 10 feet from the 10,000-barrel gasoline tank when it exploded about 5:30 p.m. January 12.

CB&I Wins $50 Million Refinery Hydrotreating Unit Project

CB&I has been awarded a project, valued in excess of $50 million, to design and fabricate a distillate hydrotreating unit for a North American refinery.

CB&I's scope of work for the project includes the engineering, procurement and fabrication of the hydrotreating unit, which removes sulfur from diesel by utilizing a catalyst in the presence of hydrogen.

With more than 70 proprietary licensed technologies and 1,500 patents and patent applications, CB&I takes projects from conceptual design, through technology licensing, engineering and construction and final commissioning.

Russia JV Troubleshooter to Head BP America

BP has promoted the man that acted as troubleshooter in the dispute with Russian joint venture TNK-BP to chairman and president of BP America.

Lamar McKay, 50, will succeed Bob Malone, 56, who is retiring after 34 years with the oil giant.

BP was locked in a battle for control of TNK-BP, Russia's third largest crude producer, for most of last year. As head of the special projects team, Mr McKay brokered talks with BP's Russian partners.

He is credited with helping to establish a new governance model for TNK-BP after a fierce boardroom battle.

Mr McKay is a veteran of US oil company Amoco. After the BP-Amoco merger in 2000, he led the group's worldwide exploration and production strategy efforts. He previously served as chief operating officer for BP America and is a member of the executive management team.

Mr Malone was appointed head of BP America in 2006 to repair the company reputation in the US and restore confidence among investors after the Texas City refinery explosion that killed 15 people.

But BP's operational and regulatory woes continued. Two months after Mr Malone took the helm, BP America discovered corrosion in its Alaska pipelines and had to shut some output from Prudhoe Bay oilfield, the largest in the US, prompting congressional scrutiny.

Analysts say Mr McKay will be tasked with reforming the U.S. operations and improving downstream profitability.

Conoco Plans Work on FCC ESPs at Borger Refinery

ConocoPhillips is starting maintenance on the electrostatic precipitators of a gasoline-making fluid catalytic cracking unit at its 124,000 barrel-per-day Borger, Texas refinery, the company said in a filing with state regulators on January 21.

The work is set to begin immediately and expected to last through Feb. 4, according to the filing.

Conoco to Shut Bayway Refinery FCC Unit for Maintenance

ConocoPhillips plans to shut a 145,000-barrel per day gasoline-making fluid catalytic cracker at its Bayway refinery in Linden, New Jersey, for about six weeks of maintenance starting in early February, trade sources said January 20.

"The FCC is supposed to come down in early February for six weeks," a cash oil products trader told Reuters, seconding views from other market players about the planned upcoming work at the refinery.

Valero's Preliminary Plans for 2009 Turnarounds

Valero Energy Corp expects to work on several of its refineries in 2009 but a source familiar with refinery operations said that current plans are subject to change due to financial constraints.

Refinery	Unit/Size (in’000 bpd)	Est. Date of Work
Corpus, Christi, TX	HOC/92	Ongoing
Three Rivers, TX	Alky/12	Ongoing
	Crude/95	Q1
Texas City, TX	FCCU/24	Q1
	Crude	Q1
St. Charles, LA	Coker/50	Q1
	Coker/72	Q2
Houston, TX	Hydrocracking	Q2
McKee, TX	FCCU/55	Q3

Coke Drums Arrive at Total Port Arthur Refinery Project Site

Total Port Arthur Refinery celebrated the arrival of the centerpieces for its $2.2 billion Deep Conversion Project on January 27.

Four massive coke drums left Spain in December for Port Arthur and are considered to be the heart of the project.

"Each drum is 12 stories tall, 32 feet wide and weighs 404 tons," said Rajan Krishnan, director of the Deep Conversion Project.

Michel Benezit, TOTAL's president of Refining and Marketing worldwide, and Andre Tricoire, senior vice president of Refining worldwide, attended milestone celebration along with about 200 invited guests from Southeast Texas.

"This project reflects our strategy of investing to enhance the efficiency and competitiveness of our large refining hubs worldwide, while at the same time reducing our environmental footprint," Benezit said.

The Deep Conversion Project includes a 50,000 barrel-per-day coker, a desulfurization unit, a vacuum distillation unit, and other related units. At its peak, the project will employ about 2,200 skilled workers.

The new units will increase the facility's deep-conversion capacity and expand its ability to process heavy and sour crude oil. They will add 3 million tons per year of ultra low sulfur automotive diesel to the refinery's current production, raising total out put of all products combined to about 12 million tons per year. The project is scheduled for commissioning in 2011.

Tesoro’s Anacortes Refinery Shut for Overhaul

Tesoro Corp said its 115,000-barrel-per-day (bpd) Anacortes, Washington, refinery was completely shut by January 21 for a plant-wide overhaul expected to last until mid-February.

Originally, Tesoro had planned a 45-day overhaul to begin in mid-February, but shortened the length of the work and advanced the starting date as West Coast refined products market conditions have improved.

Vapor Leaks Plagued Silver Eagle Refinery Tank that Ignited

The Silver Eagle Refining storage tank that caught fire January 12 and burned for 11 hours had a history of leaking explosive vapors, federal investigators said January 30.

The U.S. Chemical Safety Board is taking a close look at the integrity of the 440,000-gallon tank at Silver Eagle Refining Inc., five miles north of Salt Lake City in Woods Cross.

CSB Investigations supervisor Donald Holmstrom said the ignition source may have been a gas heater or a refrigerator's electric outlet in a utility shed about 160 feet from the tank.

Four workers engulfed by flash flames from 230 feet away were standing in an open cigarette smoking shed, but investigators don't think smoking caused the gasoline vapors to ignite. All four were seriously burned; three of them have been released from a hospital since the January 12 fire.

"We don't believe that the smoking led to this accident, and we are focused on other sources of ignition," Holmstrom said at a news conference to update his agency's investigation. He said the review will take months to complete.

Tanks holding refined and partly refined gasoline don't normally vent fumes, except under pressure, and investigators are trying to determine what caused the pressure inside to build up.

Before the explosion, workers had purged some of the lines to the tank. On the day of the fire, a company executive told The Associated Press that work is believed to have forced vapors to escape from the tank's vents. Holmstrom confirmed that the purging may have forced the tank to release a dense "vapor cloud."

But Holmstrom also revealed that Tank No. 105 had a history of vapor leaks before and after it was emptied for repairs last fall.

Workers told investigators they could see the tank venting fumes for three weeks before the tank's seals were replaced — and that vapors continued to escape after the repair job.

Investigators plan to take measurements to see if the 30-year-old tank was "out of round," or deformed, and unable to hold a seal.

The tank has a floating roof that rises and falls as it fills and empties, plus a fixed roof. Pressure can build up between those spaces, where seven vents let fumes escape if necessary, said Holmstrom, but he said venting isn't normal for refinery operations and that fumes should always be contained in tanks or lines.

Investigators are trying to calculate whether the buildings where appliances could have provided an ignition source are too close to refinery operations, he added.

The utility shed is 140 feet away. A laboratory — with an attached smoking shed — is 160 feet from refining operations.

Investigators also are looking into the causes of reported fires that broke out at the same refinery in 2003, 2005 and 2007.

The Chemical Safety Board is an independent federal agency that investigates industrial accidents but doesn't have any regulatory or enforcement power.

Alon Updates its Refinery Maintenance

Alon USA Energy Inc will have several periods of scheduled maintenance at its refineries, a company spokesman said February 3.

The company plans to slow rates at its refineries in Big Spring, Texas, and Krotz Springs, Louisiana, due to reformer regeneration work, spokesman Joseph Israel said.

The 83,000 barrel per day Krotz Springs refinery will slow rates to 45,000 bpd for 10 days beginning March 2, Israel said. The 70,000 bpd Big Spring refinery will slow rates to 40,000 bpd for 10 days beginning May 1, he said.

Alon's 85,000 barrel per day refinery in Paramount, California, which has been in a complete shutdown since Nov. 1, will be fully restarted by mid-February, he said.

The work at the Paramount refinery is a major turnaround, which occurs every five years, according to Israel.

When the plant is restarted, the company will also bring a new naphtha hydrotreater online, Israel said. The hydrotreater will increase the refinery's hydrotreating capacity by 50 percent, boosting its ability to make finished gasoline and diesel for the California market.

ExxonMobil’s Torrance Refinery Reports Maintenance-linked Flaring

Oil major Exxon Mobil Corp's 150,000 barrel per day Los Angeles-area refinery in Torrance, California reported flaring February 2.

The refinery exceeded certain emissions limits "due to a plant flaring event from maintenance activity," according to the filing with the California Emergency Management Agency.

The filing said "the refinery continues to operate" but gave no further details.

Exxon has begun an overhaul of the refinery's 100,200 bpd gasoline-producing fluidic catalytic cracker Dec. 30. The hydrotreater, alkylation unit and a sulfur recovery unit were included in the overhaul which the company has said early last month was due to last a few weeks.

California Refinery Pollution Regulations for Union County, SD Fail in Committee

An effort to impose California pollution regulations on the oil refinery Hyperion Refining wants to build in Union County failed in the South Dakota Senate State Affairs Committee.

The committee rejected by a 6-3 vote legislation containing the regulation after a state official said the bill, SB196, might actually impede the state's ability to regulate the Hyperion refinery.

Steve Pirner, state environment secretary, said the state already may use the most current regulations according to the technology that's available.

Sen. Ben Nesselhuf, D-Vermillion, said he offered the legislation to ensure that the oil refinery can be strictly regulated. He offered similar legislation during last year's session. It also was defeated.

Dallas-based Hyperion is entering a sensitive period in acquiring the preconstruction air quality permit it needs for the project to advance. The state Department of Environment and Natural Resources received more than 3,000 comments from the public, and the federal Environmental Protection Agency expressed "serious" concerns about the permit during the 60-day contested-case public comment period, which ended Nov. 14.

Refinery opponents, including the local Save Union County group, and the Sierra Club have assailed the project's environmental impact on the 3,292-acre site, now crop land, near Elk Point, S.D., and the air and water far beyond.

Marathon Says Detroit Upgrade Start Delayed to 2012

Marathon Oil Corp said February 3 the completion of its 100,000 barrel-per-day Detroit refinery upgrade will be delayed to mid-2012 as the company announced spending cuts for this year.

The Houston-based company also said in a statement on 2009 capital spending that a project to expand its 245,000 bpd oil refinery in Garyville, Louisiana was now 75 percent complete. It will be finished on schedule in the fourth quarter of 2009.

Marathon has said in late October that its expects delays to the Detroit Heavy Oil Upgrading Project (DHOUP), which was originally due to be completed in late 2010, but it did not provide a new expected start-up date then.

Marathon is among several oil companies to announce cuts or delays to refinery expansion projects in the United States.

Valero’s Port Arthur Hydrocracker Restarted

Valero Energy Corp said an idled 45,000-barrel-per-day hydrocracker at its refinery in Port Arthur, Texas, was ramping up to planned rates February 2, after the unit was restarted following an unplanned outage.

Bill Day, a spokesman for the largest U.S. refiner, said that the distillates unit was shut January 27 after a leak was discovered. The Port Arthur refinery has a capacity of about 325,000 bpd.

MEXICO

Pemex Sees Mexico Refinery Costing up to $10 Billion

A planned new oil refinery in Mexico could cost up to $10 billion, the head of the state oil company Pemex said on January 20.

Pemex pegged the cost of a new refinery at $8.17 billion in a report released in July with additional spending for infrastructure ranging between $852 million and nearly $2.6 billion depending on where the plant was sited.

"The refinery itself will cost around $9 billion to $10 billion although we will have to see how much this could go down, given everything that is happening in global markets," Pemex president Jesus Reyes Heroles said in an interview.

A Pemex spokesman explained Reyes Heroles was speaking of the entire project and the company had not revised its cost estimate for the project from the study in July.

Pemex is currently evaluating where the new refinery will be built and hopes to begin early construction work by the fourth quarter of 2009, Reyes Heroles said.

Mexico has not built a new refinery in years and the country now relies on imported fuel for more than 40 percent of gasoline consumption. Imports of diesel fuel and other refined products are also rising.

"A year, more or less, is needed for the basic engineering but at the same time we can begin with some site preparation works ... It is the intention of Pemex to start this around the final quarter of this year," Reyes Heroles said.

Pemex had been optimistic site preparation work could begin earlier but the company has been subject to intense lobbying by politicians seeking to have the refinery located in their home states.

Tula, near Mexico City and the Gulf of Mexico port of Tuxpan northeast of the capital were seen as the least costly locations to build the refinery in the July report.

The company has stated repeatedly economic considerations will be primary in choosing where the refinery will be built.

Pemex to Investigate SEC Claims of Siemens AG Illicit Payments

Petroleos Mexicanos said January 27 it will investigate allegations by the U.S. Securities and Exchange Commission that Siemens AG (SI) made $2.6 million in illicit payments to settle cost-overrun claims on refinery projects.

In a filing, Pemex said the SEC filed a "settled enforcement action" on Dec. 12 charging Siemens with violation of the Foreign Corrupt Practices Act, or FCPA.

"Among other matters, the SEC alleged that two Siemens subsidiaries made three illicit payments totaling approximately $2.6 million to a consultant to assist in settling cost overrun claims in connection with three refinery upgrade projects, and that some portion of those payments was passed on to a senior Pemex official," said Pemex in the filing.

Pemex said it will conduct an internal investigation that is independent of Pemex management and under the supervision of the Ministry of Public Administration "to determine whether any person acted improperly in the matters related to the SEC allegations."

A Siemens spokeswoman said the company wasn't immediately able to comment on the Pemex filing.

Pemex Set To Begin Salina Cruz Refinery Work

Petroleos Mexicanos is seeking contractors to carry out repair and maintenance work on two key units of the Salina Cruz refinery starting in late February and March, according to the Compranet government procurement web site.

Repairs for one of the refinery's two gasoline-making catalytic crackers are scheduled to start Feb. 23 and last 28 days. Repairs on one of the refinery's two crude units will start March 3 and last 35 days. Crude units are involved in the initial phases of oil refining.

A refinery operator has confirmed that both units will be shut down to carry out the repair work.

Salina Cruz, Mexico's largest refinery, processed 286,246 barrels a day of crude in December and produced 106,186 barrels a day in gasoline, according to the energy ministry.

Pemex normally has to increase gasoline imports during periods of refinery work. The company imports around 40% of the gasoline it sells locally, and is planning to build a new refinery to reduce fuel imports.

BRAZIL

Petrobras may Build $4 Billion Refinery without PDVSA Contract

Petroleo Brasileiro SA, Brazil´s state-owned oil company, said it may complete a planned oil refinery in northeast Brazil on its own if it fails to agree on a fuel-supply contract with partner Petroleos de Venezuela SA.

PDVSA, the Venezuelan oil producer, wants above-market prices for heavy crude to supply the 200,000 barrel-a-day Abreu e Lima refinery near Recife, Paulo Roberto da Costa, head of refining at Petrobras, said on January 21.

“Petrobras very much wants to build the refinery with PDVSA,” da Costa said at the event in Sao Goncalo, Rio de Janeiro state. “But it will build it on its own if it has to.”

The refinery, planned for completion next year at a cost of $4 billion, would receive half its oil from Venezuela´s Orinoco belt. Venezuela is forming joint ventures to exploit billions of barrels in the Orinoco belt, located in the country´s east.

The two companies have an agreement under which PDVSA would take a 40 percent stake in the project, da Costa said. PDVSA hasn’t yet contributed any funds to construction, he said.

The refinery has been the subject of talks at quarterly meetings between Brazilian President Luiz Inacio Lula da Silva and President Hugo Chavez of Venezuela. Chavez said the refinery was a topic at their March 26 meeting after a preliminary agreement was reached in December 2007.

Petrobras also wants to renegotiate some contracts to get lower prices given the falling price of raw materials and declining demand for construction, da Costa said.

“The price of steel and other products is falling,” he said. “If the prices don’t come down we’ll probably cancel some contracts.” He declined to say which companies or products would be the subject of cancellations.

ASIA

SRI LANKA

Iran to Spend $1Billion on Sri Lanka Refinery

Iran is contributing $1 billion to help Sri Lanka double the capacity of its refinery to 100,000 barrels per day the oil minister, A.H.M. Fowzie said.

"Iran will be giving us $1 billion and we will contribute about $500 million for the expansion," he told reporters on the sidelines of the Petrotech conference.

He said Sri Lanka has a term contract to buy 60,000 tonnes a month of Iran Light grade crude for its refinery, owned by Ceylon Petroleum.

Last year, Iran raised the credit period for crude purchases to four months from one month, he said.

THAILAND

Thai Refineries Seek Delay of Euro 4 Emission Standard Enforcement

Thai oil refineries want the government to delay enforcing the Euro 4 emission standard from 2012 by, another one or two years, citing the need for huge investments at a time of global economic hardships.

"During the down cycle of the oil refinery industry [such as now], we enjoy less revenue and smaller gross refinery margins. The global economic slowdown has further exacerbated the situation. It does not make any sense for each refinery to invest as much as US$2 billion now to upgrade the oil quality to comply with the new standard," said Chainoi Puankosoom, chairman of the Petroleum Industry Club.

Chainoi, also the president of PTT Aromatics and Refinery Plc, said that given the slow growth of oil demand and the influx of additional capacities from China and India this year, there would be a capacity glut globally. Therefore, refiners have been gradually cutting output utilization.

Pornchai Rujiprapa, permanent secretary of the Energy Ministry, said officials would hold talks with the Pollution Control Department to consider the refiners' request.

However, if no solution is reached, the ministry would suggest that local oil refineries refine their products at Thai Oil Plc and Bangchak Petroleum Plc, which have already finished upgrading their facilities to meet the Euro 4 standard and will begin operations this year.

He acknowledged the downturn caused by the severe overcapacity in the region and the rising demand for alternative fuels.

Anusorn Sangnimnuan, the president of Bangchak Petroleum Plc (BCP), said BCP was moving forward with its 17-billion-baht investment plan.

"Our petrol standard will meet the Euro 4 standard soon and we will keep upgrading our diesel facilities to meet the standard as well," said Dr Anusorn.

The Euro 4 standard sets the maximum sulfur content in emissions at 50 parts per million (ppm) from 350-500 ppm in effect today.

The new regulation also requires a reduction of lead and benzene content in refined oil to 0.005 grams per liter and 1 percent, respectively.

EUROPE / AFRICA / MIDDLE EAST

CROATIA

Croatia’s INA Says no Maintenance Work at Refineries in 2009

Croatia's oil group INA will have no maintenance shutdowns at its two refineries this year, the company said February 3.

'In 2009, there are no plans for maintenance works in either of (the two) INA refineries,' INA said in a statement to Reuters.

INA's biggest shareholder is Hungary's MOL with a 47.25 percent stake, while the Croatian government owns some 44 percent.

INA, which has both upstream and downstream segments, owns refineries in the central town of Sisak and in the northern Adriatic port of Rijeka. It last had a partial shutdown in the Rijeka refinery in the spring of 2008.

INA is in the process of modernizing its refineries, to enable them to produce gasoline for European Union markets. It plans to complete the overhaul, costing around $1.29 billion

GERMANY

Petroplus Holdings Reports Fire at Ingolstadt Refinery

Petroplus Holdings AG announced January 8 that an incident occurred at its Ingolstadt, Germany refinery.

On January 7, a fire occurred at a reflux pump associated with the crude oil unit. Refinery and local emergency response teams responded to the incident and the fire was immediately brought under control and extinguished in about an hour. There were no injuries or reported offsite environmental impacts. There was no damage to the refineries processing units and selected units were safely shutdown. The damage to the affected pump was being determined and the refinery was expected to begin full start-up by the beginning of the following week. The repair costs were expected to be minimal.

Petroplus Holdings AG is the largest independent refiner and wholesaler of petroleum products in Europe. Petroplus focuses on refining and currently owns and operates seven refineries across Europe: the Coryton refinery on the Thames Estuary in the United Kingdom, the Ingolstadt refinery in Ingolstadt, Germany, the Belgium Refining Company refinery in Antwerp, Belgium, the Petit Couronne refinery in Petit Couronne, France, the Cressier refinery in the canton of Neuchâtel, Switzerland, the Reichstett refinery in Alsace, France and the Teesside refinery in Teesside, United Kingdom. The refineries have a combined throughput capacity of approximately 864,000 barrels per day.

LITHUANIA

PKN Lithuania Refinery Plans Maintenance Turnaround in 2010

Lithuanian refinery Mazeikiu Nafta, owned by Polish oil group PKN Orlen PKNA.WA, plans to shut down for a full maintenance turnaround early in 2010, a spokesman said on January 21.

He also said the refinery would close one of its hydrodesulphurization units for upgrades at the end of March this year.

Spokesman Jacek Komar said the 2010 turnaround could take place in April, but possibly also in March or May.

"The whole refiner is planned to be shut down then ... It (the turnaround) should take about four weeks," he said.

He said the closure of the diesel hydrodesulphurization unit at the end of March this year would be for upgrades, similar to those at the first unit late last year.

TURKEY

Fuel Retailer Turcas Says Not Giving Up $4 Billion Oil Refinery Plans

Turkish fuel retailer Turcas said on January 23 it hasn't canceled plans to build a $4 billion refinery on the Mediterranean coast, denying a press report that it was abandoning the project.

Turcas and its partner Socar, Azerbaijan's state oil company, have postponed the refinery project amid the squeeze on financing during the global economic downturn.

Sabah newspaper on January 23 cited Turcas Chairman Erdal Aksoy as saying the partners had given up on building the refinery at the Turkish port of Ceyhan due to a conflict with a protected environmental area.

SOUTH AFRICA

Chevron Keeping Quiet about South Africa Refinery Future

Energy group Chevron SA was tight-lipped January14 about reports that have cast doubt on the future of its refinery at Milnerton in Cape Town.

Recent media reports quoted Chevron Corporation executive vice-president for strategy and investment John Watson saying the group might sell refineries in order to focus on its downstream business in the Asia Pacific region.

Refineries likely to be sold are those not serving the Asia Pacific market, according to the report. The Milnerton refinery and another one in Britain are the only two of Chevron's 13 refineries that do not serve the Asia Pacific market.

In a statement, Chevron SA spokesman Haymish Paulse would not comment on the implications of Watson's comments on the Cape Town facility.

"We have no announcements to make regarding our refining portfolio and will not speculate on future plans," Paulse said.

The 100,000-barrel -a-day refinery is one of four in SA and is critical to the security of liquid fuel supply. Refined petroleum products from the refinery are marketed through Caltex.

An industry source, who declined to be named, said Watson's comments did not come as a complete surprise, as international oil companies were restructuring their global assets.

He said the crisis in global markets put a number of oil companies under pressure.

The source said it was a worldwide tendency for oil companies to rationalize their operations. "It is a global trend. The next two years will be tough for the oil industry," he said.

He said news of a possible sale of the Cape Town refinery was also expected. "It is too small and cannot produce clean fuel. It is simply not globally competitive," he said.

He said if Chevron decided to sell the facility, it might struggle to find a buyer.

RUSSIA

Rosneft Plans Tuapse Refinery Expansion and Upgrade

Russia’s Rosneft is implementing a major expansion and upgrade at its Tuapse Refinery.

Rosneft is seeking to more than double the refinery's capacity and to increase its depth from 56% to 95%.

Commissioned in 1929, Tuapse Refinery is Rosneft's oldest refinery. Located in the Black Sea port city of Tuapse in Russia's Krasnodar region, the refinery is the only such Russian facility on that seacoast.

Under the first phase of the project, which is scheduled to conclude in 2011, Rosneft will increase Tuapse Refinery's capacity to 12 million tonnes per year (approximately 241,000 b/d). In Phase II of the project, the company will upgrade the refinery's core processes so that it can produce Euro-4 and Euro-5 gasoline and diesel fuels. This second phase is slated for completion in 2012.

According to Rosneft, the modernization project will enable Tuapse Refinery to fully meet the demand for high-quality fuel in Russia's Southern Federal District. Moreover, boosting the capacity of the nearby oil loading terminal to 12 million tonnes reportedly will help to significantly boost exports from the refinery.

The refinery processes crude oil produced in Western Siberia and Southern Russia and transported via Transneft's pipeline system and by rail. Its capacity is roughly 5 million tonnes per year, or approximately 100,274 barrels per day. The refinery's product mix primarily consists of gasoline, naphtha, diesel, and fuel oil. Located adjacent to an oil loading terminal, the refinery exports approximately 90% of its products.

KAZAKSTAN

Kazakhstan to Build Refinery on Caspian Coast

Kazakhstan plans to complete the construction of a Caspian oil refinery in the oil-bearing western region of Mangistau in 2012.

Kazakh Prime Minister Karim Masimov familiarized himself with a relevant project as part of his tour to the region on January 24-25, the press service of the Mangistau regional administration reported January 26.

"There are plans to implement the project during 2009-2012. The production capacity of the plant is up to 1m tonnes of oil annually. Once the plant is put into operation, it will make it possible to reach at least 80 percent refining of oil after the first phase, and at least 90 percent at the second stage," the press release said.

IRAN

Oil Projects in Lavan and Bandar Abbas Come On-stream to Raise Refining Capacity 320,000 bpd

Iranian Oil Minister Gholam-Hossein Nozari officially inaugurated three new units of the Lavan refinery February 2.

A dual-purpose jetty, a sour gas sweetening unit, and an LNG recovery, refining and storage unit are the three mentioned projects which came on stream, the Mehr New Agency reported.

Referring to the 10 billion barrels in-situ reserves of Lavan oil region, Nozari expressed hope that the output of the region’s four oil fields (Salman, Lavan, Resalat, and Reshadat) rises to 250,000 barrels per day.

Two of Bandar Abbas refinery’s units also officially restarted their production and Gholam-Hossein Nozari attended the ceremony, IRNA reported.

With these units coming on stream the refinery’s refining capacity has risen to 320,000 bpd from the previous figure of 232,000 bpd.

The Bandar Abbas refinery’s capacity boosting plan has been implemented at the cost of €17.74 million and 207.1 billion rials in 32 months.

SAUDI ARABIA

Saudi Aramco, Total Eye $1.2 Billion Cost Cut on New Refinery

Saudi Aramco and France's Total want bidders for a new joint venture refinery to chop at least $1.2 billion from costs due to the global economic downturn, a spokesman for the venture said on January 25.

Top oil exporter Saudi Aramco has sent bidders back to the drawing table on several mega-projects to expand energy capacity as it looks to take advantage of the slide in prices for commodities and to drive down costs.

The tight credit market may also encourage contractors to lower bids, as they look for access to Aramco's cash. The Saudi state company funds the majority of projects from its balance sheet, rather than through credit.

"I think we will be saving more than 10 percent on the cost," Khalifa al-Lahdan, public relations head for the Saudi Aramco Total Refining and Petrochemical Co (Satorp), told Reuters. "It will save a lot of money."

When commodity prices were near their peak last year, the 400,000 barrels-per-day refinery to be built on the Saudi east coast at Jubail had an estimated cost of around $12 billion.

Satorp has delayed the bid round for refinery construction contracts by another month to March to give bidders time to rewrite proposals to reflect cheaper prices for commodities and raw materials, Lahdan said. The bid round has already been delayed from November as Satorp looked to force down costs.

Aramco and ConocoPhillips have also delayed bidding on a 400,000 bpd joint venture refinery to be located at Yanbu.

Aramco has also put contracts for its 900,000 bpd Moneefa field under review. Moneefa will pump heavy crude to feed the two joint venture refineries.

Satorp has divided the construction of the Jubail plant into 14 contract packages. It awarded the second contract, worth around $200 million to Saudi company Abdul-Rahman M. Al-Shalawi Est, Satorp said in a statement on January 25.

Shalawi will lay roads and connect water, power and sewage at the construction site for the 30,000 workers that will build the refinery.

The first contract was awarded late last month to develop the land and accommodations for the workers. The remaining 12 contracts are for construction of the refinery itself.

Satorp held a meeting with contractors interested in the construction packages in January in Rome, Lahdan said. The companies asked for the bidding round to be delayed another month to allow them time to rewrite bids, he added.

Turmoil in credit markets and a slump in oil prices have prompted energy companies around the world to reconsider expensive projects or cut back on spending to preserve liquidity.

Saudi Aramaco and Total Award $12 Billion Contract for Refining and Petrochemical Facility

Saudi Arabia-based Contracting & Construction Enterprise has been awarded a construction contract by Saudi Aramco and Total for the US$12 billion joint venture refining and petrochemical facility in Saudi Arabia.

This contract, which is required to support the construction phase of the complex at Jubail, is an indication of the company's commitment to push through the project. Under the terms of agreement, the construction company will develop about 600 hectares with basic infrastructure allowing for the accommodation of 30,000 workers, temporary offices, and 3000 personnel.

Construction of all facilities is to be finished by the end of 2012, with commercial operations of the facilities set for March 2013.

WorleyParsons Gets Contract for SAMREF Project in Saudi Arabia

"WorleyParsons has announced that Saudi Aramco Mobil Refinery Company Limited (SAMREF) has selected WorleyParsons to execute its Clean Fuels Project at Yanbu Al-Sinaiyah, Saudi Arabia.

The project encompasses significant modifications to SAMREF's refinery to comply with future mandatory sulfur levels of 10 parts per million in gasoline and diesel. The phased construction project is expected to begin start-up in 2013.

WorleyParsons' scope of work includes front-end engineering design (FEED) and full responsibility for engineering, procurement, and construction of the facilities. Dependent on finalization of the scope of work details, WorleyParsons' services contract value could be as high as US$ 400 million.

The overall project management and out-of-Kingdom scope of work will be executed in WorleyParsons' West Coast Operations Monrovia, California office, which is currently engaged in work supporting Saudi Aramco's Ras Tanura refinery expansion on the country's East coast. WorleyParsons' Al-Khobar office will provide in- Kingdom logistics support and resources.