A bill to help get an oil refinery going in North Dakota is dead. The House defeated a measure to give a property tax incentive to any oil refinery or pipeline until its start up costs could be recovered. Representative Dave Weiler says the finance and tax committee decided to not support the idea. He says two groups testified that they have been looking at constructing an oil refinery in the state and the tax incentive would not help them...

However Democrats say this is how North Dakota can add value to our crude oil...

Weiler, (R) Bismarck said "They put a lot of time and effort and money into the projects that they are working on and so I guess I think it was felt by the majority of the committee that why should we spend $750 thousand dollars on an RFP when we already have two groups that have already been working on this for five years."

The proposal would've cost the state $750,000. It failed with a vote of 35-59.

Chevron to Delay Pascagoula Refinery Pilot Project

Chevron Corp is delaying plans to build a unit to test a new heavy-oil upgrading technology at its Pascagoula, Mississippi, refinery, a company spokesman said on February 4.

Depending on market conditions, the company said it will delay until 2010 construction of a 3,500 barrel per day pre-commercial plant that uses the technology, called Vacuum Resid Slurry Hydrocracking.

"This is a strategic deferral," said Lloyd Avram, a spokesman for the company.

He added, "First, the recent drop in oil prices: Second, an opportunity to achieve reductions in construction costs as global construction slows in the coming year: and Third, the opportunity to incorporate additional design flexibility.”

The technology, which could significantly increase yields of gasoline, diesel and jet fuel from heavy and ultra-heavy crude oils, like those produced in Venezuela and the Canadian oil sands, was very attractive in times of tight supply and demand for oil products.

Given the falling price of oil -- down nearly $100 a barrel from its high in July -- and sluggish demand for oil products due to a weak global economy, refiners have been forced to cut back production of existing units to keep profit margins in the black.

Chevron announced the project in March of 2008 and at that time said it had secured all the necessary permits to begin construction later in the year. The company did not put a price tag on the project.

The Pascagoula refinery has a capacity of 330,000 barrels a day.

Valero Takes CVU Offline at Corpus Christi Refinery

Valero Energy Corp. took a crude-vacuum unit (CVU) offline Feb. 3 at its 340,000 b/d Corpus Christi, Tex., refinery for unplanned maintenance following discovery of a leak in the unit, a company spokesman Bill Day reported.

The CVU, which is in the East Plant section of the complex, would be shut for 2-3 days, Day said.

"The impact on production will be minimal," he said. "The East Plant gasoline-making unit and a heavy-oil cracker in the West Plant are already down for planned maintenance."

The West Plant alkylation unit also is shuttered for planned maintenance, the company previously had announced.

Flying J Lays Off 200, Puts Pipeline Up for Sale

Flying J, the oil refiner and fuel marketer that filed for bankruptcy in December, is laying off 200 workers and putting its Texas refined fuel products pipeline up for sale.

The affected workers include 80 people in Utah, Peter Hill, a spokesman for Ogden-based Flying J, said February 4.

The pipeline is owned by Longhorn Pipeline Holdings LLC, a subsidiary of Flying J that was part of the Chapter 11 bankruptcy filing on Dec. 22.

The pipeline carries 72,000 gallons of gasoline and diesel a day from Houston to a Flying J storage facility in El Paso, Texas.

"From Flying J's standpoint, it is seeking to maximize value for its creditors and the Longhorn pipeline is a valuable asset," Hill said.

Hill refused to say what price Flying J had placed on the 700-mile pipeline.

Last month, another Flying J subsidiary, Big West of California, shut down its 70,000-barrel-per-day refinery in Bakersfield, Calif., saying it didn't have enough cash to buy crude oil under terms offered by suppliers.

On February 4, Hill said Flying J is exploring its options in Bakersfield, including a possible sale of the refinery.

The disruption hasn't affected Flying J's North Salt Lake refinery.

Flying J filed for bankruptcy following a liquidity crisis initiated by falling oil prices and trouble securing financing from lenders.

At the time, the company said none of its 16,000 employees would be laid off.

Citgo Lake Charles FCCU Restart Moved Back Again

Restart of gasoline-producing fluidic catalytic cracking unit A at Citgo Petroleum Corp's 429,500 barrel per day (bpd) Lake Charles, Louisiana, refinery has been delayed for a second time, sources familiar with refinery operations said on February 8.

The unit was expected to begin restarting over the weekend as work continued to prepare the unit to return to service, the sources said.

Restart of FCCU A, one of three at the refinery, was originally planned to begin by Feb 4, but was delayed by minor snags in finishing the overhaul, which began a month earlier. Such delays are common in major refinery unit overhauls.

Citgo planned to begin restarting February 11, the sources said.

A Citgo representative was not available at the time to discuss refinery operations.

Citgo plans to overhaul FCCU B in 2010 and FCCU C in 2011 at the Lake Charles refinery, sources have said.

Court Finds BNSF Railway Responsible for $32.5 Mln Montana Oil Site Cleanup

BNSF Railway is responsible for cleaning up pollution at the Kalispell, MT site of a former oil refinery, a state judge ruled in a decision that could hit the company with a cleanup bill estimated at $32.5 million.

The decision by District Judge Jeffrey Sherlock of Helena came in the first Superfund hazardous-waste case that the Montana Department of Environmental Quality had taken to trial.

The ruling February 12 defines how Fort Worth, Texas-based BNSF or other parties with stakes in Superfund sites are responsible for cleanup, DEQ lawyer Cynthia Brooks said.

"I'd hope this (ruling) means responsible parties like BNSF will recognize the liability, and rather than choose to deny it they will accept that liability, clean up the site quickly and not draw the process out," she said.

BNSF has indicated strong disagreement with the ruling. The company said it already has spent $5 million on cleanup at the Kalispell site and "never owned or leased the refinery property."

In a statement, railroad spokesman Gus Melonas said that "BNSF is reviewing the decision and is considering its options in light of the (Montana) court's reliance on a (related) case presently pending before the U.S. Supreme Court. BNSF is committed to being a good corporate citizen. It has worked and will continue to work closely with Montana Department of Environmental Quality to perform remediation."

The state and BNSF went to trial last March over whether the railroad is responsible for cleanup of the property used for an oil refinery from the 1920s to 1963. Soil and groundwater are polluted from the dumping of petroleum products, dioxin and other hazardous material, according to court records.

The polluted area includes the Reliance Refinery site, the former Kalispell Post and Timber Co. yard and the former Yale oil yard, which has been cleaned up by Exxon Mobil under a settlement agreement. The court already has ruled that BNSF is liable for cleanup at the timber yard site, which is near the Stillwater River in Evergreen, a community next to Kalispell.

Sherlock said that BNSF shares at least some of the responsibility for the pollution at the Reliance Refinery site because its rail cars transported oil within the site to where it was dumped on the ground. The railroad also "owned or operated part of the facility where the hazardous or deleterious substances were disposed of," he wrote.

Under Superfund law, a "responsible party" such as BNSF can be found liable for the entire cleanup at a site, even if it only shared in the ownership or actions that contributed to the pollution.

Brooks said BNSF has denied responsibility for the Reliance Refinery site for 14 years.

The company has done cleanup on part of the property, but the state estimates $32.5 million worth of work remains, to remove polluted soil and cleanse polluted groundwater.

"We don't want the taxpayer to have to pay to clean up these sites," Brooks said.

Marathon Chief Predicts Closing of Older U.S. Refineries

Facing weaker demand for gasoline, U.S. refiners could be forced to close older plants and may even see potential to export gasoline to Latin America, the chief executive of Houston’s Marathon Oil said February 10.

But the industry must be careful to keep the U.S. market well-supplied with gasoline, in part to avoid price spikes at the pump.

“To the extent there is excess capacity, this industry will adjust,” said Clarence P. Cazelot, speaking at Cambridge Energy Research Associates’ CERAWeek conference in Houston.

Refiners must continue to invest in upgrading plants to handle a wider variety of crude oil types and boost output of diesel fuel, which is expected to see higher global demand than gasoline in coming years, Cazelot said.

But the least competitive facilities will likely close, he said, comparing the current period to a shakeout in the late 1970s that ultimately cut the number of U.S. refineries in half to about 175. Despite the cuts, the nation’s fuel making capacity is higher today because of larger, more efficient facilities, he said.

But if U.S. gasoline surpluses continue to rise, Central and South America would be “excellent markets for us to target,” he said.

In 2008, U.S. gasoline demand fell 3.3 percent, its first annual decline since 1991, and utilization at the nation’s refineries slipped to its lowest point since 1988, according to the American Petroleum Institute.

Gasoline demand dropped after $4 pump prices last summer spurred U.S. drivers to pull back, more ethanol was blended into the fuel supply and a recession shrank consumer spending.

Amid the uncertainty, ConocoPhillips, Valero, Chevron, Sunoco and other refiners have said they will postpone some refinery upgrade and expansion projects.

Marathon, too, is delaying a $1.9 billion heavy oil upgrade of its Detroit refinery, but is moving forward with a $3.3 billion expansion of its Garyville, La., facility, Cazelot said. The project will add 180,000 barrels per day of capacity when it is complete later this year.

William Veno, a director with CERA, said the project is an example of the fortitude that may be required to face what he called formidable challenges facing the refining industry in the years ahead.

Shell to Overhaul FCC at Anacortes Refinery

Shell Oil Co plans to overhaul a 57,900-barrel-per-day (bpd) gasoline-producing fluidic catalytic cracking unit at its 145,000 bpd Anacortes, Washington, refinery between late February and early April, sources familiar with refinery operations said on February 10.

Shell declined to discuss which units will be shut during the overhaul, but said "additional fuel supplies will be shipped into the area so product availability will not be impacted."

The Shell refinery is the second in the Puget Sound town of Anacortes to carry out an overhaul this winter.

Tesoro Corp shut its 120,000 bpd refinery in mid-January while it does a plant-wide overhaul expected to last about 30 days.

BP Reports Carson Refinery Process Upset

BP Plc reported a process upset in an unspecified unit at its 265,000 barrel per day refinery in Carson, California, on February 9, according to a company environmental filing.

Personnel were evacuated at the Los Angeles-area refinery unit impacted by the upset, which had resulted in flaring, BP added in the filing with the California Emergency Management Agency.

U.S. Oil Refinery Expansion Plans

MOTIVAENTERPRISES LLC (RDSa.L) [ID:nN23314144]

Pt. Arthur, TX 45,000 bpd DHT 2008 Construction began June 2006

325,000 bpd Refinery 2010 $7 bln project approved

-------------------------------------------------------------------------------------

PASADENA REFINING SYSTEM INC.

Pasadena, TX N/A Refinery 2010 Revamp to run 70,000 bpd Marlim

N/A CDU N/A Future 100-200,000 bpd expansion

-------------------------------------------------------------------------------------

PLACID REFINING COMPANY LLC

Port Allen, LA N/A FCC Q2-08 Gasoline output to rise 7,000 bpd

N/A CDU Q3-08 Heavy oil revamp 25,000 bpd CDU

N/A Planned expansion

-------------------------------------------------------------------------------------

TOTAL SA (TOTF.PA) [ID:nL13709737]

Pt. Arthur, TX 50,000 bpd DCU 2011 $2.2 bln heavy oil project

N/A HDS 2011 N/A VDU 2011

-------------------------------------------------------------------------------------

VALERO ENERGY CORPORATION (VLO.N)

Pt. Arthur, TX 75,000 bpd CDU 2010 Crude throughput expansion

45,000 bpd DCU 2011 New coker 50,000 bpd HCU

2010 New diesel hydrocracker

N/A CGU 2012 $2.5 bln coke gasification unit

St Charles, LA 45,000 bpd CDU 2010 $1.4 bln, board approved

10,000 bpd DCU 2010 Coker expansion

50,000 bpd HCU 2010 New hydrocracker

N/A Aromatics 2012* Proposed $2.1 bln aromatics plant

that would cut mogas output

-------------------------------------------------------------------------------------

WRB REFINING (ConocoPhillips and EnCana joint venture)

Borger, TX N/A Refinery 2009 $300 mln debottleneck, boost

bitumen processing

54,000 bpd CDU 2012 Bitumen phase 3, $600 mln

*************************************************************************************

ROCKY MOUNTAINS (PADD 4)

*************************************************************************************

CONOCOPHILLIPS (COP.N)

Billings, MT 70,000 bpd CDU 2011 Replace existing CDU, capacity

up 7,000 bpd

-------------------------------------------------------------------------------------

HOLLY CORP (HOC.N) [ID:nN05301152]

Navajo, NM 16,000 bpd CDU Q1-09 Revamp. Delayed three months

15,000 bpd HCU Q1-09 $240 million total outlay

N/A CDU Q4-09 40,000 bpd heavy crude revamp

-------------------------------------------------------------------------------------

SINCLAIR OIL CORPORATION

Salt Lake, UT 60,000 bpd DCU 2009

-------------------------------------------------------------------------------------

TESORO CORP (TSO.N)

Woods Cross, UT N/A GHT N/A $55 mln gasoline hydrotreater

*************************************************************************************

WEST COAST (PADD 5)

*************************************************************************************

CONOCOPHILLIPS CORP (COP.N) [ID:nN27462953], possible delay: [ID:nN28348458]

Ferndale, WA 20,000 bpd DCU 2012 Adds 25,000 bpd heavy oil capacity

5,000 bpd CDU N/A

Rodeo, CA 20,000 bpd HCU Q3-09 5,000 bpd CDU Q3-09

Los Angeles N/A DCU/FCC 2010 Revamp, clean yields up 2 percent

-------------------------------------------------------------------------------------

TESORO CORP (TSO.N)

Los Angeles N/A DCU 2012 Revamp

N/A DHT 2012 Revamp

*************************************************************************************

KEY: FCC: Fluid Catalytic Cracker; CDU: Crude Distillation Unit; VDU: Vacuum Distillation

Unit; DCU: Delayed Coker Unit; DHT: Distillate Hydrotreater; HTU: Hydrotreater; HCU:

Hydrocracker; CCR: Catalytic Reformer; KHT: Kerosene Hydrotreater; GDS: Gasoline

Desulphurization Unit; ALK: Alkylation unit ISE: Iso-Octene unit

Frontier Oil Pays $128 Mln for Upgrades and EPA Penalty

Frontier Oil Corp. will pay about $128 million in a settlement with the U.S. Environmental Protection Agency under the Clean Air Act for refineries here and in Kansas.

The EPA announced the settlement February 10, which includes a $1.23 million civil penalty -- for pollutants -- and $127 million on pollution control upgrades.

"Today's settlements demonstrate EPA's continuing efforts to reduce emissions of nitrogen oxide and sulfur dioxide, which are the largest sources of pollution from refineries," Catherine McCabe, acting assistant administrator for EPA's Office of Enforcement and Compliance Assurance, said in a news release. "Nitrogen oxide and sulfur dioxide can cause severe respiratory problems and contribute to childhood asthma, smog and haze, as well as other health and environmental effects."

The settlement is intended to reduce emissions of pollutants in the following amounts:

- Nitrogen oxide by more than 2,098 tons per year

- Sulfur dioxide by more than 2,987 tons per year

- Particulate matter by 589 tons per year

- Carbon monoxide by 622 tons per year

Kristine Boyd, manager of investor relations for Frontier Oil Corp., said about 45 percent of the $127 million in upgrades will be at the Cheyenne refinery.

"Which is significant considering it's smaller," Boyd said of the Cheyenne refinery, compared to the company's El Dorado, Kan. location.

Boyd said Frontier Oil Corp. has been in negotiations with the EPA for several years.

"We have until 2017," Boyd said. "We've already done some of this investment."

About $33 million of the upgrades will be going in later this year, she said.

The upgrades could provide benefits other than environmental effects, Boyd indicated.

"We do expect some growth," she said.

Boyd said the majority of the remaining upgrades will occur between 2012 and 2017.

Dave Ryan, a press officer with the EPA, has explained that "the settlement with Frontier is the latest in a series of multi-issue, company-wide enforcement agreements that EPA has been pursuing with the refining industry nationwide to significantly reduce emissions from this industrial sector."

The agency has reached agreements with two dozen companies for 99 refineries in 29 states, pushing for more than $5 billion in new pollution controls.

Blast Shuts Down East Texas Carthage Hub

DCP Midstream, LLC and its master limited partnership DCP Midstream Partners, LP on February 12 announced their jointly owned natural gas processing complex and residue natural gas delivery system known as the Carthage Hub, both located near the town of Carthage in East Texas, have been temporarily shut down following an explosion and fire that occurred when a nearby third party owned pipeline outside its property line ruptured February 11.

DCP Midstream employees immediately shut down the plant, blocked in all pipelines feeding the complex, and evacuated the premises. No employees or contractors were injured in the incident.

There was no damage to the natural gas processing complex. A company-assembled investigation team is on site to assess damages to the Carthage Hub and determine the scope of work to return the facilities to service.

The East Texas processing complex has a processing capacity of approximately 780 million cubic feet per day (MMcf/d) with recent throughput of approximately 550 MMcf/d. The Carthage Hub has approximately 1.5 billion cubic feet per day of delivery capacity. The East Texas facilities are operated by DCP Midstream and owned 75 percent by DCP Midstream and 25 percent by DCP Midstream Partners.

Refineries not Affected by Maumee Oil Pipeline Leak

The Maumee Ohio-to-Michigan oil pipeline which was shut February 18 by a leak was back on line February 22 as cleanup continued, Sunoco Logistics Partners LP said.

Crews continued cleanup of the spill despite being hampered by icy conditions on the nearby Portage River, into which some leaking oil flowed, Sunoco spokesman Thomas Golembeski said in a news release.

Restart of the pipeline minimized the risk of affecting operation of refineries served by the Maumee line. Officials had said a shutdown of less than a week was unlikely to be a problem.

Refineries often fed by the line include BP's 131,000 barrels per day (bpd) unit and Sunoco's 160,000 bpd plant, both in Toledo, Ohio, and Marathon Oil Corp's 102,000 bpd refinery in Detroit, Michigan.

BRAZIL

Petrobras Says PDVSA Plan for Refinery not Viable

A plan put forth by Venezuelan state oil company PDVSA on a 230,000-barrel-per-day oil refinery being developed in partnership with Petrobras in Brazil's northeast is not viable, Petrobras' downstream director said February 12.

Paulo Roberto Costa told reporters that PDVSA's plan was not acceptable due to the pricing mechanism for the heavy crude that Venezuela would supply to the refinery and the plan for commercialization of the refined products.

Costa said Petrobras was still committed to reaching an accord with PDVSA on the refinery in Pernambuco state. But, he said, "Without resolving these two impasses, there is no accord."

Two PDVSA officials did not respond to requests for comment.

BOLIVIA

Brazil's Petrobras Resumes $1.3 Bln Bolivia Refinery Study

Brazil's oil giant, Petroleo Brasileiro SA (PBR), or Petrobras, said it has resumed studies for a refinery project on the Bolivian border, the Estado news agency has reported.

The $1.3 billion project was suspended in 2005 when Bolivia raised taxation on oil and gas production above 80%. In January, Brazil's President Luiz Inacio Lula da Silva, said the project would be re-examined.

Paulo Roberto Costa, director for supply and refining at Petrobras, said February 12 studies were at a preliminary stage.

If the investment is feasible, then we may incorporate it in the company's revised business plan to be released next year, Costa said.

The refinery project involves the participation of Brazilian plastics producer, Braskem. It would take advantage of Bolivia's abundant natural gas supplies as feedstock, and produce 600,000 metric tons a year of thermoplastic resins.

ASIA

CHINA

China's Petrochemical Refueling Plans to Focus on Refining Projects

The plan to refuel the petrochemical industry has just been approved by the executive meeting of the State Council, China's cabinet, and it will pay the most attention to oil refining projects, said sources.

The plan will offer direct supports to such projects as oil refining, ethylene, PX, PTA, chemical fertilizer, and olefin. The number of oil refining projects will surpass 10, making up the biggest proportion.

The move will ensure the domestic refined oil projects and lead to China's less dependence on imported liquefied gas, pointed out industry analysts. The oil refining projects on the list will help ease the strained oil products supply and safeguard the state energy safety.

They include the Maoming 20-million-ton oil refinery upgrading and expansion project, the Nansha 15-million-ton oil refining project, the Fujian 12-million-ton oil refinery upgrading and expansion and 800,000-ton ethylene project, the Huizhou 12-million-ton oil refining project, and the Tianjin 15-million-ton oil refining project.

Also on the list are the Tianjin 12.5-million-ton oil refinery upgrading and expansion and 1-million-ton ethylene project, the Dushanzi 10-million-ton oil refinery upgrading and expansion and 1-million-ton ethylene project, the Guangxi 10-million-ton oil refining project, the Sichuan 10-million-ton oil refining project, the North China 10-million-ton oil refining project, and the Zhenhai 10-million-ton oil refining project.

After they are all put into operation, the country's oil refining capacity will be lifted by at least 47.50 million tons per year, and its liquefied gas output will be raised by 2.35 million tons a year, accounting for 12.6 percent of its 2008 production, predicted these analysts.

Earlier reports said that the investment of the Chinese government would reach CNY 100 billion in the upgrading of refined oil products and about CNY 400 billion in the construction of 20 new related projects in 2009 and 2010.

In 2009 alone, the country is expected to pump CNY 60 billion into the quality improvement of 60-million-ton gasoline in accordance with the National Emission Standard Phase III and Phase VI.

Next year, CNY 40 billion will be injected into the quality upgrading of 60-million-ton diesel oil to meet the III and Phase VI standards, which require low sulfur.

Notably, China's crude oil import in January 2009 stepped down 2.09 million tons from the monthly average of last year and about 11 percent from last month.

It amounted to 12.82 million tons, hitting the lowest since October 2007 when the figure stood at 12.61 million tons and marking a daily average of approximately 3.13 million barrels, according to China Customs.

S China's Qinzhou Submits 10 Mln mt/year Refinery Expansion Plan

A plan to double the crude processing capacity of a 10 million mt/year (200,000 b/d) greenfield refinery project currently under development in

China's southwestern Guangxi Zhuang Autonomous Region has been submitted by local authorities to the central government for approval, Chinese official Xinhua news agency reported March 2.

Chinese integrated oil giant PetroChina has been building the 10 million mt/year first phase of its new Qinzhou refinery project since 2006. PetroChina had originally planned to put the first phase on a trial run by the end of this year.

The proposed second phase expansion plan would add another 10 million mt/year of crude processing capacity, a 1 million mt/year aromatics unit, and

a tank farm capable of storing 3 million mt of crude oil and 1 million mt of oil products, Xinhua cited an official with the Qinzhou Port Economic Development Zone as saying.

Development of the second phase will hopefully attract investment in the downstream petrochemical sector in Qinzhou, the report added.

News of the Qinzhou refinery expansion plan followed an announcement by the central government in mid-February of a stimulus package to revitalize the domestic oil and petrochemical industries. Beijing said then it would coordinate and supervise development of major oil and petrochemical projects such as refineries and ethylene plants, but did not give details about the projects.

The $2.2 billion (Yuan 15.3 billion) first phase development of the Qinzhou project involves the construction of 11 sets of refining and auxiliary facilities, such as a 10 million mt/year atmospheric and vacuum crude distillation unit, a 2.2 million mt/year continuous reformer and a 4.1 million mt/year gasoil hydrogenation unit.

The Qinzhou refinery's first phase is expected to refine high sulfur crude oil imported from Sudan, where PetroChina's Chinese state-owned parent

China National Petroleum Corporation has a major presence in the upstream sector.

Upon completion of the first phase, the refinery will be able to produce about 7 million mt of products, including gasoline, gasoil, naphtha, LPG and other petrochemical products.

Other than meeting Guangxi's demand, the product output will be moved via pipeline to the Yunnan and Guizhou provinces neighboring Guangxi. The refinery will also help alleviate the pressure on oil products supply in neighboring southern Guangdong province.

INDONESIA

Indonesia Offers Shell Opportunity to Build Refinery in Batam

Indonesia has opened the possibility for Netherlands-based Royal Dutch Shell Plc., Europe's second largest oil company, to build a refinery in Batam, while shortlisting the company to the explore Natuna block with state oil and gas firm PT Pertamina.

Pertamina has been handed the lead in the massive Natuna project and is now seeking partners.

On February 7, Investment Coordinating Board (BKPM) chairman M. Lutfi said that while putting Shell on the government's shortlist to explore Natuna, Indonesia had also offered the company to build a plant in Batam for refining and cracking. Lutfi was speaking to reporters after accompanying Vice President Jusuf Kalla in a meeting with Netherlands Prime Minister Jan Peter Balkenende in The Hague.

"We offered the prime minister the possibility to move Shell's facilities from Singapore to Batam. It can do refining and cracking in Batam due to the large amounts of gas there [in the Natuna block]," he said.

He added that if Shell refined 320,000 barrel of oil equivalent per day, it would create 42 new sectors and absorb 192,000 new workers.

"It turns raw materials into half-processed goods," he said.

Total investment for the Natuna block is estimated at US$39 billion, according to the BKPM. Lutfi said that besides Shell, US-based ExxonMobil, Norway's StatOil and China's CNOOC had expressed interest in exploring the site.

The government has ended its contract with ExxonMobil - the previous operator - to explore the block, giving Pertamina the lead in the project. Kalla said the government wanted its natural resource to be explored by several parties "to be more competitive".

"We don't want our all natural resources in one basket. It should be a combination, not only American, but also European, so there will be a comparison to be more competitive," he said.

"Shell has technical experience. I said [to the prime minister] that as long as it complies with the requirements, we're very welcoming."

He added that Pertamina, not foreign companies, should play the biggest role in exploring oil and gas in Indonesia, unlike in previous deals.

"Why was Karen [Agustiawan] chosen as Pertamina president director? Because she's an expert in refining, processing and distribution," he said. Kalla was referring to the new Pertamina chief, who recently replaced Ari H. Soemarno to become the first woman to head the oil company. Karen previously served as Pertamina upstream director.

Pertamina ‘Hopes’ for 3 Refineries by 2012

Responding to President Susilo Bambang Yudhoyono’s call for an expansion of national refining capacity, state oil and gas firm PT Pertamina says it is “hoping” to have three planned projects operational by the end of 2012, despite longstanding problems that have repeatedly stymied their development.

Rising domestic fuel demand has heightened the need to expand the country’s refining capacity as Pertamina currently imports 30 percent of the country’s refined oil products, straining the national budget and weighing on the rupiah.

Currently, the company operates six refineries with a total capacity of 1.035 million barrels a day — enough to refine the more than 900,000 bpd the company produces itself, but not enough to cope with the 30 percent of national fuel needs that it has to import, primarily for transportation purposes. In the absence of sufficient refining capacity, Indonesia has to buy low-octane gasoline on the open market, which is more expensive than buying crude.

Toharso, Pertamina’s corporate secretary, said February 13 that construction of the refinery projects would not happen overnight. “Refineries are multiyear projects,” he said. “If we were able to go ahead and start them this year, they would take around three years to complete.”

Yudhoyono has urged Pertamina to build sufficient refining capacity to meet the country’s needs. He told the company to work closely with local governments, and with the tax service so as to reach an agreement on tax facilities so that work on proposed refinery projects located in Tuban in East Java Province, Balongan in West Java Province and Bojonegoro in Banten Province could begin quickly.

Achmad Faisal, Pertamina’s marketing director, said the proposed refinery project in Bojonegoro, involving Pertamina, Petrofield Refining Company of Malaysia and the National Iranian Oil Refining & Distribution Co., or NIORDC, would have an initial capacity of 150,000 bpd when it eventually comes onstream.

Pertamina and NIORDC will each have a 40 percent stake in the project, he said, while Petrofield will take the remainder.

Production at the facility is expected to gradually expand to 300,000 bpd.

He said NIORDC had agreed to supply 150,000 bpd to feed the refinery, but Pertamina was still seeking the remaining 150,000 bpd from other, as-yet-unidentified Middle Eastern producers.

“As for Balongan, West Java, an expansion project there will increase its current capacity by 200,000 bpd,” Achmad said. “The remaining 50,000 bpd will come from the Tuban project [in East Java].”

Evita Legowo, director general of oil and gas at the Energy and Mineral Resources Ministry, said Pertamina would seek to cut the dividend it paid to the government, its primary shareholder, should it fail to find partners for the Balongan and Tuban projects.

The government has set the dividend for this year at $1.3 billion.

Rukmi Hadihartini, Pertamina’s director of processing, said that every additional 100,000 bpd of refining capacity normally required an investment of about $2.6 billion, meaning that the three refinery projects would cost about Rp 10.4 billion in total.

During a recent House of Representatives meeting, she warned that the refinery project in Bojonegoro might be delayed unless the government extended tax incentives.

Pertamina is aiming for 14 percent profits on the project, and is seeking a permanent tax exemption from the government.

Pri Agung Rachmanto, an analyst at the ReforMiner Institute, which studies energy issues, said it would be difficult for Pertamina to make progress on the refinery projects in the existing climate, given the low price of crude oil.

JAPAN

Japan's Cosmo Oil may Restart Oil Units

Japanese refiner Cosmo Oil Co could be allowed to restart secondary units at its Yokkaichi refinery in February.

The 13,500 barrels per day No.3 catalytic reformer at the western Japan-based refinery had been shut after a fire on January 29 and subsequent suspension orders from the fire department and the local government. The 30,000 bpd No.4 kerosene and gas oil hydro desulphurization unit had also been shut.

The fire department and the local government planned to conduct checks at the facility and it was possible the suspension orders could be lifted by February 12. The fire resulted from human error, a fire official added.

PAKISTAN

Abu Dhabi and Pakistan to Resume Talks on $5 Bln Refinery Deal

Pipeline Dubai reported that Abu Dhabi’s investment arm International Petroleum Investment Company and Pakistan’s petroleum ministry may carry on talks to build the disputed US$5 billion oil refinery in Pakistan.

Mr Mohammad Rasheed Jang, a representative of IPIC to construct Parco and pressing on to gain control the project by buying a majority stake said that Abu Dhabi wants to retain the project’s managing director.

He said that “The government will notify any moment the third extension of Rasheed Jang as MD Parco.”

The plan to build 300,000 barrels per day Khalifa Coastal Refinery Project, to be located in the southwestern Balochistan city of Hub, were left grounded as the two governments couldn't agree on the conditions as per earlier report.

IPIC wanted to buy a majority stake at the Pakistan Arab Refinery Company, or Parco, to gain greater control of the project while Pakistan’s government refuses to sell its stake in Pak Arab Refinery.

Pakistan owns 60% of Parco, and Abu Dhabi 30%. Mr Jang was seconded from IPIC to the project, and Pakistan wanted to replace him with a candidate from the country according to report.

It added that however Pakistan has not conceded ground on IPIC’s second demand, to hand over control of Parco to the Abu Dhabi Company.

THAILAND

Thai Oil Sees 2009 Profit but Delays Refinery Upgrade

Top refiner Thai Oil PCL TOP.BK on February 13 forecast a net profit for 2009 and said it would not post another net loss in the first quarter of the year.

The refiner, which earlier reported a second consecutive quarterly loss for October-December after falling crude prices hit inventories, has delayed indefinitely plans to upgrade its refinery as the economic slowdown has reduced demand, managing director Viroj Mavichak told reporters.

Thai Oil had planned to upgrade the refinery this year, with an investment of $1.5-2.0 billion, he said.

VIETNAM

Opens Maiden140,000 bpd Dung Quat Refinery

Vietnam opened its maiden oil refinery on February 22, a project that has been dogged by delays, failed joint ventures and criticism of its location, but which ends the country's total reliance on imported fuel.

The 140,000-barrels per day (bpd) Dung Quat plant, flanked by rice paddies and situated on a sandy stretch of coast almost exactly halfway between the capital Hanoi and commercial hub Ho Chi Minh City, will eventually allow Asia's second-biggest auto fuel buyer to cut imports by a third.

Dung Quat is Vietnam's biggest economic project ever, 15 years in the making.

The refinery "is a symbol of socialism in Vietnam's 'doi moi' reform era," said Tran Ngoc Canh, CEO of Petrovietnam.

Dung Quat was conceived in 1994 so that Vietnam could put its domestically produced crude oil to use at home instead of selling it to foreign refiners, only to import fuel at high prices.

VIPs, including Prime Minister Nguyen Tan Dung, saw workers fill tankers with "made in Vietnam" petrol for the first time.

Vietnam's leaders decided to put the plant in Quang Ngai in the hope that it would kick-start the economy of central Vietnam, the poorest region in the S-shaped Southeast Asian country.

But locating the refinery in Dung Quat -- far from both the crude oil fields and the majority of the country's downstream product users -- has made for a rough ride.

In 1995, France's Total pulled out of a planned joint venture to build the refinery with state oil monopoly Petrovietnam over the location and in 2002 Russian state oil Zarubezhneft bailed out too, due to disagreements over the plant's distant location and technical issues.

The central coast is typhoon-prone, too.

Still, local officials say the deepwater port will make it cheaper to import crude oil from the Middle East eventually.

Currently, the facility is only outfitted to process Vietnam's flagship Bach Ho light sweet crude oil, whose offshore fields are expected to run dry in less than a decade.

Petrovietnam has a preliminary agreement with BP for supplies, and if the plant cannot be retrofitted in time, Nguyen Hoai Giang, technical deputy general director of the facility, said BP could provide oil of similar quality to the Bach Ho the plant is contractually bound to use exclusively until 2011.

The refinery is expected to be running at full capacity of 6.5 million tonnes a year by August and plans were already under way to expand to 10 million tonnes by 2013 or 2014 -- an increase of more than 50 percent, officials said.

To get there will likely require outside investment.

PetroVietnam hopes to install a $1 billion desulfurizing unit by 2013 and is in talks with foreign oil companies including Royal Dutch Shell, India's Essar and South Korea's SK Energy to upgrade and sell part of the refinery.

Vietnam has other oil refineries in the pipeline. The 200,000-bpd Nghi Son refinery is expected to come online in 2011, and Vietnam is planning a 240,000-bpd refinery in Long Son -- both of which are closer to the users.

Consumption of oil products in the country of 86 million people and 25 million motorbikes stands at about 280,000 bpd and is expected to grow 10-12 percent (about 30,000 bpd) a year in the next three years, according to energy experts.

EUROPE / AFRICA / MIDDLE EAST

ITALY

Eni SpA Looking for Buyers Interested in Livorno Refinery

Italy's Eni SpA is looking for buyers interested in its Livorno refinery, Chief Executive Paolo Scaroni said on February 6.

Italian daily La Repubblica had quoted a local mayor saying Eni had mandated an adviser to sell the Agip Plas plant or to find a partner.

The newspaper said local officials had written to Prime Minister Silvio Berlusconi on the matter.

The refinery has been in production since 1936, it said.

Scaroni also said Eni had no intention of selling its TAG pipeline carrying gas from Russia into Italy and it would consider an appeal if it was fined by the EU Commission for antitrust reasons.

Restrictive practice proceedings were launched against Eni, as well as other European companies, by the Commission in 2007 over TAG, and over the TENP and Transitgas pipelines, which supply Italy with gas from northern Europe.

A Commission source told Reuters the ruling could be "particularly harsh", while newspaper Il Sole 24 Ore said Eni might have to sell a stake in the pipelines or face a fine of up to 1 billion euros ($1.3 billion).

Scaroni declined to comment on the possibility Eni could cede management the TENP and Transitgas pipelines to reach an accord with the European Union over antitrust concerns.

A source close to the situation told Reuters Eni could give up operational management of those pipelines in return for assurances it will be able to maintain its hold over TAG.

GE Oil & Gas to Supply World’s Largest Reactors for Eni Oil Refinery

GE Oil & Gas has received a major contract to supply Italian energy company Eni S.p.A. with the largest refinery reactors of their type ever to be manufactured. The reactors will be a critical part of Eni Refining & Marketing Division’s project to boost production at its refinery in Sannazzaro, Italy. Financial terms of the contract were not disclosed.

GE Oil & Gas’ components production facility in Massa, Italy, will manufacture the heavy-wall, slurry reactors, which will weigh approximately 2,000 tons each—the largest ever produced. GE will utilize advanced manufacturing techniques such as Cr-Mo-Vanadium welding, which resists corrosion in refineries and other harsh environments.

Heavy-wall reactors are used for high-pressure and high-temperature refinery processes including hydrocracking, hydrotreating and desulphurization.

The reactors will be the centerpiece of a new process technology designed to enable Eni to produce more middle distillates from each barrel of feedstock. The refinery will highlight a proprietary Eni process called Eni Slurry Technology (EST) that enables increased efficiency in unconventional oils, heavy oils and residues distillation. This new process produces no residues, unlike other heavy oil cracking processes.

Located in the Po Valley, Eni’s Sannazzaro refinery is being expanded to meet the growing energy demands of the Turin-Milan-Genoa industrial triangle, the country’s most highly industrialized area. In addition to northwestern Italy, the facility also serves key markets in Switzerland.

Delivery of the huge reactors will present significant logistical challenges. Due to their size, and the refinery’s location in a densely populated area, the units cannot be delivered completely assembled. Forged rings for the reactors will be welded at GE’s Massa facility and then transported to the refinery on specially designed trucks. GE will set up a temporary facility at the project site to complete the construction of the vessels.

"The development of larger, heavy-wall reactors is an example of technology evolving to meet new industry demands,” said Joe Mastrangelo, vice president of turbomachinery equipment for GE Oil & Gas. "At GE, we built our first reactors more than 40 years ago and we have continued to develop the technology, guided by the needs of industry and process licensors. Today, we have the capability to manufacture reactors equipped with the latest generation of vanadium-modified materials and are able to build larger units than ever before.”

"In addition to building the vanadium-technology reactors, we also have unmatched experience in handling the final assembly of the units on site, as will be required for the Eni refinery project,” Mastrangelo added.

The two reactors are scheduled to be delivered to the Eni refinery in the first quarter of 2011, with commercial operation expected in 2012.

LITHUANIA

Lithuania to Proceed with Refinery Stake Sale

Lithuania is to exercise within "several weeks" its option to sell the remaining state-held stake in the country's refiner to Polish oil group PKN Orlen PKNA.WA, the economy minister said on February 4.

Lithuania has said earlier it also would look at the possibility of putting safeguards in place so that Mazeikiu would not fall into the hands of hostile buyers after PKN acquires all shares.

"We have informed (PKN) that we would be ready within several weeks to execute the option," the Economy Minister Dainius Kreivys told journalists after meeting with PKN Chief Financial Officer Slawomir Jedrzejczyk.

He said PKN was ready to buy the remaining stake in the government's hands.

"As soon as we get the letter (of notification), we would follow the procedures," he added.

Kreivys said the issue of safeguarding Mazeikiu strategic importance was not linked to the execution of the option, which would see Lithuania get $284.45 million for the 9.98 percent stake.

The minister said the safeguards should be put into a new agreement with PKN or other document. He did not elaborate.

PKN's investment in Lithuania has not been trouble-free: a fire forced a shutdown of the refinery in October 2006, just after the Polish group bought it.

PKN also wants to buy Lithuania's main oil export terminal, but the government has refused to sell it.

"Our strategic position is... to get the access to the sea terminal, to have a kind of operational control of Klaipedos," Jedrzejczyk said.

NORWAY

Norway Plans $750 Mln Carbon Tech Center at Mongstad Refinery

The Norwegian government proposed on January 30 to spend $750 million to build a center for development of carbon capture and storage (CCS) technology at oil and gas group StatoilHydro's Mongstad refinery.

Policymakers and industry have big hopes for CCS, which involves burying carbon dioxide (CO2) underground or below the seabed, as a means of fighting climate change.

The government estimated investment costs of the new center at $750.2 million (5.2 billion Norwegian crowns) and said it aimed to make Norway a pioneer in the field of CCS.

"CO2 capture is a cornerstone of Norwegian climate policy," Petroleum and Energy Minister Terje Riis-Johansen said in a statement.

"The goal...is that the technology center for CO2 capture should create an arena for development, testing and qualifying of technology and should contribute to international dissemination of this experience," the oil ministry said in the statement.

The proposal to parliament sets out a project where the state would initially have an 80 percent stake and StatoilHydro 20 percent, but other industrial partners could join later to reduce the state's stake, the ministry said.

The partners should aim to make an investment decision once the detailed basis for doing that is completed towards the end of the first quarter of 2009, and the center would take about two and a half years to build, the ministry said.

StatoilHydro has been burying a million tonnes of C02 per year under the seabed at its Sleipner field in the North Sea since 1996.

That activity involves stripping CO2 from the natural gas well stream at Sleipner, as opposed to capturing carbon dioxide emissions from an industrial plant.

PORTUGAL

Fluor Wins $455 Mln Portugese Refinery Contract

Engineering and construction group Fluor Corp said on February 18 it had won a $455 million contract for a conversion project on Galp Energia's Porto refinery in Portugal.

Fluor, which had started front-end engineering and design for the project in 2007, said it would now begin a contract for engineering, procurement and construction.

The conversion project when completed is expected to produce 2.5 million tons of diesel, gasoline and kerosene per year and will be able to process heavier grades of crude oil.

The project is expected to be completed in fourth quarter of 2010.

ANGOLA

Angola Refinery to Cost $8 Bln and be ready by 2011

Angola's new refinery, aimed at putting an end to the oil-producing nation's dependency on imported gasoline, will cost around $8 billion and is expected to be ready by 2011, according to the country's oil minister.

The new refinery, initially expected to cost $6.4 billion, is expected to produce 200,000 barrels per day and employ around 8,000 people. It will be located near Angola's southern port city of Lobito.

Angola, which vies with Nigeria as sub-Saharan Africa's biggest oil producer, imports over two-thirds of the gasoline it consumes. Its 39,000 bpd refinery near the capital city Luanda has so far failed to satisfy demand.

"The country imports more than 70 percent of gasoline and other fuel derivatives. With the new refinery this will end," Jose Botelho de Vasconcelos was cited by state-owned news agency Angop as saying.

About 90 percent of the refinery's production will be aimed at supplying the local market and Angola's neighboring countries. The remaining 10 percent will be exported to nations outside the region, Botelho de Vasconcelos said.

U.S. engineering firm KBR has been hired to design the plant. The new refinery, also known as Project Sonaref, had been stalled for years as Angola struggled to find a foreign partner to build the plant.

MOZAMBIQUE

Oilmoz to Build $8 Bln Oil Refinery in Mozambique

Oilmoz Lda will build an $8 billion oil refinery in Mozambique’s Maputo province that will process 350,000 barrels of oil a day when completed in 2014, the company said.

Oilmoz, founded by Leonardo Simao, Mozambique’s former foreign affairs minister, will employ 15,000 people during the construction of the project, and 2,000 people when it’s at full capacity, Fausto Cruz, chief executive officer, said at a presentation in the capital, Maputo, February 5. The refinery will be the first to be built in Mozambique since the only other one shut down 24 years ago, leaving the country dependent on fuel imports, he added.

Oilmoz has entered into a technical partnership with Shell Global Solutions International BV, a unit of Royal Dutch Shell Plc, to design the plant, Cruz said. Shell Global will start off as technical adviser for the projects and will later become technical partner for a period of 30 to 40 years, Robert Trout, the unit’s general manager for third-party services, said.

“We also have a large stake in the project,” Trout said. “It’s not a project for us, but it is a long-time partnership between Shell and OilMoz.” Shell will source crude oil for the plant, he added.

The refinery will be wholly owned by Mozambican investors, which include the Joaquim Chissano Foundation, Mozambique’s national oil company, Petromachas, and Pricewaterhouse Coopers LLP, Simao said at the presentation. All the capital required has been raised by the shareholders through banks, he added.

SOUTH AFRICA

PetroSA Says Cost of 400,000 bl/d Refinery will Fall

State-owned oil and gas company PetroSA was fully aware that economic conditions were materially different today from when it began pursuing plans to build a 400,000-bl/d crude-oil refinery in the Eastern Cape three years ago. But CEO Sipho Mkhize stressed that the group remained committed to the development, which he hoped would reach financial close within 18 to 24 months.

Speaking at a conference  organized by the Global Pacific & Partners, Mkhize even argued that the project was “perfectly timed” as it would benefit from rapidly reducing capital and construction costs in the oil industry, as projects were delayed or cancelled. It would also be able to tap into a global skills base that was, until recently, under severe strain. 

Bloomberg News quoted PetroSA as saying that the total cost of building the so-called Mthombo refinery could fall to between $9.5-billion and $10-billion as a result of these lower costs. Previous reports put the  expected capital cost at more than $11-billion.

And, PetroSA’s told Business Day , that, owing to reduced flexibility, a material portion of the funding would come from export credit agencies. The national oil company also said that it had changed the project’s configuration after a re-evaluation of the market study and following discussions with its technical and commercial adviser.

The project was still informed by South Africa’s energy master plan, which placed a premium on security of supply. But while Mkhize acknowledged the project’s strategic nature, he was confident that the project’s economic rationale would stand scrutiny. 

He indicated, for instance, that the refinery would be able to produce higher volumes of diesel as South Africa’s product-demand mix moved increasingly from petrol to diesel. It would also enable incumbent  refineries, which were constrained by virtue of their age and the capital requirements associated with upgrades, to lean on the new project to meet tightening clean-fuel specifications.

Mkhize also described as “unsustainable” South Africa’s current geographic concentration around aging refinery and logistical infrastructure in KwaZulu-Natal and the Western Cape. The proposed new refinery would support South Africa’s diversification imperative and create an opportunity for an alternative fuel-pipeline network feeding into the Gauteng hinterland. 

In January, PetroSA appointed US-based and NYSE-listed engineering firm KBR as engineering contractor for Project Mthombo.

The company had contracted KBR to work with it to provide a feasibility and a front-end engineering and design study for the project. The contract was estimated to be worth close to R1-billion.

The studies would seek to ensure that the refinery conformed to the Euro V fuel specification.

The feasibility study should be completed by September and PetroSA wanted to seek board sanction in late 2010, with construction beginning possibly in 2011.

RUSSIA

Gazprom Considers Oil Refinery in Shtokman Project

Russian energy major Gazprom is considering building an oil refinery in the village of Teriberka on the Barents Sea coast. The refinery will handle oil from the Prirazlomnoe and Dolginskoe fields, general director of Gazprom-subsidiary Sevmorneftegaz confirms.

Until now, the plan for the Prirazlomnoye field has been to deliver crude oil directly by tankers to Rotterdam.

Gazprom subsidiary Sevmorneftegaz is revising the technical scheme for development of the Prirazlomnoye field.

We want to create that kind of systemic structure for oil production and refining, the company’s general director Aleksandr Mandel, said to Interfax after presenting the ideas at the Energy Exchange conference in Moscow February 5.

It also said the Prirazlomnoye infrastructure will be used to develop other fields in the area. Geological surveys and test-drilling show that the eastern part of the Barents Sea, is very promising for the petroleum industry.

Mr. Mandel also said that the refinery is projected to have a capacity of five million tons, Portnews.ru reports with reference to Rbc.ru.

The refinery will primarily handle oil from the Prirazlomnoe and Dolginskoe fields in the Pechora Sea. Production start on the Prirazlomnoe project is planned for 2011 and annual peak production of 6,6 million tons is to be achieved six-seven years later. It is Sevmorneftegaz which controls the license to the field.

However, the refinery is also to handle up to 600,000 tons of condensate per year from the Shtokman field, the company leader said.

Teriberka is the place chosen by Gazprom to be the hub for activities in the Shtokman project. Pipelines will be laid to the site and a major LNG plant built.

Mr. Mandel said that the refinery project feasibility study is to be completed by late 2009 or early 2010 and that the plant construction will need about 4-5 years.

Mr. Mandel also said that oil from the Prirazlomnoe field in the first period will be exported unprocessed, but that that it later will be processed and exported with the help of the new Teriberka refinery.

The Sevmorneftegaz leader maintained that Gazprom’s need for oil products amounts to 1.5 million tons, while the total consumption of Murmansk and Arkhangelsk Oblast amount to four million tons.

IRAQ

Iraq Awards Engineering Contracts for Four Refineries

Iraq has awarded Front End Engineering and Design (FEED) contracts to international companies to build four major new refineries with a combined total capacity of 750,000 bpd, Iraqi oil sources said recently.

The sources said the first contract, valued at an estimated US$65 million, was signed between the State Company for Oil Projects and Foster Wheeler of the US to carry out the FEED for a proposed 300,000 bpd refinery to be located in Nassiriyah in southern Iraq.

The Nassiriyah refinery and the adjacent Nassiriyah oil field were the subject of a confidential memorandum of understanding signed last August between the Oil Ministry and a partnership of Japan's Nippon Oil and Italy's Eni. Under the MoU, which has not been made public and was not included in Iraq's two bid rounds, Nippon will build the refinery and Eni will develop the oilfield to supply the refinery with crude. Both projects are to be implemented on an Engineering, Procurement and Construction basis with Nippon providing the financing for the estimated US$5 billion project.

There has been no confirmation from Eni on the report, which follows a visit to Iraq by Eni CEO Paulo Scaroni, the most senior oil executive to have visited Iraq since the US-led war of 2003.

According to a report from Platts, the Oil Ministry later invited Spanish oil company Repsol to bid for development of the Nassiriyah field, to provide some sort of competition after objections by some quarters in the ministry that the award to Eni was exclusive and non-competitive.

Sources said Repsol was responding positively to the Ministry's request.

The second contract, valued at an estimated US$27 million, was signed between SCOP and French engineering giant Technip, for a 150,000 bpd refinery to be located in the south central province of Kerbala. This is the old Central Refinery project which has been on and off since the late 1980s.

The third and fourth contracts, valued at US$60 million each, were negotiated by the Oil Ministry in Baghdad with Shaw & Webster of the US to carry out the FEED for two 150,000 bpd refineries, one to be located in the southern province of Meissan and the other in the northern oil province of Kirkuk.

The contracts were signed on the Iraqi side by the Southern Refinery Company and the Northern Refinery Company respectively.

Iraq currently has three main refining centers: the northern Baiji refining complex with a nominal capacity of 300,000 bpd; the Dora refinery near Baghdad with 90,000 bpd capacity and the 140,000 bpd Basrah refinery in the south.

It also has 15 units of an old How-Baker design with a capacity of 10,000 bpd, some of them assembled locally in recent years, which are capable of producing naphtha and gasoil only.

These units make Iraq's total installed refining capacity 680,000 bpd, but actual operating capacity during 2008 was around 450,000 bpd.

Iraq currently imports large quantities of products, to meet local demand, mainly from Persian Gulf countries, including Iran, at an average daily rate of refined products imports, including gasoline, exceeding 5 million liters per day during 2008.

Technip Awarded a Services Contract for Grassroots Refinery in Iraq

Technip has been awarded by State Company Oil Project (SCOP) a lumpsum contract, worth more than €20 million, for the front-end engineering design (FEED) of a new refinery to be built in Karbala, Iraq.

The refinery will have a total capacity of 140,000 barrels per day and will include 18 process units based on state-of-the-art technologies, as well as related utilities, offsite facilities, infrastructures and a dedicated power plant.

This refinery is expected to produce liquid petroleum gas, gasoline, jet fuel, diesel oil, asphalt and fuel oil mainly for the internal needs of the Iraqi market.

Technip's operating center in Rome, Italy, will execute the contract, which is scheduled to be completed in the first half of 2010.

UNITED ARAB EMIRATES

Vitol to Strengthen Focus on 82,000 bpd Fujairah Refinery

Vitol Group announced February 11 that it has divested its 10% stake in Vopak Horizon Fujairah Limited (VHFL), a 1.5 million cubic meter oil storage facility in Fujairah, United Arab Emirates.

The stake has been acquired by VHFL's existing shareholders, which include Vopak, Horizon, the Government of Fujairah and IPG.

The sale of its stake in VHFL will enable Vitol to strengthen its focus on its key strategic asset in the region, the Fujairah Refinery Company Limited (FRCL), which operates an 82,000 barrel per day refinery and a 461,000 cubic meter tank farm. FRCL has major development plans in place, which include a 564,000 cubic meter expansion of the tank farm, refurbishment of existing refining units and the installation of more processing units. The transaction also allows Vitol to exit VHFL having achieved an attractive return on its original investment.

Ian Taylor, President and CEO of Vitol, commented: "Vitol has benefited significantly from its involvement in VHFL and we wish them continued business success. The sale will now allow us to focus fully on the expansion and development of the Fujairah Refinery Company and continue our work with the Government to promote the role of Fujairah in the regional and international energy markets."

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