Projects and revamps create buoyant refinery sector

Paul Boughton

Plant construction and revamps are keeping the refining market buoyant, says Eugene McCarthy.

Fluor has won a five-year enterprise framework agreement for engineering and project management services for Shell's downstream, and potentially, upstream onshore projects in Europe, Africa and the Middle East (EAME). Under terms of this agreement, Fluor will provide design, project and construction management, home-office and site-based engineering services.

"This new enterprise framework agreement with Shell for the EAME region demonstrates Fluor's alignment with Shell's global strategy," said Peter Oosterveer, president of Fluor's energy & chemicals group.

The agreement includes an option to be extended for another five years and opportunities to include Shell's upstream projects and other geographic regions.

Maintenance services

Fluor is currently working on Shell projects in Malaysia, the Philippines and Canada. Fluor also provides operations and maintenance services at Shell sites in Australia, Qatar, Russia and the Netherlands.

The company is also managing two projects for Reliance Industries Limited (RIL) at its world-scale Jamnagar refining and petrochemical complex on the west coast of India in Gujarat.

In addition to assisting RIL in project management, Fluor will also perform engineering and procurement services for a pet coke gasification project.

RIL's investment in the expansion of energy and petrochemicals projects represents one of the largest such investments globally. The proposed coke gasification facility is also among the largest such projects ever built.

"These two contract awards that will support Reliance Industries' next phase of growth in India are also important milestones for Fluor, but most of all, I am truly excited about our relationship with this very important client," said Oosterveer. "Fluor's global project execution capability coupled with close to 20 years of growing our engineering and technical talent in New Delhi have positioned us for this key project in India. Reliance is a global player in the energy and petrochemical industries and we are poised to successfully deliver value-added projects to meet their capital expansion and operational objectives."

The scope of the project management services to be provided by Fluor includes several world-scale units including petroleum coke gasification units, refinery off-gas cracker and downstream petrochemical plants, a captive power plant, and associated utilities and offsites.

The completed gasification project will gasify petroleum coke to produce fuel and hydrogen for the expanded refinery and petrochemical complexes and captive power plant as well as feedstock for future chemicals production.[Page Break]

Texas City sell-off

BP has reached an agreement to sell its Texas City, Texas, refinery and a portion of its retail and logistics network in the Southeast USA to Marathon Petroleum for US$2.5 billion (EUR1.9 billion) (Fig. 1).

"Today's announcement is the second major milestone in the strategic refocusing of our US fuels business," said Iain Conn, chief executive of BP's global refining and marketing business. "Together with the sale of our Carson, California refinery, announced in August, the divestment of Texas City will allow us to focus BP's US fuels investments on our three northern refineries, which are crude feedstock advantaged, and their associated marketing businesses."

This agreement brings the total value of the divestments that BP has agreed since the beginning of 2010 to over US$35 billion (EUR26.7 billion). The company expects this total to reach US$38 billion (EUR29 billion) by the end of 2013.

Subject to regulatory and other approvals, Marathon Petroleum will purchase the 475,000 bbl/d refinery, associated natural gas liquids pipelines, and four marketing terminals in the Southeast USA.[Page Break]

"This sale will reduce BP's presence in the Southeast US, however BP remains firmly committed to growing and strengthening our BP-branded retail network and the value of the BP brand east of the Rockies in partnership with BP-branded jobbers and dealers," explained Doug Sparkman, president of BP's East of Rockies fuels business. "A number of valued jobbers are affected by this transaction and we are committed to working very closely with Marathon Petroleum to make this transition as smooth as possible."

"During the past several years the Texas City refinery has been transformed through a resolute focus on safe, compliant, and reliable operations and in recent months has returned to profitability. It does not, however, fit with the long-term strategic direction of BP's global refining portfolio," said Texas City refinery manager Keith Casey. "I believe today's announcement is good for our workers, good for our community, and positions the refinery to achieve its full potential over the long term as part of one of the leading refiner-marketers in the USA."

BP continues to invest heavily in its three northern USA refineries. The company is in the midst of a multi-billion Dollar modernisation effort at its Whiting refinery in Northwest Indiana. The Cherry Point refinery in the state of Washington is being upgraded to produce cleaner-burning diesel fuel and the BP Husky joint venture near Toledo, Ohio, is investing to improve its gasoline making capabilities.

"BP remains committed to supplying customers in the USA with the fuels, lubricants and petrochemicals they depend on while at the same time delivering long-term growth and profits to our shareholders and we are pleased to be delivering on the strategy we announced last year," Conn added. "When we complete these sales and our Whiting refinery upgrade project next year, we will have a smaller, well-positioned and highly competitive portfolio of refining and marketing businesses in the USA."

The Whiting refinery work will halve capacity there from its current 405,000 bbl/d while it takes place. The company is also replacing the largest of the refinery's three crude distillation units, with the work expected to be completed by the second half of 2013.

Major project in Serbia

Gazprom Neft's subsidiary Naftna Industrija Srbije (NIS) has completed a major modernisation project of its refining capacity in Serbia. The company has started operating a new light hydro-cracking and motor fuel hydro-treatment facility at the Pancevo refinery (Fig. 2).

The completion of the facility will allow NIS to take a leading position in the Balkan oil products market.

Launching the vacuum gas oil and diesel hydro-treatment facility, which has a capacity of 3m t/y, will increase the refining depth of the Pancevo plant to 84 per cent, and the percentage of output of light oil products to 76 per cent.

From 2013, the Pancevo facility will shift to producing only Euro-5 standard gasoline and diesel. The launch of the new facility will raise the volume of Euro-5 standard gasoline production to 638,000 t/y and diesel to 1.5m t/y.

According to Gazprom Neft, this will confirm NIS's status as a major supplier of high-quality fuel to the domestic market and will allow it to start exporting to the Balkan region - while also having a positive impact on the environment.

So far Gazprom Neft has invested EUR547 million at NIS in upgrading and rebuilding, including EUR397 million on building the hydro-cracking facility and over EUR150 million on modernising and adding to the plant's infrastructure, equipping the hydrogen facility and on ecological projects.

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