downstream monitor - mea week 16
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MEATRANSCRIPT
For analysis and commentary on these and other stories, plus the latest downstream developments, see inside…
Copyright © 2014 NewsBase Ltd.
www.newsbase.com Edited by Ian Simm
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
23 April 2014
Week 16
Issue 153
News Analysis
Intelligence
Published by
NewsBase
COMMENTARY 2
Middle East focuses on downstream
expansion 2
Iranian offer underscores Indonesia’s
downstream bind 4
Iraq signals impending export deal
as Turkey looks to the future 5
REFINING 6
Kurdish authorities refute new
refinery claim 6
Production insufficient at
Nigeria’s refineries 7
FUELS 8
Vitol predicts dominance of fuel
imports in the African market 8
PETROCHEMICALS 8
Iran and UAE seek high profile
petrochemical tie up 8
TERMINALS & SHIPPING 9
Iran hit by insurance uncertainty 9
Shipping firms set for Sohar move 9
Bahrain offers Kazakhstan use of
export terminals 10
Eni opens talks on FLNG offshore
Mozambique 10
TENDERS 11
New bidding set for Jubail acrylics,
Ras Tanura refinery contracts 11
NEWS IN BRIEF 12
CONFERENCES 17
SPECIAL REPORT 19
NEWS THIS WEEK…
Eye on refining
Throughout the Middle East, expansion plans pile up for the modernisation and capacity increase of refining units, but their success and place in the market appears to be uncertain.
The chemicals industry is likely to grow faster
than any other in the Middle East. (Page 2)
Asia, in particular China, will be the main target
market for refining and petrochemical output.(Page 2)
The expansion of Abu Dhabi’s Borouge refinery
will add around 400,000 bpd of new capacity. (Page 3)
Pushing for pole position
Turkey is continuing to position itself close to the authorities in both Baghdad and Erbil as the three work together to resolve the lengthy disputes over piped oil exports to the Mediterranean.
During a recent conference Iraqi and Turkish oil
ministers did not discuss offers made by the KRG
for oil transit. (Page 5)
They did however, opine about the prospects for
reopening the 46-inch line of the Kirkuk-Ceyhan
conduit. (Page 5)
NewsBase Downstream Monitor
–– MEA ––
Downstream Monitor MEA 23 April 2014, Week 16 page 2
Copyright © 2014 NewsBase Ltd.
www.newsbase.com Edited by Ian Simm
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Oil-producing countries throughout the
Middle East are focusing on the
expansion of refining and processing
capacity in an attempt to cut their
reliance on crude exports, to comply with
European fuel standards and to
counterattack declining production
targets across Europe, where refiners
have cut their capacity by 8% over 2007-
2013 – a figure that is expected to
continue to drop.
According to a recent report by IHS,
the Middle East‟s drive to invest in new
technology is being led by a changing
global feedstock mix and increasing
competition in the US caused by the
availability of cheaper gas feedstock. In
addition, the region‟s refining and
petrochemical industry is diversifying its
own feedstock mix and expanding its
product slates to include more higher-
value intermediates.
IHS said that this renewed investment
in the Middle East would drive chemical
exports from the region and will help its
chemicals industry grow faster than any
other key industries.
The main market for these exports –
expected to grow by more than 8% year-
on-year in 2016 – will be China.
“The Middle East continues to be a
dominant force in petrochemical
production,” said Dave Witte, general
manager of IHS Chemical and senior
vice president at IHS.
“The region faces an opportunity to
pivot to strategies that leverage their
growing technological expertise, expand
their global footprint and seize upon
commercial advantages. Additionally, it
enables Middle East producers to
continue building on their leading
position in commodity production and
expand into intermediates and higher-
value products,” he added.
Saudi leads diversification
One of the examples pointed out by IHS
is the diversification strategy of the
Sadara Chemical project, a US$20
million joint venture (JV) between Saudi
Aramco and Dow Chemical which will
incorporate liquid feedstock and gas to
feed its cracker in Jubail, scheduled to go
online in 2015.
Also in Saudi Arabia, Saudi Basic
Industries Corp. (SABIC) and
ExxonMobil are investing US$3.4 billion
to build a rubber and elastomers
complex.
Saudi is also home the world‟s largest
single-train crude oil refinery – Saudi
Aramco Mobil Refinery Co. (SAMREF)
at Yanbu on the Red Sea coast.
Also in Yanbu is the Saudi Aramco
Lubricating Oil Refining Co. (Luberef),
which produces LPG, gasoline, jet fuel,
diesel oil, base oil and fuel oil. The
facility is currently undergoing a US$1
billion expansion, which started in
January 2011 and is expected to be
completed by 2015, to increase its overall
capacity from the current 280,000 tonnes
per year (tpy) to 710,000 tpy of base oil.
To the north-east, Saudi Arabia‟s Gulf
coast hosts the region‟s oldest refinery,
Ras Tanura.
With a crude distillation capacity of
550,000 bpd, the refinery has already
undergone a series of expansions since
its 1945 inauguration.
The latest expansion is behind
schedule, after Aramco had to reassess
plans in order to reduce costs.
The company is now planning to re-
launch contracts for engineering,
procurement and construction (EPC)
projects to enable the refinery to produce
higher grades of products as well as a
wider variety of petrochemicals.
North awaits capacity increase
Across the Gulf, in the Kurdistan region
of northern Iraq, the local Qaiwan Group
has recently issued a call for bids related
to the planned expansion of its 34,000
bpd Bazian refinery.
The project, designed to increase the
refinery‟s capacity to 84,000 bpd, will
add processing units, amine generation, a
sulphur recovery unit and a wastewater
treatment plant.
COMMENTARY
Middle East focuses on
downstream expansion
Throughout the Middle East, expansion plans pile up for the modernisation and capacity
increase of refining and petrochemical units, but their likely success and place in the
market appears to be uncertain
By Nádia Morais
The chemicals industry is likely to grow faster than any other in the Middle East
Asia, in particular China, will be the main target market for refining and for petrochemical output
The expansion of Abu Dhabi’s Borouge refinery will add around 400,000 bpd of new capacity
It may be that the chemical
industry in the Middle East
will follow the path of the
global gas market, with a
wide string of projects
entering an already
oversupplied market
Downstream Monitor MEA 23 April 2014, Week 16 page 3
Copyright © 2014 NewsBase Ltd.
www.newsbase.com Edited by Ian Simm
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
The company
expects the distillation
unit and supporting
utilities to be
completed by the
fourth quarter of 2017.
In Kuwait, Daewoo
Engineering &
Construction last week
signed a US$3.4 billion
deal with the Kuwait
National Petroleum Co.
(KNPC) in co-
operation with Hyundai
Heavy Industries (HHI)
and Fluor Corp. The
firms will provide EPC
services for the Mina
Abdullah Package 2
(MAB2) under the
US$12 billion Clean
Fuels Project (CFP).
With this project, the
sulphur content of
petroleum products is
expected to fall below
5% and combined oil refining
capabilities are expected to increase from
715,000 bpd to 800,000 bpd. According
to Daewoo, the construction phase will
last until 2018.
South: a string of new projects
Outside the „mouth‟ of the Strait of
Hormuz, Oman‟s state-owned Oman Oil
Refineries and Petroleum Industries Co.
(ORPIC) has awarded oil and gas
services providers Petrofac and Daelim
Industrial Co. a US$2.1 billion
construction contract for the
improvement of its 116,000 bpd Sohar
refinery, which includes start-up and
commissioning services as well as
improvements to the existing plant and
the addition of new refining units. The
project is expected to increase Sohar‟s
refinery capacity by more than 70%.
In neighbouring Yemen, there are also
plans to expand the Aden refinery
following new legislation that will
remove leaded petrol from the domestic
market. The project includes the
replacement of the process and utility
units, as well as the provision of
additional storage for new product
exports. The US$4.25 billion expansion
to the 175,000 bpd refinery does not yet
have a planned schedule.
Qatar‟s expansion of the Laffan
refinery has already been inaugurated.
The project is expected to double the
condensate refining capacity of the
refinery to 300,000 bpd, strengthening
the country‟s position as the largest
condensate producer as well as having
the largest condensate refining capacity
in the world. Construction work on the
US$1.5 billion facility is scheduled to be
completed by the third quarter of 2016.
The UAE is also planning to increase
refining capacity. Abu Dhabi National
Oil Co. (ADNOC) is in the process of
adding 417,000 bpd of capacity at
Ruwais in an expansion that will enable
the plant to double its gasoline output to
meet rising domestic demand and new
fuel standards.
The 400,000 bpd plant will only
produce diesel with 10 parts per million
of sulphur from July and will
simultaneously stop making 500 ppm
diesel. The US$10 billion expansion of
the Ruwais refinery is expected to start in
the first half of this year, taking the plant
capacity to over than 800,000 bpd.
Market to remain oversupplied
With so many Middle Eastern countries
undergoing expansion projects and
upgrades, and with many other similar
projects still on the pipeline, it could be
that the chemical industry in the Middle
East will follow the path of the global
gas market, with a wide string of projects
entering an already oversupplied market.
The capacity expansion projects could
potentially lead to a scenario where
refiners would have to export fuel to
Europe – currently suffering a decline in
fuel demand which many in the industry
feel is here to stay.
China has already foreseen this
scenario, with the recent decision to put
off starting up two new refineries and
delaying the expansion of another amid
slower demand. This could be a trend
that we shall see continue.
COMMENTARY
Downstream Monitor MEA 23 April 2014, Week 16 page 4
Copyright © 2014 NewsBase Ltd.
www.newsbase.com Edited by Ian Simm
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Indonesia is once more looking to a
Middle Eastern oil producer to save its
embattled downstream ambitions and this
time Iran has stepped up to the plate.
Iranian media reported last week that
the country planned to build as many as
six oil refineries in Indonesia. While the
obvious issues surrounding such a
suggestion, both geopolitical and
technical in nature, render it an unlikely
outcome the story does underline the
latter country‟s struggles to attract a
credible investment partner.
After all, the country has apparently
lost state-run Saudi Aramco and Kuwait
Petroleum Co.‟s (KPC) interest in
investing in refineries there, prompting
Indonesian counterpart Pertamina to
commit to fully funding a new refinery.
Iranian involvement
The six refineries Iran is to build will
include a 150,000 barrel per day facility
and five smaller plants, with a total
capacity of around 300,000 bpd, the
official Fars news agency said last week,
quoting the head of the Oil, Gas and
Petrochemicals Products Exporters
Union, Hassan Khosrojerdi.
This is not the first time that Iran has
been linked with Indonesia‟s
downstream, however. In February 2013,
the agency reported that Iran‟s Nakhle
Barani Pardis (NBP) and Indonesia‟s
Kreasindo had signed a deal to build a
refinery in West Java valued at US$3
billion. It said NBP had agreed to finance
30% of the project, with throughput to be
exported, and that work would begin in
2015 and take three years to complete.
Khosrojerdi, meanwhile, said an
Iranian-Indonesian consortium would be
formed to build the six refineries and that
Iran would supply the crude feedstock
for the plants. Presumably, the
development of one large and five small
refineries would mean that, unlike the
NBP-Kreasindo agreement, these
facilities would be focused on meeting
local demand. In such a scenario, the
plan does have some merit. It allows the
consortium, presumably to involve
Pertamina and a state-owned Iranian firm
such as the National Iranian Oil Co.
(NIOC) or National Iranian Oil Refining
and Distribution Co. (NIORDC), to
establish smaller refineries in more
remote areas that can more readily
supply local demand. After all, Indonesia
has the world‟s fourth largest population
scattered across 27 provinces and
thousands of islands. Given such a
fragmented population, having a handful
of 50,000 bpd capacity refineries should
afford a certain amount of flexibility,
such as smoother land acquisitions and
shorter development times, missing from
larger developments.
On the flipside, of course, there are
several major challenges.
Feedstock pressure
A core issue that needs resolving is
feedstock supply. Iranian crude makes
sense for such a project, since domestic
oil and condensate output is in decline.
But the threat of future sanctions against
Iranian crude cannot be dismissed.
This is a problem for any downstream
project in Indonesia, which already has
six refineries with a combined capacity
of more than 1.1 million bpd that cannot
run fully on domestic crude production.
The country‟s crude and condensate
output averaged just 823,000 bpd in 2013
and the NewsBase Research Ultra
Forecast (NBRUF) predicts a continued
slide despite the anticipation of new
discoveries being brought on line.
Indeed, production is forecast to stand at
650,000 bpd by the end of the decade.
The country, meanwhile, has detailed
several plans for new refineries that have
centred around Middle Eastern oil
producers committing feedstock supplies.
Pertamina was in talks with Saudi
Aramco and KPC over two 300,000 bpd
refineries, but discussions fell apart after
Jakarta failed to provide the financial
incentives the two firms wanted.
The government has responded by
committing to fully fund another 300,000
bpd plant that will process Iraqi crude.
Doubts persist, however, over whether
the state could afford such a project on
its own, given the heavy burden of its
fuel subsidy programme.
It is impossible to predict accurately
the outcome of future talks between Iran
and the P5+1. Even if a best-case
scenario unfolds where sanctions are
lifted completely, that does not preclude
fresh sanctions from being applied in
years to come.
COMMENTARY
Iranian offer underscores
Indonesia’s downstream bind
News that Iran plans to build up to 300,000 bpd of refining capacity in Indonesia
highlights the problems the latter has encountered in wooing foreign investors
By Andrew Kemp
Iran is to build six refineries, including a 150,000 bpd facility
Iranian crude would be used as feedstock, but geopolitical problems remain
Smaller refineries are not seen as a good investment bet
Downstream Monitor MEA 23 April 2014, Week 16 page 5
Copyright © 2014 NewsBase Ltd.
www.newsbase.com Edited by Ian Simm
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
As such, the idea that a multi-billion
dollar development could be based on
uncertain crude supplies is something of
a stretch. Beyond geopolitics, however,
are the commercial and technical
challenges the proposed slew of small-
scale refineries must overcome.
Operational issues
Smaller refineries by their very nature
are less competitive than mega-refineries,
which enjoy economies of scale and a
level of complexity that allow them to
remain competitive in an increasingly
crowded Asian market.
The Asia-Pacific region‟s capacity
stood at 30.12 million bpd in 2012, up
from 22.45 million bpd in 2002,
according to BP‟s Statistical Review of
World Energy 2013. This could rise to as
much as 36 million bpd by 2018,
according to a Reuters survey of several
analysis houses in late 2013.
Demand for Asian oil products in the
Middle East, the US and Europe is
diminishing, meanwhile, meaning there
will be greater competition for local
demand from Asia‟s traditionally export-
focused refineries. Australia and Japan
have already witnessed downstream
rationalisations, with capacity being
slashed in both countries. Smaller and
older refiners are increasingly finding
themselves under pressure.
Questions of crude transport also must
be answered if the plan is, indeed, to
have a scattered selection of smaller
refineries. As Asia‟s fuel importers have
discovered, it makes more economic
sense to import and refine crude,
producing value added products, than
import fuel. But does it make commercial
sense to break up crude cargoes into
smaller shipments in either Singapore or
Indonesia to send to smaller, less
efficient plants? Industry investment
consistently points to a “build big, run
efficiently” approach.
Nevertheless, if Indonesia continues to
struggle with its bigger downstream
dreams then building smaller refineries
may end up proving an appealing
alternative, with or without Iranian crude
in the picture.
The appearance by Iraqi Oil Minister
Abdul Karim Luaibi at the recent Turoge
oil and gas conference in Istanbul came
as something of a surprise. Luaibi‟s name
did not appear on conference
programmes circulated prior to the event,
which was instead billed as featuring
presentations by several speakers with
interests in the upstream of the Kurdistan
Region of northern Iraq. In the event,
they did not show up, but Luaibi did, and
regaled those present with the news that
an agreement between the central
government in Baghdad and the
Kurdistan Regional Government (KRG)
in Erbil over the latter‟s plans to export
crude from the region independent of
Baghdad was “very close.” Turkish
officials confirmed that Luaibi was in
Ankara for talks on technical issues
related to the re-opening of the Kirkuk-
Ceyhan pipeline – currently closed
following sabotage attacks on the line at
various points in northern Iraq, and the
planned addition to the flow through the
line of crude from the KRG-controlled
region. They also added that those talks
in Ankara would have no direct bearing
on the outcome of the talks ongoing in
Baghdad, and that they were waiting for
news of what they also expected to be an
imminent announcement.
Notable silence
In the event, as of the time of writing no
final agreement has been announced,
which tends to suggest both that Luaibi‟s
mission in Ankara was indeed not
directly related to the ongoing talks with
the KRG and that he is more peripherally
involved in those talks than the deputy
prime minister with responsibility for
energy affairs, Hussain al-Shahristani,
who still holds overall responsibility for
Iraq‟s energy policy. This is a position
apparently borne out by the fact that in
their joint press conference neither
Luaibi nor Turkish energy minister Taner
Yildiz made any mention of the KRG‟s
recent offer to transit 100,000 barrels per
day of Kurdish crude via the Baghdad
controlled 46-inch (1,170-mm) diameter
section of the Kirkuk-Ceyhan pipeline,
nor of what will happen to the 1.35
million barrels of crude from the
Kurdistan region currently at Ceyhan
which arrived via the Kurdish-controlled
40-inch (1,020-mm) diameter operational
line of the Kirkuk-Ceyhan conduit and is
currently being held in tanks.
COMMENTARY
Iraq signals impending export deal
as Turkey looks to the future
Turkey is continuing to position itself close to the authorities in both Baghdad and Erbil as
the three work together to resolve the lengthy disputes over piped oil exports to the
Mediterranean
By David O’Byrne
Talks are ongoing, as Ankara, Baghdad and Erbil try to come to an agreement about exports
Downstream Monitor MEA 23 April 2014, Week 16 page 6
Copyright © 2014 NewsBase Ltd.
www.newsbase.com Edited by Ian Simm
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Nor did they mention Turkey‟s
previous indication that it would like to
see revenue from the sale of crude from
the Kurdistan region made independently
of Baghdad through the 40-inch line paid
into an account at Turkey‟s state-owned
Halk Bank – perhaps advisedly so given
the continuing rumblings of discontent
inside Turkey at the authorities‟ quashing
of a police implemented investigation
into corruption at the bank.
Size matters
Instead both ministers discussed
prospects for the re-opening of the 46-
inch line, which is currently undergoing
repairs, with Luaibi suggesting that once
repaired, Iraq could boost exports to as
much as 1 million bpd.
If possible, that would certainly please
Turkey, which has been complaining for
years of low capacity usage through the
line, with Yildiz pointing out that Turkey
has kept its sections of both the 40-inch
and 46-inch line in good working order
despite reduced throughput, and restating
Turkey‟s hopes that throughput will be
increased soon.
The two parallel pipes have a
combined capacity of 1.6 million bpd, of
which around 1 million bpd is accounted
for by the 46-inch line and the remainder
the 40-inch line.
However, the combined effects of over
a decade of underuse and little
maintenance following the first Gulf War
and a subsequent decade and a number of
regular sabotage attacks and ad-hoc
repairs have left the line in a very poor
state of repair, with throughput capacity
reckoned to be less than 600,000 bpd.
Even that, though, is considerably
higher than the 278,000 bpd of crude
from the Baghdad-controlled 46-inch line
carried in February.
Realistically, though, while Baghdad
may have the ability to raise throughput
to a limited extent, it is unlikely for some
time to be able to reach the current
assumed throughput limit of 600,000 bpd
without the addition of substantial
volumes of Kurdish crude.
Raising throughput to 1 million bpd
appears only possible with the
completion of substantial repairs and
refurbishment of lengthy sections of line,
in areas nominally controlled by KRG –
for which again, an agreement will need
to be finalised.
Turkish aspirations
Now if Luaibi is to be believed, that
agreement between Baghdad and the
KRG is apparently now only a matter of
time, which will open the door to new
talks on Turkish hopes for an expansion
of the Ceyhan export route.
Speaking in Ankara last week Yildiz
restated Turkey‟s hopes for Iraqi support
to build a new Iraqi export pipeline in
parallel to the existing line, for carrying
both crude from the planned expansion
of production at Kirkuk, and linking to a
second planned new line running from
Iraq‟s southern oilfields at Basra.
Although still far from clear who
would finance a line from Basra to
Kirkuk, it is a suggestion that both
Turkish and US officials have been
making for close to a decade.
Suggested as a means of avoiding the
risk of a possible Iranian blockade of the
Strait of Hormuz, the recent apparent
rapprochement between Tehran and the
West may appear to have rendered the
project surplus to requirements.
However, with Iran still at loggerheads
with both Turkey and the West over
Syria, and the possibility that Tehran
may yet perform another „volte face‟ and
fail to persuade the US to end the
international sanctions regime, few
would bet against the eventual necessity
of a Basra-to-Ceyhan pipeline.
Correction
In last week‟s issue of Downstream
MEA, it was mistakenly inferred that
Adel Al Kindi was the former CEO of
Oman Oil Refineries & Petroleum
Industries Co. (ORPIC).
Al Kindi was in fact CEO of Oman Oil
Refinery Co., which disappeared when
ORPIC was formed in 2011. ORPIC‟s
current CEO, Musab Al Mahruqi, is the
only CEO the firm has had. NewsBase
apologises for any inconvenience caused
by this error.
The Kurdistan Regional Government
(KRG) on April 17 issued a vehement
and angry refutation of the claim made in
a press release four days earlier by an
obscure Philippines-based firm, Black
Diamond Oil, of plans to build a private
refinery near Erbil in partnership with a
local private sector company, Rezhwan.
The reports suggested that the facility
would be fed by crude from the 950-
square km Taq Taq field operated by
Genel Energy. The Black Diamond
announcement improbably claimed that
the refinery would start operations by the
end of April at a rate of 1,500 tonnes
(11,000 barrels) per day. Citing Genel‟s
own projections for Taq Taq‟s reserves
and output – at 1.7 barrels of oil in place
(OIP) and average 2012 output of 75,000
bpd – the new refinery would
purportedly “purchase the crude directly
from the Taq Taq field” and deploy “ a
plethora of trucks” to transport the oil to
the facility, according to the release.
COMMENTARY
REFINING
Kurdish authorities refute
new refinery claim
Downstream Monitor MEA 23 April 2014, Week 16 page 7
Copyright © 2014 NewsBase Ltd.
www.newsbase.com Edited by Ian Simm
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
“The KRG Ministry of Natural
Resources (MNR) categorically rejects as
false claims by the Black Diamond
Company that it has signed a deal to
purchase crude oil from the Taq Taq
oilfield to supply a „new‟ refinery
operated by a private Kurdish group,
Rezhwan Company,” read the regional
government‟s riposte.
“Neither Black Diamond Company,
which has offices in the Philippines, nor
its local joint venture partner Rezhwan
Company, is officially registered with the
MNR, which has no knowledge of either
company … MNR affirms that Black
Diamond has no basis on which to make
spurious and misleading public claims of
crude oil purchases in the Kurdistan
Region.”
The MNR statement added that Genel
had also informed the ministry that it had
no knowledge of, let alone dealings with,
the firms. Genel is a key partner in the
KRG‟s controversial – from the point of
view of the central Iraqi government in
Baghdad – autonomous up- and
downstream development, with Taq Taq
the area‟s largest producing field,
yielding 77,000 bpd in 2013, according
to the company‟s most recent operational
update. Genel is also a minority partner
in the Tawke field, operated by Norway‟s
DNO International, which last year
produced an average 39,000 bpd.
One of two major ongoing refinery
projects in the Kurdistan region is the
expansion of the Baizan facility, situated
around 24 km outside Sulaymaniyah, to
84,000 bpd through the addition of a new
50,000 bpd crude distillation unit: in this
case, crude will indeed be sourced from
Taq Taq, as well as from the Bina Bawi
field operated by Austria‟s OMV,
through a 110-km pipeline under design
– as is the expansion itself – by France‟s
Technip. An engineering, procurement
and construction (EPC) tender is
expected imminently.
Construction is already under way by
Ventech Engineers of the US on the
other, to expand the 100,000 bpd Kalak
refinery near Erbil through the addition
of two 30,000 bpd modular complexes
and a 15,000 bpd condensate-processing
unit. Baizan and Kalak are operated
respectively by Qaiwan Group and KAR
Group, both local.
KRG‟s downstream plans had
progressed notably smoothly before the
Black Diamond confusion, which is more
redolent of the refining sector in
federally controlled territory – where a
string of private sector investments have
been announced before collapsing or
quietly disappearing.
The latest concerned a memorandum
of understanding (MoU) signed in
October between Baghdad and
Switzerland-based Satarem Group to
develop a US$6 billion, 150,000 bpd
refinery in Missan Province close to the
Iranian border. Immediate widespread
scepticism of the Swiss company‟s
qualifications to undertake such a project
were made public by experts in
December and nothing has been heard
since of the now-expired four-month
provisional agreement.
The Nigerian National Petroleum Corp.
(NNPC) has estimated the combined
average capacity utilisation at the
country‟s four refineries at 25.95% in
December 2013.
According to the company, this
represents a significant improvement
from the 6.46% average capacity
utilisation registered in November 2013
but a slight decline from the 30.87%
utilisation year-on-year to December
2012.
The respective capacity utilisation of
the refineries in December saw Kaduna
(KRPC) average 32.96%, and Warri
(WRPC) at 40.41%. Meanwhile, Port
Harcourt‟s (PHRC) two facilities –
PHRC 1 and 2 averaged a paltry 4.48%
during the period. The NNPC explained
that a total of 338,000 tonnes of dry
crude oil, condensate and slop was
received by the refineries over the month.
“With an opening stock of 433,000
tonnes, total crude oil available for
processing was 816,000 tonnes [5.98
million barrels], out of which 403,000
tonnes [2.95 million barrels] was
processed”.
According to a recent report by
Business Day, this announcement comes
as a poor advertisement to state
ownership in Nigeria. The report
questioned the purpose of the refineries
and said that the solution would be to
remove subsidies and wait for the private
sector to build greenfield refineries like
Dangote Group‟s proposed US$9 billion
complex, which is expected to be
completed in 2016 with a refining
capacity of 400,000 barrels per day.
The report added that none of the
proposals are likely to materialise before
deregulation and the replacement of
subsidies with a market-based structure.
Once these greenfield refineries meet
domestic consumption and export to the
sub-region, the NNPC refineries would
“wither away,” it said.
Nigeria has four crude refineries with a
combined capacity of over 445,000 bpd,
but remains the continent‟s largest per
capita importer of refined petroleum
products.
Despite promises by successive
government to improve the refineries‟
performance, they continue to operate
well below their capacity and Nigeria
continues to import nearly 80% of its
requirement of refined petroleum
products.
REFINING
Production insufficient
at Nigeria’s refineries
Downstream Monitor MEA 23 April 2014, Week 16 page 8
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All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
The world‟s top oil trader Vitol has
predicted that Africa‟s dependency on
fuel imports is likely to grow because of
the myriad challenges in the development
of the region‟s refining capacity.
The company‟s director of origination
and investments Chris Bake told a
Reuters Africa Summit that several
refinery projects lined up in the continent
may not be built because of their small
size and limited funding.
He was quoted by Reuters as saying
that Africa can only reduce the reliance
on the imported fuel if the refineries to
be developed “are either gigantic or with
guaranteed crude supply in a landlocked
location.”
“Micro refineries in waterborne
locations are not a viable way to get a
return on capital. You have to go big, and
today big means a 300,000 to 500,000
barrel per day complex refinery and
US$5-15 billion of capital,” Bake said.
He said it will take up to seven years
for a proposed refinery in West Africa to
be constructed while those planned in
East Africa are likely to be less
competitive because of the stiff
competition from Middle East.
Bake‟s remarks come at a time when
four countries in East Africa have
revived plans to boost the region‟s oil
refining potential after Uganda and
Kenya confirmed significant oil reserves
that are ready for commercial
exploitation.
Kenya, Tanzania, Uganda and Rwanda
have, through a regional trade and
political organisation – the East African
Community (EAC), launched the first
phases of a Strategy for the Development
of Regional Refineries that could see the
region have two new refineries and
Kenya‟s Mombasa facility upgraded.
Landlocked South Sudan, which
together with its neighbour to the north,
Sudan, are the region‟s major oil
producers, has also been co-opted into
the oil refinery development plan
especially after its access to the refining
facilities in Khartoum has been limited
because of politically motivated pipeline
problems. East Africa, which holds an
estimated 8% of Africa‟s crude refining
capacity, produced the continent‟s lowest
levels of oil in 2012 and held the lowest
level of proved oil and gas reserves
compared to other regions in the
continent according to the US Energy
Information Administration (EIA).
And in the interview with Reuters,
Bake said Africa‟s hopes of growth in the
oil and gas sector hinges on the expected
overall growth of its gasoil market.
Meanwhile, Vitol, which is leading a
consortium to bid for a US$2.5 billion
refinery in Uganda, hopes to have a slice
of the Africa gas supply market as the
region seeks more natural gas for
electricity production.
“Africa is a power-hungry continent,
and we are looking at domestic gas
opportunities,” said Chris Joly, director
of exploration and production told
Reuters.
He added that the firm, which pumps
around 10,000 bpd, would look for
exploration and production opportunities
that complement its existing assets and
trading contracts.
Iran and the UAE could be on the verge
of collaborating on petrochemical
projects.
This follows last week‟s agreement
between the two sides to set up a high
profile politico-economic committee to
facilitate co-operation on regional and
international issues. The meeting took
place under the aegis of the Tehran-Abu
Dhabi Joint Economic Commission. The
two sides agreed to boost cooperation in
the renewable energies, oil, gas and
petrochemical industry. As a result of
sanctions, „official‟ UAE-Iran trade has
been cut by up to 33%.
However, the black market trade is on
the rise. Both sides will be looking for
synergies in their petrochemical sectors,
although no projects have so far been
identified. Over the past few years, Iran
has significantly increased the range and
volume of its petrochemical products.
Iran‟s National Petrochemical Co.
(NPC) has become the second biggest
producer and exporter of petrochemicals
in the Middle East, second only to Saudi
Arabia.
However, Iran‟s US$10.72 billion
petrochemical industry is badly in need
of investment. Similarly, future growth in
the UAE‟s petrochemicals capacity could
be hamstrung by a slowdown in the
UAE‟s traditional Asian markets.
FUELS
Vitol predicts dominance of fuel
imports in the African market
PETROCHEMICALS
Iran and UAE seek high profile
petrochemical tie up
Downstream Monitor MEA 23 April 2014, Week 16 page 9
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
BMI‟s latest UAE Petrochemicals
Report warned that unless external
markets recover, additional UAE
capacity will exacerbate problems. An
example of UAE‟s capacity ramp-up is
the 1.5 million tonne per year (tpy)
ethane cracker at Borouge that is on track
to start production at its six new
petrochemical plants this year.
Meanwhile, even as Iran and the UAE
look to strengthen their petchem ties,
Turkey recently announced that its 2008
move into Iran‟s downstream sector is
now paying big dividends. Gubre
Fabrikalari led a group of companies that
paid US$681 million to buy a stake in
Razi Petrochemical Co. from Iran‟s
asset-sales agency.
General Manager Osman Balta told
Bloomberg last week that the US$95
million in dividends announced in March
from its 48.9% stake is more than double
the Istanbul-based company‟s 2013 net
income. “We target raising sales at Razi
by 16% this year,” Balta said. Iran‟s
improving relations with the West have
had “a positive effect” on this target, he
added. Balta noted that an “easing of
sanctions may bring new investments
into our agenda. We‟ve already received
offers in Iran due to Razi‟s success. We
may make a new petrochemical
investment there.”
Iran‟s oil tankers are still being insured
by domestic firms, despite the temporary
lifting of sanctions earlier this year.
Quoting a source close to the matter,
on April 14 the Fars news agency
reported that “although Iran and the
[P]5+1 struck an interim agreement in
Geneva 4 months ago, no foreign
company has taken charge of insuring the
Iranian oil tankers.”
The source, who wished to remain
anonymous, went on to say that cargoes
may not receive any overseas insurance
unless a permanent agreement is reached
later this year.
On June 1, 2012, European Union
(EU) measures against Iran over its
nuclear programme were introduced,
effectively preventing most shipowners
from obtaining insurance for tankers
containing Iranian oil as 95% of oil
tankers are covered by the 13 members
of the London-based International Group
of P&I Clubs (IGPIC).
These measures were temporarily
lifted following the high profile P5+1
talks in November 2013, which sought to
bring an end to the long-running standoff
over Tehran‟s nuclear programme.
However, in February the IGPIC
warned its members not to offer
insurance for Iranian cargoes as it
remained unclear whether claims can be
handled after the six-month period
expires on July 20, even if the incident
occurred before this date.
In March, India – a major importer of
Iranian crude – looked to clarify the issue
with the EU after local reinsurers refused
to cover refineries processing oil from
Tehran.
“This is something we have to attend
to immediately and hopefully in the near
future we will find some solution,”
Salman Khurshid, India‟s foreign
minister, told reporters in New Delhi at
the time.
The lack of certainty over insurance
has meant that trade with Iran “is
becoming tighter and tougher,” he
continued.
A number of major shipping firms have
announced their intention to move to
Oman‟s Sohar Port and Freezone ahead
of the closure of the country‟s Port
Sultan Qaboos (PSQ).
In a statement released last week,
Oman‟s ministry of information said that
Maersk Line, Safmarine, Hyundai
Merchant Marine and Oman Container
Lines have all confirmed that they will
begin activity at Sohar ahead of the
August 31 deadline set by the country‟s
government for commercial activity to
end at PSQ.
After this date, the Muscat-based port
will begin its transformation into a
leisure and tourism hub, with the focus
on a new marina and hotel and shopping
resorts, although cargoes of liquid tar,
sheep, fish products, food oil and cement
vessels will be received until further
notice.
“Investment and growth go hand in
hand at Sohar Port and Freezone,” said
Sohar‟s CEO, Jamal Aziz recently.
“We‟re delighted to be working with
some of the biggest and most recognised
global names in the shipping industry.
We have a strategy in place that will
encourage growth and investment for
years to come.”
PETROCHEMICALS
TERMINALS & SHIPPING
Iran hit by insurance uncertainty
Shipping firms set for Sohar move
Downstream Monitor MEA 23 April 2014, Week 16 page 10
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All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
He added: “We‟re now ready for
anything; we‟ve been working towards
this momentous occasion for many years
and look forward to a bright and
prosperous future with many new
partners.”
This news reflects the continued
success of Sohar, which at US$15 billion
is the country‟s largest infrastructure
project to date. In recent years, the port
has become a focal point of the
Sultanate‟s economic and industrial
progress, prompting the decision in
October 2013 to transfer PSQ‟s
commercial operations from the capital.
Sohar is located 220 km northwest of
Muscat.
The port is managed by Sohar
Industrial Port Co. (SIPC), a 50-50 joint
venture between the Oman‟s government
and the Port of Rotterdam.
Adel Khalil Almoayyed, the CEO of
Bahrain Petroleum Co. (BAPCO), has
said that his firm can offer its terminals
in the Persian Gulf for crude oil and
natural gas exports from Kazakhstan.
BAPCO is in a position to co-operate
with Kazakhstan in “several areas,”
Almoayyed said at the Kazakh-Bahraini
Business Forum in Astana last week.
“The first area is a production
modernisation programme implemented
by BAPCO. Our experience may be of
interest to Kazakhstan. The second
direction is that we can offer Kazakhstan
our terminals in the Persian Gulf for
Kazakh oil and gas export,” he was
quoted as saying by the Azeri news
agency Trend.
“Bahrain has great potential in the field
of oil and gas field exploration. As two
oil-producing countries, we can share
[our] experience in the field of oil and
gas exploration and production,” he
added.
Almoayyed‟s comments came a week
after Kazakh Oil and Gas Minister
Uzakbai Karabalin announced that his
country was seeking alternative routes
for its oil exports. New options may be
needed, owing to concerns that Kazakh
transit routes may be affected if the West
imposes tougher sanctions on Russia, he
explained.
At least two pipelines involving
Kazakhstan would be at risk if the West
intensified trade restrictions on Russia.
The Atyrau-Samara pipeline, owned by
Russia‟s state-run oil pipeline operator
Transneft, would be the most vulnerable.
The Tengiz-Novorossiisk link built by
the Caspian Pipeline Consortium (CPC),
led by US major Chevron, could also be
affected because it carries some Russian
oil as well as Kazakh volumes.
Oil-rich Kazakhstan produced 1.634
million barrels per day of oil last year
and also exported around 440,000 bpd.
The Central Asian state is home to 3% of
global recoverable oil reserves and also
controls proven gas reserves of 2.41
trillion cubic metres.
Along with Oman, Bahrain is one of
only two countries bordering the Persian
Gulf that is not a member of the
Organization of the Petroleum Exporting
Countries (OPEC).
In 2012, Bahrain produced 48,000 bpd
of total petroleum liquids, less than any
other country in the Persian Gulf,
according to the US Energy Information
Administration (EIA). It hopes to boost
total petroleum production to 100,000
bpd by the end of the decade. Bahrain is
also a small producer of gas, producing
12.63 billion cubic metres of dry natural
gas in 2011, according to EIA data.
Italy‟s Eni has invited companies to
express their interest in providing a
floating LNG vessel to be used to export
natural gas from offshore Mozambique.
Eni placed the announcement in the
Mozambican press on April 15, the
Mozambique News Agency reported,
saying the Italian company had published
a “Public Announcement for Expression
of Interest” for the FLNG vessel.
Companies are requested to submit
documents by May 5.
Eni holds a 50% stake in
Mozambique‟s offshore Area 4 in the
Rovuma Basin through Eni East Africa,
in which China National Petroleum Corp.
(CNPC) is also a partner. The gas
resource in Area 4 has been estimated at
2.4 trillion cubic metres or higher. Eni
and the US‟ Anadarko Petroleum, which
operates Area 1, plan to establish a joint
onshore complex, which may hold as
many as 10 LNG trains.
Mozambique‟s natural gas resources
are estimated to be as high as 5.66 tcm,
as a result of discoveries by the two
operators.
TERMINALS & SHIPPING
Bahrain offers Kazakhstan
use of export terminals
Eni opens talks on FLNG
offshore Mozambique
Downstream Monitor MEA 23 April 2014, Week 16 page 11
Copyright © 2014 NewsBase Ltd.
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All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
The Mozambican media reported Eni
was keen to see front-end engineering
and design (FEED) proposals for the
FLNG systems and possible future
phases of detailed engineering,
procurement, construction, installation,
commissioning and operation and
maintenance of services.
It was reported earlier this month that
Eni is looking for partners to help it
finance the gas development in Area 4
and was considering the sale of more
equity in the licence. The price of
developing Area 4 has been estimated as
high as US$50 billion.
Eni is reported by Reuters to be
considering two FLNG vessels for
placement in the offshore Mamba field,
besides at least one onshore train. A final
investment decision (FID) is expected in
late 2015 with start-up seen in 2020. The
agency said another FLNG vessel was
under consideration for the Coral field,
which Eni fully owns.
A decision on that investment may
come before the end of this year, it
reported. During a meeting in Brussels in
early April, between Eni‟s then CEO,
Paolo Scaroni, and Mozambican
President Armando Guebuza, the Italian
company said it had completed 11 wells
in Area 4, with a 100% success rate. Two
more wells are planned for 2014.
Eni confirmed at the meeting that it
planned to combine on- and offshore
LNG production along with a gas-to-
liquids (GTL) plant to meet
Mozambique‟s domestic diesel
demand.
Two major downstream projects in the
kingdom are being taken to a further
stage of engineering, procurement and
construction (EPC) bidding.
Revised prices have been requested on
the Jubail acrylics plant being developed
by state-owned Saudi Basic Industries
Corp. (SABIC) and Japan‟s Mitsubishi
Rayon Co. (MRC) and a re-tender has
been planned for the third quarter for the
main packages on Saudi Aramco‟s clean
fuels and aromatics project at Ras
Tanura.
Both schemes have already faced
delays during the front-end engineering
and design (FEED) stage.
Revised prices are due by the end of
April following clarification meetings
with the four bidders for the estimated
US$500 million SABIC/MRC scheme at
Jubail, entailing construction of a plant
with capacity of 250,000 tonnes per year
(tpy) of methyl methacrylate (MMA) and
40,000 tpy of polymethylmethacrylate
(PMMA), used primarily in the
automotive and construction industries.
Bids were submitted in late March
from Daelim Industrial and Hanwha
Engineering & Construction, both of
South Korea, France‟s Technip and
Spain‟s Tecnicas Reunidas, the last of
which also carried out the FEED work –
delayed by discussions between the
partners over technology selection. MRC
subsidiary Lucite International‟s
technology was eventually selected. The
project was launched in 2009 as a 50:50
joint venture (JV), with the partners
subsequently also teaming up with
Japan‟s Asahi Kasei for an acrylonitrile
plant at Jubail for which an EPC tender is
expected imminently.
The revisions to the Ras Tanura clean
fuels and aromatics contracts are to be far
more fundamental, since original bids in
October 2013 came in at roughly double
the original US$2 billion budget, thus a
re-tender is planned by Aramco in the
third quarter.
The scope of works had already been
expanded from initial plans during the
prolonged FEED stage carried out by the
US‟ Jacobs Engineering, so higher costs
were anticipated before the first round of
bidding. The three packages tendered
were for paraxylene (PX) production,
naphtha and aromatics processing and
offsites and utilities, with a JV of South
Korea‟s Daewoo Engineering &
Construction with Japan‟s JGC Corp.
bidding low for the first two and JGC
sole bidder for the third.
Construction is expected to take 42
months, rendering the original targeted
completion date of 2017 now impossible.
One option reported to be under
consideration by Aramco is to abandon
the PX component.
The scheme is part of a wider drive by
Aramco both to refine cleaner fuels and
to integrate its major refineries with
petrochemicals complexes: the biggest
chemicals project under way, the US$20
billion Sadara JV with Dow Chemical of
the US, was originally to have been built
at Ras Tanura before being moved to the
more established industrial hub at Jubail
and sourcing feedstock from the Saudi
Aramco Total Refining and
Petrochemical Co. (SATORP) JV
refinery.
A US$7 billion petrochemicals
complex is also planned adjacent to the
Rabigh Refining and Petrochemical Co.
(Petro Rabigh) facility.
At the same time, clean fuels projects
are under way at the state-owned giant‟s
Rabigh, Riyadh and Yanbu refineries
with the aim of reducing the sulphur
content in domestically-consumed diesel
for transportation to 10 parts per million
(ppm), in line with international
standards.
TERMINALS & SHIPPING
TENDERS
New bidding set for Jubail acrylics,
Ras Tanura refinery contracts
Downstream Monitor MEA 23 April 2014, Week 16 page 12
Copyright © 2014 NewsBase Ltd.
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All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
The following news items are sourced
from local and international news
sources. NewsBase is not responsible for
the contents of the stories and gives no
warranty for their factual accuracy.
REFINING
Essar buys more oil
from Iran
Essar Oil, Iran‟s top Indian client
imported 18.6 percent more oil from
Tehran in 2013/14 after a jump in
shipment volumes in the final quarter to
end-March, according to tanker arrival
data obtained from trade sources. The
private refiner shipped in about 231,100
barrels per day (bpd) of Iranian crude in
March, its highest monthly shipment
since at least January 2011, reflecting a
growth of about 90 percent from
February and six times more than the
volume in March 2013, the data showed,
Reuters reported. The higher volumes in
the quarter were probably triggered by an
interim deal agreement Tehran and the
six world powers cut in November for a
loosening of trade sanctions in exchange
for curbs on Iran‟s disputed nuclear
program. Essar shipped in about 105,700
bpd from Iran in the year to March 31,
the data showed, benefiting from
discounts offered by Tehran.
FNA, April 19, 2014
FUELS
Iran likely winner of
gas price dispute
Iranian oil minister Bijan Namdar
Zanganeh says Turkey‟s complaint with
an arbitration court about the price of
natural gas imported from Iran “will
create no problem for Iran,” adding that
the court will “most likely” rule in favor
of the Islamic Republic. Speaking to
reporters on the sidelines of his talks with
Turkish Development Minister Cevdet
Yilmaz in Tehran, Zanganeh stated that
he discussed the development of oil and
gas relations between Iran and Turkey in
the meeting. Asked whether Iran is likely
to reduce the price of natural gas exports
to Turkey, he responded, “Negotiations
are ongoing in this regard.” Yilmaz
arrived in the Iranian capital on Tuesday
at the head of a 100-member delegation
of Turkish tradesmen and investors to
attend the 24th meeting of Iran-Turkey
Joint Economic Commission. He also
discussed issues of mutual interests with
senior Iranian official during his three-
day visit.
TT, April 18, 2014
Qatar rides on LNG
Liquid natural gas has helped make Qatar
the richest nation in the world, with a per
capita income for its citizens of
US$101,000 in 2012, according to
International Monetary Fund data.
Blazing gas flares 230 feet into the night
sky above Qatar‟s Ras Laffan Industrial
City. The 183-square-mile complex
houses the world‟s largest assemblage of
liquefied natural gas plants and its
biggest port for LNG exports. Ras Laffan
chills to a fluid more gas in a year than
Canada consumes. It then ships it to run
electric plants and warm homes from
Tokyo to Buenos Aires. The gas facilities
within its grounds produce almost a third
of the world‟s LNG exports. The
government takes every precaution
against sabotage. Entry to the Industrial
City for those who don‟t work there is
severely restricted; photography inside
the facility is forbidden. Ras Laffan
makes Qatar the richest nation in the
world, with a per capita income for its
citizens of US$101,000 in 2012,
according to IMF data.
WP, April 18, 2014
Turkey wants gas
discount from Russia
Turkey will try to obtain a discount from
Russia for the gas supplied by this
country, and this issue will be discussed
with the management of Russia‟s
Gazprom in coming days, Turkish
Minister of Energy and Natural
Resources, Taner Yildiz said, the
country‟s TRT Haber TV channel
reported on April 21. The information
about that Gazprom refused to offer any
discount to Ankara for the supplied gas,
is untrue, according to the minister. “The
contract signed between Ankara and
Moscow gives every reason for Turkey
to demand a discount on the supplied
gas,” Yildiz said. Turkish minister went
on to add that the increase of gas supply
to Turkey will also be discussed during
the talks with Gazprom. The Turkish
state pipeline company Botas imported
38.42 bcm of gas from various sources in
2013.
TREND, April 21, 2014
Libya plans cards to
cut subsidies
Libya plans to limit the costly subsidies
its citizens enjoy when buying fuel –
much of which is smuggled into Tunisia
for resale at higher prices – by
introducing a “smart card” system like
one newly implemented in neighboring
Egypt. The North African country‟s
economy is burdened by subsidies for
items from gasoline to bread and airline
tickets, which along with public salaries,
eat up more than half of the budget. The
weak interim government has been
reluctant to cut the subsidies, introduced
by former leader Moammar Gadhafi to
discourage opposition, as it is still
struggling to impose authority in a
country awash with weapons. However,
with a nine-month shutdown of major oil
fields and ports due to political unrest
and local disputes drying up crude oil
export revenues, the government is
proposing a fuel card system to
parliament, Cabinet spokesman Ahmad
Lamin said Thursday.
DS, April 19, 2014
Subsidies cause fuel
shortage in Egypt
The shortage of natural gas and the huge
energy subsidies provided to large
factories in Egypt are behind the
recurrent power outages in the most
populous Arab country, Egyptian energy
experts said. Egypt has been exporting
gas to Israel, Jordan and other countries
since 2005, for allegedly below-market
prices, which lead the country to suffer
shortage of the gas provided for
operating power stations.
NEWS IN BRIEF
Downstream Monitor MEA 23 April 2014, Week 16 page 13
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All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
“Power outages in Egypt started in 2008
when the country had to use diesel for
power stations as alternative for natural
gas, causing maintenance issues that cost
about 10 billion Egyptian pounds (around
US$1.4 billion),” said international
energy expert Ibrahim Zahran.
XINHUA, April 20, 2014
Uganda officials
implicated in fuel
scam
According to the National Budget,
Uganda National Roads Authority
(UNRA) is one of the sectors that receive
the biggest allocations. Most of its
expenditures are spent on construction
and maintenance of national roads. The
Authority has however come under fire
over alleged fraudulent payment of
sh1.4b to Shell Uganda Limited by
authority officials and by the time the
auditors reviewed UNRA‟s books,
sh1.1b had already been paid out. An
audit of the Authority‟s expenditures by
the Auditor General in a report to
Parliament revealed that during the
period from 1st July, 2012 to April 30,
2013, individuals from UNRA received
excess fuel and lubricants from a fuel
company compared to what was ordered
for by UNRA through the Director
Finance and Administration for each
station. At the end, the company over
invoiced UNRA 1.4 bn shillings for fuel
and lubricants which it did not download.
Some of the over invoiced fuel was for
fuel stations that had not dealt with any
of the UNRA stations.
NV, April 21, 2014
Busia fuel dealers up
in arms
Operators of petrol stations in Busia
county have raised the alarm over illegal
sale of fuel in transit. They said some
truck drivers conspire with unscrupulous
middlemen to siphon fuel destined for
neighboring countries. The operators said
the racket involves some clearing agents
at the Busia border. Speaking to the Star
in Busia town yesterday, the operators,
who sought anonymity, said they have
lost business because of the cheap but
smuggled fuel in the market. “We have
lost scores of our clients because they are
rushing to buy cheap fuel being sold
through the black market,” said a petrol
station owner. He asked police to probe
the racket and apprehend the culprits.
Investigations by the Star yesterday
confirmed the racket as some tankers
were spotted offloading fuel into drums.
Some trucks were packed near the Busia
Baptist Church on the Busia-Kisumu
highway, which is off the route they
should follow.
AA, April 21, 2014
Gas city project
ready in Nigeria
All is now set for the ground breaking
ceremony of the US$16 billion Gas City
Project located at Ogidigben in Warri
South West Local Government Area of
Delta State, the State Governor, Dr.
Emmanuel Uduaghan has revealed.
Governor Uduaghan who undertook an
inspection visit to the project site on
Wednesday told reporters that President
Goodluck Jonathan would in a few
weeks perform the ground breaking
ceremony. “The ground breaking will
take place in the next few weeks. Mr.
President will come here to do the
ground breaking. I know it is going to be
very soon. They will soon give us a date.
We are quite ready. You can see that the
site is ready for the ground breaking,” he
said.
DT, April 17, 2014
Ghana reduces fuel
pump price
Transport Operators have expressed their
appreciation to Government for the
decision to reduce fuel pump price. This
was made known in a statement signed
by Mr Stephen Okudzeto, General
Secretary, GPRTU and Alhaji Aliyu
Baba, General Secretary, Ghana Road
Transport Coordinating Council
(GTRCC) and copied to the Ghana News
Agency on Thursday. The statement
called for the full co-operation from
transport operators and the travelling
public in this matter.
The fuel pump price was reduced by by
3.94% early this week.
VGL April 17, 2014
PETROCHEMICALS
Iran planning to
export more
petrochemicals to
Africa
The National Iranian Petrochemical Co.
(NIPC) voiced readiness to enter new
markets around the world, stressing that
export of more petrochemical products to
the black continent stands atop the new
agenda of the company.
The NIPC, which had cited China, India,
Southeast Asian countries and the Far
East as main markets of its products, has
recently found markets in African
continent.
African countries have so far imported
Iranian petrochemical products after
lifting the ban on the import of these
products by the EU countries.
In addition to China and India,
Bangladesh, Sri Lanka, Pakistan, and
Iraq, and in some occasions, Armenia
and Malaysia also imported Iranian
products especially urea and ammonia
fertilizers. Last year, Tanzania and
Mozambique joined the bandwagon of
countries importing Iran‟s products.
For instance, Head of Marketing Office
of Khorassan Petrochemical Complex
Ali Asqar Khazayee said that the
melamine cargo of Iran‟s Northwestern
petrochemical complex had been
exported to new markets in Africa.
On Tuesday, an Iranian deputy oil
minister said Iran is resolved to increase
its revenues from exporting
petrochemicals, and announced that four
new petrochemical plants are scheduled
to go into operation in the current Iranian
year calendar (started March 21).
Iranian Deputy Oil Minister for
Petrochemical Affairs Abbas She‟ri
Moqaddam said that the completion and
construction of development projects are
among the main priorities of the NIPC,
and therefore four petrochemical plants
will come on stream this year.
NEWS IN BRIEF
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
He further stated that the second phase of
Kavian Petrochemical Complex in Iran‟s
Southern province of Bushehr, as well as
petrochemical complexes of Lorestan,
Kordestan and Mahabad will be
operational by the end of the current
Iranian calendar year.
Earlier this month, Director for Planning
and Development Department of the
NIPC Hossein Shahriyari told reporters
that Iran plans to increase its
petrochemical exports considerably in
the current Iranian year as sanctions
against the Islamic Republic are eased in
the wake of an interim nuclear deal
between Tehran and the Group 5+1 (the
US, Russia, China, France and Britain
plus Germany).
“Iran will increase the value of its
petrochemical exports to the level of
US$12 billion,” Shahriyari said.
He reiterated that Iran‟s petrochemical
sector enjoys ample opportunities that
could be seized once the capital
necessary for its development projects
are provided.
“In recent years, the domestic sales of
petrochemical products have increased
considerably, and with the
implementation of the new development
projects, the petrochemicals production
capacity will rise significantly,”
Shahriyari said.
Iran has trade transactions with over 105
world countries.
Last year, former Iranian Economy
Minister Seyed Shamseddin Hosseini
said that Iran‟s non-oil exports witnessed
an eye-catching growth in the last Iranian
year (ended March 20, 2013) despite the
sanctions and restrictions imposed by the
West on Tehran.
“The value of the country‟s non-oil
goods exported last year hit
US$41.3bln,” the Iranian economy
minister said, addressing a conference on
monetary policy of global economy.
He noted that the figure shows an
increase as compared with last year due
to growth in tourism sector and exports
of agricultural and mineral products.
“The non-oil export deficit reduced to
US$12.3bln last year from the previous
figure of US$18bln,” Hosseini said.
FARS, April 23, 2014
Railway to fuel intra-
GCC petrochemicals
trade
Trade in petrochemicals between Gulf
Co-operation Council (GCC) states is set
for robust growth in the coming years led
by the development of the region‟s rail
and transport network, predicts the Gulf
Petrochemicals & Chemicals Association
(GPCA), the region‟s longest-standing
trade association.
“An integrated railway network is an
important catalyst in driving increased
economic integration between GCC
countries as it fosters the region‟s
development agenda,” said Dr.
Abdulwahab Al-Sadoun, GPCA
Secretary General. “Railways will
similarly have a positive effect on the
intra-regional petrochemicals supply
chain as it will enhance cross-border
trade within the Gulf, while minimising
the risk of transporting chemicals across
long distances.”
The GCC petrochemicals industry is an
export-oriented sector. In 2012, 60.7
million tonnes of petrochemicals
produced in the Gulf were exported to
diverse markets such as China, the
European Union and North America.
According to GPCA estimates, only
6.2% of exports occurred within the GCC
region. “Intra-GCC chemicals trade has
seen a cumulative growth of 13% over
the last five years,” explained Dr.
Sadoun. “This is a positive development
as it signifies deeper trade ties within the
Gulf.”
In the medium term, intra-regional trade
is set to surge following the planned
expansion of the GCC railway network.
“The GCC railway network will enable
the region‟s petrochemical companies to
optimise their supply chains,” he added.
The GCC railway network is an
estimated US$200 billion venture, and
will link the six Gulf countries for the
first time. The project is expected to be
completed by 2018, and talks are
underway to connect Jordan and Iraq
once the core GCC states are linked.
Post-2020, GPCA predicts that the Gulf
states will be less reliant on
petrochemical imports to fulfill regional
demand for a whole host of products
across sectors like aviation, food &
beverage and infrastructure.
The importance of railway connectivity
will be a key focus at the upcoming
GPCA Supply Chain conference. Held in
Dubai from May 6- 8, senior executives
from Saudi Railway Company, Etihad
Rail and Rail Cargo Austria will provide
local and international insights on best
practice in the transport sector.
ZAWYA, April 23, 2014
SABIC profit dips,
plans overseas
expansion
Saudi Basic Industries Corp (SABIC)
reported a dip in its quarterly earnings
yesterday as its chief executive said a
shortage of natural gas was limiting its
domestic growth, making expansion
abroad vital. SABIC, the biggest listed
company in the Gulf and one of the
world‟s largest petrochemical firms said
net profit slipped 1.8 percent from a year
earlier to SR6.44bn (US$1.72bn) in the
first quarter of 2014. That was slightly
below the average forecast of analysts,
who had predicted a quarterly profit of
SR6.79bn. Chief financial officer Mutlaq
Al Morished said sales in the first quarter
climbed to SR49.5bn from SR46.8bn a
year earlier. But SABIC said lower prices
for some of its petrochemical products
offset rises in output and sales volumes,
while expenses related to sales and
administration increased. More broadly,
SABIC chief executive Mohamed Al
Mady complained that a lack of ample
natural gas supplies within Saudi Arabia
had emerged as a key constraint on
growth there. Natural gas is used as a
feedstock for petrochemical production.
TPQ, April 21, 2014
Mesaieed clarifies
dividend distribution
Qatar Exchange-listed (QE) Mesaieed
Petrochemical Holding Company
(MPHC) Monday issued a clarification
advising its shareholders on delivering
dividends according to a QE notice.
NEWS IN BRIEF
Downstream Monitor MEA 23 April 2014, Week 16 page 15
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www.newsbase.com Edited by Ian Simm
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
“MPHC appointed Commercial Bank of
Qatar (CBQ) as dedicated bank to deliver
its cash dividends” QE‟s 43rd company
listed for trading shares said.
“Shareholders can receive their dividend
from any CBQ branch. Shareholders can
opt to receive in cash dividends less than
QR100000 and dividends greater than
this amount via cheque.” Dividend
transfer to a bank in Qatar or worldwide
is also possible MPHC said. CBQ shall
deposit dividends in the accounts of
shareholders who used Qatar Central
Securities Depository with their direct
credit service. CBQ business hours are
from 7.30am to 1.00pm at most
locations.
MENAFN, April 21, 2014
Muntajat promotes
Qatar’s industry
Qatar Chemical and Petrochemical
Marketing and Distribution Company
(Muntajat) Q.J.S.C. represented Qatar‟s
downstream industry at PlastiCon 2014,
the International Conference for Plastic
Conversion, and Plastivision 2014, the
International Plastics, Printing and
Packaging Exhibition and conference,
both in Sharjah, UAE. The annual GPCA
PlastiCon 2014 conference, now in its
5th edition, was held from the 7th to the
9th of April. Muntajat returned to the
regional event with a larger delegation to
represent Qatar at the forum that is
focused on highlighting the key role of
plastic innovation in market and product
development. Exhibiting at Plastivision,
Muntajat showcased Qatar‟s polymer
products to customers and industry
stakeholders from around the world
during the exhibition that ran in
conjunction with PlastiCon.
MENAFN, April 17, 2014
PIPELINES
Pak to seek
concessions from
Iran
After failing to get Iran-Pakistan (IP) gas
pipeline exempted from US sanctions,
Prime Minister Nawaz Sharif is set to ask
Tehran during an upcoming visit to
waive penalty following delay in work
and revise the agreed deal. In case of
disagreement, the two countries may land
in the international court of arbitration to
settle the matter, sources say. In addition
to this, Pakistan and Iran will sign a
3,000-megawatt power supply deal
during the premier‟s trip slated for May
11-12. Pakistan is already importing
73MW from Iran to meet the needs of
Gwadar, but has not been able to clear
outstanding payments, a process impeded
by US sanctions against Iran for its
alleged nuclear program, which Tehran
vehemently denies, that blocks
transactions through banks. The US has
already refused to exempt the IP pipeline
from sanctions, triggering uncertainty
about the future of the project.
TRIBUNE, April 22, 2014
Turkey to offer new
pipeline route to
Russia
Turkey intends to offer Russia a laying
option for the “South Stream” gas
pipeline not on the bottom of the Black
Sea as expected, but onshore, the Turkish
Minister of Energy and Natural
Resources Taner Yildiz, said. The
Turkish side intends to discuss the issue
with the Russian “Gazprom” company in
the future which is the largest supplier of
gas to Europe, the Turkish TRT Haber
TV channel quotes the Minister as
saying. The crisis in Ukraine will not
affect economic relations between
Turkey and Russia, as Ankara and
Moscow are strategic partners, Yildiz
said. The “South Stream” gas pipeline
with the capacity of 63 billion cubic
metres will pass across the Black Sea to
the countries of South and Central
Europe, bypassing Ukraine to diversify
export routes for natural gas. The
project‟s main participants are Russia‟s
Gazprom and Italy‟s ENI. The pipeline is
expected to launch in 2015. Its maximum
capacity will be 63 billion cubic metres
per year. The gas pipeline will operate at
full capacity in 2018.
TREND, April 17, 2014
NNPC completes gas
pipeline repairs
Following the completion of repair works
on vandalised gas pipeline in Delta State,
consumers of electricity in Nigeria would
soon heave a sigh of relief as end is
expected to come to the epileptic power
supply occasioned by seven-month old
nation-wide gas shortage. The Nigerian
National Petroleum Corporation (NNPC)
stated that it had completed the repair of
the gas pipeline in the region. In a
statement released by the Corporation,
almost 200million cubic feet per day
(mmcf/d) of gas is being re-instated into
the grid. “This will improve power
availability in the country, after the
prolonged period of outages. An
additional 60mmcf/d is expected within
three weeks when ongoing repair works
at the Utorogu gas plant is also
completed. “With this development,
Nigerians should expect continuous
steady improvement in power availability
throughout the course of the year.
“Despite short term challenges being
experienced, it is essential to state that
the gas sector reform is on course,” it
stated. The Minister of Petroleum
Resources, Diezani Alison-Madueke, had
directed the NNPC to embark on an
accelerated implementation of the
Nigerian Gas master-plan.
TRIBUNE, April 20, 2014
TERMINALS &
SHIPPING
Allegations of gas
leak denied
The Arabian Gulf Oil Company
(AGOCO) has denied social media
reports that there was an leakage of toxic
hydrogen sulphide gas at Marsa Al-
Hariga in Tobruk while the first tanker
since the blockade there was lifted, the
Aegean Dignity, was being loaded with
oil. “It is not true,” AGOCO
spokesperson Ahmed Al-Erabi told the
Libya Herald. “The loading was done
normally and to the usual standards.”
NEWS IN BRIEF
Downstream Monitor MEA 23 April 2014, Week 16 page 16
Copyright © 2014 NewsBase Ltd.
www.newsbase.com Edited by Ian Simm
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Hydrogen sulphide is present in sour
crude oil, such as from Saudi Arabia, but
Libyan crude is generally sweet with
extremely low hydrogen sulphide levels.
LH, April 20, 2014
Iran to increase
natural gas storage
capacity
Iran plans to increase its gas storage
capacity by the end of the current Iranian
calendar year, which started on March
21. Iranian oil minister has instructed the
related bodies to do their best to achieve
the goal, Iran‟s IRIB News Agency
reported on April 20. Deputy Director of
National Iranian Gas Company,
Abdolhossein Samari said that in
previous winter the gas storage facilities
proved their efficiency. “The Sarajeh gas
storage facility pumped some 10 million
cubic metres of gas to the national gas
network in winter. The figure is not
significant, but it was really helpful,”
Samari added. He went on to note that
Shoorijeh gas storage facility will come
on stream by the end of year. “Once
Shoorijeh gas storage facility comes on
stream, we expect to be able to inject 50
percent more from the gas storage
facilities to the national gas network in
comparison to previous year,” he
explained.
TREND, April 20, 2014
Port of Duqm in talks
Port of Duqm is in negotiation with four
mineral processing and refining
companies to set up projects at the
industrial zone‟s mining cluster. These
mineral processing companies include
three foreign firms from the Middle East
and Europe and one from Oman, Reggy
Vermeulen, commercial director of Port
of Duqm, told Times of Oman. These
companies are planning to process
minerals like limestone to make panels or
primary refining facility for other
minerals. However, it is a long-term plan
as the zone has to be ready with utilities
like natural gas and power. The
companies are also studying the sector
law, which was announced by the
government last year. The government
wants mineral products to be processed
in the country to get value addition. As
per the new regulation, mining
companies are not allowed to export
minerals in raw forms rather companies
are expected to add value for exporting
products.
TOO, April 20, 2014
Libya restarts oil
exports from Hariga
port
Libya is restarting the process of
exporting oil after an eight-month
standoff with rebels who blockaded a
number of the country‟s most prominent
ports ended last week following
negotiations between the rebels and the
Tripoli government. A tanker, the
Aegean Dignity, arrived at the Hariga
port in the country‟s eastern region on
Tuesday, according to a statement by
Salah Al-Monghi, the head of the
Management Committee at the Arabian
Gulf Oil Company, a subsidiary of
Libya‟s state-owned National Oil
Corporation (NOC). Monghi said the
tanker would load some 1 million barrels
of crude oil destined for Italy. An NOC
official speaking to Reuters said the
vessel began loading the oil on
Wednesday. Speaking to Asharq Al-
Awsat, NOC spokesperson Mohamed Al-
Harari said a further “800,000 barrels of
crude will be ready for export from the
Hariga Port within the next 10 days,”
adding that he expected the government
to step up activity at the port in an
attempt to make up the losses.
AAWSAT, April 19, 2014
Zueitina port
reopening delayed
Technical problems have delayed the
reopening of Libya‟s eastern Zueitina oil
export terminal after the government
reached a deal with rebels to end an
eight-month blockade of the port, a
minister said on Sunday. Two weeks ago,
the Tripoli government reached an
agreement with rebels in the restive east
to end their occupation of four oil ports
which had halted vital exports. Under the
plan, the Hariga and Zueitina ports were
due to open immediately while the larger
Ras Lanuf and Es Sider terminals would
resume oil exports within a month. But
Justice Minister Salah al-Merghani said
Hariga port located in Tobruk in the Far
East would be the only one to start
operations due to technical problems at
Zueitina. “There is some damage (at
Zueitina port) due to the long closure,”
Merghani told a televised news
conference from Benghazi.
REUTERS, April 20, 2014
NEWS IN BRIEF
Downstream Monitor MEA 23 April 2014, Week 16 page 17
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
CONFERENCES
Downstream Monitor MEA 23 April 2014, Week 16 page 18
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
CONFERENCES
Downstream Monitor MEA 23 April 2014, Week 16 page 19
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www.newsbase.com Edited by Ian Simm
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
SPECIAL REPORT
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HEADLINES FROM A SELECTION OF NEWSBASE MONITORS THIS WEEK
Oil and Gas Sector
AfrOil Total has found light oil at its deepwater Saphir-1XB well,
offshore Cote d’Ivoire.
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ChinaOil China's first-quarter crude imports climbed more than 8%
year on year to almost 550 million barrels.
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GLNG Excelerate Energy is to supply an FSRU to Puerto Rico in
a 15-year charter deal.
LatAmOil Petrobras’ pre-salt production hit 428,000 barrels per day
on April 15.
MEOG Chinese firm BGP has begun a seismic survey on behalf
of Russia’s LUKoil covering Iraq’s Block 10 concession.
NorthAmOil ConocoPhillips will resume LNG exports from its Kenai
plant in Alaska.
Unconventional OGM Goodrich Petroleum has drilled a second successful well
targeting the Tuscaloosa Marine shale in Louisiana.
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