July 5, 2012:

Thailand's IRPC Pcl will postpone a late July refinery maintenance shutdown and Thai Oil Pcl may do the same to help avert supply shortages after a fire on Wednesday at a refinery operated by Bangchak Petroleum Pcl. PTT Pcl is the parent company of both IRPC and Thai Oil. "PTT group will seek more supply from domestic refineries, including a plan to delay IRPC's maintenance shutdown, and may consider imports," PTT Pcl said in a statement. IRPC, which has capacity of 215,000 barrels per day (bpd), had a major shutdown in the fourth quarter of 2011. It had planned a shutdown, this time not involving major units, from July 20 to Aug. 7. It may now push that to later in August or October, President Atikom Terbsiri told Reuters. IRPC currently runs at about 180,000 bpd.

Thai Oil, the country's biggest refiner, could also postpone a shutdown planned for Aug. 1 to Sept. 7 if there proves to be a shortage of fuels, the Energy Ministry said. This shutdown wasn't planned for any major units, Thai Oil said. It has said it may undertake major maintenance for a month in the second quarter of 2013. The ministry has asked Thai Oil and IRPC to raise output and expects they can produce an additional 35,000 bpd to help offset the shortfall caused by the Bangchak fire, Energy Minister Arak Chonlathanont told reporters. Bangchak produces around 99,000 bpd, accounting for 9.9 percent of Thailand's total output of 1 million bpd. The country has enough reserves to meet demand, the minister said. Bangchak declared force majeure on crude imports after the fire, which broke out early on Wednesday but was brought quickly under control. Bangchak has shut the 120,000 bpd plant for a week as the fire damaged a crude distillation unit. That unit, with a capacity of 80,000 bpd, will remain shut for at least 30 days, while the smaller 40,000 bpd unit and a hydrocracker unit will be restarted after a week, President Anusorn Sangnimnuan told reporters.

The shutdown of the bigger CDU may extend to two months, he added.

By Reuters

July 4, 2012:

Bangchak Petroleum PCL (BCP.TH) is confident that the closure of its sole refinery for a week after a fire Wednesday at a crude distillation unit will have only a minimal impact on adjusted earnings before interest, tax, depreciation, and amortization this year. EBITDA will likely fall by 300 million-400 million baht ($9.5 million-$12.6 million) if the CDU has to remain closed for three months, President Anusorn Sangnimnuan told reporters Wednesday. The company's net profit was THB5.6 billion last year and it previously targeted an EBITDA of THB7 billion for 2012. Bangchak plans to import around 15,000 barrels a day to run its hydrocracker at its full capacity of 25,000 barrels a day, Mr. Anusorn said. The hydrocracker is a major source of revenue for the company.

He also said the company has no plan to relocate its refinery from the existing site--despite public concerns over its location in the nation's capital--as it would involve a hefty investment. The company said it needs to shut down the entire refinery for a week to investigate the cause of the fire. Equipment at the CDU, with a refining capacity of 80,000 barrels a day, was ignited around 0020 GMT and the fire was put out an hour later. The refinery has a maximum crude processing capacity of 120,000 barrels a day--about 10% of the country's total refining capacity. Bangchak's average refining capacity this year will likely fall to 90,000 barrels a day, below a previous target of 94,000-95,000 barrels a day.

Mr. Anusorn said the company would need at least 1-2 months to fix the CDU, and around 3 months if the unit's tower needs to be replaced. The company will also halve fuel oil exports to the spot market to 30 million liters a month, he said, adding that it won't cut sales to buyers under contracts. State-owned energy conglomerate PTT PCL (PTT.TH), which owns 27.2% of Bangchak, will boost supply to compensate for Bangchak's lost production to prevent a local supply shortage, Nuttachat Charuchinda, chief operating officer, downstream petroleum business group, said.

By Dow Jones Newswires

July 4, 2012:

ABUJA, Nigeria (AP) — A $4.5 billion deal to build six refineries in Nigeria is set to make Africa's top oil producer less reliant on exports for oil products, authorities say. Yemi Kolajo, a spokeswoman for Nigeria's trade ministry, said in a statement late Monday that U.S.-based Vulcan Petroleum Resources Ltd. and Nigerian-based Petroleum Refining and Strategic Reserve Ltd. signed the memorandum of understanding with the government in the capital, Abuja. Two of the six refineries are to be built within the next year, Kolajo said. Nigeria, despite producing about 2.4 million barrels of oil a day, has decrepit refineries unable to meet the nation's growing demand for gasoline due to years of mismanagement and sabotage.

The six new refineries will refine a total of 180,000 of barrels of oil per day in a bid to address that need, the statement said. Edozie Njoku, chairman of the Nigerian partner, said Tuesday that all the funding for the project would come from outside the country. He said they opted for modular refineries because there are many local challenges to building a refinery from scratch. Each refinery will be built in the U.S., disassembled for shipping and reassembled in Nigeria, he said. "Our job as the local partner is to make sure that the government does all we asked of them," Njoku said, "that they approve all the permits, etc." He said the U.S. partner company was a venture capitalist that would be bringing investors as well as technical know-how. The company could not immediately be reached for comment.

The government has shown a lot of will to make this happen, Njoku said. "They really want to start refineries in this country, they are committed to it."  The deal comes six months after the Nigerian government tried to end a cherished fuel subsidy program that had kept Nigeria's largely imported fuel cheap for more than two decades. President Goodluck Jonathan said the country could no longer afford it. The move meant that prices at the pump jumped from 45 cents per liter ($1.70 per gallon) to at least 94 cents per liter ($3.50 per gallon) on Jan. 1. Jonathan later announced a new, partially subsidized price of 60 cents a liter ($2.27 a gallon) to stop a six-day national strike.

Nigerians consider cheap fuel one of the only benefits they reap from living in an oil-rich but impoverished nation. The subsidies, in theory, keep prices artificially low for Nigerian consumers. Because of the country's reliance on exports, fuel actually comes into the country at global prices. Functioning refineries will reduce the bill of the subsidy which Nigeria's finance minister, Ngozi Okonjo-Iweala, recently put at $8 billion for 2011. But, this bill also includes the heavy price of corruption, authorities say. Top officials, including Okonjo-Iweala and Nigeria's respected Central Bank Governor Lamido Sanusi, have said corruption inflates the cost of the subsidy program.

A recent probe by lawmakers said billions of dollars have been wasted in the program. The head of that probe, House of Representatives member Farouk Lawan, is now being accused of accepting a $620,000 bribe from an oil company that had been under investigation during the probe. Lawan has denied any wrongdoing.

By Thenorthwestern.com

July 3, 2012:

Sunoco Inc.'s Philadelphia refinery, which was threatened with closure at the end of this month, will be reborn as an "energy hub." The Carlyle Group, a Washington private-equity manager, announced plans Monday to operate the refinery with Sunoco as a joint venture called Philadelphia Energy Solutions. The venture will save 850 jobs at the refinery, the largest fuel-production plant in the northeastern United States, and may employ hundreds more if plans to expand production are realized. Carlyle officials say they are "reimagining" the business to exploit new, cheaper domestic sources of crude oil to replace expensive imported petroleum, a major reason the refinery was uncompetitive. In September, Sunoco announced plans to exit refining and to sell or shut down the plant this summer, saying it was losing a million dollars a day on fuel production. Carlyle, which will have a majority interest in the venture and operate the refinery, also plans to increase dramatically the use of low-priced natural gas from Pennsylvania's booming Marcellus Shale region to reduce refining costs and emissions.

"We believe the changing nature of the energy paradigm in the U.S., coupled with a redefined operating model, can truly benefit this refinery," Carlyle managing director Rodney S. Cohen said at a news briefing Monday. Immediate upgrades at the 330,000-barrel-per-day refinery will require more than $200 million of new capital, he said, but he would not disclose the extent of Carlyle's total investment. Closure of the refinery would have had enormous repercussions. The U.S. Energy Department had warned that a shutdown could lead to spot shortages of fuels and spikes in price. The state estimates that the plant, which hires a constant stream of skilled contractors for maintenance projects, supports 10,000 jobs indirectly. The site, originally two refineries merged into one, occupies more than two square miles of South Philadelphia. United Steelworkers union members, alarmed by the threatened closure of several refineries in the Philadelphia area, mobilized to pressure elected officials to take action. Key players described an unusual collaboration of the Democratic White House, Republican Gov. Corbett, U.S. Rep. Bob Brady (D., Pa.), and Democrat Mayor Nutter to urge Sunoco to find a partner to keep the facility open.

"It's a big win - a big win for the community, for workers, for energy security in the United States," said Brian P. MacDonald, chief executive of Sunoco, which will retain a one-third nonoperating interest in the venture. "It's a really interesting situation where you had private equity, unions, and key politicians on both sides of the aisle working together." Carlyle will receive $25 million in state grants to support upgrades at the refinery, including construction of a terminal to allow the high-speed unloading of railcars carrying crude from new oil-shale formations in North Dakota, Colorado, and Texas. Officials said they were also moving to include parts of the refinery in the Keystone Opportunity Zone so it can receive tax benefits for new construction. State and federal environmental regulators have agreed to modify a 2005 consent decree to allow the Philadelphia refinery to receive some of the emissions credits assigned to Sunoco's Marcus Hook refinery, which was shut in December but, according to a consultant's report, could be converted to a variety of uses. Those temporary credits should allow the Philadelphia refinery to more quickly implement its expansion plans.

"This is huge, at a number of different levels," said Nutter. Jim Savage, president of Steelworkers Local 10-1, which represents the plant's 600 unionized workers, said his membership was "over the moon" about the deal. The union voted Monday night on a new three-year contract that gives Carlyle more flexibility on work rules and pensions. To run Philadelphia Energy Solutions, Carlyle has hired Philip L. Rinaldi, who turned around a troubled refinery in Coffeyville, Kan., in 2005 for another group of investors, Pegasus Capital Advisors. Rinaldi, who lives in Bridgewater, N.J., said the new management intends to refurbish a residual catalytic cracker, a unit that turns heavy oil into diesel. The project will create more than 1,000 contracting jobs early next year. He added that the venture wants to refurbish other units that would optimize production of cleaner-burning ultra-low-sulfur diesel fuel, for which there is a big market demand.

The company also is exploring plans to build a co-generation plant to produce steam and electricity for the refinery, and possibly new production units to manufacture derivatives of natural gas, such as urea ammonium nitrate fertilizer, a product line Rinaldi built up in Kansas into a separate $1 billion business. "The idea here is to build out that entire complex into a strong energy and chemical industrial site," said Rinaldi, who also serves as chairman of the board of New Jersey Institute of Technology. Carlyle Group, which has $159 billion in real estate and industrial assets under management, has established a reputation for turning around stressed businesses and selling them for handsome profits. Former President George H.W. Bush, former British Prime Minister Sir John Major, and former Secretary of State James A. Baker III have served as advisers.

"Carlyle has been a very, very large investor for many years in what I would call unsexy industrial facilities," said David Marchick, Carlyle's managing director for external affairs. "We believe in manufacturing in the United States." Carlyle was among the 150 prospective buyers that looked over the refinery last year after Sunoco announced that it planned to exit refining because of continuing losses. But Sunoco said it received no viable offers for the refineries. Only a few candidates had the operational experience and access to billions of dollars in finances needed to run such a capital-intensive business. "Carlyle wouldn't even give us a number," said Lynn Elsenhans, Sunoco's former chief executive, who had overseen the company's painful sell-off of underperforming assets and noncore businesses, leading to the decision to exit refining. But public officials and union leaders said they were frustrated working with Sunoco under Elsenhans, whom they said seemed to be hardened to the fate of closing the refineries. A critical moment, they said, came when MacDonald, formerly Sunoco's chief financial officer, succeeded Elsenhans as chief executive on March 1.

"Lynn Elsenhans was there to get out of the refinery business and was going about that," Corbett said. "My conversations with Brian have gone much easier than my conversations with her." "I think if we hadn't had a change of leadership at Sunoco, this deal wouldn't have happened," said Leo W. Gerard, international president of the United Steelworkers. "The other person was intent on leveling the facility, it seemed to us. We couldn't get a sensible discussion with them."  In an interview, Elsenhans, who now lives in Houston, called such characterizations "totally unfair." The refineries were consuming Sunoco's cash, she said, and would have required a massive long-term investment to operate in a declining market for motor fuels. She said she was "absolutely thrilled" that Carlyle came back to the table. "Maybe they have figured out a way to run it differently, to be cash-neutral," Elsenhans said.

Marchick, Carlyle's chief lobbyist, called Brady the "quarterback" who was "pushing and prodding" officials to take action. "I just kept everybody talking," Brady said. On Feb. 27, a few days before he formally took over as chief executive, MacDonald met in Washington with Brady. Both described the meeting as tense, but they cleared the air. At Brady's urging, Gene Sperling, director of the White House National Economic Council, arranged a March 8 conference call with MacDonald, during which the Sunoco chief suggested that Carlyle might be a good candidate to run the refinery in a joint venture, rather than buying the plant outright. Immediately after the meeting, MacDonald called Cohen at Carlyle. White House officials also called Carlyle executives that night, urging them to talk to Sunoco, said MacDonald and Carlyle officials.

Marchick credited MacDonald with coming up with the proposal to engage in a joint venture, which reduces Carlyle's risk and allows it to channel its investment entirely into operating the refinery. "He's the one who came up with this creative structure, proposed it to us," Marchick said. "But for his involvement, this facility would be shutting down next month." Watch sports videos you won't find anywhere else.

By Philly.com

July 3, 2012:

Brian P. MacDonald, the son of a coal miner, grew up in a small town in Canada that was devastated by the deindustrialization of North America. "Our whole community got wiped out when we lost all of our coal mines, we lost our steel plant," said MacDonald, 46, who grew up in Glace Bay, Nova Scotia. "Our whole area basically got wiped out, and I saw it happen in my teenage years." So when MacDonald became chief executive officer of Sunoco Inc. on March 1 and public officials begged him to save the company's 1,400-acre Philadelphia refinery complex from imminent closure, their pleas had a special resonance. "I felt very strongly that if there was a chance to save Philadelphia a thousand good union jobs, blue-collar jobs, I was going to work to bring people together the best I could to help make it happen," MacDonald said in an interview before Sunoco announced Monday its joint venture with the Carlyle Group to keep the refinery operating.

Officials singled out MacDonald's commitment to find a partner to run the refinery, which Sunoco had pledged to shut down if it was unable to to find a buyer. He has built up a reservoir of good will with figures as diverse as Gov. Corbett and Leo W. Gerard, international president of the United Steelworkers, who became the first labor leader ever quoted in a Sunoco news release April 23, when the company announced it was entering joint-venture negotiations with Carlyle. "We've been impressed with Brian MacDonald's open-mindedness," said Gerard, a native of Ontario, who joked that "the Canadian connection always works." MacDonald came to Sunoco in 2009 after working in executive positions with Dell Inc. and General Motors Corp. He took over from Lynn Elsenhans, a career oil-industry executive. Corbett said that he did not want to disparage Elsenhans, but that MacDonald communicated a greater willingness to find a solution and that they struck up an immediate rapport.

"I'm not saying she didn't have a willingness," the governor said in an interview. "With some things, you almost get a vibe, if you understand. . . . "I think Brian understood - I guess the word I want to use is - the corporate citizenship role. Maybe he understood that better.

By Philly.com