June 16, 2012:

THE ENERGY department is looking to prod Pilipinas Shell Petroleum Corp. to conduct an initial public offering (IPO) on the local bourse after the local refiner bared plans to upgrade its Batangas facility, an official said on Friday.  “We shall need to review the public listing of Shell. There have been no discussions on it yet so we will need to look into it,” Energy Secretary Jose Rene D. Almendras said. Section 22 of the Oil Deregulation Law states oil companies that operate refineries are required to do list “at least 10% of its common stock within a period of three years from the effectivity of the law or the commencement of its refinery operations.”

The Oil Deregulation Law went into effect in 1998 but Shell has not made any move to list its shares, citing unfavorable market conditions. Shell further said its IPO is contingent on its investment decisions for its refinery. The Energy department said in 2010 it will not push Shell’s IPO until its tax cases with the Bureau of Customs have been resolved. The firm is charged with misdeclaration of importations and allegedly owes the government some P2.7 billion in taxes. Last week, however, Mr. Almendras announced Shell intends to upgrade its refinery by next year. “Shell is going to invest in the refinery. It’s a final decision and I understand they will start early next year,” said Mr. Almendras.

The upgraded refinery is expected to be in commercial operation by 2015 and will cost the firm around $100 million to $150 million. This comes on top of some P3 billion the company intends to spend this year partly to expand its retail network according to earlier reports. Shell has not yet given any further details on the planned upgrade of its refinery. It earlier said any additional investments in its refinery will allow Shell to meet new standards for Euro IV grade diesel and gasoline, which will take effect in 2016. Shell operates the country’s second largest refinery. The other oil refiner is Petron Corp.

Petron offered its shares to the public in 2004. It has since increased its public float to 14% to meet with new minimum listing requirements of the bourse. Petron began a $1.8-billion refinery expansion project last year to be able to process different kinds of crude oil. In the meantime, Shell is in the process of conducting a study to determine the feasibility of a liquefied natural gas receiving terminal in Batangas.

The firm is affiliated to the operator of the Malampaya natural gas project offshore Palawan.  Royal Dutch Shell, through its upstream unit Shell Philippines Exploration BV (SPEX), was reported to be readying another $1-billion infusion to increase the production and extend the life of the Malampaya deepwater project, earlier reports show. -- Emilia Narni J. David

By BusinessWorld

June 16, 2012:

A former energy minister has emerged as sole bidder for a bankrupt British oil refinery, and controversy over his past deals with distressed assets may be overlooked in last-ditch efforts to rescue the plant and up to 900 jobs. Igor Yusufov remains interested in buying the Coryton refinery in Essex, say people close to both sides of the talks. The plant, a unit of bankrupt Swiss oil firm Petroplus, has run out of oil and its workers will be laid off if no deal can be reached. Coryton is one of only seven working refineries in Britain. Yusufov, who served as energy minister during Vladimir Putin's first term as president, has faced questions about a past deal involving the purchase of a Norwegian shipyard group that he helped finance. It subsequently failed, although before it went bankrupt, some assets were transferred offshore in a transaction deemed illegal by the official receiver. The group's former owner died in a shooting last year that remains unsolved.

Yusufov's investment vehicle, Fund Energy, is the only bidder left seeking to operate Coryton as a refinery, and has been asked by administrator PricewaterhouseCoopers to submit a best and final offer. A spokeswoman for Britain's Department of Energy and Climate Change said it is up to the administrator to secure a sustainable future for the plant. "The U.K. welcomes inward investment to our energy sector but any bid for U.K. energy assets is, and would be, subject to the usual, rigorous scrutiny." Other potential bidders for the site would use it as a storage terminal, which would leave many more without jobs.

Yusufov was an energy adviser in the Kremlin under Dmitry Medvedev until April 2011. He is currently a director at Gazprom. In 2008, he reportedly helped an associate, Andrei Burlakov, raise a 200 million euro ($250 million) loan to buy Norwegian shipbuilder Wadan Yards, which owned shipyards in Germany and Ukraine, in an attempt to turn the business around. When that failed, Wadan was split up. Yusufov's son, Vitaly, bought the German operations in a deal that Chancellor Angela Merkel backed to save jobs. She visited Medvedev to lobby for the 40.5 million euro sale, praising the Yusufovs as "seriously interested" investors. Vitaly Yusufov had previously run the Moscow office of pipeline project Nord Stream that is chaired by former German Chancellor Gerhard Schroeder. He moved the German shipyards into a new German-based firm, called Nordic Yards. They remain in operation. The Ukrainian asset, the Okean Shipyard on the Black Sea coast, met with a more controversial fate.

Wadan Yards, the Norwegian parent company, was declared bankrupt in March 2010. Just before then, its shares in the Ukrainian yard, held through a Dutch subsidiary, Okean BV, were transferred to a firm called Blakur, based in the British Virgin Islands, according to official receiver Johan Ratvik of DLA Piper Norway. Ratvik, in a December 2010 letter, said he viewed this share transfer as illegal as it took place after bankruptcy proceedings had opened, and that it should be revoked and investigated as a criminal act by the Norwegian police. No investigation was launched. He wrote that Igor Shaposhnikov, chairman of Wadan and Okean at the time of the deal, was criminally responsible. Shaposhnikov was fired in late 2010 after Okean was acquired from the receiver by Kostyantin Zhevago, a Ukrainian metals and mining magnate. The alleged asset stripping is now the subject of a Dutch court case in which Zhevago, who still owns Okean, is trying to recover the assets. A writ issued by Okean in April names Blakur and a number of other offshore companies among the defendants. The writ does not name the Yusufovs. The case comes to court in September.

Burlakov, the associate who was helped by Yusufov to finance the 2008 takeover of Wadan, stated after the shipyard's collapse that Yusufov had been in effective control of the business all along — an allegation denied by Vitaly Yusufov. Burlakov and his former partner, a banker called Anna Etkina, were held in Russia in late 2009 in an investigation into whether they had misappropriated funds to pay for the shipyard deal. They were released separately on bail in 2010, and went on to allege in summer 2011 that Igor Yusufov, not Burlakov, had been the beneficial owner of the Wadan Yards group. Burlakov — who suffered from a coronary condition — was shot on Sept. 29, 2011 in a Moscow restaurant by an unknown assailant with a pistol that shoots rubber bullets. These are sometimes used to deliver warnings in criminal disputes. Burlakov died of a heart attack. Etkina, who was with him, was wounded after being shot in the head and chest.

Vladislav Tkachenko, Etkina's legal representative, said she was shot after testifying that Igor Yusufov still controlled the Ukrainian shipyard assets. "Igor Yusufov controlled assets that have been frozen and he has participated in fraudulent schemes," Tkachenko told Reuters at a meeting attended by Etkina. Igor Yusufov has kept silent in public. Vitaly Yusufov has denied that his father was the ultimate owner of Wadan Yards, and dismissed all other allegations of wrongdoing. "It is dishonorable for me to comment on such groundless allegations against my family," Vitaly Yusufov told newspaper Vedomosti last week when he was asked whether his father stood to gain from Burlakov's death.

By The Moscow Times

June 15, 2012:

Taiwan's Formosa Petrochemical Corp will raise the average utilization rates at its 540,000 barrels per day (bpd) refinery to nearly 90 percent in July from around 67 pe r cent in June as a crude unit is about to restart, said its spokesman. Asia's fifth largest refinery owns three crude distillation units (CDUs) of equal of 180,000 bpd.  Its No. 3 CDU is to restart around July 10 after it was shut on May 10 for maintenance. Formosa also owns two gasoline-making units, or residue fluid catalytic cracker (RFCC). Each has a capacity of about 84,000 bpd.

It also operates two residue desulphurizer units (RDS) with capacity of about 80,000 bpd each. One of the RFCCs, also idled for maintenance, will resume operations in about one to two weeks, said the spokesman. Formosa has skipped spot gasoline exports in May and June as a result of the maintenance. Its No. 1 RDS is expected to restart between July 1 and 10. Formosa said its refinery operations were unaffected after a dam that supplies water to its plant was damaged by rain this week as it has other alternative supplies.

By Reuters

June 15, 2012:

Union leaders have urged ministers to meet workers from the Coryton oil refinery in Essex, to explain why they have ruled out using state aid to save the plant from closure. The government said it will not apply to Europe for permission to use state funds to keep the refinery open. About 850 jobs are at risk after Coryton's parent company went bust. Ministers said overcapacity in the refining industry meant it would not be sustainable to provide government help. The Labour Party and unions have pressed ministers to consider putting up cash to keep the refinery - which supplies about 20% of south-east England's fuel - going until administrators can find a buyer. The future of the Thames Estuary refinery has been in doubt since January, when its Swiss-based parent company, Petroplus, became insolvent.

An economic impact assessment report commissioned by Thurrock Council revealed the closure or change of use of the site would cost about £107m in costs such as materials, contractor payments, and wages.

'Devastating impact'

Two weeks ago administrators PricewaterhouseCoopers said they had failed to find a buyer and operations would be run down. Labour MPs and local Lib Dem MP Bob Russell tabled a Commons motion on Monday calling on the government to step in to allow the refinery to remain open until a buyer is found. If Government did step in to help Coryton, this would be a short term fix, and it could potentially lead to job losses at other refineries”

Department for Energy and Climate Change

They said the refinery was an important national infrastructure asset and that its closure would have "a devastating impact on the people of Essex" and risk making the UK more dependent on foreign fuel imports. They have been calling on ministers to approach the European Commission to find out if short term state aid could be offered to the refinery. Unite and the GMB unions have both condemned the government's decision. Unite General Secretary Len McLuskey said the government's actions were "simply not good enough". He added, "Last night, the Chancellor pledged to pump in at least £100bn into the banking system to boost lending... in an attempt to build a financial firewall against the situation in Greece. "Yet, a similar request from Unite for state aid... to tide over Coryton until a viable buyer is found to take over the oil refinery is dismissed by ministers out-of-hand.

"[Energy Secretary] Ed Davey and his ministerial team should have the courage to... drive to Coryton to tell the workers why they have to lose their jobs, while bankers in the City scoop up outrageous and undeserved bonuses."

'Short term fix'

But the Department for Energy and Climate Change (DECC) said that overcapacity in the refining industry and declining demand for petrol meant it would not be sustainable for the government to provide assistance even if the EU allowed it to do so. A spokesman added: "If Government did step in to help Coryton, this would be a short term fix, and it could potentially lead to job losses at other refineries who would be at an unfair disadvantage to Coryton. "This was a very difficult decision and it is particularly regrettable that people may lose their jobs. "The closure of Coryton as a refinery should not have any impact on supply of fuel to London and the south east. There are many other supply points and operational refineries which can be used." Some redundancies are expected next week. The government says this is regrettable, but it was working with local agencies and Jobcentres to help the refinery's skilled workforce find new positions. About 100 workers protested at the site and in Corringham town centre on Monday.

A demonstration was also held on Thursday outside London's Royal Courts of Justice where Prime Minister David Cameron was giving evidence to the Leveson Inquiry. In February, a group of financiers agreed to pay to refine their own oil at the plant for three months, giving administrators more time to find a new buyer.

By BBC News

June 15, 2012:

Ministers were tonight urged to meet workers at an oil refinery set to be made redundant and explain why they are not using state aid to help save jobs. Unite accused the Government of "betraying" workers at the Coryton oil refinery in Essex after a decision not to apply to the European Commission for permission to use state funds to keep it open while efforts continued to find a buyer. Unions, politicians and other campaigners have been pressing ministers to consider putting up cash to keep the refinery going until administrators can find a buyer as its closure would drain £100 million from the economy.

But ministers said overcapacity in the refining industry meant it would not be sustainable to provide government help. Unite said Energy Secretary Ed Davey should meet the 850 workers, accusing the coalition of "double standards" after £100 billion was offered to banks for lending purposes. General secretary Len McLuskey said: "Last night, the Chancellor pledged to pump in at least £100bn into the banking system to boost lending - which bankers should be doing anyway as that's their job - in an attempt to build a financial firewall against the situation in Greece. "Yet, a similar request from Unite for state aid in the short-term to tide over Coryton until a viable buyer is found to take over the oil refinery is dismissed by ministers out-of-hand. "This is simply not good enough. Ed Davey and his ministerial team should have the courage to get in their limos and drive to Coryton to tell the workers why they have to lose their jobs, while bankers in the City scoop up outrageous and undeserved bonuses."

GMB union official Phil Whitehurst said: "How can the Government just sit back and let 850 refinery workers lose their jobs? "Most will not be able to get work in the immediate area in their specialised professions. "The closure will also have a devastating effect on local businesses and the supply chain to the refinery." Thurrock Council commissioned an economic impact assessment of the closure or change of use of the site, which found it would cost £30 million in wages, £26 million in contractor costs, £6 million in locally sourced materials, £40 million spent on chemicals and utilities, and £5 million in business rates.

A Government spokesman said: "It is extremely disappointing that the administrators haven't been able to find a buyer who could provide investment required to keep Coryton operating as a refinery. "Departments across Government have looked very carefully at whether or not state aid should be provided for Coryton. "But we have come to the conclusion that the existing overcapacity in the refining industry and declining demand for petrol mean that it would not be sustainable. "This would not be a long-term solution either for the taxpayer or for the industry, which will thrive best with open and fair competition.

"If Government did step in to help Coryton, this would be a short-term fix, and it could potentially lead to job losses at other refineries who would be at an unfair disadvantage to Coryton. "This was a very difficult decision and it is particularly regrettable that people may lose their jobs. "We are working with local agencies and Jobcentre Plus to ensure the right support is in place if it's required to help these skilled workers find new positions. "The closure of Coryton as a refinery should not have any impact on supply of fuel to London and the South East. There are many other supply points and operational refineries which can be used."

By The Independent