February 7, 2018:

Abu Dhabi, which holds most of the oil reserves in the U.A.E., plans to boost exports of its highest quality crude into the next decade following a $3.1 billion upgrade of its Ruwais refinery. Flagship Murban crude fetches the highest price of the emirate’s three grades because it’s easier to refine and yields greater amounts of premium fuels like gasoline. Abu Dhabi National Oil Co. plans to upgrade Ruwais on the United Arab Emirates coast, allowing it to switch to cheaper lower-quality alternatives from offshore fields, the company said in a statement. The refinery currently processes only Murban crude, equivalent to about half of total production of the grade. The move will allow Abu Dhabi to generate higher profits from sales to nations including China where demand growth is set to increase. Abu Dhabi is part of U.A.E., the OPEC member which produces just under 3 million barrels a day of crude, of which about half is Murban grade. The company has been considering the plan to process offshore crudes at Ruwais since at least 2014.

The refinery upgrade will allow Adnoc to process crude from the offshore Upper Zakum field or similar grades at Ruwais, which can process about 817,000 barrels a day. A joint venture of Samsung Engineering Co. of Korea and Chicago Bridge & Iron Co. will work on the project, Adnoc said.

By Bloomberg

February 2, 2018:

Azerbaijan’s state oil company SOCAR has signed an EPC (engineering, procurement and construction) with Italy’s Maire Tecnimont for the construction of new facilities as part of the reconstruction and modernization of Heydar Aliyev Baku Oil Refinery.  SOCAR proceeds with the revamp of the Heydar Aliyev Oil Refinery with the objective of advancing the quality of fuel and lubricants in Azerbaijan and increasing the volume of production, said the message.  “The tender for the construction of new units was announced on February 10, 2017. Five international companies participated in the selection process. The subsidiaries of Maire Tecnimont S.p.A. - Tecnimont S.p.A. and KT-Kinetics Technology S.p.A. were selected with the highest score for the construction of new facilities. The deal includes the construction of more than 10 new production units. The tender for the reconstruction of existing units has been granted to Técnicas Reunidas, which won the qualifying proceedings last December,” said the company.  The contract was signed by Elman Ismayilov, CEO of Heydar Aliyev Refinery and Pierroberto Folgiero, CEO Maire Tecnimont. 

SOCAR President Rovnag Abdullayev said that SOCAR was one step closer to producing high-quality diesel, gasoline and other types of fuel meeting the requirements of the Euro-5 standard, adding that Maire Tecnimont S.p.A is one of the world’s leading companies.  Pierroberto Folgiero, in turn, noted that the signing of a new contract after two strategic petrochemical projects implemented by the company in Azerbaijan will allow the Maire Tecnimont group to establish fruitful relations with SOCAR.  He also stressed that Maire Tecnimont intends to continue joint training of local personnel in cooperation with the Baku Higher Oil School and expand these activities after signing a new contract.  Italian media reports that the contact’s cost is estimated at $800 million.  SOCAR announced the liquidation of the Azneftyag refinery and its merger with the Baku Oil Refinery named after Heydar Aliyev, in 2015. This decision was made in the framework of works to improve and optimize the structure of SOCAR.  The company plans to produce high-quality oil products as part of the next stage of the reconstruction work to be carried out at the Heydar Aliyev Baku Oil Refinery. Under the program, the oil refinery will produce Euro-5 standard diesel in 2019 and the Euro 5 standard petrol in 2020.  The cost of modernization of the refinery is estimated at about $1.5-1.7 billion.  By the construction of a new bitumen production facility, the current infrastructure of former Azerneftyag oil refinery will be fully decommissioned and the coastal areas will be emptied and handed over for the realization of White City project. Furthermore running costs of Heydar Aliyev Baku Oil Refinery will be optimized and the country will be provided with high-quality bitumen.  The modernization of the Heydar Aliyev Baku Oil Refinery will be completed by 2021. The production capacity of the refinery will be increased from 6 million to 7.5 million tons per year as a result.  

By www.azertag.az

January 22, 2018:

LONDON (Reuters) - The recent OPEC-led rally in crude prices is hitting refinery profits hard, flashing warning signs over oil’s Bull Run.  A wave of refinery maintenance scheduled in spring could also put downward pressure on crude, analysts said. Higher oil prices typically quench consumption and squeeze profit margins at refiners that convert the feedstock into gasoline, diesel and aviation fuels. Benchmark profit margins in key refining hubs dropped sharply in recent weeks - by over 50 percent in the U.S. Gulf Coast and northwest Europe, Reuters data shows - increasing expectations that some refiners will reduce operating rates.“ Margins have suffered and the biggest factor behind the weak margins we’ve seen is the run-up in crude prices,” said Jonathan Leitch, research director with‎ consultancy Wood Mackenzie. Crude prices have gained more than 50 percent since June, as production cuts by OPEC and a number of non-OPEC oil producers increasingly bite into global inventories. But while crude stocks tumbled at increasingly higher rates throughout 2017, refineries around the world continued to run at record levels to meet demand and lock in strong margins. The lag between the gain in crude prices and the decline in refining margins led in turn to a rise in stocks of products. In the fourth quarter of 2017, refinery runs hit a record 81.5 million barrels per day (bpd), International Energy Agency data shows, tipping fuel supply into excess and sending cargoes into storage tanks after a year of drawdowns. And according to analysts FGE, fuel stocks in Europe, Singapore and the United States built by some 27.5 million barrels in the first two weeks of 2018.Stocks are expected to grow further in coming weeks, a trend exacerbated by the rising oil price, which Wood Mackenzie says leads shippers to save fuel by reducing vessel speed and prompts power plants to use cheaper energy sources instead of fuel oil. “Refining margins are looking very shaky,” a European trader said. “Everyone’s asking each other about run cuts. ”The crude price also has a major impact on the operating costs of refiners, which consume more than 5 percent of the feedstock to power their plants.

MAINTENANCE BOOST

Margins are expected to receive a boost in coming months as plants close for seasonal maintenance before demand peaks in summer. But that will likely put further pressure on crude prices as demand ebbs, while freeing up crude oil supplies. This year, a large slate of maintenance closures in the Middle East, particularly Saudi Arabia, will take fuels off the market – underpinning margins worldwide. In March, more than 900,000 bpd of refinery capacity will go offline in the Middle East, according to Energy Aspects, due in large part to work at Saudi Arabia’s 400,000-bpd Yanbu refinery. “Refineries are going to need to run flat out to meet that and they’re going to need a good margin to do so,” Leitch said. “Our forecast is that crude prices have hit the top and prices will come down.”

By Reuters

January 22, 2018:

­When oil came, Nigerians changed focus, abandoned agriculture and other income sources and all attention was diverted to oil, with its rich harvest of petro dollars. Curiously, as oil gained traction and indeed, transformed into the nation’s sole revenue earner, corruption blossomed, development stymied and the mass poverty increased

The persistent fuel crisis Nigeria has been made to undergo reflects the curse which oil has become to an oil rich country; in fact, the sixth largest oil producer in the world. That curse shows glaringly in the paradox that such an endowed country almost wholly depends on imported finished fuel products for driving its energy needs. Yes, the country has drunk full from the blessings from oil. Oil has yielded bountifully since it was discovered in commercial quantity. Oil has yielded rich harvest to a country that is equally blessed with other resources. But from all indices, oil has rather led to a harvest of tears and regrets as its discovery marks the abandonment of other resources in preference to the effortless mining of oil and the huge payoff that comes from crude. How best to show this than that before the advent of oil, Nigeria was running very efficiently as an agricultural nation where cash crop was the source of an efficient system that benefitted the people and added greatly to the country’s infrastructural base, but has been abandoned in the craze for oil wealth? When oil came, Nigerians changed focus, abandoned agriculture and other income sources and all attention was diverted to oil, with its rich harvest of petro dollars. Curiously, as oil gained traction and indeed, transformed into the nation’s sole revenue earner, corruption blossomed, development stymied and the mass poverty increased. With oil as the country’s sole revenue source, the directive principles of state policy assumed a deadly tenor as the struggle to corner oil resources came to define governance, politics and relationship between the combustible ethnic units that make up the country. With oil, deep fissures and divisions emerged not only between the various people that make up the country but between the classes as closeness to oil came to define the strata of the society. Oil seemed to have funded only the huge corruption complex that came with it. With the government fixated on sharing oil revenue, other sources of revenue were allowed to go extinct and a social system that calibrated the citizens along the oil chain emerged. Attachment to this chain became a defining charter in our national scale as oil gained importance in the international commodity market. The stupendous rise in the price of oil added to the problem as Nigerians struggled to get attachment to its high yielding chain. But these never transformed to the wellbeing of the people. What more, there was no noticeable improvement in the oil process. There was no noticeable indigenous input in the sector. The exploration and mining were wholly outsourced and left in the hands of expatriate companies and the modest state investment in refining either for local use or even exportation was not improved upon. What rather emerged is a cache of indigenous petrol importers and marketers who exploited the helplessness of the Nigerian people to grow exceedingly rich merely by fiddling with imported petroleum products. Curiously, they made no attempt to plough back the illicit wealth they got from this mindless exploit to the development of the sector. The above scenario has been grown and allowed to blossom for many years now to not only make Nigeria wholly dependent on imported fuel but susceptible to the tempestuousness and vagaries that follow the international oil market. The crux of the matter is that refineries built by past military regimes have been allowed to rot away by successive governments before the advent of the present regime who have recovered some chunk of their operational capacity to ease what would have been a very messy situation. At a fully operational refining capacity of 450,000 daily, the existing refineries fall hugely short of the petroleum needs of Nigeria at present. Yes, they were built for the needs of the country at the time they were built but there was that inherent supposition that successive governments would be adding to them as the needs of the country blossom with expanding population. But nothing of that sort was done for decades now. Rather, as the corruption complex around the oil industry quadrupled in leaps and bounds, these refineries served as conduits for multi-billion Naira looting in the guise of unending turn-around maintenance contracts that never improved their lots.

As the refineries were used for massive stealing, they rotted away till they became inoperable scraps from which the present government has battled to recover some appreciable degree to support the local fuel demands. Because successive governments found it so attractive to depend wholly on imported finished products, no efforts were made to either rehabilitate the existing refinery or add new refineries. What more, fuel importation became a huge cash cow and a flowering corruption font for enriching sundry interests by successive governments. This paradoxical state where Nigeria, as the sixth largest oil producer on earth, became the largest net fuel importer gradually grew and with it, a gargantuan corruption that soon over swept the entire country and became the main business in town. Because the fluctuations in the international crude market was bound to affect this dependent regime, it was impossible for fuel importers to consistently fiddle with fuel prices as crude prices fluctuate as this was bound to unleash chains of unpalatable social crisis, the government will have to subsidize imported fuel prices for there to be a stability in prices. This was what led to the notorious subsidy scheme, which itself became another huge cesspool of fleecing the country and expanding the frontiers of corruption. Subsidy, as a policy, would have been a non-issue if Nigeria has optimal refining capacity to ensure adequate supply of refined petroleum products for its expanding populace. The existing refineries were designed for a population of between 50 and 60 million, at optimal operation capacity. With our population at over 180 million, there is no doubt that the existing refineries, even if they were operating at full capacity, would merely meet the needs of a little fraction of our population. So there was need for regular maintenance of the existing refineries to keep them at optimal level while building new refineries for Nigeria to meet her local fuel needs but these imperatives were all abandoned and Nigeria made to depend on imported fuel. So subsidy would not have happened if Nigeria had full refining capacity and crude supplied to these refineries at tolerable local price. So, the Nigerian oil industry was converted to a huge corruption complex and the ordinary Nigerians were structured as the ultimate brunt bearers and financiers of this massive corruption. Over the years, the corruption has been deepened. Since President Buhari came to power, there has been decisive actions to unhinge this deeply rooted corruption and this led to the expunging of the hugely corrupt subsidy regime that was so manipulated to corruptly enrich many interests that are attached to those in power. But then, without local refining capacity, it would be difficult to control the price of fuel without somehow, subsidizing the price of imported fuel in the midst of global fluctuation in oil prices. That is why we are having the supply glitches we have been having since December and the government should be bold to address it.

Methinks that a highly controlled and transparent subsidy regime, not the scrambled corrupt subsidy scheme that existed before Buhari came, would be in order. The present government should weigh in with a transparent subsidy regime that takes care of the rise in petroleum products to ensure that the present price regime is not tampered with. There is nothing wrong with a transparent subsidy process. Why Nigerians were against the subsidy regime before now was because of the widespread abuses and total lack of transparency that attended it. It got to a point the immediate past government paid a whopping N2.1 trillion as doubtful subsidy to oil marketers without corresponding supply of imported fuel. With the vastly improved transparent culture this government conducts its policies, I believe it can enthrone a transparent and open process of subsidizing imported refined products so as to ensure that Nigerians are not subjected to the whims and selfish caprices of hawkish petroleum importers. All said, the tremendous promises of the Dangote refinery, which promises to start operation next year, should gladden the hearts of Nigerians that somehow, a Nigerian has come to the rescue from many years of official ineptitude and corruption. The Dangote refinery is expected to end this cyclical embarrassment of total dependence on petroleum products and the businessman needs commending for this giant intervention. Is it not curious that the many other people that made huge gains from the corrupt twists in the petroleum industry never deemed it proper to invest the loot they got from the oil sector into developing the sector as Dangote is doing? He deserves our kudos but before his refinery comes on steam, the government must develop a supply template to keep the product available to Nigerians while not increasing the price to reflect international crude pricing. The only option is a transparent subsidy regime that will take care of the difference between the present landing cost of imported fuel and the existing controlled price of petrol. There is no way out of the crisis than this

By Saharareports.com

January 20, 2018:

ASTANA – Kazakhstan’s Atyrau refinery has switched to K4 and K5 diesel fuel production that meets ecological standards, Kazinform reported. “The Atyrau refinery began shipping diesel fuel of ecological classes K4 and K5 (equivalent to Euro-4, Euro-5) from Jan.1. This became possible after a major overhaul in the diesel section of the KU HBD, where catalysts were replaced… As a result of the replacement, a reduction in the sulphur content of hydro-treated diesel fuel to 2-3 ppm was achieved with the norm for K5 class not more than 10 ppm, and for K4 class not more than 50 ppm,” the Atyrau refinery press service explained.  Measures related to the washing of pipeline systems, oil filling systems and tank farms of the plant were carried out in preparation for the transition to the production of new fuel standards at the facilities. Pilot-industrial lots of diesel fuel K4 and K5 have also been developed and product quality passports have been issued.  “The plant also imposed high demands on organisations engaged in the transportation of products and the supply of tanks for filling, associated with new approaches for the washing of tanks and their cleanliness. Similar technical measures must necessarily be carried out in the tank farms of oil depots and gas stations,” the press service informed.  In 2017, the plant reached 101.6 percent of its set goal of 4,650,000 tonnes, processing 4,723,647 tonnes.  The Atyrau refinery processed 218,778 tonnes of oil, with almost 7,844 tonnes processed in excess of the plan in 15 days of January.  During the same period, K-4 and K-5 diesel fuel was shipped in the amount of 44,971 tonnes, 589 tonnes of which exceeded the planned amount.  The Atyrau plant also exceeded expectations for the shipment of TS-1 jet fuel TS-1, shipping 1,080 tonnes were shipped though only 968 tonnes were planned. 

By Astanatimes.com