Downstream Monitor - MEA Week 16

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





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






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






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






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






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






“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






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






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






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.


Bahrain offers Kazakhstan

use of export terminals

Eni opens talks on FLNG

offshore Mozambique






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.


TENDERS

New bidding set for Jubail acrylics,

Ras Tanura refinery contracts






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






“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






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






“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.


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






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.


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






CONFERENCES






SPECIAL REPORT

Downstream Monitor MEA 23 April 2014, Week 16 Back Page

For further details on the stories above and NewsBase’s entire product range:

tel: +44 (0) 131 478 7000 e-mail: [email protected] Copyright © 2014 NewsBase Ltd.

www.newsbase.com

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.

AsianOil Ongoing political instability in Thailand has led PTT to cut

its 2014 capex by around 30% to US$1.9 billion.

ChinaOil China's first-quarter crude imports climbed more than 8%

year on year to almost 550 million barrels.

FSU OGM Novatek expects to sign an LNG supply agreement with

China in May.

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.

CUSTOMERS INCLUDE

NEWSBASE INFORMATION

Downstream Monitor - MEA Week 16

Documents

Transcript of Downstream Monitor - MEA Week 16