Downstream Monitor Mena Week 08

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NewsBase Downstream MENA. Whats going on and why within the downstream industry in the Middel East & North Africa

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Downstream Monitor Mena Week 08

  1. 1. 01 June 2011 NewsBase Week 08 Issue 08 Downstream Monitor   News Analysis  Intelligence –– MENA ––  NewsBase Published byCOMMENTARY 2 NEWS THIS WEEK… Iran overview Iran’s downstream industries battle through sanctions challenge 2 Yemen on the brink of civil war 4 International funding lines up for In the seventh instalment of a series of Middle East North Africa 5 and North African country profiles, DownstreamREFINING 7 MENA gives an overview of Iran’s downstream OAPEC sees half of refinery projects sector. delayed 7 Israel’s Oil Refineries announces  Iran hopes to bring 61 petrochemical projects Q1 profit 7 onstream by 2015 at a cost of US$43 billion. (Page 2) KNPC to issue tender for mega gas train 8 Work to begin on Iraq refinery 8  International sanctions have stifled Iran’s attempts to become an LNG exporter. (Page 2)FUELS 9 trade picking up, but no real end Fuel  While Western ties have been depleted, Iran’s in sight for Libya’s troubles 9 relationships with China and India are blossoming.(Page 3) Egypt set to hike gas prices for Upheaval and impact neighbours 10PETROCHEMICALS 10 firms to submit bids for Safco EPC Yemen’s oil sector is becoming riskier as the urea train 10 country plunges into political turmoil. With heavy proposes ‘petchem OPEC’ Iran 11 gun battles resuming in the capital, civil war is anTERMINALS & STORAGE 11 ever more likely scenario. begins bunker operations at Shell Jebel Ali Port 11  Pipelines are being attacked, while IOCs have Qatar’s Barwa Bank reaches finance been pulling out. (Page 4) deal with NPS 12NEWS IN BRIEF 12  Petrol imports have increased three-fold and the unrest has cost the country around US$4 billion.(Page 5)TENDERS & CONTRACTS 22For analysis and commentary on these and other stories, plus the latest downstream developments, see inside… Copyright © 2011 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
  2. 2. Downstream Monitor MENA 01 June 2011, Week 08 page 2 COMMENTARYIran’s downstream industries battlethrough sanctions challengeDespite international sanctions, Iran’s oil and gas industry remains of major importance.Challenges face the country’s downstream sector, however, major investments have beenannouncedBy Martin Clark OPEC pegs the country’s oil reserves at 137 billion barrels hopes to bring 61 petrochemical projects onstream by 2015 at a cost of US$43 billion Iran While Western ties have been depleted, Iran’s relationship with China and India is blossomingNote: This is the seventh in a series of country-specific commentaries, intended to give an overviewof downstream activities and capabilities in the MENA region. The next instalment will cover Algeria.Iran’s oil and gas sector is huge by By then, the report stated that 61 These have been ratcheted up in recentalmost any measure, but it could be so petrochemical projects would be times amid concerns from the US and itsmuch more but for the bite of sanctions onstream at a cost of US$43 billion. allies that Iran’s nuclear energyand its frosty relations with much of the programme is being used to developWestern world. Sanctions challenge nuclear weapons, an allegation denied by The Islamic Republic holds the world’s And yet the downstream sector, much Tehran.second largest natural gas reserves after like the upstream, is faced with critical Western sanctions were tightened aRussia, an estimated 29,610 billion cubic challenges and bottlenecks as a result of year ago to exploit Iran’s lack ofmetres (bcm), according to figures from the international sanctions facing the domestic refinery capacity, which meantthe Organisation of Petroleum Exporting country. it had to import 30-40% of its petrol.Countries (OPEC). Still, Iran’s massive The country is also the cartel’s hydrocarbon reserves, and thesecond biggest crude oil substantial income it receivesproducer, with the capacity to from energy exports, havepump around 3.5 million barrels helped grow the downstreamper day. Again, according to industry despite the manyOPEC, proven oil reserves stand practical challenges that blightat around 137 billion barrels. the sector. As a result, the downstream These include limits onsector too, from refineries to foreign companies working inpetrochemicals factories, is the country, including asubstantial, and growing. complete absence of US andRefinery capacity currently some other international firms,stands at over 1.5 million bpd, plus reduced access to newaccording to OPEC data. technology and external And there are massive plans sources of capital.for growth detailed in Iran’s 20- It has thrown up addedyear strategic plan. complications in planning and The Tehran Times reported on executing certain exportthis last week, with the projects, notably Iran’s much-government targeting hyped but long-delayed hopespetrochemical output to reach for establishing itself as a100 million tonnes by 2015, the major liquefied natural gasend of its fifth five-year (LNG) producer.development plan. Copyright © 2011 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
  3. 3. Downstream Monitor MENA 01 June 2011, Week 08 page 3 COMMENTARY Despite its enviable gas deposits, straightforward.there is still no firm indication when Last week, an explosion at an AbadanIran will export its first consignment oil refinery, Iran’s largest, during a visitof LNG, with technology constraints by President Mahmoud Ahmadinejad,and access to markets holding back killed two people and injured 12.any development. The circumstances behind the blast Tehran officials have repeatedly remain something of a mystery, however.talked up the country’s potential to Iranian media said the explosion wasrival Qatar as a world-beating LNG caused by a technical fault and did notseller. speculate on the possibility of an attack So far, however, while Qatar has on the president.recently put the finishing touches on Industrial accidents are not uncommonits decade-long vision to grow LNG in Iran’s under-performing oil and gasproduction to a whopping 77 million industry, although energy assets are alsotonnes per year, Iran’s production occasional targets for sabotage by rebelremains at zero. groups in various parts of the country. Simultaneous explosions haveInvestment damaged gas pipelines on two separateBut that should not mask the genuine occasions in 2011, with officials eitherprogress that has been made in other giving no explanation or ruling outareas, with Iran – despite all the technical problems, implying foul play.hurdles it faces – a major downstream It means assessing how much sanctionssupplier to world markets. are hurting Iran, and affecting its fuel While local companies, led by the import needs, is something of a guessingstate-owned National Iranian Oil fundamental importance to China’s game. An emergency plan was initiatedCompany (NIOC) and its many spin-offs growing economy, and this is likely to to produce petrol at petrochemical plantsand subsidiaries, have led developments, expand further in new downstream as well as speed up new refinery projects.foreign investment is also filtering industries, driving investment by state- While Iranian officials suggest thethrough too. backed Chinese companies. country is self-sufficient, now even The sensitivities associated with Iran’s China’s big energy companies, the exporting fuel, many analysts dismisssanctions mean that information on this likes of China National Petroleum Corp. these claims.investment, specifically who is doing (CNPC) and China Petroleum & President Ahmadinejad himself playedwhat, can be hard to come by. Chemical Corp. Ltd. (Sinopec), already down the sanctions impact last week, Last week, Iranian press reported that a have a clutch of interests in Iran, from following the Abadan explosion.Chinese company was ready to invest upstream oilfield activities to refining “The enemy’s hope to exert pressureUS$5 billion in petrochemicals projects projects.] on Iran by restricting oil products hasat the Mahshahr Special Economic Zone, turned into complete desperation,” hein the southwest of the country. Refining pressure was quoted as saying by local news Typically, the company – which has But understanding Iran’s energy sector source, IRIB.also reportedly opened talks with Iran’s and its performance is rarely Rhetoric is nothing new to IranNational Petrochemical Company (NPC) watchers, all a part of the cat and mouseto build a giant methanol unit in the Pars What is clear is that while game Tehran plays with its rivals, but itSpecial Energy Zone – was not identified can also distort the true picture of thein the report. sanctions may be having nation’s energy sector. What is certain, however, is that an effect, the demand for What is clear is that while sanctionsrelations with China, and to a lesser may be having an effect, the demand fordegree India, have blossomed as Iran’s natural resources globally natural resources globally is such thatassociations with older Western partners is such that Iran’s role in Iran’s role in supplying downstreamhave deteriorated. markets – and its future role – is not Iran’s oil shipments are now of supplying downstream likely to diminish anytime soon. markets is not likely to diminish anytime soon Copyright © 2011 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
  4. 4. Downstream Monitor MENA 01 June 2011, Week 08 page 4 COMMENTARYYemen on the brink of civil warYemen’s oil sector is becoming riskier as the country plunges into political turmoil. Withheavy gun battles resuming in the capital, civil war is turning into an ever more likelyscenarioBy Nádia Morais of al-Qaeda assuming power is rife Fear Pipelines are being attacked, while IOCs have been pulling out Petrol imports have increased three-fold and the unrest has cost the country around US$4 billionRecent unrest in Yemen has already seen Attacks on protesters country further away from a resolution toover 50 people killed in demonstrations Meanwhile, government forces have this political crisis,” she said.in the Southern city of Taiz, as well as launched attacks against protesters in EU Policy Chief Catherine Ashton washundreds injured, following the relentless Taiz and the coastal city of Zinjibar. quoted by the Associated Press as sayingfighting in the capital, Sana’a, between The United Nations said reports she was “shocked” by the use of forcetribesmen and the forces of the president, indicated that deaths in Taiz had been and live ammunition and describedAli Abdullah Saleh, ending a day-long caused by “Yemeni army, Republican attacks on medical centres astruce. Guards and other government-affiliated “appalling.” With Saleh refusing to step down elements, which forcibly destroyed the Observers see the government’s recentdespite months of protests against his protest camp in Horriya Square, using attacks as an attempt to retain power,rule, BBC News reported that further water cannons, bulldozers and live following the tribesmen taking control ofdemonstrations were expected ammunition.” government buildings and attempts tothroughout the country. Navi Pillay, the UN High seize the headquarters of the ruling party, In Sana’a, battles have again exploded; Commissioner for Human Rights, urged the General People’s Congress.as the president’s opposition has accused all parties to find a resolution. “Such According to a report by IHS GlobalSaleh of letting the city fall under al- reprehensible acts of violence and Insight, with clashes likely to escalateQaeda’s power, causing widespread fear indiscriminate attacks on unarmed further, Yemen’s recent history of eventsof a potential Islamist takeover, AFP civilians by armed security officers must could plunge it into civil war: thereported. stop immediately. Further violence will political and economic situation become only yield more insecurity and move the darker every day, while Yemen’s previously blooming oil production is facing serious disruption. Catastrophe beyond imagination In early May, the country’s oil minister, Amir al-Aidarous, sent out a warning that the country’s lack of security had led to a major slowdown in terms of its oil production, exports and refining, which was creating “a catastrophe beyond imagination,” since Yemen relies heavily on oil exports – roughly 70% of the government’s income. Copyright © 2011 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
  5. 5. Downstream Monitor MENA 01 June 2011, Week 08 page 5 COMMENTARY IHS Global Insight reported that repair purchasing refining products as “an and further undermine oil and gaswork on damaged pipelines was making easier choice.” production and exports in the country,”slow progress and attacks were showing said IHS analyst Samuel Ciszuk. Andno signs of abating. Yemen also lacks the Impact of security the crisis with no-one seemingly able to mediateright type of crude to be sent from its Ras Deteriorating security in the country is between Sheik Sadeq al-Ahmar, the headIsa port to its main refinery in Aden. also expected to impact oil and gas of the most powerful tribal confederation The resulting lack of refined products production and exports further, as most in the country, and the government, theto satisfy the domestic market has led to International Oil Companies (IOCs) have risk of more tribes getting involved couldfurther complications, creating already heavily reduced their workforces, escalate.widespread discontent about the causing a severe shortage of availablegovernment’s capabilities to deal with skilled personnel, which will make it Political unrestthe situation. This has also forced the increasingly difficult for production In March, al-Ahmar declared he wouldYemeni government to use resources that levels to return to normal any time soon. support the popular forces requestingcould be invested elsewhere in crude This also causes a growing need for Saleh’s resignation after he failed to signimports for the Aden refinery, as well as further investment in technology and a transition agreement on May 22.refined products to compensate for the facilities, which cannot be easily done as Meanwhile, government securitycurrent shortage. political uncertainty soars. forces attacked some of the tribal chiefs According to an oil ministry official According to IHS, the slowdown in who tried to mediate. The fear is nowquoted by Reuters, the country is now production and the lack of human capital that tribal chiefs “will lose patience withbuying 280,000 tonnes of diesel and could mean the country’s remaining the president and take matters in their120,000 tonnes of petrol per month in the reserves will be lost, “potentially own hands,” IHS reported.international market, which represents a forever.” Facing a stronger al-Qaeda presence,three-fold increase in diesel imports, and And disruption is now becoming even Sana’a is expected to see morenearly four-fold when it comes to petrol greater, as tribes opposing the president widespread fighting, but the Southernpurchases. have destroyed the pipeline that carries and Northern regions also pose an At present, the country can only use oil from Ma’rib, in central Yemen. increasingly serious risk.crude from Ma’rib in the Aden refinery, The country’s Minister of Industry and If the government declines in Sana’a,while output from the Masila area is soon Trade, Hisham Sharaf, estimates the Northern rebels could gain a strongerexpected to be improved, through a overall costs of the unrest on Yemen’s position in the capital province, while indifferent pipeline to the Arabian Sea economy at US$4 billion. “We are the South, there also seems to be acoast, but this will not be enough to solve talking about a deficit that will break the conflict waiting to happen.the country’s refined products crisis. country… We are barely surviving, but All of this has led to the fear that the Reuters reported that because of the we have not collapsed and will not country could sink deeper into economicspecificity of crude that can be used in collapse,” he said. crisis, hand in hand with intense politicalAden, the government had opted for “The situation is likely to deteriorate uncertainty.International funding linesup for North AfricaA range of sources have lined up to pledge support for Tunisia and EgyptBy Christopher Coats Tunisia and Egypt have signed up around US$20 billion in funding Economic assistance is needed to tackle high youth unemployment Instability in the area has deterred private-sector investments although there are opportunitiesTunisia and Egypt have both undergone neighbours – face difficulties in countries, doubts remain about howtraumatic political changes in the first rebalancing their books, where oil and many of these will move forward in themonths of 2011 and have both recently gas production will play a strong role. wake of sprawling political and socialreceived pledges of international cash. After a week of public announcements change.However, these two countries – and their regarding funding initiatives for MENA Copyright © 2011 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
  6. 6. Downstream Monitor MENA 01 June 2011, Week 08 page 6 COMMENTARY Over the last week, the World Bank, The extent to which these pledges will be According to Reuters, growth forecaststhe G8, the International Monetary Fund met is unclear. for the Arab world by IIF show Yemen’s(IMF) and the European Investment While all groups have avoided offering economy will contract the most, by 4%,Bank (EIB) all set out new direct specific plans of action about how direct while in 2011 the economies of Syriafunding, loan and forgiveness funding and loans will be applied, all will shrink by 3%, Egypt by 2.5% andprogrammes to help strengthen have made specific mention of the need Tunisia by 1.5%.transitional governments in the Middle to support and sustain energy production Additionally, growth rates shouldEast and North Africa. in the region. stabilise and rebound somewhat by 2012 Driven by domestic policy plans from However, as plans from the different if some progress can be demonstrated inthe US, the UK, France and Germany, international groups were announced, it the move towards political stability, butamong others, the entities pledged became clear that these were likely to fall current unrest and worries that risks willbillions of dollars to support political short of what the region claims it needs increase will keep much needed foreignstability and economic development to sustain growth and stability in the investment at bay. Some of theseacross the region, specifically targeting years ahead. countries do boast modest domesticTunisia and Egypt. Earlier in the week, Tunisia had called reserves, but these are generally for international backing of US$25 insufficient – or too under-developed – toFunding pledges billion over the next five years, while a offer any financial support for theEarly last week, the EIB announced a report from the IMF earlier in the week necessary infrastructure investment.US$7.6 billion support plan for the two suggested the region would need morecountries as an extension of their existing than US$160 billion in external OpportunitiesEuro-Mediterranean Partnership. investment during the coming decade. Although this year’s changes have This was soon followed by a World The IMF said it could provide limited the attention and investment fromBank programme that would provide financing of around US$35 billion to oil- many state entities and potentialUS$4.5 billion for Egypt and US$1.5 importing countries in the region and that investors, some have signalled theirbillion for Tunisia over the next two donors would be needed to contribute. willingness to look past the slowdownyears. Economic difficulties in the area, most and risks for longer-term projects. The week concluded with the gathering notably the high unemployment rates Ireland’s Petroceltic International,of the G8 in Deauville, France, where the among the young, were a contributing which has run into difficulties over itscountries’ economic and political factor to instability earlier this year and exposure to North Africa, has set outstability took centre stage. With financial efforts must be made in order to improve plans to expand in the region.support from all but one member, the this situation. “We’re looking at deals in Egypt,group offered an array of funding and Tunisia and elsewhere, both farm-ins andforgiveness plans that amounted to Deficit new licence applications, but we’reapproximately US$20 billion, according This oil and gas deficit has emerged as a mainly looking to get into farm-ins onto Reuters. The exception was Canada, core obstacle for development and development projects, which people arewhich refrained from pledging any stability, according to regional analysts finding it difficult to fund,” said themoney to the region. and the Institute of International Finance minnow’s CEO, Brian O’Cathain, to According to the news service, specific (IIF), which lowered growth rate Reuters last week.components of the funding plans predictions for all MENA states that Despite the ongoing conflict in Libya,included US$250 million per year in stand as energy importers. Italy’s Eni has continued to pledge itsdevelopment aid to Egypt support for staying in thefrom France and US$175 North African oil production country, going so far as tomillion over four years from Algeria Libya Egypt Tunisia Source: BP meet with anti-governmentthe UK for political and forces in the eastern part ofeconomic development. In 2 the country to discuss theaddition, the US said it would resumption of exports in theforgive US$1 billion of 1.5 coming months. The ItalianEgypt’s debt and provide an company’s CEO, Paolo million bpdadditional US$1 billion in Scaroni, went so far as to tell 1loan guarantees, with the Financial Times: “I haveGermany pledging US$40 no doubt that one year frommillion up front and US$130 0.5 now the Libyan problem willmillion in the coming years. be behind us.” 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Copyright © 2011 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
  7. 7. Downstream Monitor MENA 01 June 2011, Week 08 page 7 REFININGOAPEC sees half of refineryprojects delayedIncreasing competition and weak million bpd, while the schemes cancelled products, to remove “the imbalance” asmargins are affecting the investment on represent 1.315 million bpd. “some oil exporters import refinedthe refining industry in the Arab World, According to Makki, the figures product”, Makki was quoted as saying byPlatts reported. provided by OAPEC concern January Reuters. During the 5th Annual Global Refining 2011 and the delays are being caused by The members of OAPEC have a totalSummit in Rotterdam, an expert at the a decreasing demand justified by the of 53 refineries with a capacity of 7.06Organisation of Arab Petroleum economic crisis as well as changes in the million bpd, 8% of the total globalExporting Countries (OAPEC), Imad price of the material needed. refining capacity.Makki, told the news agency that 51% of However, it is already certain that the Capacity is expected to grow to 12.86the refinery plans in the region had been Yanbu and Jubail refinery projects will million bpd by 2015 once the newdelayed and another 26% had been continue under construction in Saudi projects are completed, Makki added.cancelled. Arabia, with a planned processing OAPEC’s members include Algeria, “Only 23% [1.2 million barrels per day capacity for 400,000 bpd, he added. Bahrain, Kuwait, Libya, Syria, the UAE,worth of capacity] is under construction” The new projects aim to replace low- Egypt, Iraq, Qatar, Saudi Arabia andin Saudi Arabia, the UAE and Kuwait, he efficiency refineries and integrate with Tunisia.explained. The share of projects delayed petrochemical plants while reducing therepresents a production capacity of 2.594 yield of fuel oil and increasing lightIsrael’s Oil Refineriesannounces Q1 profitHaifa-based Oil Refineries Ltd. (ORL) “Oil Refineries achieved higher the North African country. Egypt isposted a net profit of US$6 million for refining margins than the benchmark and ORL’s main supplier of natural gas.the first quarter of 2011 on May 23 showed strong growth in the “There were two acts of sabotage onagainst a net loss of US$4 million for the petrochemicals sector,” said CEO Pinhas the Egyptian gas pipeline in recentequivalent period last year. Buchris. months, and gas deliveries to Israel have The increase came on the back of a “The disaster in Japan boosted demand not yet resumed after the second attack,”combination of higher prices for fuel for petrochemicals products in Buchris said.products and improved refining margins. international markets, which Oil “Oil Refineries has not received During the period the company, which Refineries knew how to spot to meet natural gas deliveries from [EMG], andoperates Israel’s largest refinery, saw its market needs,” he added. the company [has] therefore decided toadjusted refining margin climb to However, the news was not all buy natural gas from another supplier,”US$3.90 per barrel from US$3.20 per positive, with the recent attacks on he added.barrel in the first three months of 2010. Egypt’s East Mediterranean Gas Co. On May 27, the firm said that it hadIn addition, the benchmark margin fell to (EMG) leading to halt in imports from signed a contract with the local YamUS$0.50 per barrel from US$3.50 per Tethys project that would see it buybarrel. US$350 million of Israeli natural gas This helped offset a fall in refining over the next 27 months.volume to 2.06 million tonnes from 2.13 In a statement ORL said it had notmillion tonnes in the corresponding changed its contract with EMG as aquarter, while the utilisation of result of the agreement, and that the dealproduction plants also dropped to 86% had been necessary to meet supplyfrom 89%. needs. Copyright © 2011 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
  8. 8. Downstream Monitor MENA 01 June 2011, Week 08 page 8 REFININGKNPC to issue tenderfor mega gas trainKuwait National Petroleum Company identified. “Ethane and propane, to be consultant (PMC) and the issue of the(KNPC) is aiming to issue a tender for produced from the new facility, will be main EPC contract. The new train willthe main construction package covering a supplied as feedstock for new take 30 months to build.mega gas train at its Mina al-Ahmadi petrochemical capacity,” he said. Currently, South Korea’s Daelimrefinery in late 2011-early 2012, The FEED package is due to be Industrial Company is carrying out thefollowing the completion of a front-end completed by November. The next stage main EPC contract to install a fourth gas-engineering and design (FEED) work by in the project implementation will be the processing train at Mina al-Ahmadi ofthe UK’s Amec. appointment of a project management similar capacity under a US$886 million The new facility, which is estimated order placed by KNPC in mid-2010. Theto cost US$1 billion, will be the fifth unit is expected to be completed by lategas train at the refinery. It will utilise 2013.the offgas vented during refining of Meanwhile, additional gas of 5 mcmcrude oil to produce liquefied per day will also come from the third-petroleum gas (LPG) and other phase development of EPF 50 or theassociated products. The gas train will early production facilities 50 project,also process associated gas produced which was commissioned in 2008.in the north and south-east of Kuwait EPF 50 was Kuwait’s first gas projectinto ethane and propane. to be built on a build-own-operate (BOO) “Train 5 will have a capacity to basis, as part of the Gulf state’s efforts toprocess 23 million cubic metres per seek private-sector investment into theday of gas and 100,000 barrels per day energy industry. The project nowof condensates,” said a Kuwait-based produces 10 mcm per day of natural gasindustry official, who wished not to be and 50,000 bpd of condensates.Work to begin on Iraq refineryUOP has announced that the design of a technology package. for new refineries in Maissan andproposed 300,000 barrel per day “We are pleased to be working with Kirkuk, both of which have a capacity oftransportation fuel refinery in Nassiriyah the SCOP again as Iraq focuses on 150,000 bpd.in Iraq is set to start soon. doubling its oil refining capacity,” Iraq is planning to boost its existing In a statement on May 25, the president and CEO of UOP, Rajeev refining capacity to 1.6 million, or morecompany – a division of US giant Gautam, said. than double its current level, by 2017.Honeywell – said that it had been “The high yields delivered by our This figure is expected to double againselected by the State Company for Oil technologies combined with our by 2030 on the back of increasedProjects (SCOP), under the Ministry of methodology for process unit integration domestic demand for transportation fuel.Oil for Iraq, as a main contractor for the and optimisation will enable SCOP to However, many analysts haveproject. produce the maximum yields of high- described these targets as overly This will see UOP carry out reforming, quality petrol and diesel product while ambitious, while a report released inisomerisation, fluid catalytic cracking also maximising the economic value of April by the International Monetary Fundand selective hydrotreating technologies the project,” he added. (IMF) expressed doubts over Iraq’sfor the new facility. In addition, it will This is the third major Iraq refinery ability to reach this goal withoutalso supply basic engineering, award for UOP. In 2010 the company significant investment in bothtechnology licences, catalysts and won a contract from South Refineries infrastructure and facilities.specialty equipment as part of the overall Company and North Refineries Company Copyright © 2011 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
  9. 9. Downstream Monitor MENA 01 June 2011, Week 08 page 9 FUELSFuel trade picking up, but no realend in sight for Libya’s troublesLibya’s Western-backed rebels are Last week, another tanker was deputy foreign minister Khaled Kaim.running out of crude as Ghadaffi’s forces scheduled to arrive in Benghazi carrying Kaim also told The Associated Presscontinue with surprise attacks on their 5,000 tonnes of liquefied petroleum gas that the Oil Minister had been in contactoilfields, despite NATO’s protection. (LPG), but it was not clear whether it with the Prime Minister’s office in theHowever, officials in Benghazi have reached its destination. According to AIS Libyan capital of Tripoli since fleeing thedecided not to hire private security firms ship-tracking data reported by Reuters, it country, without giving further details.to protect the oilfields. takes one to two days to cross the This follows rising uncertainty over “We don’t want to repeat the debacle Mediterranean, from North to South. Ghanem’s location, after Tunisia’swe have seen, for example, in Iraq,” In the hope that strangling Ghadaffi’s Foreign Minister Mouldi Kefi said thatprovisional minister of finance Al fuel supplies will bring a speedy and he had escaped Libya and switched hisTarhouni told the Financial Times. The peaceful resolution, NATO and Western loyalties away from Ghadaffi. He told theprovisional government is now low on allies continue to intensify the campaign Oil & Gas Journal: “I believe and Ifunds, despite greater discussions about against Ghadaffi’s regime, increasing suspect… Ghanem just left Libya andfinancial assistance by Western allies, aerial bombing attacks of Tripoli and that he is not any more working with theand the Transitional National Council seeking to interrupt the flow of fuel in Ghadaffi regime.”still has not succeeded in obtaining loans the areas of the country that are still Ghanem’s presence in the OPECagainst frozen assets from the old regime. under his control. However, even if the meeting would not be well received by While Ghadaffi’s oil and gas end of the conflict seems to be in sight, rebel forces, as they are hoping to sendshipments continue to be stifled by after they run out of supplies, Petroleum their own representative to the encounter.economic sanctions, rebels are picking Economist has raised the question of OGJ quoted Mahmum Shammam, mediaup shipments from Tobruk, with two what will happen to the country, facing a spokesman for the rebel Nationaltankers fulfilling earlier contracts and the weakened structure and failed economy. Transitional Council, as saying: “Welatest one under a deal with Qatar, Abdel want to attend and will study the legalJalil Mayouf, spokesman for Arabian Missing in action procedure.” In the meantime, productionGulf Oil Co. (Agoco) told the Financial The Libyan Oil Minister Shukri Ghanem is at a standstill, with new authorities inTimes. has been missing for over a week now, eastern Libya holding major oilfields Until now, the provisional government although he is expected to represent since the uprising and oil companieshas spent US$480 million on fuel, Libya at the meeting of the Organisation halting production amongst fears aboutkeeping the subsidised price of US$0.15 of Petroleum Exporting Countries the safety of their oil workers, the FTper litre, Mayouf added. (OPEC) on June 8, according to the reported. Copyright © 2011 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
  10. 10. Downstream Monitor MENA 01 June 2011, Week 08 page 10 FUELS The Libyan rebels’ oil and finance there is a minimum level of security, we Libya’s crude oil reserves are nowminister told Reuters that oil production will resume production again, but I don’t producing less than 500,000 barrels perwas not expected to resume in the near think that will happen in the next two to day, the minister explained. Before thefuture over concerns with the security of three weeks; it will take some time”, he unrest, the country was producing aroundoilfields. “As soon as I’m confident that said. 1.6 million bpd.Egypt set to hike gasprices for neighboursEgypt intends to extract a higher price for Egypt peace treaty and that 79% had a 2005 between Egypt’s Easternits gas exports to neighbouring states, negative view of the US. The interim Mediterranean Gas (EMG) and Israeltargeting increased revenues of US$3-4 Egyptian administration is set to pursue a Electric Corporation.billion, according to a recent note from course more in line with public opinion A lack of transparency over the deal,Barclays Capital. The report said the than Mubarak. BarCap said, has led to concerns aboutNorth African state was facing a 9.4% A sign of this new course is an corruption in the contract and Cairo saidGDP deficit for the 2011-12 fiscal year. agreement brokered earlier this month by it had lost US$714 million as a result. A Subsidies would benefit from the extra Egypt between Hamas and Fatah – a number of officials have been arrestedcash, BarCap said, with a rise of 50% for move towards a Palestinian unity over the deal, including the formerdiesel and natural gas, reaching US$10.1 government. In addition, Cairo has re- petroleum minister, Sameh Fahmy, andbillion. Around 25% would go on gas. opened the Rafah crossing allowing Interpol has been asked to arrest a In addition to the economic benefits access to the Gaza strip. Furthermore, businessman, Hussein Salem, who is saidfor Egyptians of such a price increase for Egypt has indicated it may be time to re- to have been close to Mubarak.exports, the shift also reflects changes in establish diplomatic relations with Iran. Israel receives 9.3% of Egypt’s totalthe political mood. BarCap qualified these actions by gas exports and 31% of pipeline exports. The former president, Hosni Mubarak, noting there had not been a complete Israel has taken steps towards selfwas a close ally of the US and had good break with Mubarak’s foreign policies sufficiency, with gas finds made offshorerelations to Israel, while he was also an and that the peace agreement with Israel and plans for a liquefied natural gas“ardent foe” of Iran, Hamas and would remain. Egypt is highly reliant on (LNG) terminal. Jordan also receivesHezbollah. The current administration – funds from the US and Saudi Arabia, cheap gas – at US$83 per 1,000 cubicand the expected shape of politics after which will moderate any movements metres – from Egypt. Jordan, though, haselections – has different views. away from Israel and towards Iran. managed to avoid most talk of pricing BarCap quoted a recent survey of The provision of subsidised gas to shortfalls, as public opinion is lessEgyptians as showing a slight majority of Egypt’s neighbours, though, is likely to opposed to the country’s government.those polled opposed the 1979 Israel- change. A 15-year deal was signed in PETROCHEMICALSEPC firms to submit bidsfor Safco urea trainSeven leading engineering, procurement the main contractor to build a fifth urea Kellogg Brown & Root of the US;and construction (EPC) firms have been train at its facility in Jubail. Chiyoda Corp. of Japan; Germany’sprequalified to submit both technical and The prequalifiers are: Daelim Uhde, and a team of Saipem of Italy andcommercial bids by June 23 to Saudi Industrial Company and Samsung Paris-based Technip.Arabian Fertiliser Company (Safco) for Engineering, both of South Korea; Copyright © 2011 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
  11. 11. Downstream Monitor MENA 01 June 2011, Week 08 page 11 PETROCHEMICALS Estimated to be worth US$450-500 contract by late 2011. market and the remaining 87% ismillion, the scope of works for the EPC Non-availability of feedstock natural exported to Asia.contract includes the construction of a gas from Saudi Aramco had proved to be Urea is widely used as a fertiliser fornew urea train, a reactor, separation units a stumbling block in the proposed agricultural production, but it also hasand concentrator, heat exchangers and expansion that Safco has been planning applications in the production ofcondensers, an absorber unit, evaporation since 2008. melamine, urea-formaldehyde resin andand debottlenecking plant, as well as air Safco is the first petrochemical project acrylate plastic. At present, Safco is aand carbon dioxide compressors. to be set up in the kingdom in 1965 as a subsidiary of Saudi Basic Industries The front-end engineering and design joint venture between the government Corp. (SABIC), which holds a 41%(FEED) package for the new train has and Saudi citizens. It has since grown to stake, while the remaining 59% is spreadbeen prepared by Chiyoda Corp. It will be the largest urea producer in the across company employees and Saudihave a capacity of 3,250 tonnes per day Middle East with a total annual output of investors. Feedstock natural gas for theand is targeted for completion by late more than 2.6 million tonnes. Of the total plant is sourced from Aramco’s onshore2013. Safco is aiming to award the production, 13% is sold to the GCC oilfields.Iran proposes ‘petchem OPEC’Iran has put forward a proposal to for this industry, as well as safeguard the active. We want true co-operation andestablish an international petrochemical interests of those with stakes in this negotiation in an internationalassociation that would be similar in business,” he said. association. We want to rotate the placescope to the Organisation of Petroleum “In terms of grand policies and for the headquarters of such a forum. WeExporting Countries (OPEC). operational activities there will be many want it to have subsidiary centres.” Speaking at an international similarities between these two In December 2010, the GPCA said thatpetrochemical conference in Tehran on organisations but we must keep in mind it had refused to help its Iranian membersMay 22, Abdolhossein Bayat, the that the petrochemical industry’s global address the international sanctionsdirector of Iran’s National Iranian field of activities is much broader than imposed on them – a decision that hasPetrochemical Company (NIPC) said that OPEC’s,” he added. seen relations cool in recent months.while the association would not precisely The announcement could spell the end During Bayat’s speech, he said thatbe a petrochemical equivalent to the of Iran’s relationship with the Gulf Iran was due to bring around 65 neworganisation, its “objectives would be Petrochemicals and Chemicals petrochemical projects onstream bysimilar.” Association (GPCA), which was founded 2015, upping the country’s annual “I hereby announce in this forum that in 2006. Bayat expressed his production capacity by 66 million tonnes.the Islamic Republic of Iran proposes the dissatisfaction with the group, describing These include eight methanol and nineestablishment of an international it as having failed to meet Iran’s ammonia facilities as part of Iran’s planpetrochemical association to adopt “objectives.” to become the world’s leading producermacro-policies and to conduct planning Bayat said: “The GPCA is not very of petrochemical products by 2025. TERMINALS & STORAGEShell begins bunker operationsat Jebel Ali PortShell Marine Products recently largest container port in the Middle East, Port, a fast-growing container port, putsannounced that it had started supplying and added that the launch of these Shell in an excellent position to supportmarine fuels at Jebel Ali Port in Dubai. operations was a reinforcement of Shell’s liners operating in the Middle East,” said The company said that it was the only selective strategy to extend its network of Shell Markets Middle East generalglobal integrated energy company to set ports in the Gulf region. manager, Richard Jory, in a statement inup operations at the port, which is the “The strategic location of Jebel Ali Dubai. Copyright © 2011 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
  12. 12. Downstream Monitor MENA 01 June 2011, Week 08 page 12 TERMINALS & STORAGE Shell said that it had acquired several transparency in the quality of brings improved accuracy andstorage tanks adjacent to the main measurement of marine fuels delivery. transparency to the fuel deliveryterminals at Jebel Ali Port and had set up “We welcome Shell’s bunker process,” he added.an 8,000 tonne high-capacity bunker operations as an important contribution Maersk Oil Trading businessbarge for delivering fuels and services. towards strengthening the services for development manager, Jesper Previously used in Singapore, the vessels calling at Jebel Ali Port,” DP Rosenkrans Ødum, commented:barge is one of the first vessels to use World UAE Region senior vice president “Integrity in the custody transfer of fuelsmass flow meters in the Middle East, and managing director, Mohammed Al remains an important issue in bunkeringaccording to the company. Muallem, said. “On top of the assurance and Shell’s adoption of mass flow meter Shell Marine said that through the that our products are always vetted measurement in Jebel Ali promotes aimplementation of the latest flow meter according to rigorous standards, the use greater level of transparency across thetechnology, it aimed to increase of mass flow meter technology now marine industry.”Qatar’s Barwa Bank reachesfinance deal with NPSNational Petroleum Services Group Bahrain, Syria, Brunei, Malaysia, months and years,” he said.(NPS), a Middle East-based provider of Singapore, Libya, and Iraq. It is also Barwa Bank said it would continue todrilling, customised well services and oil currently engaged by oil companies such work closely with the energy sectorand gas industry client support, has as Saudi Aramco, Qatar Petroleum, within Qatar and elsewhere in the region.entered into a 529 million riyal (US$145 Mearsk, Shell, Total, ConocoPhillips and NPS’ business plan is focused onmillion) financing agreement with Occidental. expanding and consolidating its range ofQatar’s Barwa Bank. In a statement, head of banking at petroleum services, partly through NPS’ agreement with Barwa, described Barwa Bank, Keith Bradley, said of the geographical expansion and strategicas Qatar’s newest Shariah-compliant deal: “NPS has a solid track record of mergers and acquisitions.banking service provider, is to refinance steady growth, and we look forward to To this end, it has entered into aan existing NPS syndication and support partnering with NPS to support its further number of technical alliances withthe company’s expansion and working expansion going forward.” companies such as Medeng – whichcapital. Abdul Aziz Al Delaimi, NPS’ designs and develops flow metering NPS was formed out of the merger of chairman, said that Barwa Bank had equipment for the oil and gas industry –three multinational oil and gas service structured an innovative facility that and EOR Solutions, which suppliescompanies that had been operating in the closely matched his company’s needs. solutions for increased oil productionMiddle East since the early 1980s. Its “The relationship has got off to a very through enhanced oil recovery.products and services now span countries strong start and we are looking forwardsuch as Qatar, Saudi Arabia, the UAE, to strengthening it over the coming NEWS IN BRIEF to follow the International System of applying SI.POLICY Units, or SI. “The decision to shift to meter in official According to the Emirates Authority for and commercial activities, especially inUAE to enforce Standardization and Metrology (ESMA), the real estate sector, was announced inmetric system for no more feet, inches or yard, will be used August last year. The move is in lineNovember as measurement units with effect from with the UAE Cabinet of 2006 on the 11/11/11 – a well suited date to have a national system of measurement, whichAfter the successful implementation and world unified system. mandates the use SI as a basis for thereplacement of gallon with liter for From November 11, these units will be legal units of measurement in thepetroleum products in January this year, replaced with liter and meter along with country,” ESMA announced onthe UAE government has decided to do their sub-units to comply with World Wednesday.away with other ancient measuring units Trade Organization regulations calls for Copyright © 2011 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

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