European refiners face dwindling fortunes

Squeezed between shrinking exports to the United States, game-changing giant Middle East refineries and dwindling domestic demand, more European refineries are likely to face the axe.

Demand for refined product in Europe is set to decline by 170,000 bpd every year over the coming five years, leading to the closure of two small refineries or one large refinery.

Oil major Shell announced that it was considering the sale of the bulk of its downstream business in Italy, following the recent sale of refineries in Britain and Germany. Overall European refining margins, or cracks, averaged at $5.46 a barrel in March, compared with $22.83 a barrel in the United States, where refiners enjoy significantly lower crude prices.

$7.5bn refinery for Cross River

A Chinese firm, Sino Arab Energy, SAE, in partnership with a local firm, Osabo Refining and Petrochemical Industry Limited, have concluded plans to build a refinery in Akabuyo, Local Government Area of Cross River State.

Agreement s for the construction of the refinery which is expected to refine 107,000 barrel of crude per day have been signed by the partnering firms, and is valued at about $7.5billion.

Speaking on the project, Hon Etim Effiong Okon, who is a member of the management team of Osabo Refining, said the process for the procurement of requisite licenses to establish and operate the refinery had fully commenced, while Akwa Esuk Eyamba, the community where the refinery will be located had donated 500 hectares of land for the refinery.

The refinery is expected to be completed within five years, with the first phase slated to commence in 2014, while the feedstock for the refinery would come from the several Niger Delta basin oil wells.

Eton Group to Fund $1.7bn Greenfield Refinery

Eton Group in conjunction with Qua Petroleum Refinery Ltd is to invest about $1.7 billion in the construction of a Greenfield Refinery in Akwa Ibom State. Speaking at the signing ceremony of the agreement in Abuja, Director of Eton Finance Private Ltd, Allen Rennie, said when operational, the refinery will produce about 100,000 barrel per day. He explained that, “the financing by the Eton Group is for $1.7 billion, while $1.4 billion represents funds for the re-engineering and construction of the export designated refinery for Qua Petroleum Refinery.”

Rennie, stated that $300 million had been earmarked for start-up, operations and feed stock. The deal will complete all financial and administrative formalities within the next two months, after which, re-engineering, approval for fabrication and construction phases will be provided before the end of the year.

A representative of Qua Petroleum Refinery, Essien Ekanem, said when approval is received from the Directorate of Petroleum Resources (DPR), the construction of the refinery is expected to last 18 to 24 months, with first production billed for late 2014 or early 2015.

Eton Group, a major financier of the project has presence in the USA, Malaysia, Japan, UK and operate in Nigeria under the auspices of the Niger-Delta Refinery and Petrochemicals Company Ltd.

Anambra State now an oil producing state

The Federal Government announced that Anambra State has joined the list of oil bearing states in the country. The announcement was made by President Goodluck Jonathan while inaugurating Orient Petroleum’s Anambra River Production Facility in Aguleri-Otu. By this development, Anambra has joined the group of oil producing states like Akwa Ibom, Cross River, Rivers, Abia, Bayelsa, Ondo, Delta and Edo.

Speaking at the ceremony, Jonathan said it was high time Nigeria stopped exporting crude oil and unprocessed agricultural produce. He said the country must begin to refine its crude oil before exporting it so that it could be more valuable. He wondered why the country would continue to export crude oil and then import refined petrol, kerosene and aviation fuel.

Port Harcourt Refinery Turn-Around Maintenance Gets Underway

The resuscitation of Port Harcourt Refinery is bound to commence as the Federal Government is expected to receive the technical and commercial proposal for its turn-around maintenance (TAM). The Group Executive Director, Refining and Petrochemicals, Nigerian National Petroleum Corporation (NNPC), Mr. Tony Ogbuigwe, said the schedule for the TAM of the refinery has been firmed up.

He stated this in a keynote address he presented at the international conference on petroleum refining and petrochemicals organized by the University of Port Harcourt and the Petroleum Technology Development Fund (PTDF), with the theme: Sustainable Refinery Turn around Maintenance.

Ogbuigwe said the evaluation of the proposal would follow immediately and while the contract would be awarded by October. According to him, the contractors would move to site immediately in October and commence detailed planning and mobilization of manpower and heavy equipment that would be expected to last for about four months. The plant would be shut down in February 2013 and handed over to the contractor for the turn maintenance to be executed in about 45 days. It is expected that the country’s biggest refinery, with installed crude oil processing capacity of 210,000 barrels per day, should be back in operation by April 2013.

He expressed optimism that with the planned TAM on Warri and Kaduna refineries next year, three refineries would at 90 per cent installed capacity and the daily production of petroleum products would be expected to improve to 20.3 million, 9.24 million and 15.36 million litres of premium motor spirit, kerosene and automotive gas oil respectively.