India raises cost of refinery project with Aramco by 36%

МОСКВА (МRC) -- India has increased the cost estimate of a giant refinery and petrochemical project to be jointly built with Saudi Aramco and Abu Dhabi National Oil Co by more than 36%, after protests by farmers forced the relocation of the plant, said Reuters.

The 1.2 million barrels-per-day (bpd) coastal refinery in the western state of Maharashtra is now expected to be built at Roha in the Raigad district, about 100 km (62 miles) south of Mumbai.

The new cost estimate of $60 billion for the refinery was given to Saudi Arabia’s energy minister Khalid al-Falih at a meeting with Indian Oil Minister Dharmendra Pradhan last month in New Delhi, said the four sources familiar with the talks between the two ministers.

“The $60 billion is a preliminary estimate that was told to Saudi Arabia. The final number will be decided on the basis of a detailed feasibility study,” said a source present at the meeting.

The project cost at the signing of a deal with Saudi Aramco in 2018 was pegged at $44 billion. The four sources requested anonymity because of the sensitivity of the matter.

Despite the cost expansion, the project is still expected to be commissioned in 2025, the sources said. Global oil producers are vying to gain entry into India to establish a stable outlet for their output and to earn profit from the South Asian nation’s strong gasoline and petrochemical demand prospects due to the rising disposable income of its 1.3 billion population.

The world’s third-largest crude oil importer aims to raise its refining capacity by 77% to 8.8 million bpd by 2030.

The state government suspended land acquisition at the previous site in Ratnagiri - about 400 km south of Mumbai - after thousands of farmers refused to surrender their land, fearing the project could damage a region famed for its Alphonso mangoes, cashew plantations and fishing hamlets that boast bountiful catches.

“It is a huge escalation in cost. But since the project is of a mega scale, we expect the investment to be staggered,” said Sri Paravaikkarasu, director at Singapore-based consultancy FGE, adding that her firm was doubtful the 2025 timeline of the project would be met.

The sources said the cost escalation is mainly due to the delay in land acquisition for the project and that all calculations need to be reworked.

State run companies - Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum - own 50% of the Ratnagiri Refinery & Petrochemicals Ltd (RRPCL), the company building the project.

Saudi Aramco and ADNOC hold the remaining half. B. Ashok, chief executive of RRPCL, declined comment on the increased cost estimate, and there was no immediate response from India’s national oil ministry.

Saudi Arabia’s Energy Ministry and Saudi Aramco also did not respond to a Reuters request for comment.

The Maharashtra state government has promised that land at the new site would be acquired by end-December.

A consortium led by Russia’s Rosneft acquired a controlling stake in Nayara Energy in 2017, illustrating the interest in India refining sector.

Saudi Aramco is also in talks to buy a minority stake in Reliance Industries’ refining, marketing and petrochemical business, and analysts say any further delay in land acquisition may force it to take a harder look at the private Indian refiner’s assets.

Investment in a new west coast refinery is a better option as this would give Aramco more say in the operation and configuration of the project, said Paravaikkarasu.

“But if land acquisition is not completed within this year, then Reliance appears to be a better option as this is a running project and they can monetise the investment from day one."
MRC

MOSCOW (MRC) -- Azerbaijan is betting on petrochemicals investment to diversify its oil and gas-dependent economy, industry and government officals told Reuters.

Plummeting global oil prices five years ago sent the former Soviet energy producer’s economy into decline, devalued its currency and led to bankruptcies among its commercial banks. But lessons appear to have been learned as Azerbaijan has sought additional sources of revenue, investing in petrochemical plants at home and abroad as it chases the bigger margins from turning crude oil into plastics rather than oil products.

Construction has been completed on three new petrochemical plants in Azerbaijan over the past 12 months. The plants are producing polypropylene, carbamide and high-density polyethylene.

Azerbaijan also produces methanol and other petrochemicals and plans to begin construction of a new petrochemicals plant in Turkey to produce various materials in partnership with British oil major BP at the end of 2020, aiming to complete the project within three years, said BP and state-controlled Azeri oil and gas company SOCAR.

Plans to construct a second carbamide plant in Azerbaijan with Tekfen will also boost the South Caucasus country’s potential as a petrochemicals exporter.

“Azerbaijan is deliberately conducting a policy of non-oil sector development,” Vahit Akhmedov, a member of Azerbaijan’s parliamentary economic policy committee, told Reuters.

“Development of petrochemicals is one of the priorities as this sector will bring good profits and provide the country with these products.”

Oil and gas account for about 95% of Azeri exports and 75% of government revenue, with the hydrocarbon sector also generating about 40% of the country’s economic activity, making the Caspian Sea republic particularly vulnerable to a downturn in gas and crude prices.

“Rapid development of the petrochemicals sector will help us to support economic growth if the oil price falls,” said SOCAR vice president Suleyman Gasimov.

Oil output in Azerbaijan, led by BP and SOCAR’s Azeri-Chirag-Guneshli oilfields (ACG), has been stable over the past couple of years. BP and SOCAR say that ACG, which has so far produced 3.5 billion barrels of oil, has the potential to pump a further 3 billion barrels by 2050. Azerbaijan is also a major producer of gas in the region, aiming to export supplies to Europe.

“Azerbaijan’s oil and gas reserves are enough for rapid and successful development of the petrochemicals industry,” an industrial source told Reuters.

New enterprises have allowed the country to satisfy domestic petrochemicals demand while boosting exports, with Azeri officials saying total petrochemical exports are projected to reach USD241 million this year, up from USD190 million in 2018.

Its export markets for petrochemicals include Georgia, Turkey, Russia, Ukraine, Europe, China, Egypt and Israel. Other non-oil exports, including the agriculture and mining sectors, are projected to grow to USD2 billion in 2019 from USD1.7 billion last year, Azeri officials said.
MRC

MOSCOW (MRC) -- Royal Dutch Shell is considering to install solar panels to power its Bukom refining site in Singapore, a company spokeswoman told Reuters.

“We are exploring the potential of installing solar panels at our Pulau Bukom Manufacturing Site,” she said, without providing further details. The Bukom manufacturing site includes a 500,000 barrels-per-day refinery, which is Shell’s largest wholly owned refinery.

The oil and gas company has been exploring solar installations for its other sites in Singapore as part of its plans to improve energy efficiency and reduce carbon footprint.

Globally, Shell is installing solar photovoltaic panels on the roofs of seven lubricant plants in China, India, Italy, Singapore and Switzerland.

It has so far identified three manufacturing and logistics sites in Singapore’s western regions of Tuas, Jurong Island and Pandan to install a solar photovoltaic (PV) power generation system, with a combined peak capacity of about three megawatts.

The first and largest of the three Shell solar farms, which will go live next month, will have more than 6,500 panels placed above a lubricant plant in Tuas. The solar farm is expected to produce about 3,300 megawatt hours of renewable energy every year.

The generated solar energy will be used to help power operations at the Tuas lubricants plant, the company said, adding that this can result in the avoidance of a third of the greenhouse gas emissions from the plant’s electricity use which is equivalent to taking about 700 cars off the road for one year.

Installations at Shell’s sites in Pandan and Jurong Island are expected to start in late 2019 and early 2020 respectively, the company said.

Shell said as part of its efforts to try low carbon solutions, the company has signed a Memorandum of Understanding (MoU) with the Energy Market Authority of Singapore to jointly work on energy storage systems.

“This could include piloting commercially viable business models with innovative solutions that integrate storage systems and solar power to Shell’s sites in Singapore,” Shell said, declining to provide more details citing commercial confidentiality reasons.
MRC

MOSCOW (MRC) -- Royal Dutch Shell Plc is returning the crude unit (CDU) at its 225,300 barrel-per-day (bpd) Norco, Louisiana, refinery to normal operations, sources familiar with plant operations said, as per Reuters.

The 225,300-bpd CDU remained in operation while repairs were performed on a portion of the unit this morning, the sources said.

Shell spokesman Ray Fisher said planned work was continuing at the refinery, but declined to offer details.

The CDU developed a problem during operations overnight and the repairs were to correct the malfunction, the sources said.

CDUs do the initial breakdown of crude oil into hydrocarbon feedstocks for all other production units at the refinery.

Shell began a planned overhaul of the coker at the refinery in July, the sources said.
MRC

MOSCOW (MRC) -- Spolana has planned to undertake a planned shutdown at its polyvinyl chloride (PVC) plant, said Apic-online.

A Polymerupdate source in Europe informed that the company is likely to shut for maintenance turnaround at the plant in end-August, 2019. The plant is expected to remain off-line for about one month.

Located in Neratovice, Czech Republic, the plant has a production capacity of 135,000 mt/year.

As MRC informed earlier, in 2017, Spolana from Neratovice has been granted an approval to change the integrated permit and extend the utilization of amalgam electrolysis for the production of chlorine and caustic soda.

Spolana a.s. is one of the largest chemical manufacturing companies in the Czech Republic and the only manufacturer of PVC and caprolactam also producing sodium hydroxide and ammonium sulphate. It currently employs over 700 people.
MRC