Kenya says crude oil capacity insufficient for refinery

MOSCOW (MRC) - Crude oil deposits discovered in Kenya are insufficient to justify construction of a refinery, a senior petroleum ministry official said. Kenya discovered commercial oil in 2012 in its Lokichar basin, which Tullow Oil estimates contains an estimated 560 million barrels in proven and probable reserves, as per Reuters.

Tullow has said this would translate to 60,000 to 100,000 barrels per day of gross production. It is proven the world over that a refinery would make money only when it has a refining capacity of at least 400,000 barrels a day, Andrew Kamau, principal secretary at the petroleum and mining ministry, told reporters.

"And we have 80,000 barrels a day, so where are we going to make money on that? We can import cheaper from India," he added. Kenya, which does not export any oil, previously had a crude oil refinery at its port city of Mombasa but halted operations in 2013 after plans for a USD1.2 billion upgrade were abandoned on the advice of consultants who said it was not economically viable.

The government took it over in 2016 and converted it into a storage facility. Other partners in the blocks with crude oil discoveries are Africa Oil Corp and Total.

Last week Tullow said it expected commercial framework agreements from the government and deals over land acquisition for an 800 km pipeline and oilfield infrastructure in the first quarter.

The government announced its intention to list state-run National Oil Corporation of Kenya in November 2017 to raise USD1 billion in a dual listing on the Nairobi bourse and London Stock Exchange (LSE) by early 2019. The Nairobi Securities Exchange has said the local listing will be by the end of 2019.

Kamau said the listing will only take place after a final investment decision (FID) is agreed. Tullow says it expects that decision to happen by the end of this year.

"The listing will only be done after FID. Because that’s when you book the reserves; before that you really can’t do anything," he said.
MRC

Top Citgo executives removed amid battle to control firm

MOSCOW (MRC) - Citgo Petroleum Corp has removed at least three top executives close to Venezuelan President Nicolas Maduro, people familiar with the matter said, in a move to cement management control under a new board of directors, said Reuters.

The U.S. refining arm of Venezuelan state-run oil company PDVSA has been thrust in recent weeks into the center of a political battle between an opposition leader and self-declared president backed by many Western nations, including the United States, and Maduro, a socialist whose re-election last year they consider illegitimate.

Monday’s departures appeared to shift control of Citgo’s day-to-day operations to officials expected to recognize a new board of directors appointed last week by the opposition-controlled congress, led by self-proclaimed president Juan Guaido.

Citgo Vice Presidents Frank Gygax, Nepmar Escalona and Simon Suarez, all of them Venezuelans promoted by Citgo Chief Executive Asdrubal Chavez from 2017 to 2018, were escorted out of Citgo’s Houston headquarters on Monday by human resources staff, the people said.

It was not immediately clear if the executives were fired, forced to resign or if they retired. Chavez, a cousin of late Venezuelan leader Hugo Chavez, has been running Citgo from the Bahamas since last year as the U.S. government denied his visa petition to work from Houston. Other Venezuelan members of the oil refiner’s board are also working with him from the Caribbean office.

Citgo is the eighth-largest U.S. refiner and runs plants in Illinois, Texas and Louisiana that provide about 4 percent of U.S. refining capacity. It also operates fuel pipelines and terminals and supplies fuel to a retail network of 5,500 gas station across 29 U.S. states.

The company has been hurt by U.S. sanctions imposed on Jan. 28 to curtail Maduro’s access to oil revenue. Citgo, the largest U.S. buyer of Venezuelan crude, can continue importing PDVSA’s oil only if the sale proceeds go to banks accounts controlled by Guaido.

Citgo’s new board of directors is led by Venezuelan Luisa Palacios, four veteran oil executives and current Vice President of Strategy and Compliance Rick Esser. The new members have yet to take office in Houston. A fourth top Citgo official, General Auditor Eladio Perez, also was removed from his office on Monday, according to one of the people.

Citgo’s manager for corporate social responsibility and legislative affairs, Larry Elizondo, declined to comment on Monday, saying he was not authorized to speak publicly on the matter. A Citgo spokeswoman did not respond to requests for comment.

Escalona, Suarez and Perez could not be immediately reached for comment. An assistant for Gygax said she was unaware of the decision.

A Citgo unit on the Caribbean island of Aruba, said a project to refurbish and reopen a 209,000-barrel-per-day idled refinery rented by the company since 2016 was put on hold and remaining employees would be laid off by Feb. 27 because of sanctions.
MRC

Halliburton breaks ground on first oilfield specialty chemical manufacturing reaction facility in Saudi Arabia

MOSCOW (MRC) -- Halliburton Company has announced it will build the first oilfield chemical manufacturing reaction plant in Saudi Arabia, as per Hydrocarbonprocessing.

The Company held a ground-breaking ceremony on Monday, at the plant’s PlasChem Park location in Jubail. Upon the plant’s completion in 2020, Halliburton will begin local manufacturing of specialty chemicals to help customers achieve production and reliability goals in applications from the reservoir to the refinery.

"This is a strategic, targeted expansion to accelerate our fast-growing specialty chemicals business. We are excited to house this premiere facility in Saudi Arabia while continuing to strengthen our commitment to the In Kingdom Total Value Add program," said Jeff Miller, Halliburton chairman, president, and CEO. "We chose Saudi Arabia for this plant because it provides an advantaged location for us to deliver our value proposition of superior service and chemical applications expertise to Eastern Hemisphere customers, and because of our strong 80-year history of success in the Kingdom of Saudi Arabia."

The plant will have capabilities to manufacture a broad slate of chemicals for stimulation, production, midstream, and downstream engineered treatment programs. Halliburton’s global laboratory and team in Dhahran Techno Valley and local manufacturing uniquely position the Company to accelerate the production of next generation specialty chemical solutions while developing local employees and capabilities.
MRC

Citgo Petroleum to dismiss workers in Aruba over US sanctions

MOSCOW (MRC) -- A Citgo Petroleum Corp refining unit in Aruba plans to dismiss workers following sanctions imposed by the United States on Venezuela's state-run PDVSA, the parent company of the US refining firm, as per Hydrocarbonprocessing with reference to the island's prime minister.

President Donald Trump's administration last month disclosed tough sanctions on Petroleos de Venezuela (PDVSA), barring U.S. customers from paying the company for exports until a team led by Venezuelan congress head, Juan Guaido, arranges its own bank accounts to support his interim government.

Citgo in 2016 signed a 15-year lease with the government of Aruba, agreeing to refurbish and reopen an idled 209,000-barrel-per-day refinery previously run by US refiner Valero Energy.

Citgo had hired about 300 workers and four contracting firms for the project, which has faced delays due to lack of financing and sanctions imposed since 2017 on PDVSA.

It was unclear on Friday how many employees could be laid off. Citgo did not immediately reply to a request for comment.

"Our government contacted refinery executives to avoid it (the layoff plan). Unfortunately, it is not entirely in our hands due to the tense and confusing situation in Venezuela," Prime Minister Evelyn Wever-Croes said in a statement.

The layoff notice was passed by Citgo to the government in a meeting last Thursday, she said.

Wever-Croes also said that the Caribbean nation is not involved in military action related to Venezuela amid US efforts to move humanitarian aid from the nation's borders.

As MRC wrote before, in late January, 2019, Citgo Petroleum Corp idled the small gasoline-producing unit at its 157,500-barrel-per-day (bpd) Corpus Christi, Texas, refinery for economic reasons.
MRC

Aruba refinery puts refurbishment on hold due to Venezuela sanctions

MOSCOW (MRC) -- The 209,000-barrel-per-day Aruba refinery, operated by a unit of US Citgo Petroleum, is putting a USD685 million refurbishing project on hold due to sanctions imposed by the United States on Venezuela, reported Reuters with reference to the company's statement.

Citgo is owned by Venezuelan state oil company PDVSA.

Works for modernizing and converting the refinery into an oil upgrader, approved in 2016, will likely be halted by Feb. 27 and workers directly involved laid off, Citgo Aruba said in a statement.

The facility’s management and the island’s government plan to continue seeking solutions to avoid having to completely halt the project, it said.

As MRC informed previously, in September 2018, a unit of Citgo Petroleum resumed long-delayed work to refurbish an idled, 235,000-barrel-per-day (bpd) oil refinery on Aruba. Due to a lack of credit, Citgo Aruba Refining in February had slowed efforts at the plant amid US financial sanctions imposed since 2017 on its parent company, Petroleos de Venezuela (PDVSA). Under a USD685-million project that was approved in 2016 by Aruba’s government in a 25-year lease contract, Citgo aims to revamp and restart a facility that has been idled since 2012 when the previous operator, US-based Valero Energy, halted crude processing due to low profits.
MRC