Nigerias huge oil refinery delayed until end of 2020

MOSCOW (MRC) -- Africa’s largest oil refinery will not be finished until the end of 2020 due to problems importing steel and other equipment, executives at Dangote, which is building the facility in the Nigerian commercial hub of Lagos, told Reuters.

Nigeria, Africa’s most populous nation, imports virtually all its fuel due to sclerotic and underutilised refineries, and even the state oil company is looking to the 650,000 barrel per day (bpd) Dangote refinery to help address this. Price caps force NNPC to import nearly all its gasoline at a significant cost and periodic fuel shortages are common.

Despite the delays at the congested Apapa and Tin Can Island ports in Lagos, a Dangote executive said the company could start using the refinery’s tank farms as a depot to warm up operations. “We will be able to complete the (refinery) project by the end of next year - mechanical completion,” said Dangote Group Executive Director Devakumar Edwin, who oversees the project.

The company expects fuel production within two months of completion of the refinery, which could transform Africa’s biggest crude producer from a fuel importer into a net exporter, upending global trade patterns.

Billionaire Aliko Dangote, who built his fortune on cement, first announced a smaller refinery in 2013, to be finished in 2016. Dangote then moved the site to Lekki, in Lagos, upgraded the size and said production would start in early 2020. Industry sources told Reuters last year that fuel output was unlikely before 2022.

Edwin also said during an interview at his office in Lagos that Dangote is setting up its own trading desk, with a senior team of three people and a staff of roughly 30 who will monitor international commodity prices. “We are setting up a complete trading desk here with us. In the next three months the full desk will be set up,” he said.

Giuseppe Surace, the refinery’s chief operations officer, said the refinery’s tank farms will be finished this year and could be used as a warm-up for operations. The tanks will be connected to five “single point mooring buoys” (SPMs), which will allow the refinery complex to pump crude straight into tanks from large ships at sea and pump products back out onto boats of any size.

The SPMs will be the primary method of supplying oil products from the refinery, Surace said, adding that the team were considering using the tanks as training or as a depot before the refinery’s production starts.

“We might do that. We will be ready to do that,” he said, though he added that no decision had been taken yet. The team is in talks with NNPC, two other international oil companies and two large oil traders, all of whom are interested in supplying crude and buying products, Edwin said.

Edwin said the crude unit for the refinery, which set sail from China last month, would arrive by the end of October.
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MOSCOW (MRC) -- McDermott International, Inc. announced it has been awarded a sizeable* contract by PetroLogistics ll LLC to perform the front-end engineering design (FEED) services for a propane dehydrogenation (PDH) facility planned for the U.S. Gulf Coast, said the company.

Under the scope of the contract, McDermott will assist in the development of a PDH plant to be constructed on the U.S. Gulf Coast. The plant has a design basis of 500 KTA.

"McDermott is pleased to be working with PetroLogistics II in the development of a facility that will support the growth of propylene in the U.S.," said Mark Coscio, McDermott's Senior Vice President for North, Central and South America. "We will pull from our vast expertise in engineering to complete the FEED."

"The shale revolution has resulted in a significant decline in co-product propylene production from the sources that historically supplied the majority of US propylene: petroleum refineries and heavy feed ethylene crackers," said Nathan Ticatch, PetroLogistics II President. "As a result, future growth in propylene demand will need to be supplied largely via on-purpose propane dehydrogenation. We are excited to work with McDermott to develop a facility that can supply a solution to this need."

McDermott was selected due to its strength in engineering and extensive knowledge in executing fluid catalytic cracking (FCC) projects. "We have had excellent experience working with McDermott in the past and we are pleased to be collaborating with them again on this very important project," said David Lumpkins, PetroLogistics Chairman.

This award was reflected in McDermott's second quarter 2019 backlog.

PetroLogistics II is a Houston based company focused on acquiring, developing and operating petrochemical manufacturing, processing and logistics assets in North America. PetroLogistics II is owned by affiliates of Quantum Energy Partners and certain members of the Company's management.


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MOSCOW (MRC) -- Saudi Aramco plans to buy a stake in the refining and chemicals business of India’s Reliance Industries Ltd., moving to diversify from Saudi Arabia as its first half-year earnings report showed a drop in net income, said Bloomberg.

The purchase by Aramco, the largest oil exporter and the most profitable company in the world, precedes a planned public offering that could be held as early as next year. Profit slid 12% to USD46.9 billion in the first six months as crude prices fell and costs rose, the state-owned company said Monday.

"In downstream we will further profitably diversify our operations and increase petrochemicals production,” Khalid Al-Dabbagh, senior vice president for finance, strategy and development, said in an interview. The details of the agreement with Reliance remain in the “early stages," he said.

The deal will allow Aramco, officially known as Saudi Arabian Oil Co., to expand its chemicals business as it seeks to reduce reliance on sales of crude. Saudi Crown Prince Mohammed bin Salman, who runs the country day to day, is pursuing a radical program to diversify the economy and can tap the company’s strong balance sheet to finance his plans.

For Reliance, the cash from Aramco will help reduce debt that’s been pushed up by a headlong expansion into new sectors such as telecommunications.

Aramco will buy a 20% stake in the company’s oil-to-chemicals business, including the 1.24 million-barrel-a-day Jamnagar refining complex on India’s west coast, Reliance Chairman Mukesh Ambani said in Mumbai. Reliance values its oil-to-chemicals division at USD75 billion including debt, implying a USD15 billion valuation for the stake.

Despite the decline in profit at Aramco, the state oil giant increased cash flow and raised its dividend to almost match net income, giving a special payout to the government. Those are key concerns for potential investors ahead of an initial public offering planned for 2020 or 2021.

Aramco will hold its first-ever earnings call with investors later Monday as it tiptoes toward the greater disclosure required of public companies. It published annual financial statements for the first time in April, ahead of a USD12 billion bond sale. An IPO would put the Saudi giant under even greater scrutiny from investors and invite comparisons with other oil majors.
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MOSCOW (MRC) -- The European Union's proposal to impose anti-subsidy duties on Indonesian biodiesel is part of a "grand design" to block palm oil, a senior official at Indonesia's Trade Ministry said Reuters.

Earlier this week the European Commission proposed duties ranging from 8% to 18% on imports of biodiesel from Indonesia to counter what it says are unfair subsidies.

Biodiesel from Indonesia is mostly made from palm oil, which the EU said in March it will no longer consider as an environmentally sustainable source of fuel and it should be phased out of renewable transportation fuels.

"This is a structured, systematic and massive grand design," said Pradnyawati, the director of trade security at Indonesia's Trade Ministry. "The point is they don't want vegetable oils produced from European soil rivalled by vegetable oil produced by tropical countries."

The EU has said there is evidence that Indonesian producers benefited from subsidies in the form of export financing, tax breaks and provision of palm oil, the key raw material, at artificially low prices.

The EU began looking into biodiesel from Argentina and Indonesia in 2012 and imposed anti-dumping duties on companies from both major producers in 2013.

However, the exporters won challenges at the World Trade Organization and the European Court of Justice. This prompted the EU to remove duties on most biodiesel imports from the two countries, resulting in a surge in imports.

In 2018, Indonesia shipped 807,439 tonnes of unblended biodiesel to EU countries, such as Spain, the Netherlands and Italy, according to data from the Indonesian statistic agency.

Following the anti-dumping duties removal, the European Commission started an investigation into possible unfair subsidies.

Indonesian biodiesel exporters filed their rebuttal to the allegation on Friday, Pradnyawati said. While the Indonesian government is waiting for official document on the EU's preliminary determination before it sends a response.

Indonesia's biofuel producers association has said the allegations were "totally untrue".

The EU measures are provisional pending the conclusion of the EU investigation and will apply from Sept. 6. Definitive duties, typically applied for five years at the end of an investigation, would need to be set by Jan. 4, 2020. The measures can be blocked by EU member countries.

Indonesia has accused the EU of being "discriminatory" against palm oil. Pradnyawati said it hampers closer relations between the country and the group. "How can we improve our relationship to closer ties if they keep bothering our exports," she said.
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MOSCOW (MRC) -- Oil jumped more than 2% on Thursday on expectations that falling prices could lead to production cuts, coupled with a steadying of the yuan currency after a week of turmoil spurred by an escalation in U.S.-China trade tensions, said Hydrocarbonprocessing.

Brent crude ended the session up USD1.15, or 2.1%, at USD57.38 a barrel, after hitting a session high of USD58.01. U.S. West Texas Intermediate (WTI) crude futures rose USD1.45, or 2.8%, to settle at USD52.54 a barrel after hitting a peak of USD52.98.

Prices rebounded after tumbling nearly 5% to their lowest since January on Wednesday after data showed an unexpected build in U.S. crude stockpiles after nearly two months of decline. Lending some support to prices on Thursday, inventories at Cushing, Oklahoma, the delivery point for WTI, fell about 2.9 million barrels in the week to Aug. 6, said traders, citing data from market intelligence firm Genscape.

China’s yuan strengthened against the dollar and its exports unexpectedly returned to growth in July on improved global demand despite U.S. trade pressure. The dollar fell 0.2% against the offshore yuan. “Today’s price rebound across the energy spectrum looks like a normal correction from a short-term oversold technical condition,” Jim Ritterbusch of Ritterbusch and Associates said in a note.

“While some Saudi overtures of additional output restraint, a softening U.S. dollar and lift in global risk appetite are facilitating today’s rally, we are not viewing this as the beginning of a sustainable advance by any measure." Reports that Saudi Arabia, the world’s biggest oil exporter, had called other producers to discuss the slide in crude prices have helped supported the market, traders and analysts said.

“Saudis are scrambling to send a signal that will stabilize oil markets ... With energy prices heading for the worst weekly close since December, we should not be surprised to hear more rumors that OPEC may be considering increased production cut efforts ahead of a key summit that is tentatively planned for the second week in Abu Dhabi,” said Edward Moya, senior market analyst at OANDA in New York.

Persistent worries about demand growth have weighed on global oil markets, particularly as the world’s two biggest economies are locked in a trade row. Crude oil shipments into China, the world’s largest importer, in July rose 14% from a year earlier as new refineries ramped up purchases. Fuel exports continued to climb as supply outstripped demand in the world’s second-largest oil consumer.

Saudi Arabia plans to keep its crude oil exports below 7 million barrels per day in August and September despite strong demand from customers, to help drain global oil inventories and bring the market back to balance, a Saudi oil official said.

Geopolitical tensions over the safety of oil tankers passing through the Persian Gulf remained unresolved as Iran refused to release a British-flagged tanker it seized last month.

The U.S. Maritime Administration said U.S.-flagged commercial vessels should send their transit plans for the Strait of Hormuz and Gulf waters to U.S. and British naval authorities, and that crews should not forcibly resist any Iranian boarding party.
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