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BP to Spice up refinery
R. SURYAMURTHY
New Delhi, March 24, 2008: BP will enter into a strategic agreement to supply crude oil to Spice Energy for the 5-million-tonne refinery at Haldia being set up by CALS Refineries. Spice Energy is the holding company of CALS. Sources said officials of the two companies had finalised the memorandum of understanding and would strike the deal soon. BP, formerly British Petroleum, will supply 2.5 million tonnes of heavy crude and a similar quantity of light crude to the Haldia refinery.
CALS Refineries will produce aviation turbine fuel, LPG and petroleum coke for the domestic market. It also plans to produce petrol and diesel for export, which BP is interested in buying out.
CALS Refineries raised $200 million through a global depository receipt on the Luxembourg Stock Exchange in November, attracting investments from the Dubai Investment Group, part of Dubai Holding, and London’s RP Capital. It now hopes to raise another $100-200 million from a strategic investor.
Spice Energy had bought the 90,000-barrel-per-day (bpd) refinery from Germany’s Lohrmann International. It will dismantle the refinery, pack it in containers and ship it to Haldia. Located at Ingolstadt on the river Danube, the refinery is one of the three plants that make up Bayernoil, a joint venture among BP, Austria’s OMV, Italy’s Eni and PDVSA of Venezuela.
The 32,000-tonne consignment will be shipped to Antwerp, and then through the Suez Canal to Haldia. The reconstruction work will be carried out in 24 months at a cost of around $1 billion.
According to Spice Energy estimates, it will cost more than $1.5 billion and take 60 months to build a refinery from scratch.
BP usually supplies to refineries in which it has an equity stake. Crude supply to the Bayernoil refinery has been stopped after its sale. However, the Haldia refinery will operate on the basis of a supply and offtake trading agreement, officials said.
BP was earlier in talks with Hindustan Petroleum Corporation to build the Bhatinda refinery at an investment of $3 billion. But negotiations failed to make any headway and the Mittals got the stake in the refinery.
The proposal in this year’s budget to withdraw a seven-year tax holiday for refineries that start operation after April 2009 has not discouraged CALS Refinery or BP from going ahead with the Haldia project as they expect some clarification before the Finance Bill is passed by Parliament.
According to Manish Kumar of KPMG, “New refineries that intend to serve the domestic market may be hit. Tax sops help manage fluctuations. We are in an era of high margins but once they are lower, the incentives or lack of them may impact their profitability.”
India plans to add 2.14 million bpd to its existing 2.98 million bpd capacity by 2012 to become a global refining hub. -
Another surprise but a Germany-India version of the US Sinclair Rawlings Refinery which relocated Powerine Coking Refinery from California.
Here is the Update on BP’s MOU for a JV with Spice Energy to relocate the German JV (BP-OMV-ENI-PDVSA) Bayernoil Ingostadt (90 MBD) Refinery as CAL’s Haldia Refinery. BP will also be supplying crude & finally make its way into India’s refining market – a target since 2003.
The article indicates Petcoke will be one of the products from the reconstructed CAL Haldia Refinery but Ingostadt had shutdown/idled the one-off hybrid Lurgi Fluid Coker that Exxon never actively participated in. Ingostadt had plans to build new fluid coker using XOM technology or perhaps a delayed coker but it is unclear if a new coker is in the plans for the reconstructed refinery – although KBC has been hired to upgrade the plant and their will be new units added to allow reconstructed refinery use heavier crudes. (My bet is that they will add a delayed coker that India is familiar with.)
The relocation is expected to cost $1 Billion and start up in 24 months – Jan 2010. The comparison cost for building from scratch by Spice was $1.5 Billion and 60 months for an equivalent refinery. <My personal opinon on relocated equipment/units is that when you move the outhouse alongside house – doesn’t make it an indoor bathroom; it just becomes an indoor outhouse = worst combination at 80% of cost.>
The plans are for Lohrmann to shutdown the refinery in June, take it apart and ship the 32,000 tonnes refinery in +3000 crates from its location on the Danube to Antwerp and then ship it on thru the Suez Canal to India’s Halida Port near Calcutta for reconstruction.
Regards -
Clarification news comments CER:
The German Ingolstadt Refinery being relocated to India Halida Refinery is Spice Energy/Lohrmann refinery JV (also BP/Bayernoil Ingolstadt Refinery) that will be shutdown in June 2008. There are indications that Halida will also have a coking unit.
The Petroplus purchased the Esso/Exxon German Ingolstadt Refinery in 2006 and has recently formed a Growth Vehicle which includes the Ingolstadt Refinery. The hybrid Lurgi Fluid coker at Esso Ingolstadt was shutdown in Dec 2004 and there were plans to replace it with new delayed coker or Exxon Fluid Flexicoker.
The 2 coking projects are separate and were 2 different German Refineries in Ingolstadt.
Sorry for confusion. Regards -
<Looks like CAL jumped gun on deal with PetroCan on Edmonton’s used coker & crude units sale – but are in talks & will also be for Haldi “Frankenstien” Refinery that it is building. Charlie Randall>
Petro-Can says has no deal to sell refinery parts
Reuters CALGARY, Alberta, May 14, 2008 – Petro-Canada hopes to sell parts of its Edmonton, Alberta, refinery that will not be used when it completes a C$2.2 billion ($2.2 billion) – CALGARY, Alberta, May 14 – Petro-Canada hopes to sell parts of its Edmonton, Alberta, refinery that will not be used when it completes a C$2.2 billion ($2.2 billion) retooling project, but has yet to sign a deal, a spokeswoman said on Wednesday.
“There have been some discussions with potential buyers through a third party that we’ve hired to assist us, but beyond that there’s nothing signed,” Kelli Stevens said.
A report in the online edition of India’s Business Standard said CALS Refineries bought two distillation units and a delayed coker from Petro-Canada for $110 million to use at a refinery it is moving to Haldia from Germany.
The report quoted Arun Ramachandra, president , CALS Refineries. Stevens described the report as “premature.”
Petro-Canada is converting the 125,000 barrel a day Edmonton plant to run crude solely derived from Alberta’s oil sands.
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