JGC Receives Order for Refinery Upgrading Project in Iraq

  JGC Holdings Corporation announced today that JGC Corporation, which operates the overseas engineering, procurement, and construction (EPC) business of the JGC Group, has been received the Letter of Award for the Basrah Refinery Upgrading Project for an Iraqi oil refining company under the Iraqi Ministry of Oil. Details of the project are as follows.

1. Client	South Refineries Company (Oil refining company under the Iraqi Ministry of Oil)
2. Construction location	Basrah, Republic of Iraq (Approx. 550 km SE of the capital of Baghdad)
3. Primary equipment(processing abilities)	Fluid catalytic cracking unit (34,500 barrels/day),  vacuum distillation unit (55,000 barrels/day),  diesel desulfurization unit (40,000 barrels/day), etc.
4. Contract services	Engineering, procurement, construction and commissioning
5. Contract type	Lump sum contract
6. Order amount	Approx. 400 billion JPY
7. Scheduled completion	2025

Iraq is one of the world's leading oil-producing countries, with a confirmed crude oil reserve of 145 billion barrels and a daily crude oil production of 4.41 million barrels. However, the two refineries currently in operation were constructed in the 1970s and their production capacity has decreased due to war damage and deterioration. Unable to meet domestic demand for petroleum products, Iraq has to import petroleum products such as gasoline.

This upgrading of the Basrah refinery will newly install, on land adjacent to the existing Basrah refinery, fluid catalytic cracking unit, vacuum distillation unit, and diesel desulfurization unit, etc., thereby increasing production to 19,000 barrels/day of gasoline and 36,000 barrels/day of diesel fuel, making it possible to reduce the gap in supply and demand for petroleum products. In addition, the petroleum products produced at the modernized refinery will meet international environmental standards and it is expected that they will contribute to reducing the environmental impact. This project is positioned as spearheading the modernization and sophistication of Iraq's oil refining sector.

Funding for the project will be procured through Japanese ODA loans from the Japan International Cooperation Agency (JICA), and is the largest-scale reconstruction assistance from Japan since the 2003 Iraq War.

In carrying out this project, the Group plans to conduct skills training for more than 1,000 Iraqis and to hire approximately 7,000 skilled Iraqi workers. Furthermore, it is expected that more than 2,000 operating personnel jobs will be created after the project's completion, which will contribute to solving the unemployment problem in Iraq.

The Group completed a power station reconstruction project in Iraq in 2013, and this is the Group's second project in Iraq. The Group will contribute to the reconstruction and economic development of Iraq through the successful completion of this project.

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SHELL BOOSTS IMPORT CAPABILITY WITH REFINERY Transformation

Aug 13, 2020

Pilipinas Shell (“the Company”) is transforming its Tabangao Refinery into a world-class full import terminal to optimize its asset portfolio and enhance its cost and supply chain competitiveness. This move will further strengthen the Company’s financial resilience amidst the significant changes and challenges in the global refining industry and the shift to the new normal brought about by the Covid-19 pandemic. 

“We have the technical capability and financial flexibility to manage and adapt to disruptive conditions. The regional refining margins which have been weak for some time due to the oil supply/demand imbalance in the region, have worsened due to demand destruction from the covid crisis. As such, it is no longer economically viable for us to run the refinery. It is with a heavy heart that we announce the cessation of oil refining activities in Tabangao.” says Pilipinas Shell President and CEO Cesar Romero.

“Nonetheless, it is with an equally invigorated spirit that we reveal our plans to transform Tabangao into a world-class import terminal – one that will sustain and grow Pilipinas Shell’s competitive advantages that have continuously evolved to stay relevant with the times ever since we started our business in the Philippines 106 years ago”.

Romero assures that the conclusion of refining operations will not affect Pilipinas Shell’s capability to supply high-quality fuels as the shift in supply chain strategy from manufacturing to full import-based. “Shell remains committed to the Philippines and will pursue opportunities where we can leverage our global expertise in line with our growth strategy,” Romero says.

The Tabangao Refinery has been on shutdown since May 24 to help insulate the Company from further deterioration of refining margins, and aid in its cash preservation efforts. “During this time, Pilipinas Shell has been consistently supplying quality products to its customers and the motoring public”, Romero points out.

According to the Department of Energy, demand for petroleum products declined by 20 to 30 percent in March and by as much as 60 to 70 percent in April during the imposition of the enhanced community quarantine, compared to February levels.

The demand for fuel products is not yet back to its normal levels, with many of the businesses still suspended or operating below capacity, while travel remains limited due to the varying levels of quarantine restrictions nationwide. Decline in demand may be expected once again now that Metro Manila and key cities and provinces revert to MECQ.

In addition, refining margins, which saw a steep decline earlier in the year, have gone down further and may remain depressed in the medium term.

The Tabangao facility will become a world-class import terminal and will continue to cater to the fuel needs of Luzon and Northern Visayas. Meanwhile, the North Mindanao Import Facility (NMIF) in Cagayan de Oro will serve the growing energy needs in the balance of Visayas and Mindanao region.

The transformation of the refinery means that Pilipinas Shell will maintain its presence in Tabangao, likewise preserving the support to its stakeholders, particularly the communities that benefit from its corporate social responsibility programs.

The Company will ensure that employees directly impacted by the transition are well taken care of. “I salute all the men and women whose sacrifices and contributions over the years have made the Tabangao Refinery an icon for Shell in the Philippines, and most especially in Batangas”. Romero says. “We will be guided by our core values of Honesty, Integrity and Respect for People in safeguarding their well-being, addressing their needs sensitively and preparing them for their next journey ahead.”

“As we embark on this new exciting chapter for Pilipinas Shell, we wish to reiterate that we are here to stay, and we remain to be a partner in nation-building. We have been serving Filipinos for 106 years and we intend to continue to do so for the next 100 years or more,” says Romero.

HollyFrontier Announces Expansion of Renewables Business

Jun. 1, 2020

HollyFrontier Corporation (NYSE: HFC) (“HollyFrontier”) today announced that its Board of Directors has approved a plan to convert the Cheyenne Refinery to renewable diesel production and to construct a pre-treatment unit (“PTU”) located at the Artesia Refinery. Including the previously announced renewable diesel unit at the Artesia Refinery, HollyFrontier is expected to have a combined capacity to produce over 200 million gallons per year of renewable diesel and pre-treat over 80% of its feedstock. HollyFrontier expects to invest between $650-$750 million in its renewables business, with an expected aggregate internal rate of return of 20-30%.

Mike Jennings, HollyFrontier’s President and Chief Executive Officer, commented, “Demand for renewable diesel, as well as other lower carbon fuels, is growing and taking market share based on both consumer preferences and support from substantial federal and state government incentive programs. This represents an exciting opportunity to enhance both the profitability and environmental footprint of HollyFrontier through organic investment.

“Today’s announcements lay the groundwork for an integrated renewables business at HollyFrontier, including multiple renewable diesel plants with feedstock flexibility. After 86 years as a petroleum refinery, Cheyenne will take on a new challenge. We realize that this decision affects many employees, their families and the community. We are thankful to all of our colleagues in Cheyenne and will work closely with those impacted by this decision.”

Conversion of the Cheyenne Refinery to Renewable Diesel Production

With expected capital spending of $125-$175 million, HollyFrontier intends to repurpose Cheyenne’s current footprint and a portion of its existing assets to produce approximately 90 million gallons per year of renewable diesel. HollyFrontier expects the project will be completed in the first quarter of 2022 and generate an internal rate of return of 20-30%.

Construction of Pre-Treatment Unit at the Artesia Refinery

HollyFrontier also plans to construct a PTU that will process over 80% of the feedstock for both of HollyFrontier’s renewable diesel plants. The PTU is expected to provide feedstock flexibility, mitigating single feedstock risk and generating value through the use of lower carbon intensity feed.

HollyFrontier estimates the capital cost of the PTU to be $175-$225 million and the in-service date to be in the first half of 2022. The PTU has an expected internal rate of return of 10-15% but is intended to protect the returns of HollyFrontier’s renewables business against potential volatility in the feedstock markets.

Petroleum Refining in Cheyenne

The conversion to renewable diesel production will result in HollyFrontier ceasing petroleum refining and reducing the workforce at the Cheyenne Refinery. This decision was primarily based on the expectation that future free cash flow generation in Cheyenne would be challenged due to lower gross margins resulting from the economic impact of the COVID-19 pandemic and compressed crude differentials resulting from dislocations in the crude oil market, coupled with forecasted uncompetitive operating and maintenance costs and the anticipated loss of the Environmental Protection

Agency’s small refinery exemption.

Based on the initial review of its long-lived assets, over the second and third quarters of 2020, HollyFrontier expects to record non-cash charges of $225-$275 million for impairment and depreciation charges and $3-$12 million for asset retirement obligations. Additionally, over the next twelve months, HollyFrontier anticipates pre-tax costs of $25-$45 million for decommissioning assets and $5-$7 million for severance obligations and proceeds of $50-$70 million from the liquidation of working capital.

Phillips 66 Plans to Transform San Francisco Refinery into World’s Largest Renewable Fuels Plant

 Phillips 66 (NYSE: PSX), a diversified energy manufacturing and logistics company, announced today that it plans to reconfigure its San Francisco Refinery in Rodeo, California, to produce renewable fuels. The plant would no longer produce fuels from crude oil, but instead would make fuels from used cooking oil, fats, greases and soybean oils.

The Phillips 66 Rodeo Renewed project would produce 680 million gallons annually of renewable diesel, renewable gasoline, and sustainable jet fuel. Combined with the production of renewable fuels from an existing project in development, the plant would produce greater than 800 million gallons a year of renewable fuels, making it the world’s largest facility of its kind.

The project scope includes the construction of pre-treatment units and the repurposing of existing hydrocracking units to enable production of renewable fuels. The plant will utilize its flexible logistics infrastructure to bring in cooking oil, fats, greases and soybean oils from global sources and supply renewable fuels to the California market. This capital efficient investment is expected to deliver strong returns through the sale of high value products while lowering the plant’s operating costs.

“Phillips 66 is taking a significant step with RodeoRenewed to support demand for renewable fuels and help California meet its low carbon objectives,” said Greg Garland, chairman and CEO of Phillips 66. “We believe the world will require a mix of fuels to meet the growing need for affordable energy, and the renewable fuels from RodeoRenewed will be an important part of that mix. This project is a great example of how Phillips 66 is making investments in the energy transition that will create long term value for our shareholders.”

If approved by Contra Costa County officials and the Bay Area Air Quality Management District, renewable fuels production is expected to begin in early 2024. Once reconfigured, the plant will no longer transport or process crude oil.

The plant is expected to employ more than 400 jobs and up to 500 construction jobs, using local union labor, including the Contra Costa County Building & Construction Trades.

Phillips 66 also announced plans to shut down the Rodeo Carbon Plant and Santa Maria refining facility in Arroyo Grande, California, in 2023. Associated crude oil pipelines will be taken out of service in phases starting in 2023.

To learn more about the project, visit www.RodeoRenewed.com.