FINAL INVESTMENT DECISION TAKEN FOR CONSTRUCTION OF THE CABINDA REFINERY

 Sonangol makes public that on Thursday, October 29, 2020, Gemcorp, a trade and investment group in emerging markets, in alignment with the national oil company, took the final investment decision for the construction of the Cabinda Refinery .

 The refinery, which will be built on the Malembo plain, 30 kilometers north of the capital of Cabinda, will be the first private investment of this nature in Angola and will use the latest North American technology for its design, operation and development in 3 phases, with adherence to the Equator Principles.

 The 1st phase of the Project is expected to include 30,000 barrels per day of the Crude Distillation Unit, with a desalinator, kerosene treatment and auxiliary infrastructure, including a conventional float anchoring system, pipelines and storage facility for more than 1.2 million barrels. First phase expenses are approximately US $ 220 million (two hundred and twenty million US dollars). The 2nd and 3rd phases will turn the Cabinda Refinery into a total conversion refinery, with an additional refining capacity of 30,000 barrels per day and the installation of a new catalytic reformer, hydrotreater and catalytic cracking unit, which should total USD 700,000. 000 (seven hundred million US dollars).

 The formal construction of the site started in March 2020, with the complete cleaning and preparation of the land, completed in August 2020. The fence of the site started in September 2020 for 313 hectares of land. The main long-term items were ordered in early November 2020 and the Refinery is expected to start operating in the first quarter of 2022.

The project will create approximately 2,000 direct and indirect jobs for the community, sustaining and supporting local and national economies. These opportunities cover the areas of construction, engineering, logistics, security and administration. Once operational, the Refinery will also contribute to the sovereign energy security of Angola, reducing its dependence on the import of refined products, as well as increasing their exports with higher margins.

“This final investment decision represents one of the main strategic objectives of the Angolan Government. The construction of this Refinery will provide an increase in the capacity for processing crude oil at the national level and a considerable reduction in the country's dependence on imports of refined products, as provided for in the National Development Plan. Sonangol is pleased to support this private initiative which not only makes a major contribution to the socio-economic development of Angola, but also encourages increased foreign direct investment in the country, ”said Sebastião Gaspar Martins, Chairman of the Board of Directors of Sonangol EP.

 “The private investment of the Cabinda Refinery demonstrates Gemcorp's commitment to the development of Angolan strategic assets and our ability to deliver in the most challenging moments. Gemcorp is excited to deliver this project and support the Angolan government's long-term strategic goals of energy independence and job creation in Angola. Through the Cabinda Refinery, Gemcorp will accelerate community outreach, training and social impact. The long-term plan is for the Cabinda Refinery to maximize local employment and transition to operation by a fully Angolan workforce, ”said Atana Bostandjiev, President of Gemcorp.

 “The final investment decision is an important milestone in Gemcorp's efforts to continue formal construction on the ground. This private investment will support Angola's goal of achieving energy independence and reducing imports of refined products. Using the plan agreed with Sonangol and the Government of Angola, the refinery will replace the need for expensive imports and create thousands of job opportunities, providing significant long-term benefits for the Angolan economy, especially in the Cabinda region. With the support of Sonangol and the Government of Angola, the Gemcorp group was able to overcome the challenges presented by COVID-19 and committed to delivering the Cabinda Refinery on time and maximizing the delivery of refined products dedicated to local consumption, ”he said. Reginald Crawford,

bp to cease production at Kwinana refinery and convert to fuel import terminal

 bp Australia today announced that it will cease fuel production at its Kwinana Refinery and convert it to an import terminal, helping to ensure ongoing security of fuel supply for Western Australia

The refinery, near Fremantle, has provided fuels for Western Australia for 65 years. However, the continued growth of large-scale, export-oriented refineries throughout Asia and the Middle East has structurally changed the Australian market.

Regional oversupply and sustained low refining margins mean the Kwinana Refinery is no longer economically viable. Having explored multiple possibilities for the refinery’s future, bp has concluded that conversion to an import terminal is the best option.

bp Australia Head of Country Frédéric Baudry said: “bp’s Kwinana Refinery has played an important role in the development of Western Australia. It helped underpin the early development of the surrounding community and key industries. Generations of Western Australians have worked at the facility, building a fantastic legacy of safe and reliable operations that we will always be proud of.

“Today’s decision to cease refining is a difficult one and not in any way a result of local policy settings. It comes in response to the long-term structural changes to the regional fuels market. Converting to an import terminal will not impact the safe and reliable supply of quality fuel products to Western Australia; however, it will require fewer people to run. We deeply regret the job losses that will result and will do everything we can to support our people through the transition.”

The refinery currently employs around 650 people – 400 permanent staff and 250 contractors. Refining activities will wind down over the next six months, with a conversion workforce supporting site works. The new terminal will support construction work out to 2022. Once complete, the import terminal is expected to support around 60 jobs.

“bp is committed to playing a leading role in growing Australia’s future prosperity, making significant investments in natural gas production, as well as in convenience and mobility businesses,” Frédéric Baudry said.

This includes building on its position in the North West Shelf joint venture through gas exploration at Ironbark and investing in retail growth, as well as progressing low carbon projects with Lightsource bp. It is also assessing the feasibility of a large-scale hydrogen export plant in Geraldton (WA) in partnership with the Federal Government.

“We are particularly excited by the shared ambitions with Western Australia to be net zero by 2050 and the opportunities this can offer,” Frédéric Baudry added.

In addition to investing in an import terminal at Kwinana, bp is also exploring future options for the site including a potential clean energy hub to harness the existing and emerging technologies required for the decarbonisation of the Western Australian economy. A multiuse clean energy hub could produce and store lower carbon fuels, including sustainable aviation and marine fuels and waste-to-energy solutions such as renewable diesel.

Refining NZ finalises plans for simplified refinery operations in 2021

On 25 June 2020, Refining NZ announced completion of the first phase of its Strategic Review, taking forward a near-term proposal to simply refinery operations and in parallel explore with customers a possible future staged transition to an import terminal.

The Company has now finalised its proposal to operate the refinery in 2021 under the current Processing Agreement, which will enable it to extend cash neutral operations in a low-margin environment at the Fee Floor.

This proposal includes:

·       Reducing refinery throughput to 90,000 bbls/day (equivalent to levels at the time of commencement of the Processing Agreement in 1995) and the cessation of bitumen production;

·       c$20M reduction in opex compared with 2020 primarily through lower labour and other costs;

·       Undertaking the deferred 2020 turnaround of Crude Distillation Unit 1 and the CCR Platformer. Total capex for 2021 is forecast at $50M; and

·       Estimated restructuring costs in 2020 of c$5M, which will be funded using proceeds from asset sales.

The simplification proposal for 2021 follows the action already taken in 2020 to reset the cost base to Fee Floor levels through $70M in opex and capex cost reductions.

During the last quarter, the Company has also progressed import terminal discussions with customers. These discussions are ongoing and any decision to proceed with a conversion to an import terminal will ultimately be a decision voted on by non-customer shareholders.

Refining NZ chairman Simon Allen said: “We are pleased we have been able to find a way to continue operating the Marsden Point refinery in the most challenging environment Refining NZ has faced since deregulation of the oil industry in 1988. Our focus at this time is on operating the refinery safely and on our people who are impacted by the changes we need to make. We are working closely with local, regional and national authorities and agencies to ensure that the proposed transition is smooth and the impact on our people and the region is minimised.

Neste sells its shares in Nynas to Bitumina Industries

 Neste AB has sold its 49.99% shares in Nynas AB to Bitumina Industries Ltd on Tuesday 15 September 2020. 

“We have been an owner in Nynas since the 1990’s and have seen the company develop into a global leader in naphthenic specialty oils and a premier bitumen partner in Europe. We believe that the sale of Neste’s shares in Nynas to an industrial player with a strong focus in the same sector is the right solution for Nynas, recognizing also the ongoing reorganization process,” says Neste’s Chief Financial Officer Jyrki Mäki-Kala.

Nynas is a Swedish manufacturer and marketer of naphthenic specialty oils and bitumen products. Nynas has four refineries: Harburg in Germany, Nynäshamn and Gothenburg in Sweden and Eastham in the UK. Eastham is a joint venture with Shell.

The Bitumina Group is a vertically integrated specialty Bitumen company which has expanded its business on a global scale.

“We take great pride in having been able to acquire the shares of Neste in Nynas which is a natural expansion in our global industrial bitumen portfolio. We are certain that we can contribute to the successful future of Nynas”, says Bernd Schmidt, Executive Chairman of Bitumina Industries Ltd. 

 

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14 September 2020

Neste plans to restructure its refinery operations in Finland and starts co-operation negotiations

Published in Releases and news under Oil products

Neste Corporation, Press Release, 14 September 2020 at 10.00 a.m. (EET)

In order to ensure the competitiveness of the Oil Products business, Neste is planning to restructure its refinery operations in Porvoo and Naantali, Finland. The company is exploring the shutdown of its refinery operations in Naantali and focusing the Naantali site on the terminal and harbor operations, as well as transforming the Porvoo refinery operations to co-processing renewable and circular raw materials.

The demand for fossil oil products will continue to decline, and the share of renewable energy solutions will continue to grow in the coming years. The COVID-19 pandemic has substantially accelerated the decline in demand for oil products, which is not expected to recover to previous levels. Fundamental changes are therefore needed to secure the competitiveness of Neste’s Oil Products business. With the planned measures, Neste aims to improve its productivity, resource efficiency and adaptiveness to market changes. The planned measures will not affect the security of fuel distribution supply in Finland. 

“The energy transition is proceeding faster than expected. The forthcoming operating and maintenance investments in the Naantali refinery are not viable nor sustainable in a situation where there is large over-capacity for oil refining globally. Although the time is not optimal, and this news is unfortunate for many of us, the planned actions to develop our refinery operations are urgently needed to maintain operations and strategic capabilities in refining in Finland and to secure Oil Products’ competitiveness,” says Neste’s President and CEO Peter Vanacker. 

To initiate the transformation, the company will start cooperation negotiations in the Oil Products business unit and its supporting functions in Finland. If implemented, the plans would mean up to 470 redundancies, including possible outsourcing. The decisions on the measures and impacts on the various functions, personnel groups and locations will be made after the negotiations have been concluded. The planned changes are expected to result in annual fixed cost savings of approximately EUR 50 million.

“Neste’s ambition is to become a global leader in renewable and circular solutions, and to achieve carbon neutral production by 2035. The planned changes will support the transformation of the Porvoo refinery into a leading sustainable, safe and efficient refinery, enabled by our highly innovative and efficient Neste people,” Vanacker continues.