Tuesday 30 April 2024

Renewable Fuels Project in Canada Begins Production

A Fluor Corporation (NYSE: FLR) project reached a major milestone recently with the production startup of the Braya Renewable Fuels facility in Come by Chance, Newfoundland and Labrador, Canada. Fluor provided engineering and procurement (EP) services to convert the idled petroleum refinery into a modern facility that produces renewable diesel fuel from soybean oil and other low carbon intensity feedstocks.

“The transformation of this facility into a sustainable asset improves Canada’s global climate impact by supporting the decarbonization of hard-to-abate sectors such as heavy-duty transportation and aviation,” said Jason Kraynek, President of Fluor’s Production & Fuels business. “Fluor was proud to be part of this exciting renewable fuels project and I commend the Braya team for its safe startup.”

In addition to EP services, Fluor provided construction support services through startup.

Friday 12 April 2024

Rhône Energies has entered into exclusive negotiations for the acquisition of the Esso Fos-sur-Mer refinery in southern France

Rhône Energies, a consortium of Entara LLC (“Entara”) and Trafigura Pte Ltd (“Trafigura”), has entered into exclusive negotiations to acquire the Fos-sur-Mer refinery and the Toulouse and Villette de Vienne terminals from Esso. The proposed acquisition is subject to a formal information and consultation procedure with employee representative bodies. Its completion is subject to regulatory approvals and is expected by the end of 2024. The financial terms of the proposed transaction are confidential.

Rhône Energies was formed by Entara and Trafigura to combine the strengths of a proven refinery operator with a global market leader in energy and commodities. Entara was established by former executives of Crossbridge Energy who have a track record of managing and optimising refinery assets, including at the Fredericia refinery in Denmark. Entara will manage the Fos-sur-Mer asset, overseeing operations, maintenance, asset integrity, commercial, health, safety and environmental performance.

Trafigura is one of the world’s largest suppliers of energy and commodities, operating in over 150 countries and trading over 5.5 million barrels of oil and petroleum products every day. Trafigura has a 30-year history of working with refineries through direct investment, capacity utilization and supply and offtake.

“We would be delighted to acquire and assume stewardship of the Esso’s Fos-sur-Mer refinery operations and look forward to engaging with the operational management, employee representatives and government stakeholders over the coming weeks and months to confirm our commitment to the operation and our plans for the future,” said Entara’s CEO, Nicholas Myerson. “We are committed to upholding the operation’s high standards of environmental responsibility, safety, and operational excellence.”

“The Fos-sur-Mer refinery is an efficient, flexible, well-run operation strategically located on France’s Mediterranean coast,” said Ben Luckock, Global Head of Oil for Trafigura. “The refinery will continue to be an important contributor to energy security in the region and would benefit from Trafigura’s global trading and logistics network. Oil and petroleum products will continue to play an important role in supporting growing global energy demand during the transition currently underway to a low-carbon economy.”

Rhône Energies intends to maintain the current workforce with approximately 310 members of staff who will transfer to Rhône Energies on completion of the proposed transaction. The company would also aim to maintain a competitive compensation and benefits programme for the workforce as well as learning and development opportunities.

Under the terms of the proposed acquisition, Trafigura would enter into a minimum 10-year exclusive crude oil supply and product offtake agreement, including ownership of crude oil and product stocks in tank. These agreements would ensure the refinery has a secure supply of on-demand feedstock at competitive costs, and a reliable off-taker of refined products destined to the domestic market. Rhône Energies would agree to continue to supply Esso SAF in the region.

With this proposed acquisition, Rhône Energies plans to capitalize on the refinery’s existing skilled teams and strong manufacturing performance. The company aims to further improve margin capture, crude flexibility, process utilization and to maximize high value products, while investing in personnel and process safety.

Rhône Energies intends to invest in the sustainability of the site to reduce its carbon intensity footprint while also investing in growth projects enabling further co-processing of biogenic feedstocks to produce renewable fuels.

With a crude oil processing capacity of 140 thousand barrels per day, Fos-sur-Mer benefits from direct access to a major port, competitive operating costs and the ability to process a wide range of crude oil feedstocks.

Thursday 14 March 2024

KBR Awarded Project Management Contract for Sonangol’s New Lobito Refinery Project

KBR announced today it has been awarded a project management contract by Sonangol for the design and construction of a new 200,000bpd refinery in Lobito, Angola.

Under the terms of the contract, KBR will provide services encompassing the project management of engineering, procurement and construction phase execution. The Lobito Refinery Project is one of the most significant energy infrastructure projects in the region and will contribute to Angola’s energy independence. The project will also contribute to significant job creation and economic development of this region. Upon completing the Lobito Refinery Project, Angola is expected to have a 200% increase in the capacity to produce fuel products within the country in an efficient and sustainably improved approach.

This award further extends the more than twenty-year long partnership between KBR and Sonangol in the development of essential natural resources in Angola. KBR completed the FEED phase of the project earlier in 2023, providing a cost competitive design that met Sonangol’s business objectives while meeting the advanced emission standards required in the industry. In line with our strategy in energy transition to provide more environmentally friendly solutions, KBR’s FEED design also meets 2030 African and European Product Specifications with river water consumption and waste-water treatment requirements reduced by 30% as a result of KBR’s innovation in the refinery’s cooling system design.

“We are excited to be a part of this important project and to continue to grow and maintain a substantial presence in the region,” said Jay Ibrahim, President, Sustainable Technology Solutions. “This win is indicative of KBR’s strategic commitment to offer differentiated technical services that support Angola’s sustainable development goals.”

For more than 100 years, KBR has provided holistic and value-added solutions across the entire asset life cycle. Our leading experts have helped design and deliver world-class refinery and petrochemical plants across the globe.

Wednesday 6 March 2024

bp wants to reposition its refinery in Gelsenkirchen for the future

With its strategy for the German market, bp also wants to drive forward its transformation into an integrated energy company. The refinery in Gelsenkirchen is an important component of this project. By the end of the decade, bp plans to gradually renovate the site so that it can follow the path of the energy transition and exploit its potential.

Currently, our refinery site in Gelsenkirchen is not competitive. We are too complex and – not only because of this – burdened with structurally too high costs. In order to be able to take advantage of the opportunities that arise for our location from the energy transition, we have to change today. We want to give Gelsenkirchen a perspective and greater potential for its contributions to the energy transition.

Arno Appel, head of the refinery in Gelsenkirchen

Refinery: Perspectives through Change and Adaptation

  • In order to make the refineries fit for the future, it is necessary to massively reduce the complexity of the site and to shut down plant components for which capacity utilization is expected to decline in the future – with petrochemical production remaining a core area.
  • For this reason, as a first step, five plants at the Horst and Scholven plants are to be decommissioned as planned from 2025. This could lead to a planned and controlled reduction of the total production capacity – currently around twelve million tonnes of crude oil per year – to around eight million tonnes at the site.
  • With these measures, the site could also reduce its Scope 1 emissions by up to one half a million tons of CO2 per year.
  • In addition, subject to appropriate approvals, bp plans to enable the production of lower-emission fuels through co-processing at the hydrocracker plant at the Gelsenkirchen-Scholven site, in order to produce, among other things, more sustainable aviation fuels (SAF).1
  • Another perspective for future steps towards the production of more sustainable products is the possibility of establishing a circular economy network at the refinery for its petrochemical plants together with a partner. Only recently, the city council of Gelsenkirchen created the basic prerequisite for this by adapting the development plan accordingly.
The planned focus of the refinery on the future will also have an impact on the organization of work on site. Arno Appel says: "The tasks on site will change in the course of our transformation. We are determined to take as many colleagues as possible with us on this journey. However, it is also true that there will be fewer jobs overall in the refinery of the future in the future. In order to make this change as fair and socially acceptable as possible, we want to start negotiations with the employee representatives as soon as possible."

About the Gelsenkirchen location:
With around 2,000 employees and 160 trainees, bp operates the two plants in Horst and Scholven in Gelsenkirchen as an integrated refinery and petrochemical site. The processing capacity is about twelve million tons of crude oil per year. In addition to gasoline, diesel, jet fuel and heating oil, this results in more than 50 different products, primarily for the chemical industry. In addition to its great importance for the domestic fuel and energy supply, the Gelsenkirchen site also plays an important role in the North Rhine-Westphalia Chemical Network.

Thursday 15 February 2024

Members of the Moratti family enter into an agreement to sell approx. 35% of Saras to Vitol

Massimo Moratti S.a.p.A. di Massimo Moratti, Angel Capital Management S.p.A. (“ACM”), and Stella Holding S.p.A. (collectively the “Moratti family”) and Vitol B.V., a company based in The Netherlands (or a wholly-controlled entity designated by Vitol), (“Vitol”) have entered into a sale and purchase agreement (the “SPA”) pursuant to which the Moratti family has undertaken to sell to Vitol, shares of Saras S.p.A. (“Saras”) representing approx. 35% of Saras’s corporate capital (the “Transaction”), at a price per share equal to €1.75/share (the “Price per Share”).

Under the SPA and subject to fulfilment of certain circumstances set forth therein, ACM has undertaken to sell to Vitol the shares of Saras (if any) that ACM may be entitled to receive under the existing funded collar derivative contract, covering approx. 5% of Saras’s corporate capital.

If a dividend distribution is resolved and paid by Saras before the closing date of the Transaction, the Price per Share will be reduced accordingly.

Completion of the Transaction is exclusively subject to obtaining the required regulatory approvals (i.e., the clearances under the EU foreign subsidies regulation, the EU antitrust regulation and the Golden Power framework).

Upon the closing, the entire stake owned by the Moratti family in Saras will be transferred to Vitol. This will trigger a mandatory tender offer for the outstanding share capital of Saras, which will be launched by Vitol at the same Price per Share (i.e., €1.75/share), as may be adjusted in case of dividend distribution occurring before closing of the Transaction. The goal of the MTO is to achieve a delisting from the Milan Stock Exchange, which may also be achieved through delisting merger should the required conditions be met.

The price of €1.75/share values the equity of Saras at approximately €1.7 billion and represents a premium of:
  • 10% to the unaffected share price
  • 7% to the unaffected one-month volume-weighted average share price
  • 12% to the unaffected three-month volume-weighted average share price
  • 21% to the unaffected six-month volume-weighted average share price
  • 30% to the unaffected twelve-month volume-weighted average share price

Unaffected price refers to the closing market price as of February 6, 2024 (i.e., the date before the Bloomberg press notice referring to a potential sale by the Moratti family).

Saras is a leading industrial and energy company based in Italy. Its assets include the largest single-site refinery in the Mediterranean. Strategically located on an industrial site in Sardinia, the 300kb/d refinery supplies oil products to Italy and the rest of Europe, while its fully-integrated power generation plant, one of the largest of its kind, has an installed capacity of 575MW and supplies over 40% of Sardinia’s power. In addition, Saras has a significant renewables portfolio comprising 171MW of operational wind assets and a pipeline of 593MW and 79MW of wind and solar projects respectively.

Vitol has a long history of investing in energy infrastructure around the world, from oil production and refineries to renewables and carbon capture. This Transaction presents an opportunity for Vitol to invest in a high-quality asset, well placed to serve both Italy’s and Europe’s current and future energy needs.

Massimo Moratti, Chairman and CEO, Saras said: “62 years after my father founded it, together with my nephews Angelo and Gabriele and my sons Angelomario and Giovanni, I believe that the best assurance for the future success of the Sarroch refinery is the aggregation with a leading player in the global energy sector, such as Vitol, with relational, managerial and financial resources, needed to compete in the current international market environment.

“Therefore, I believe that this transaction will be beneficial for all shareholders, the employees and the customers, as well as all other stakeholders whom I thank for the trust they have always placed in us.

“Today Saras is a solid and profitable company, leader in the entire Mediterranean basin, and we wish Vitol to be able to expand the successes achieved so far.”

Russell Hardy, CEO, Vitol said: “Our ambition is to invest in a strong Italian energy company, run by an empowered local management team and supported by Vitol’s expertise and market reach. We appreciate the significance of Saras within Sardinia, and the country more broadly, and are committed to continuing the Moratti family’s legacy of diligent stewardship, safe operations and support for the local community and employees. Saras’s business is highly complementary to Vitol’s core operations and this transaction will strengthen European energy security and enhance supply for a key European energy asset.”

On completion, Vitol will be invested in over 800kb/d of refining capacity across seven refineries, 4GW of thermal power generation and over 1.4GW of renewable generation.

The Moratti family is advised by BofA Securities and Four Partners Advisory as financial advisors and Linklaters as legal advisor. Vitol is advised by J.P. Morgan as sole financial advisor and by Chiomenti and Weil, Gotshal & Manges as legal advisors.

Monday 29 January 2024

Eni moves ahead with conversion of the Livorno refinery into a bio-refinery

Today, Eni confirms its decision to build Italy's third bio-refinery in Livorno. The project, first announced in October 2022 and followed by an application for Environmental Impact Assessment (EIA) in November 2022, is awaiting official authorisations and includes the construction of three new facilities for the production of hydrogenated biofuels: a biogenic feedstock pre-treatment unit; a 500,000 tonnes/year Ecofining™ plant; and a facility to produce hydrogen from methane gas.

The conversion of the Livorno industrial site, following other successful conversions in Porto Marghera (2014) and Gela (2019), confirms Eni's decarbonization strategy, which aims to achieve carbon neutrality by 2050 and increase bio-refining capacity from the current 1.65 million tonnes/year to over 5 million tonnes/year by 2030.

In line with the strategic decision to convert the Livorno refinery, future-proofing the site in terms of production and employment, Eni has stopped importing crude oil and initiated the shutdown of the lubricants production lines and Topping plant. Fuel distribution in the area will be guaranteed through the import of finished and semi-finished products.

Preparatory work for the construction of the three new bio-refining plants is underway, with construction to commence following regulatory approval. Completion and commissioning are expected by 2026.

The plants will process various biogenic feedstocks, mainly vegetable waste and residue, to produce HVO diesel, HVO naphtha and bio-LPG. Eni, through Enilive, is the second-largest producer of hydrogenated biofuels (HVO) in Europe and the third-largest in the world.

Eni’s growth strategy is driven by the increasing demand in Europe and Italy for biofuels in the mobility sector, both to meet the emission reduction targets set out in the recently approved RED III (Renewable Energy Directive) and to comply with Italian legislation requiring the introduction of pure biofuels. Forecasts predict a 65% increase in demand for hydrogenated biofuels globally between 2024 and 2028.

Friday 26 January 2024

Shell invests to repurpose German Energy and Chemicals Park Rheinland

Shell Deutschland GmbH has taken a final investment decision (FID) to convert the hydrocracker of the Wesseling site at the Energy and Chemicals Park Rheinland into a production unit for Group III base oils, used in making high-quality lubricants such as engine and transmission oils. Crude oil processing will end at the Wesseling site by 2025 but will continue at the Godorf site.

Huibert Vigeveno, Shell’s Downstream and Renewables Director, said: “The repurposing of this European refinery is a significant step towards serving our growing lubricant customer base with premium base oils. This investment is part of Shell’s drive to create more value with less emissions.”

The high degree of electrification of the base oil plant, as well as the ceasing of crude oil processing into fuels at the Wesseling site, is expected to reduce Shell’s scope 1 and 2 carbon emissions (those which come directly from our operations and those from the energy we buy to run our operations) by around 620,000 tonnes a year. Shell’s target is to become a net-zero emissions energy business by 2050.

The new base oil plant is expected to start operations in the second half of this decade. It will have a production capacity of around 300,000 tonnes a year, equivalent to about 9% of current EU demand and 40% of Germany’s demand for base oils.

Notes to editors:
  • This investment, financed by Shell’s Chemicals and Products business, meets the minimum acceptable internal rate of return set out at our Capital Markets Day in 2023.
  • A hydrocracker converts heavy, low-quality hydrocarbons into lighter, high-quality products, such as fuels (gasoline, jet fuel, diesel), chemicals feedstocks, and base oil feedstocks. This is achieved through a high-pressure, high temperature reaction between the hydrocarbons and hydrogen, in the presence of a catalyst.
  • Group III base oils are mineral base oils with very high viscosity index, produced by hydrocracking technology. The market for high-quality engine and transmission oils, as well as e-fluids and cooling fluids, some of which are made from these base oils, is expected to grow.
  • Shell has already driven forward the transformation of the Energy and Chemicals Park Rheinland with investments in a 10-megawatt electrolyser to produce renewable hydrogen and a biomethane liquefaction plant.
  • Shell’s Energy and Chemicals Park Rheinland is located near Cologne and is comprised of two sites: Wesseling and Godorf. It currently has capacity to process over 17 million tonnes of crude oil a year, of which 7.5 million tonnes are processed at the Wesseling site.
  • Despite ceasing crude oil processing at the Wesseling site, fuel supplies for the German market are expected to remain stable and secure.