- Refineries in Asia-Pacific are further reducing throughput due to storage issues.
- They are halting operations as governments introduce strict measures to combat the coronavirus pandemic.
- There is a worldwide reduction in crude oil output with many nations under lockdown.
- Many refineries have postponed their operations.
According to an article published in Platts and authored by Elza Turner, refineries in Asia-Pacific are further reducing throughput or halting operations as governments introduce strict measures to combat the coronavirus pandemic.
Reduction in crude output
India
Indian Oil Corp. reduced crude throughput by 50% at its nine refineries to combat a slump in demand for petroleum products. The Indian government imposed a complete nationwide lockdown, initially from March 25 for 21 days to contain the pandemic, and subsequently extended it until May 3. IOC also invoked force majeure on four of its Persian Gulf suppliers: Iraq, Saudi Arabia, UAE and Kuwait, market sources said.
India’s Chennai Petroleum Corporation Ltd. has reduced the run rate at its Manali refinery to 30-35%. It has shut two of the three crude distillation units, with only the largest CDU currently running in addition to secondary units. “We plan to keep the run rate at 30-35% until the end of the lockdown,“ an official said.
Bharat Oman Refineries Limited’s Bina refinery in central India is considering cutting crude throughput, a source close to the company said. The refinery is currently running at around 100% of capacity, and should a reduction be implemented, it would be in the range of a 20%-30% cut, the source said.
India’s sagging domestic demand has pushed Mangalore Refinery and Petrochemicals Ltd. to cut the output of refined products further. MRPL has cut output of transportation fuels by around 50%, while output of LPG has been slashed to about 20-25%, market sources said.
India’s Hindustan Petroleum Corp. has cut throughput at its Mumbai refinery by a tenth, though the Vizag refinery continues to maintain normal run rates. Hindustan Petroleum Corp. Ltd. also invoked force majeure on its Iraqi crude supplies.
Pakistan
Pakistan Refinery Ltd. has cut its utilization rate to 50%. The refinery temporarily shut production from March 25 but subsequently decided to extend its shutdown indefinitely.
Pakistan’s Byco Petroleum Pakistan Ltd. initially put its refinery in Baluchistan province on “cold circulation“ but has since resumed production.
Pakistan’s Attock Refinery Ltd. in Punjab province warned in an exchange filing that its refinery could be completely shut down.
South Korea
South Korea’s SK Energy in March reduced the crude run rate at Ulsan to 85%, from 95% a year ago.
South Korea’s Hyundai Oilbank said it has lowered its crude run rate to 90% but declined to say whether it would cut rates further.
Australia and New Zealand
New Zealand’s Refining NZ said it has reduced operations at its refinery at Marsden Point for three months initially, with a decision due this month on whether to extend this arrangement beyond June.
Caltex Australia’s 109,000 b/d Lytton Refinery has shifted forward its scheduled turnaround, with works at the facility to commence in May.
Thailand, Taiwan, and Vietnam
Thai Oil has cut operating rates at Sriracha refinery by about 20% in response to falling demand.
Taiwan’s Formosa Petrochemical is planning to reduce operating rates after units currently under maintenance restart, an official said. “We are thinking of a 10% cut for now. We will review the situation again and then decide,“ he said. With the ongoing turnaround, Formosa’s refinery is now running at two-thirds of capacity. As such, the company has not reduced operating rates at its other two CDUs, which are running at near full capacity, the official said.
PetroVietnam’s Binh Son Refining and Petrochemical have postponed maintenance at its refinery at Dung Quat. A complete shutdown had originally been planned to start from June 12 for around a month, but the start has since been postponed to June 27, with the plant pegged to restart on August 17, one source said. The work is to replace and repair units such as the CDU, RFCC, and CCR. The company is closely monitoring the situation and has developed a number of scenarios, one of which would be to delay the maintenance work until 2021. In response to the lower demand, the Dung Quat plant has also reduced operating rates further to 103% from 105% in mid-March, sources said. Binh Son Refining and Petrochemical Co. said Dung Quat may halt production if supply continues to exceed demand.
PetroVietnam proposed that the government curb imports of oil products to help local refineries that are struggling with stockpiles. PetroVietnam’s refineries at Dung Quat and Nghi Son are among many refineries globally that are facing difficulties due to low demand, PetroVietnam said.
New and revised entries
Asia-Pacific
PetroVietnam’s Binh Son Refining and Petrochemical have postponed the maintenance of its refinery at Dung Quat, as the coronavirus spread continues to wreak havoc on plans from regional refiners, sources with close knowledge of the matter said. A complete shutdown had originally been planned to start from June 12 for around a month, but the start has since been postponed to June 27, with the plant pegged to restart on August 17, one source said. The work is to replace and repair units such as the CDU, RFCC, and CCR. The company is closely monitoring the situation and has developed a number of scenarios, one of which would be to delay the maintenance work until 2021.
Caltex Australia’s Lytton Refinery has shifted forward its scheduled turnaround, with works at the facility to commence in May, as opposed to the originally scheduled August start-date, the company said in an official statement. The decision to bringing forward the scheduled works as a result of “weak refiner margins [that] are creating operating cash flow challenges at Lytton,“ and with the plant idled in May, the refiner expects “a more capital efficient T&I [Turnaround and Inspection]… as well as further optimization of the supply chain,“ the statement also said. The duration of the works is currently unknown, with the refinery expecting to recommence operations “when margin conditions have sufficiently recovered.“ To that end, Caltex Australia has seen a dip in domestic fuel sales since the Australian government put in place “Stage 2 and 3 [travel] restrictions“ in late-March.Taiwan’s Formosa Petrochemical plans to delay the restart of its No. 2 residue fluid catalytic cracking unit at Mailiao refinery from April 20 to early May, due to weak gasoline margins, a company spokesman said.
The unit was shut on March 1 for a turnaround. Formosa has two RFCCs, each with a nameplate capacity of 84,000 b/d. The 180,000 b/d crude distillation unit and 80,500 b/d No. 1 residue desulfurization unit which were shut last month for a turnaround, are expected to restart around April 20-25 as previously scheduled, the official said. With demand destruction for refined oil products due to the coronavirus pandemic, the company is planning a reduction of operating rates after the units restart from maintenance, the official said.
Existing entries
India
Bharat Petroleum Corp. Ltd. was initially slated to shut a 210,000 b/d crude distillation unit and a vacuum gas oil hydro-desulfurization unit at its Kochi refinery early April for maintenance, but following India’s lockdown, the turnaround of the VGO-HDS unit is delayed to May while plans for the CDU is unclear, sources with direct knowledge of the matter said. Crude throughput at the Kochi refinery will also be cut by 30% with effect from Sunday.
India’s BPCL has postponed the maintenance of Mumbai units to end-April. BPCL had initially planned for maintenance at its Mumbai refinery to start on April 6 before postponing the start to April 16. It postponed the start of the turnaround again to April 28 on manpower considerations following the spread of the coronavirus in India. It should last 25-30 days. The turnaround includes 10,000 mt/day Diesel hydrotreater (DHT) unit, 1,500 mt/day Isomerization unit and 5,000 mt/day Aromatics Extraction unit (ARU).
Asia-Pacific
South Korea’s Hyundai Oilbank will idle its residue desulfurization unit with a capacity of 100,000 b/d at its Daesan refinery in the country’s west as the refiner will revamp the unit to increase low sulfur fuel oil production, a company source said in March. The capacity will be raised to 130,000 b/d after the shutdown. The company will be able to produce up to 200,000 mt/month of LSFO after the completion, a trader said.
Shell’s Pulau Bukom refinery plans to shut its Bukom refinery for scheduled maintenance over April 18-May 27, market sources with knowledge of the matter said. Shell officials declined to comment on S&P Global Platts when contacted. According to several trade sources, the initial turnaround plan was scheduled to start in May, but the plan was brought forward by a month due to declining product margins.
South Korea’s largest refiner SK Energy plans to shut its biggest crude distillation unit, the 260,000 b/d No. 5 unit, at Ulsan, for scheduled maintenance over late May-late June, a company official said. Earlier in March, the refiner reduced the combined operating rate of its five CDUs at Ulsan to 85% until the end of March amid weakening demand for refined oil products due to the coronavirus. This means 15% of total capacity, or 126,000 b/d, will remain idle through end-March. The 85% run rate is SK Energy’s lowest since the second quarter of 2017 when it was 79%. The operating rate of the refiner’s five CDUs at Ulsan averaged 95% in Q1 last year, 90% in Q2, and 94% in Q3, then dropped to 89% in Q4 as refining margins narrowed.
PARCO’s Mid-Country refinery has shut for a two-month long scheduled maintenance period from early-February to end-April, industry sources with close knowledge of the matter told S&P Global Platts. The turnaround saw the 100,000 b/d plant completely idled, to “undergo repairs and maintenance works“, the source added. PARCO was not immediately available for official comment. PARCO is a joint venture between the Pakistan government and the Emirate of Abu Dhabi, with the former holding a 60% shareholding, while the latter a 40% interest through state-owned Mubadala Investment Company.
South Korea’s third-biggest refiner S-Oil Corp will shut its 90,000 b/d No. 1 crude distillation unit and 76,000 b/d No. 2 residue fluid catalytic cracker at Onsan for several weeks’ maintenance sometime in 2020, but has yet to confirm the dates, a company official said. “The two units will be shut for maintenance this year, but the exact time is not decided,“ the official said. S-Oil operates three CDUs — No. 1 with a capacity of 90,000 b/d, No. 2 with 240,000 b/d and No. 3 with 250,000 b/d, and a condensate fractionation unit with a capacity of 89,000 b/d, giving it a total refining capacity 669,000 b/d. It also operates two RFCCs — No. 1 with a capacity of 73,000 b/d and No. 2 with 76,000 b/d, at its Onsan complex on the country’s southeast coast. S-Oil last year shut its No. 3 CDU for maintenance over March-April, No. 2 RFCC over April-May and No. 1 RFCC over September-October.
South Korea’s Hyundai Oilbank plans to idle one of two crude distillation units and a fluid catalytic cracker at Daesan for maintenance in mid-April, a source with knowledge of the matter said. The turnaround will be for one month lasting until mid-May.
GS Caltex, South Korea’s second-biggest refiner, has scheduled maintenance at its Yeosu refinery for March, a source close to the company said. The duration was expected to be around one month.
Indonesia’s state-owned Pertamina was eyeing a turnaround for its Balongan refinery at the end of the first quarter, sources close to the matter said.
Indonesia’s state-owned Pertamina will postpone a turnaround at one of its two crude distillation units at Balikpapan in East Kalimantan to the end of July from mid-January, sources said. The 200,000 b/d CDU will now undergo maintenance from end-July to end-August, the source said. During the CDU turnaround, the refinery will also shut several secondary units, such as its 81,000 b/d high vacuum unit and 20,000 b/d platformer. The facility’s 60,000 b/d CDU will also be taken offline later in the year, though the exact dates have yet to be settled.
Upgrades
Existing entries
South Korea’s top refiner SK Energy has delayed commercial production of its newly built 40,000 b/d desulfurization unit due to “deterioration in market conditions“ in the wake of the coronavirus pandemic, a company official said. The refiner completed mechanical construction of the vacuum residue desulfurization, or VRDS, on January 31, three months ahead of its original schedule, to supply low sulfur marine fuels compliant with IMO 2020 regulations. Since then, the unit underwent a two-month test run, which the company said was very successful. “With the end of the test run, the VRDS is ready to start commercial production,“ the company official said. “But we have delayed the timing of full operation because of the deterioration in market conditions amid the coronavirus pandemic,“ the official said, adding that it has not fixed when commercial production will start due to market uncertainties. The VRDS transforms high-sulfur heavy fuel oil into value-added low sulfur light products, producing 34,000 b/d of 0.5% sulfur fuel oil and 6,000 b/d of marine gas oil. The desulfurization unit will also produce 2,000 b/d of LPG and naphtha. The VRDS will use 30,000 b/d of vacuum residue produced by its heavy oil upgrader and 10,000 b/d of atmospheric residue from crude distillation units as feedstock to produce LSFO.
Pakistan’s Byco Petroleum Pakistan on its website said it plans to build an aromatics plant with a capacity of 27,300 b/d to produce benzene, mixed xylene, paraxylene, orthoxylene, C9 and raffinate.
South Korea’s Hyundai Oilbank will idle its residue desulfurization unit with a capacity of 100,000 b/d at its Daesan refinery in the country’s west as the refiner will revamp the unit to increase low sulfur fuel oil production, a company source said in March. The capacity will be raised to 130,000 b/d after the shutdown. The company will be able to produce up to 200,000 mt/month of LSFO after the completion, a trader said.
Indonesia’s Pertamina is looking to upgrade the Balongan refinery in West Java. Two consortiums, REE and JSW, are competing to provide a front end engineering design (FEED). The first phase of the upgrade is expected to be completed in 2-1/2 years. Once upgraded, capacity will be increased to 150,000 b/d. Previously Pertamina was looking to launch Phase 1 in 2022, according to reports. Meanwhile, Pertamina had also signed a memorandum of understanding with ADNOC for potential development in the integrated Balongan petrochemical refinery.
Hyundai Engineering has won a $2.17 billion deal to upgrade the Balikpapan refinery in Indonesia. Hyundai Engineering will “be responsible for the engineering, procurement and construction for the facility upgrade“, which would take 53 months for completion and increase the refinery’s capacity from 260,000 b/d to 360,000 b/d. Completion was expected in 2023. Separately, Indonesia’s Pertamina and Mubadala signed a Refinery Investment Principle Agreement to evaluate any possibility to cooperate in processing sector, including to accelerate Pertamina’s Balikpapan project that is expected to require about $5.5 billion of investment. Pertamina is seeking equity investor to join on the development of Balikpapan refinery.
IOC’s refinery in the western state Gujarat will have the largest capacity among its portfolio of refineries by 2022-23, company officials said. IOC plans to raise the capacity of the Gujarat refinery to 360,000 b/d by March 2023 from the current 275,000 b/d. “The expansion project will take off after a detailed feasibility report gets approval from the company’s board,“ an official said.
IOC plans to expand the atmospheric and vacuum unit at its Barauni refinery to boost its overall capacity to 9 million mt/year by 2021.
At Thailand’s Bangchak Petroleum an expansion plan is underway to ramp up the 120,000 b/d refinery’s production capacity to 140,000 b/d in 2020, through the installation of a continuous catalyst regeneration unit. Under the expansion plan, the company will also debottleneck the hydrocracker, which could expand the refinery’s production capacity by 10%.
Saudi Aramco and S-Oil signed a memorandum of understanding to collaborate on a $6 billion steam cracker and olefin downstream project at Onsan due for completion in 2024, which will produce ethylene and other basic chemicals from naphtha and off-gas.
ExxonMobil announced a final investment decision at its Singapore complex. The project includes an expansion aimed at converting “fuel oil and other bottom-of-the-barrel crude products into higher-value lube base stocks and distillates.” Start-up is set for 2023. The expansion will add capacity to increase cleaner fuel output with lower sulfur content by 48,000 b/d.
HPCL’s $3.2 billion project to expand Vizag’s 8.3 million mt/year capacity to 15 million mt/year is on schedule for completion by March. The project will install primary processing units such as a CDU, replacing one of the three existing CDUs, a hydrocracker, and a naphtha isomerization unit.
Reliance Industries Ltd. has received clearance to raise the capacity of its export-oriented Jamnagar refinery on the west coast of India by 17% to 41 million mt (820,000 b/d). By 2030, RIL aims to raise its total refining capacity — including its domestic-focused refinery at Jamnagar to 98.2 million mt/year.
Reliance currently is 1.37 million b/d, of it 707,000 b/d for the export and 660,000 b/d domestic. The export one will increase capacity to 820,000 b/d. By 2030, it aims to raise its overall capacity to 1.96 million b/d.
India’s IOC plans to raise the capacity of its Panipat refinery to 25 million mt/year by 2021 to meet the growing demand for oil products. The refinery’s capacity is 15 million mt/year.
India’s cabinet has approved a project to expand the capacity of the Numaligarh refinery to 9 million mt/year from 3 million mt/year.
South Korea’s Hyundai Oilbank plans to expand its residue desulfurization unit’s capacity to 130,000 b/d in May 2020 from the current 100,000 b/d. Hyundai Oilbank also is set to complete works to expand its CDUs, increasing its refining capacity to 650,000 b/d from 560,000 b/d. Once the works are complete, the 120,000 b/d No. 1 CDU will be expanded to 160,000 b/d, while the No. 2 CDU will be expanded to 360,000 b/d from 310,000 b/d.
Nayara Energy is seeking the renewal of environmental approval to double capacity at its Vadinar refinery as the previous approval had been given to Essar Oil. It had planned to double the refining capacity at Vadinar to 40 million mt/year.
Petron plans to expand and upgrade its Bataan refinery in Limay, increasing its capacity by 55% to produce 75,000 b/d of refined products and 1 million mt/year of aromatics. There was no timeline for when the expansion will take place. The refinery’s capacity will be increased by 100,000 b/d of condensates and light crude oils, from current capacity of 180,000 b/d.
IOC has signed up energy technology and infrastructure solutions provider CB&I for a residue upgrading unit at its Mathura refinery in north India.
India’s IOC is exploring an option to build a petroleum coke gasification plant at its Paradip refinery on India’s east coast. IOC’s $2.3 billion expansion project for the refinery to raise its overall capacity to 18 million mt/year from 13.7 million mt/year by 2020 is on schedule.
The Philippines’ Petron Corp. has been considering a plan to more than double capacity at its 88,000 b/d Port Dickson refinery in Malaysia by 2020 to 178,000 b/d.
Launches
Existing entries
Malaysia’s PRefChem refinery, also known as RAPID, said that there was a fire and explosion in mid-March at its diesel hydrotreating unit in the Pengerang Integrated Complex in Johor province. The fire caused five fatalities and one injury with 40% second degree burns, it added. PRefChem did not provide further details. Sources close to the company told S&P Global Platts Monday that the steam cracker at the complex had been closed. Any repairs could be delayed as parts need to be procured from China, which is not so easy in the current environment, a Singapore-based trader said. The complex includes a 300,000 b/d refinery and an integrated steam cracker with a capacity of 1.3 million mt/year of ethylene, with associated propylene, butadiene, benzene, polyolefins and ethylene glycol facilities. It was launched in late 2019 and targets full commercial operations for the second half of 2020.
A Rosneft and Pertamina joint venture has signed a contract with Spanish Tecnicas Reunidas to design the construction of an oil refinery and petrochemical complex in Tuban, Indonesia, Rosneft said. Commissioning of the plant in East Java is expected within the next five years. Primary processing design capacity is planned at up to 15 million mt/year, planned capacity at the petrochemical complex includes more than 1 million mt/year for ethylene and 1.3 million mt/year for aromatic hydrocarbons.
Sri Lanka has approved a $20 billion refinery project at the port town of Hambantota. The announcement follows the inauguration of a smaller refinery complex at the port, which has backing from the Oman Oil Company.
Mongolia’s first refinery is expected to reach full capacity by 2026, the facility’s top official said, implying a lagged increase in the plant’s run rate after completion of construction works in 2022. “We expect to achieve 70% of the installed capacity by 2024,“ Mongol Refinery Executive Director Altantsetseg Dashdavaa told S&P Global Platts.
Iran remains open to investing in a planned expansion project by Chennai Petroleum Corp Ltd to set up a 180,000 b/d refinery at Cauvery Basin at Nagapattinam, in the southern Indian state of Tamil Nadhu, Indian oil ministry officials said. IOC holds a 51.9% share in CPCL, while NIOC holds 15.4% through Swiss subsidiary Naftiran Intertrade.
India’s proposed new 1.2 million b/d refinery on the west coast will be commissioned in 2025, oil ministry officials said. The refinery will now be built in the Raigad district, around 100 km from Mumbai. An official at Ratnagiri Refinery & Petrochemicals Ltd. (RRPCL) said construction of the refinery complex would start in 2020.
Global trader Vitol is looking to build a 30,000 b/d refinery in southern Malaysia’s Johor state. The project involves a simple refinery to be built at Tanjung Bin at VTTI’s ATB tank farm. ATB, or ATT Tanjung Bin Sdn Bhd, is a terminal 100% owned by VTTI. Vitol co-owns VTTI.
Haldia Petrochemicals Ltd’s proposal to invest $4.05 billion in an integrated refinery and petrochemicals facility in Balasore, India, has been granted approval by the Odisha government.
Pakistan and Saudi Arabia are in talks to develop a 200,000-300,000 b/d refinery in Balochistan’s Gwadar district for $10 billion.
A new HPCL project in Barmer, India, is due for completion by March 2023.
India’s big refinery project in Maharashtra, being developed by state-owned IOC, HPCL, and BPCL, will start up around 2022-23.
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Source: Platts
