7 July 2009
Global perspectives: Pipeline connections in Central Europe
By Cris Whetton
Austria's OMV AG, central Europe's biggest oil company, wants to open a delayed pipeline between Bratislava and Vienna as early as 2010, giving it direct access to Russian oil for the first time and helping boost refining profits.
The link will connect OMV’s main refinery in Schwechat, near Vienna, with the existing Druzhba pipeline from southeast Russia, according to Gerhard Roiss, OMV’s head of refining and marketing, who will take over the role of chief executive in 2011. Transpetrol SA, Slovakia’s state-run pipeline company, will help to build the 50-kilometer (30-mile) link.
“You have thousands of kilometers of the Druzhba pipeline system, and then there’s a piece missing that you can hardly see on a map,” Roiss said. Since 2003, OMV has been trying to close the gap in its pipeline system to diversify supplies and gain better access to Russian crude. It currently relies on shipments through the Italian port of Trieste, resulting in high transportation costs that reduce profit margins. OMV had to abandon the pipeline project after Slovakia’s partner in the project, Russia’s OAO Yukos Oil Co., filed for bankruptcy in 2004. Slovakia agreed in March to buy back the minority stake formerly held by Yukos, opening the way for a second attempt to complete the link.
Meanwhile, in the neighboring Czech Republic, state-run oil pipeline operator MERO (operator of the Czech stretch of the Druzhba pipeline) is considering buying a 16.3% stake in Ceska Rafinerska from oil group Royal Dutch Shell as a way to keep the Czech refiner out of Russian hands. Shell did not confirm it intended to sell its stake in the Czech firm, estimated to be worth $200 million, although Czech media have reported several times in the past it planned to do so. Russia’s LUKoil, along with Italy’s Agip and Rafinerska majority owner Unipetrol are potential buyers. Prague is wary of Russian involvement in Czech industries, especially the ones considered strategic. The Czech government excluded Russia’s Aeroflot from a privatization tender for Czech Airlines last month.
Three new cogeneration plants going up at refineries or petrochemical plants on the Iberian Peninsula will each feature a Frame 6B gas turbine from U.S.-based GE Energy. First, DETISA, an energy supplier owned by Spanish oil company CEPSA, has selected GE Energy’s gas turbine technology for a new cogeneration project at the Gibraltar-San Roque refinery near Cádiz. The company will supply a Frame 6B gas turbine-generator for the Lubrisur Cogeneration Plant, which will help to meet the increasing energy requirements of the refinery, with excess electricity selling to the Spanish grid. The plant has a capacity of 42 MW of power and will also produce steam for refinery processes. Commercial operation of the Lubrisur project should begin by the end of 2010.
Repsol YPF, Spain’s largest oil company, has also turned to Frame 6B gas turbine technology for a new, 42 MW cogeneration plant that is part of the expansion of Repsol’s refinery east of the city of Cartagena. This will be the 14th Frame 6B GE has provided to Repsol and its affiliates. The unit will receive maintenance under an existing service agreement between the two companies.
Thirdly, the same Frame 6B gas turbine technology will go in a cogeneration plant going up as part of a new project in the Sines petrochemical industrial park on Portugal’s Alentejo coast. When completed, the 40 MW cogeneration facility will support a pure terephthalic acid plant that will have a production capacity up to 700,000 metric tons per year.
Cris Whetton is InTech’s European correspondent.