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23 June 2009

Global perspectives: Fuel plant hikes green capabilities in Germany

By Cris Whetton

Germany’s Bayernoil Raffineriegesellschaft completed the $831.9 million (€600 million) Project ISAR (Initiative zur Standortsicherung, Anlagenoptimierung und Rentabilitätssteigerung – Initiative for the Location, Asset optimization and Profitability), the largest project in the history of the company.

Managing Drector Heinz Löhr said this creates a new Bayernoil, following the decommissioning of the plant in Ingolstadt, and operations now focus on the locations of Vohburg Neustadt/Donau. With one of the largest hydrogen plants in Europe, and with the new heart of the plant, the $277.3 million (€200 million) mild hydrocracker for the production of diesel, aviation fuel, and light heating oil, Bayernoil can now meet the changing demands for fuels and fuel oil. In addition, by modernizing, the company has improved its environmental and energy performance.

Meanwhile, in Ireland, U.S.-based Marathon Oil Corp. completed the sale of its wholly owned subsidiary, Marathon Oil Ireland Limited to PSE Ireland Limited, a subsidiary of Petroliam Nasional Berhad. The transaction has a total value of $180 million. This sale does not include Marathon’s 18.5% interest in the Corrib natural gas development.

Spain’s Repsol said it considers the Escombreras refinery in Murcia to be unprofitable, and said production will come to a close. The company said the plant will be idle while the production of gasoline there remains unprofitable, but long-term plans to extend the refinery remain in place, and the 750 jobs there are guaranteed.

Other European refiners unveiled plans to shut down all or part of some refineries. Total, Europe’s largest refiner, has said it will shut a quarter of its Gonfreville plant, the biggest in France. Europe’s oil industry has long relied on supplying the U.S. market with gasoline, but a source at Total’s Gonfreville said profit margins have collapsed as gasoline exports shrank. Morgan Stanley said in a research note in March that margins, the measure for refinery profitability, would average about $4 a barrel in Northwest Europe this year, less than half of the bank’s estimate of an average $8.47 in 2008. International Energy Agency data suggest oil product demand in European OECD nations will fall to 14.7 million bpd this year, partially hit by a record high $147 oil last year and global recessions.

Meanwhile, Axens, a French company, is conducting a feasibility study to define a site in Nicaragua and build an oil refinery and a petrochemical plant there, backed by the Venezuelan government. According to Venezuelan sources, the chief executive of Alba de Nicaragua S.A., Rafael Paniagua, said Axens is the company in charge of the survey.

Cris Whetton is InTech’s European correspondent.