REFINERY NEWS ROUNDUP: Run rates on the rise in Asia-Pacific

London — Refineries in Asia-Pacific have started raising run rates on improved demand.

Taiwan's state-owned CPC has raised operating rates at the 80,000 b/d residue fluid catalytic cracker at its 400,000 b/d Dalin refinery to full capacity in March as gasoline margins strengthened, according to a company source. The unit was operating at around 90% of capacity before the run rate hike in early March.

South Korean refiner Hyundai Oilbank has raised its crude throughput by 12% at Daesan in the first quarter on expectations that refining margins will recover in 2021 due to the global rollout of COVID-19 vaccines, a company official said. "The company plans to use an average of 460,000 b/d of crude as feedstock in the first quarter, up 12.2% from the average of 410,000 b/d in 2020," the official said. This equates to a run rate of 88.5% in Q1, up from 78.8% in 2020.

South Korea's S-Oil said it plans to keep its crude run rate at Onsan high this year to meet rebounding demand for oil products and has no scheduled maintenance at its CDUs and upgraders.

India's demand for gasoline has surpassed pre-pandemic levels on the back of an increased preference among consumers to use their own vehicles to commute rather than public transport. Gasoil is also close to pre-pandemic levels, indicating a strong revival in industrial activity.

Platts Analytics expects India's oil demand in 2021 to recover to slightly above the level of 2019, with growth of 480,000 b/d this year after declining 470,000 b/d in 2020.

India's Reliance Industries Ltd recorded a combined run of 93% at its two refineries at Jamnagar in February, down from 108% a year earlier, oil ministry officials said March 23, confirming that the complex was still to attain pre-pandemic levels. For the first 11 months of the current fiscal year combined runs stood at 88%, compared with 102% in the April-February period of the previous fiscal year, mainly as a result of coronavirus lockdown effect.

Australia's aviation turbine fuel imports in January hit their highest level since March 2020 while its January diesel imports also continued their strong run, hitting a five-month high, data from the country's Department of Industry, Science, Energy and Resources showed. The country's jet fuel imports in January stood at 1.95 million barrels, according to the data. Although this was still some 40% below the level around the same time last year, it was still up 87% month on month and almost double the March-December average of 996,641 barrels, the data showed.

The FOB Singapore physical spread between 95 RON and 92 RON gasoline widened to an eight-month high on March 22, prompted by improving demand for 95 RON gasoline from Malaysia and firm MTBE prices amid balanced to tight supply-demand dynamics, market sources said. "Malaysia's demand [is] coming back, as seen in the widening 95-92 spread," a Singapore-based trader said.

South Korea's consumption of refined oil products in February edged up 0.4% from a year earlier at 72.41 million barrels, marking the first year-on-year increase in nine months, driven by stronger auto fuel demand, data released by Korea National Oil Corp. showed March 24.

Vietnam's February gasoline imports rose 67.1% year on year to 119,533 mt as its appetite for the motor fuel rebounded after lockdown measures were removed, the latest preliminary data from the Vietnam Customs showed.

The sharp year-on-year increase stemmed from a low base in February 2020, when Vietnam was facing bulging stockpiles amid lockdown measures to control the COVID-19 spread, sources said. Over January-February, gasoline imports rose to 352,137 mt, up 48.9% from a year ago, the data showed.

However, Vietnam's gasoil imports fell to a four-month low in February following the re-imposition of movement restrictions to combat a resurgence of the coronavirus, which placed downward pressure on consumption.

Meanwhile, a number of plants are planning to reduce capacity or halt.

** Shell will halve the crude processing capacity at its Pulau Bukom refinery in Singapore as part of the energy major's initiative to reduce its CO2 emissions to net zero by 2050. "Bukom will pivot from a crude oil, fuels-based product slate towards new, low-carbon value chains," the company said. "We will reduce our crude processing capacity by about half and aim to deliver a significant reduction in CO2 emissions." ** South Korea's top refiner SK Energy has shut two CDUs at Ulsan but plans to restart the 60,000 b/d No. 1 crude distillation unit and 170,000 b/d No. 3 CDU at Ulsan in January.

** Pilipinas Shell Petroleum Corp. plans to shut its Tabangao refinery and transform the facility into an import terminal, the company said in a statement. The refinery has been shut since May 24, 2020, having been idled due to weak demand for domestic products.

** Petron Philippines has taken its Bataan refinery, located in the Philippines' region of Limay, offline in February with the temporary shutdown aimed to last at least four months, industry sources with close knowledge of the matter said. The shutdown was spurred by economic reasons, with the refiner noting in a Dec. 14, 2020 statement that the "refining business remains challenging both here and around the world." The facility was originally scheduled to shut in mid-January, but was pushed back to February due to operational reasons, Platts reported earlier.

Industry sources have also highlighted that the shutdown of the refinery is only temporary, as earlier fears the refinery would be permanently shut have been dispelled.

** New Zealand's Refining NZ said it has made a "significant progress" assessing the option to transform its Marsden Point refinery into an import terminal. The proposed terminal would have annual capacity of around 3 billion liters. "Refining NZ is now well progressed in its assessment of the import terminal option," the company said in Feb. 2021 adding that "any decision to proceed with a conversion to an import terminal will be a decision voted upon by the non-customer shareholders following an Independent Appraisal Report". "Refining NZ has been negotiating with each of its customers," the company also said, adding that it has reached "in principle agreement" with BP, but negotiations with ExxonMobil and Z Energy are ongoing. "Reaching in-principle agreement on key terms with BP is a significant milestone which now allows us to progress preparations for the required approvals while continuing to negotiate to reach agreement with our other customers," the company said. ExxonMobil is one of three wholesalers that takes cargoes from Marsden Point, along with BP and New Zealand's Z Energy. During 2020, the refinery was operating its facilities on a rotating basis which enabled it to "produce at substantially lower rates" and also carried out a full six-week shutdown in the middle of the year "to help balance fuel supply across New Zealand." Its throughput was 29.9 million barrels versus 42.7 million barrels in 2019. From January, the refinery has implemented plan to simplify refinery operations, which will enable it to "continue to operate the refinery safely in 2021 in a low margin environment and providing time to properly assess the import terminal option." The simplification involves reducing total refined fuels production and ceasing bitumen production.

** Australia's second-largest refiner, Viva Energy, has decided to avoid closure of its Geelong refinery, as the company takes up a payment lifeline extended by the Australian federal government. The grant, also known as the "interim Refinery Production Payment," will last for six months from January-July 2021. Refineries that take part in the grant will have to agree to maintain operations at least during the tenure of the program, committing to "an open book process and long-term self-help measures to further inform the development of the long-term Refinery Production Payment." Should refining margins stay on an upward trajectory, "the company expects to be able to maintain refining operations once the interim Refinery Production Payment concludes at the end of June 2021," it said in a separate statement.

** Ampol, formally known as Caltex Australia, will complete the comprehensive review of its Lytton refinery by the end of H1 2021, which would provide an indication on the refinery's future in Australia, the company said in a statement on its website. The review will come amid a challenging refining landscape even in early 2021, with "headwinds including Australian dollar strength" and "ongoing COVID-19 related travel restrictions impacting fuel volumes," the company said in a statement. The company has said previously that "the review will consider all options for the facility's operations and for the connected supply chains and markets it serves." Ampol has said also that "these options include closure and permanent transition to an import model, the continuation of existing refining operations and other alternate models of operation, including the necessary investments required to execute each of the options." ** The Maritime Union of Australia has urged the federal government to nationalize BP's Kwinana oil refinery, rather than allow it to be closed. BP Australia on Oct. 30 said it was planning to shut its Kwinana refinery and convert it into a fuel import terminal, in a strategy aimed to better meet the needs of a changing oil market.

** ExxonMobil Australia plans to shut its Altona refinery in Melbourne and convert it into a fuel import terminal, the company said in a statement released Feb. 10. "The decision was made following an extensive review of operations at Australia's smallest refinery... the review considered the competitive supply of products into Australia, declining domestic crude oil production, future capital investments and the impacts of these factors on operating earnings," the statement said. The refinery will remain in operation while transition work is undertaken, the statement added.

In other news, India's refinery expansion plans are gaining speed after a year of subdued activity, but refiners are redrawing their strategy to ensure there is plentiful downstream integration that would provide flexibility in switching to different products in the event the energy transition wave takes a toll on transport fuels in coming years.

Although India's peak oil demand is nowhere near, refiners will have to adopt a different strategy and boost their ability to produce a wide variety of petrochemical products, while shedding their overdependence on transport fuels, such as gasoline and gasoil, according to analysts as well as speakers attending the S&P Global Platts Asian Refining Virtual Summit.

India's minister for Petroleum and Natural Gas and Steel Dharmendra Pradhan told the South Asia Platts Virtual Forum in February that with the country's oil demand expected to double by 2040, India would look to boost refining capacity from the current 250 million mt/year to 450 million mt/year.

Separately, sustainable aviation fuel has been slow to take off in Asia but the increased thrust on carbon emissions, a need to maintain reputational goodwill along with ready feedstock availability will likely hasten the momentum toward SAF, industry sources said at the S&P Global Platts 8th Asian Refining Virtual Summit.

Vietnam is growing fond of West African crude oil after state-run Binh Son Refining and Petrochemical, or BSR, successfully processed two Nigerian grades in recent test runs at its Dung Quat refinery, but Indonesian Minas grade also emerged on its radar recently as the company's search for more staple feedstocks continues amid faltering domestic upstream production.

Pakistan's energy ministry has finalized a refining policy aimed at modernizing the country's oil refineries and fully deregulating motor fuel prices by June 30, 2026, according to a copy of the policy document published by the government and seen by S&P Global Platts. The policy, first drafted in July, would offer a series of tax holidays for a period of 20 years for new deep conversion refinery projects in the country with a minimum capacity of 100,000 b/d. It now needs approval by the government before coming into force.

NEW AND ONGOING MAINTENANCE

UPGRADES

LAUNCHES

New and ongoing maintenance

New and revised entries

India

** The turnaround at Bathinda oil refinery in the northern state of Punjab has been completed on schedule as per the plan, company officials said March 23. "The refinery runs smoothly after a turnaround," said a company official. The 35 days shutdown for regular maintenance, due every four years, had started in the last week of January. The refinery caters to fuel demand in northern India and processed 12.2 million mt/year from April 2019 through March 2020, for a run rate of 118%. For the 11-month period until February, it ran at 87.5%, compared with 109% in the year-ago period. In February, the refinery ran at a 1.5% rate, compared with 109% in February 2020 and 83% in

January.

Asia-Pacific

** New Zealand's Refining NZ is on track to complete a month-long maintenance program at the country's sole refinery, the Marsden Point facility, by the end of March, a company spokeswoman said March 22. "The turnaround is on track to be completed by the end of March," she said in an emailed statement to S&P Global Platts. The turnaround at the Marsden Point facility, which began in late February, involved maintenance being carried out on the refinery's CDU as well as other units linked to the CDU. In addition to the CDU, the refinery conducted an inspection at its CCR platformer, Platts reported previously.

** Thai oil and petrochemical company IRPC Public Co. Ltd has restarted several units at Rayong after turnaround in February and is raising operating rates in line with the restart of various units, industry sources with close knowledge of the refinery operations told S&P Global Platts on Marc