REFINERY NEWS ROUNDUP: Some refineries in Asia-Pacific region cut runs

London — While many refineries in the Asia-Pacific region have been ramping up runs, some, especially in India, are now reducing throughput on reimposed lockdowns.

Hopes that India's oil demand will recover in the second half of the year are fading fast as some provinces implement partial lockdowns to battle the COVID-19 pandemic, prompting refiners to start planning for lower crude runs in order to prevent a problem of plenty at home. India, one of the fasting growing oil markets in Asia in recent years, is expected to end 2020 with its oil demand slipping into the red, a trend not seen for nearly two decades, as per government officials and oil analysts. The last time India witnessed negative growth in oil demand was in 2001 when consumption fell marginally from 2000 levels.

** Indian Oil Corp., the country's largest state-run refiner, reduced the run rate to 75% at its nine refineries as many states reimposed lockdowns to combat the spread of the coronavirus pandemic, company officials said July 31. IOC's average run rate at its refineries was 93% during the first week of July, when the second phase of the reopening of the Indian economy began. In the three months that ended June 30, IOC posted a 74% capacity utilization rate, compared with 100% in the year-ago quarter, according to the country's oil ministry. IOC's run rate is expected to be 70%-75% in 2020, said Shrikant Madhav Vaidya, IOC chairman. He said demand for refined products is unlikely to reach the pre-pandemic level during the company's ongoing fiscal year. IOC's fiscal year begins April 1. The refiner reduced the run rate at some of its refineries to as little as 40%-45% during the initial lockdown to combat the pandemic, which began March 25.

** India's Reliance Industries Ltd. cut the combined run rate for its Jamnagar refining complex for the fourth month in a row in June, oil ministry officials said July 29. RIL, India's leading private refiner, has two refineries at the Jamnagar complex -- one focused on the domestic market and the other on export markets. Reliance recorded a combined run rate of 83% in June, down from 91.7% in May, 94.8% in April, 95.4% in March and 105% in February. In the first quarter (April-June) of the 2020-21 fiscal year, RIL's combined run rate stood at 90% compared to 104% a year earlier.

** BPCL is currently running its Mumbai refinery at 60%-70% of capacity, and plans to keep operations steady at this level through August. Operations are steady to slightly lower by 5%-10% from July, when the refinery was running at around 70% of capacity.

** India's Bharat Petroleum Corp. plans to gradually raise operations at Kochi to 80% of capacity later in August to maximize gasoline production, in a bid to meet strong domestic gasoline demand.

** India's gasoline exports in June slid 11.11% from May to a two-month low of 985,000 mt as refiners channeled cargoes to the domestic market to meet a rise in demand, amid a backdrop of a heavily supplied Asian market. In addition to being last lower in April at 932,000 mt, June's outflow represented the third consecutive month that Indian gasoline export volumes were lower than 2019's monthly average of 1.08 million mt, according to latest data from the Petroleum Planning and Analysis Cell. PPAC data also showed that Indian gasoline demand in June jumped 28.8% from May to 2.28 million mt, though it had dropped 13.6% year on year. The decline in gasoline exports came despite higher Indian refinery run rates in June, which rose to 85% from 77% in May, oil ministry data showed. India's top two refiners Indian Oil Corp. and Bharat Petroleum Corp. had ramped up June's refinery throughput by 29.27% and 20.19%, respectively, from May, the data showed.

** India's gasoil production climbed for the second straight month in June as local refiners hiked run rates in line with emerging domestic demand as the country gradually eases coronavirus-induced restrictions. Indian refiners produced 8.01 million mt of gasoil in June, up 8.5% from 7.38 million mt registered in the previous month, according to the latest provisional data from the country's Petroleum Planning and Analysis Cell, or PPAC.

** South Korea's SK Energy's Ulsan crude run rate fell to 77% in Q2, the lowest on record and down from 90% a year earlier and 92% in Q1. "The company plans to raise crude throughput in a gradual manner in the third and fourth quarters as refining margins are likely to improve," an official said. "We expect the company's crude run rate in Q3 to be around 80-85%," he added.

** SK Energy's refining affiliate SK Incheon Petroleum, which runs two CDUs with a combined 275,000 b/d of capacity and a 100,000 b/d condensate splitter at Incheon on the west coast, will not reduce its run rate in Q3 because it is already low, the official said. SK Incheon's crude run rate averaged at 76% in Q2, down from 84% a year earlier and 80% in Q1.

** Ampol, formerly Caltex Australia, is eyeing end-August as the potential restart of its Lytton Refinery, after the facility was idled for scheduled maintenance in mid-May, industry sources with close knowledge of the matter told S&P Global Platts. A restart at end-August will bring to close four months of maintenance, which had been brought forward from the original August restart date, due to poor operating conditions earlier in the year, Platts previously reported. Australian demand for oil products has started to improve since these lockdown measures were eased in May. According to mobility data from Apple, driving activity throughout Australia has improved to 3% below the baseline, as compared with the near 75% fall in April.

** Pilipinas Shell Petroleum Corporation (PSPC) said July 29 its Tabangao refinery in the Philippines remains in "economic shutdown" and the company continues "to monitor the market conditions and will restart refinery operations as soon as it is economically viable." The shutdown, which started from mid-May, was due to "the significant decline in demand for oil products and the significant deterioration of regional refining margins" following the COVID-19 pandemic, the company said in May.

** Indonesia's TPPI plans to operate its condensate splitter at Tuban, East Java, at 60-70% of capacity through August as gasoline demand remained weak, a company source said Aug. 7. TPPI had reduced runs at the complex since April due to weak gasoline demand stemming from lockdown measures to control the spread of the coronavirus pandemic, the source said.

Separately, PetroVietnam's Binh Son Refining and Petrochemical has processed the first batch of Russian Sokol crude oil at its Dung Quat refinery, as part of its efforts to reduce dependence on local Bach Ho crude, BSR said in a statement Aug. 10. BSR bought 710,574 barrels of the Sokol crude in early July for a test run over July 13-18. The Sokol crude accounted for 20% of the mix during the trial run, with Bach Ho accounting for 29% and the rest other crudes. The result of the test run has enabled BSR to consider gradually replacing Bach Ho with Sokol and other crudes since output of Bach Ho has been declining, BSR said.

NEW AND ONGOING MAINTENANCE

UPGRADES

LAUNCHES

New and ongoing maintenance

New and revised entries

India

** India's No. 2 refiner Bharat Petroleum Corp. has pushed the start date of its CCR maintenance at the Mumbai refinery to Aug. 8-10, from the original plan of the first week of August, a company source said. "The turnaround at the reformer will start this weekend or early next week," the source said.

** India's Bharat Petroleum Corp. has restarted its 200,000 b/d crude distillation unit and associated secondary units at its 310,000 b/d Kochi refinery from a month-long turnaround, and is now running the refinery at around 70% of capacity, a company source said. The 200,000 b/d CDU, one of two at the refinery, was taken offline in the last week of June for planned maintenance and was restarted around end-July.

Asia-Pacific

** Taiwan's state-owned CPC has restarted the 200,000 b/d crude distillation unit at its Taoyuan refinery following almost two months of maintenance, which began at the end of May, sources with close knowledge of the refinery operations told S&P Global Platts. The startup of the CDU comes amid recovering appetite in Taiwan, with gasoline consumption rising 24.7% year on year to 197,000 b/d in May. Meanwhile, CPC's 70,000 b/d residue desulfurization unit will remain shut until around mid-August as maintenance works are yet to be completed.

** South Korea's SK Energy plans to shut its 170,000 b/d No. 3 crude distillation at Ulsan for several weeks' maintenance in the fourth quarter, along with a 80,000 b/d No. 2 residue hydro-desulfurization unit, a company official said. SK Energy has five CDUs with a combined capacity of 840,000 b/d at its Ulsan complex.

** South Korea's S-Oil Corp is planning to run its 76,000 b/d residue fluid catalytic cracker at full capacity after restarting July 30, a company source said. The high-severity RFCC has a propylene output capacity of 660,000 mt/year. S-Oil Corp plans to shut its 90,000 b/d No. 1 CDU at Onsan for several weeks of maintenance in the third quarter, a company official said.

** In the Philippines, Pilipinas Shell Petroleum Corp. (PSPC) said July 29 its Tabangao refinery in the Philippines remains in "economic shutdown" and the company continues "to monitor the market conditions and will restart refinery operations as soon as it is economically viable."

** PetroVietnam's Binh Son Refining and Petrochemical, or BSR, will gradually start reducing capacity at its Dung Quat refinery on Aug. 10 to prepare for the planned maintenance until Oct. 1, a source from BSR said Aug. 4. It has postponed maintenance, that was originally scheduled to start June 12 and earlier postposed to July 27, due to the global COVID-19 pandemic delaying the arrival of expert workers and parts.

Existing entries

India

** India's Paradip refinery is set for a maintenance shutdown from July 25 to August 8, company officials said, as part of routine inspections due after three years for the entire refinery. All operations at the refinery will be shut during the maintenance period. "We are now carrying out the shutdown from July 25 as per the original plan adjusting with the overall COVID-19 fuel demand-supply scenario," a refinery official said. Last month, officials said the maintenance programme was postponed to August third week due to the prevailing COVID-19 situation. Its run rate fell to 67% in April from 95% in March due to fall out of the COVID-19 lockdown. But rose to 75% in May with the gradual unlocking of Asia's third-largest economy.

** India's Reliance Industries Ltd. has taken one of its crude distillation unit at its integrated Jamnagar petrochemical complex offline for around one-month of maintenance works, according to industry sources with knowledge of the matter. The offline unit - which is one of the two CDUs at the export-oriented plant -- will undergo works from July 20 to August 18. The turnaround had initially been slated for October but has since been brought forward, said market sources.

Asia-Pacific

** Taiwan's Formosa Petrochemical will shut its RFCC unit at Mailiao mid-August for an extended period to undergo repair works following a fire at the number 2 residue desulfurization unit in the morning of July 15. Formosa Petrochemical has halted operations at its number 2 residue desulfurization unit, or RDS. According to one source close to the refinery's operations, the impacted RFCC unit was located near the fire-hit RDS unit, with the RDS unit typically supplying low sulfur feedstocks to the RFCC. "Feedstocks being used now are from the inventories," one source familiar with the matter told Platts. The Mailiao refinery is also running at a lower run rate of 60% due to the fire, down from 80% that it had previously planned for July, according to official company sources. Overall in the plant are two RFCC units, each with a propylene capacity of 330,000 mt/year, located near the RDS, which supplies feedstock to the RFCCs.

** Ampol, formerly Caltex Australia, is eyeing end-August as the potential restart of its 109,000 b/d Lytton Refinery, after the facility was idled for scheduled maintenance in mid-May, industry sources with close knowledge of the matter told S&P Global Platts. A restart at end-August will bring to close four months of maintenance, which had been brought forward from the original August restart date, due to poor operating conditions earlier in the year, Platts previously reported. Australian demand for oil products has started to improve since these lockdown measures were eased in May.

** Sri Lankan Ceylon Petroleum Corp.'s Sapugaskanda refinery in 2021 is slated to undergo "a predicted full shutdown [that] is scheduled every two years generally," the company said in the statement. The exact period and duration of the turnaround has yet to be announced.

** Petron Philippines has shut its Bataan refinery for around two months from the start of May, as the refiner grapples with poor refining margins brought about by tepid demand for refined oil products, industry sources told S&P Global Platts in the week started June 28. "[The refinery] is still in turnaround currently ... it will be for approximately 2 months as they do maintenance work," said a source with direct knowledge of the plant's operations. "Petron was still buying for early July. Which makes it doubtful that the company had brought the refinery back thus far," one Singapore-based source said.

** Australia's second largest refiner, Viva Energy, revised plans to start major maintenance work at a residual catalytic cracking unit at its Geelong refinery from early July, earlier and over a longer period to better manage COVID-19 risks, according to a statement. Completion is targeted for November, the refiner said. It was initially slated to start maintenance in August, but a sharp fall in domestic demand for refined oil products as a result of the coronavirus pandemic, and subsequent movement restrictions, had prompted the company to review maintenance plans. "We have decided to commence our major maintenance program while units are already shutdown and refining conditions are weak, and carry out the works over a longer period of time so that we can better manage the COVID-19 risks," CEO Scott Wyatt said in the statement. At the end of April, the refiner had idled its RCCU unit together with the smaller of the crude distillation units, leaving the refinery to operate in "hydroskimming mode," Platts reported earlier.

** New Zealand's Refining NZ has shifted maintenance works at Marsden Point to March 2021, deferring the turnaround at the plant's crude distillation and gasoline producing units. The units were initially scheduled to shut some time in the second half of 2020, but restrictions on movement to contain the coronavirus pandemic have forced the company to review turnaround plans. In addition to postponing its major turnaround, the refinery also intends to place several processing units on standby in July and August to enable its domestic inventories to rebalance.

Upgrades

New and revised entries

** Pakistan Refinery has issued shares in order to upgrade and expand the plant into a deep conversion refinery, according to market sources and company documents. The proceeds will be used to revamp units and increase the gasoline and diesel yield. Following the sale of shares, Pakistan State Oil, the state-run biggest retail supplier of motor gasoline and diesel, and the refinery's biggest shareholder, increased its share in the refinery to 63.56% from 60%, Pakistan State Oil said in a filing to Pakistan Stock Exchange on July 29. It bought 40% of the right shares that Pakistan Refinery issued. Banks, pension funds, the general public and Hascol Ltd. own the rest of the shares.

Existing entries

** Indonesia's Pertamina is planning to build a petrochemical plant at its Balongan refinery in West Java and will cooperate in the project with Taiwan's CPC. The project is expected to be completed in 2026 and once it is on stream Indonesia will reduce imports of petrochemical products. Pertamina will build the project in three phases. The first phase is to increase refining capacity from to 150,000 b/d by 2022 from 125,000 b/d currently. The second and third phase will increase the product yield from the refinery, including from the new petrochemical plant. Under the plan, Pertamina and CPC will build a naphtha cracker that is expected to substitute imports. The naphtha cracker will produce at least 1 million mt/year of ethylene. Pertamina is also cooperating with Abu Dhabi National Oil Company (ADNOC) in the Balongan refinery project.

** Indonesia's Pertamina will go ahead and revamp its Cilacap refinery without Saudi Aramco, raising capacity from 348,000 b/d to 370,000 b/d, a company spokesperson said. The company had signed a heads of agreement on the revamp project in November 2015 with the Saudi oil major, but Aramco did not accept the figure that Pertamina had given on asset valuation, Platts has reported. Pertamina now plans to find other partners to work on the project, Fajriyah Usman said. Originally the project was expected to be completed in 2022 but now it may be delayed to 2023, she added. After the project is completed, Pertamina will be able to produce an additional 80,000 b/d of gasoline, 60,000 b/d of diesel and 40,000 b/d of jet fuel from Cilacap. The project includes increasing the crude distillation unit's capacity; raising the residual fluid catalytic cracking unit's capacity from 62,000 b/d to 81,000 b/d and adding a new 43,000 b/d hydro cracking unit.

** SK Energy has delayed full operation at its newly built 40,000 b/d desulfurization unit due to "deterioration in market conditions" in the wake of the coronavirus pandemic. The refiner completed mechanical construction of the vacuum residue desulfurization, or VRDS, unit on January 31, three months ahead of original schedule, to supply IMO 2020 low sulfur marine fuels to the market. The company previously aimed to start commercial production by the end of March.

** HPCL's $3.2 billion project to expand Vizag's capacity to 300,000 b/d is in advance stage of completion, company officials said. Originally, the expansion project was scheduled for completion in July 2020. But officials did not provide any specific timeframe for the completion of the project. The project aims to install primary processing units such as a CDU, replacing one of the three existing CDUs, a hydrocracker, and a naphtha isomerization unit.

** 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.

** 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.

** 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.

** 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 under way to ramp up the 120,000 b/d refinery's production capacity to 140,000 b/d in 2020, through 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 fuels output with lower sulfur content by 48,000 b/d.

** 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 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.

** 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 Pengerang Refining and Petrochemical, also known as PRefChem or RAPID, plans to delay the restart its fire-hit refinery in the southern state of Johor from September to early 2021, following which, operations at the integrated petrochemical complex will resume, sources with direct knowledge of the matter told S&P Global Platts. This was due to "economic reasons," a source close to the matter said. The restart had earlier been scheduled for September, with full commercial operations targeted for late 2020, Platts reported earlier. The refinery was shut March 15 due to an explosion at a diesel hydrotreater unit that led to five fatalities, Platts reported at the time. The resulting feedstock disruption led to the shutdown of its naphtha-fed steam cracker and downstream petrochemical plants. This was the second major incident at the Pengerang Integrated Complex, which was started up in Q3 2019. In April 2019, there was an explosion and fire at the atmospheric residue desulfurization unit when the refinery was in the commissioning stage.

** Indonesia's Pertamina decided to postpone the construction of a proposed 300,000 b/d Bontang refinery in East Kalimantan, a senior official said. "Bontang is still on the list, but currently we are focusing on the existing ones," Pertamina's mega project refinery and petrochemical director Ignatius Tallulembang said, adding that upgrading the existing refineries is "our priority". Ignatius Tallulembang said that the construction has been going on "but our partner stopped. So we hold the project while we are assessing more detail on oil supply and demand. If everything is clear, we will discuss again with our stake holders." The proposed refinery is targeted to produce at least 60,000 b/d of gasoline and 124,000 b/d of diesel and the products will meet Euro IV specifications, with Pertamina prioritizing domestic marketing first.

** 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.