REFINERY NEWS ROUNDUP: Mixed picture of run rates in Asia-Pacific

London — Some refineries in the Asia-Pacific are ramping up runs as lockdowns across the region ease and demand surges, but others continue operating at low runs.

Meanwhile some maintenance is coming to a close.

** Indian Oil Corp., the country's largest state-run refiner, has reached a run rate of 92-95% for most of its nine refineries. IOC expects the run rates to hit 100% by the end of July as economic activity gains momentum. In some IOC refineries, throughput levels were brought down to as low as 40%-45% during the first half of April.

** India's Reliance Industries Ltd. reduced run rates at its two refineries in Jamnagar to 91.7% in May from 94.8% in April and 95.4% in March. The near-normal run rates at the Jamnagar complex contrast with seriously scaled-down operations at state-run refineries such as IOC, BPCL, and HPCL during the two and half months of the lockdown since March 25.

** India's Chennai Petroleum Corp. operated its Manali refinery at half of capacity in the April-June quarter of the current fiscal year (2020-21) as retail fuel demand slumped after the country went into lockdown. The refinery scaled up its run rate as high as 60% in June as the first phase to ease the lockdown began.

** India's Mangalore Refinery and Petrochemicals Ltd. is running at 50% as diesel demand in the South Indian retail markets show signs of picking up.

** India's Hindustan Petroleum Corp. has been running its Mumbai refinery at an 85% run rate despite the nationwide lockdown. The company has been running its Vizag refinery at full capacity.

** India's Bharat Petroleum Corp. Ltd. has increased run rates at its Mumbai refinery to 95% as the Indian economy unlocks from COVID-19 measures, company officials said July 21. The refinery recorded a 131% run rate in March, 78% in April due to the lockdown, and 89% in May, reflecting gradual unlocking of the economy. In the initial phase of the lockdown, BPCL's average run rate was reduced to 65% of normal capacity. BPCL's portfolio of refineries includes two standalone refineries at Mumbai and Kochi, both on the country's west coast. It also runs two facilities at Bina in central India and Numaligarh in the northeast of the country as joint ventures.

** India's state-run Numaligarh Refinery Ltd. run rate was 97% in March, but this dropped to 69% in April due to the peak lockdown period, before rising to 81% in May on relaxation in the lockdown.

** Karachi-based Pakistan Refinery Ltd. has started producing Euro 2 compliant diesel, the company said in a filing to Pakistan Stock Exchange July 16. The refinery is currently producing the fuel oil complying with the new emission standards enforced by the International Maritime Organization 2020 (IMO-2020). It has designed annual production capacity of 2.13 million tons and is currently operating at 80% capacity utilization.

** Pakistan's government has prepared a policy draft that aims to incentivize the setting up of new state of the art refineries and upgrades to existing ones in order to reduce the country's reliance on imports. The policy draft aims to attract investment in the refining sector by giving 20-year tax holidays to those that set up minimum 100,000 barrels/day projects, the document said. No simple refineries would be allowed to be installed in the country while no relocation projects of any sort would be allowed. The policy envisages expansion and upgrading projects for existing oil refineries to make them deep conversion refineries with the addition of 100,000 b/d or more to existing refining capacity.

** South Korea's top refiner SK Energy will keep its crude run rate low for the time being, an the official said. The refiner's run rate was 92% in Q1, indicating its rate over April-June was 74%, which would be the lowest on record as its rate is typically around 90%. "We expect the company's crude run rate in Q3 to be around 80%-85%," the official said.

** SK Energy's refining affiliate SK Incheon Petroleum run rate averaged 80% in Q1, down from 87% a year earlier but up from 50% in Q4 last year when the complex underwent a 40-day full turnaround.

** Hyundai Oilbank said it has not raised its crude run rate since restarting its 360,000 b/d No. 2 CDU mid-May after maintenance, due to weak demand for oil products and slim refining margins.

** New Zealand's Refining NZ is preparing to "simplify refinery operations" at its Marsden Point refinery in an attempt to cut costs in the face of prolonged market weakness, the company said in a statement. The move could result in a further reduction of operations at the plant, market sources said. The plant slashed run rates by around a third in March and 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.

** 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.

** PetroVietnam's Binh Son Refining and Petrochemical has postponed maintenance at its refinery at Dung Quat for a second time, to August 12, that was originally scheduled to start June 12 and earlier postponed to July 27, due to the global COVID-19 pandemic delaying the arrival of expert workers and parts, BSR said.

** Pilipinas Shell Petroleum Corporation (PSPC) said it is extending the temporary shutdown at the Tabangao refinery in the Philippines "beyond the original advice of one month." 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. "We will continue to monitor the market conditions and will restart refinery operations as soon as it is economically viable," it said June 18.

Separately, Indian Oil Corporation, or IOC, and French energy major Total July 27 formed a 50:50 joint venture (JV) company to manufacture and market high-quality bitumen derivatives and specialty products for the growing road-building industry in India. The new JV will produce and market bitumen derivatives like polymer-modified bitumen, crumb rubber-modified bitumen, bitumen emulsions, and other specialty products.

NEW AND ONGOING MAINTENANCE

UPGRADES

LAUNCHES

New and ongoing maintenance

New and revised 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.

** Indian state-run Bharat Petroleum Corp. Ltd. plans to bring a 200,000 b/d crude distillation unit and associated secondary units at its Kochi refinery back online after a near one-month long turnaround, industry sources with knowledge of the matter said July 27. The 200,000 b/d CDU, one of two at the refinery, was taken offline in the last week of June for planned maintenance that had been scheduled for earlier in the year, but was postponed due to the coronavirus pandemic and nationwide lockdown from late March. The refinery's FCC unit and a hydrotreater were also scheduled for a shutdown.

** India's Bharat Oman Refineries Ltd. carried out its plan to shut its 17,000 b/d continuous catalytic reformer at Bina, also known as a gasoline reformer, in the first half of July, company officials said. The crude units and hydrotreaters were shut down to carry out statutory inspections. An industry official said the 10-day maintenance involved a temporary shutdown of operations. "All other units are operating normally," company officials said.

** 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

** South Korea's 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. It has also shut its 76,000 b/d No. 2 residue fluid catalytic cracker for maintenance in June and July, the official said. S-Oil Corp is planning to restart its 76,000 b/d residue fluid catalytic cracker at the end of July after near two months of planned maintenance, a company source said July 21. The high-severity residue fluid catalytic cracker has a propylene output capacity of 660,000 mt/year. S-Oil, which runs three CDUs with combined 250,000 b/d capacity and a condensate fractionation unit with a capacity of 89,000 b/d, maintained its crude run rate at 98% in Q2, unchanged from a year ago, but up from 93.4% in Q1 despite the coronavirus pandemic, according to the official. The Q2 rate is also up from the average 95.4% for 2019. But S-Oil's crude run rate is expected to decline in Q3 due to the planned maintenance of its 90,000 b/d No. 1 CDU that accounts for 36% of its total CDU capacity.

** Taiwan's Formosa Petrochemical will shut its RFCC unit in 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.

Existing entries

India

** India's No. 2 refiner Bharat Petroleum Corp. targets maintenance of Mumbai CCR unit in first week of August. The company previously aimed to start maintenance at a few units at the Mumbai refinery from July 11 for 25 to 30 days, after repeatedly postponing it since April 6. These plans have since been postponed indefinitely as parts of the country reintroduce lockdown measures to contain the spread of the coronavirus, the source said. The units that were also supposed to go in for the turnaround were a 10,000 mt/day diesel hydrotreater, a 1,500 mt/day isomerization unit and 5,000 mt/day aromatics extraction unit.

Asia-Pacific

** A secondary unit at Taiwan's Dalin has was shut due to a mechanical glitch in mid-June, prompting the net exporter of gasoline to purchase via a spot tender one 95 RON gasoline cargo to plug the gap in its domestic requirement, industry sources with close knowledge of the matter told S&P Global Platts. Market sources told Platts that the idled unit was essential for CPC's production of high octane gasoline, which are domestically consumed. The offline unit at the Dalin refinery is slated to restart end-July, market sources said.

** 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.

** In the Philippines, Pilipinas Shell Petroleum Corp. announced in a statement on June 18 that it was extending the temporary shutdown at the 110,000 b/d Tabangao refinery in the Philippines "beyond the original advice of one month."

** 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. Preparations are underway for maintenance work to begin in early July, with completion 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.

** PetroVietnam's Binh Son Refining and Petrochemical has postponed maintenance at its refinery at Dung Quat for a second time, to August 12, that was originally scheduled to start June 12 and earlier postponed to July 27, due to the global COVID-19 pandemic delaying the arrival of expert workers and parts, BSR said.

Upgrades

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.