Refining & Petrochemicals ME - Sept 2010 by ITP Business Publishing

REGIONAL NEWS 05 | CEO INTERVIEW 25 | EVENT PREVIEW 38 | PUMPS VENDOR SURVEY 42 | YANBU SNAPSHOT 48

NEWS, DATA AND ANALYSIS FOR THE REFINING AND PETROCHEMICAL INDUSTRIES

TESTING TIMES

QATAR EXCLUSIVE QAPCO GENERAL MANAGER TALKS UP HIS DOWNSTREAM AMBITIONS

Y SUPPL FORUM CHAIN W PREVIE

IRAQ

An ITP Business Publication, licensed by Dubai Media City

ADVANCED LAB EQUIPMENT IS THE QUALITY GATEKEEPER

SEPTEMBER 2010

OPEN FOR BUSINESS COUNTRY SEEKS $20 BILLION TO REVITALISE ITS DILAPIDATED DOWNSTREAM SECTOR

LOCAL MOTION: AIR LIQUIDE MOVING INTO KUWAIT JACQUES DE THEZY, MIDDLE EAST CHIEF EXEC, SAYS $80 MILLION INVESTMENT IS JUST THE START

Contents 1

IN PRINT

27 CRACKING MOLECULES Exclusive interview with Jacques de Thezy, chief executive officer of Air Liquide in the Middle East and North Africa.

September 2010 Volume 3 Issue 9

32 LABORATORY EQUIPMENT

5 REGIONAL NEWS

The right downstream lab equipment and testing faciltities can help producers determine quality control and maximise returns.

Qatar swoops on Algerian assets • Aramco-Dow JV is on track • Egypt refiner signs US$2.35bn deal • QPIC profits slump 18%

38 EVENT PREVIEW

8 MIDDLE EAST MARKET UPDATE

Downstream industry events kick off in earnest this month, so make sure you are up to speed on what the industry has to offer.

Build & Projects • Operations & Maintenance • Science & Technology • Equipment & Machinery • Sales & Shipments

46 NUMBER CRUNCHER

15 UP AND RUNNING

Refining and Petrochemicals Middle East provides market data and analysis for the region’s listed downstream companies.

Dr Mohammed Yousef Al-Mulla, general manager of QAPCO says a new production will transform Qatar’s downstream capabilities

48 THE BIG PICTURE

20 IRAQ COUNTRY PROFILE

Eye in the sky: The Yanbu refinery is soon to undergo a multi-billion dollar facelift, courtesy of Saudi Aramco.

After decades of neglect Iraq’s refining sector will need to burst back into action if its downstream vision is to be realised.

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Refining & Petrochemicals Middle East September 2010

2 Online

The online home of:

NEW APPOINTMENTS

ONLINE GALLERY

MOST POPULAR NEWS

1 Petrofac wins 2nd KOC EPC contract in 2 weeks 2 Aramco chief’s message to industry 3 Tecnimont awarded project by Kuwait’s KNPC 4 Shaw Group wins Takreer PMC contract 5 Interview: Deputy MD NK asset KOC Hosnia Hashim

EDITOR’S CHOICE

An Eye on Natpet

Aramco’s new board

Arabianoilandgas.com picture gallery takes you behind the scene of NatPet with brand new photographs of the private polypropylene producer.

Arabianoilandgas.com brings you the names of the new board of directors of Saudi Aramco for the next three years. Al-Falih remains as CEO of Aramco.

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BREAKING NEWS AND VIEWS FIRST

MESC WINS US$14M FOR TAKREER REFINERY EXPANSION

KBR WINS SECOND CONTRACT FOR BP’S EGYPTIAN TERMINAL

MESC Group has recently been awarded a contract from GS Engineering & Construction to supply instrumentation cables for Takreer Abu Dhabi.

KBR announced that it has been selected by BP to undertake the second stage of concept selection and definition for the onshore terminal and export pipelines.

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ARAMCO TO CHANGE JAZAN REFINERY LOCATION

Interview with Salem Shaheen, president and CEO of SATORP arabianoilandgas.com

WEB FORUM

ENI IN NORTH AFRICAN GAS CONTRACT RENEGOTIATIONS

Saudi Aramco is expected to change the location of the Jazan oil refinery after it cancelled tenders to construct a harbour in Jazan.

Italian energy company ENI is to start renegotiating its long-term natural gas contracts with Algeria and Libya.

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Petrochemicals Middle East September 2010

TIME TO BUILD

E JOIN TH E T A B DE

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4 Comment

Is a global exporters’ forum a workable idea?

Registered at Dubai Media City PO Box 500024, Dubai, UAE Tel: 00 971 4 210 8000, Fax: 00 971 4 210 8080 Web: www.itp.com Offices in Dubai & London ITP Business Publishing CEO Walid Akawi Managing Director Neil Davies Managing Director Itp Business Karam Awad Deputy Managing Director Matthew Southwell Editorial Director David Ingham

ran’s Ministry of Petroleum has suggested the formation of a global forum for exporters of petrochemical products – the ‘Petrochemical Exporting Countries Forum (PECF)’ – with Saudi Arabia, Russia, Qatar, and Turkey the additional members. The idea would be to create something similar to the Organization of Oil Exporteing Countries (OPEC) or the Gas Exporting Countries Forum (GECF). According to the managing director of the National Petrochemical Company, Abdolhossein Bayat, the forum would strive to bring order and co-ordination among exporters in the areas of pricing and production practices, as well as the nature of their market presence in target countries. In an age of globalization, as the world is reduced to a small village, establishing this kind of association is a logical idea. It will arguably boost the position of producers in the market, strengthen their negotiating position, and improve cooperate between its different members. Apart from Africa, every continent around the world has its own member-run petrochemical association. In the Middle East, the majority of petrochemical companies are members in the Gulf Petrochemicals and Chemicals association (GPCA), and some of them are members of the Arab Association of Petrochemical Syndicates or the Arab Fertiliser Association (AFA). Personally, I don’t think that such a global association would be realized. The agendas of the proposed members are simply too different. Even if it is established, the example of the Gas Exporting Countries Forum (GECF) has shown that it would have no influence on price setting or on issues of supply.

Editorial Energy Group Editor Daniel Canty Tel: +971 4 444 3255 / daniel.canty@itp.com Editor Abdelghani Henni Tel: +971 4 444 3661 / abdelghani.henni@itp.com Advertising Commercial Director Jude Slann Tel: +971 4 210 8693 / judith.slann@itp.com Sales Manager Stephen Hamer Tel: +971 4 2108771 / stephen.hamer@itp.com Studio Group Art Editor Daniel Prescott Art Editor Simon Cobon Designer Wasim Akande Photography Director of Photography: Sevag Davidian Chief Photographer: Nemanja Seslija Senior Photographers: Efraim Evidor, Khatuna Khutsishvili Staff Photographers: Thanos Lazopoulos, Khaled Termanini, Jovana Obradovic, Rajesh Raghav, Ruel Pableo, Lyubov Galushko Production & Distribution Group Production & Distribution Director Kyle Smith Deputy Production Manager Matthew Grant Production Coordinator Devaprakash Managing Picture Editor Patrick Littlejohn Image Editor Emmalyn Robles Distribution Manager Karima Ashwell Distribution Executive Nada Al Alami Circulation Head of Circulation & Database Gaurav Gulati Marketing Head of Marketing Daniel Fewtrell Marketing Manager Annie Chinoy ITP Digital Director Peter Conmy ITP Group Chairman Andrew Neil Managing Director Robert Serafin Finance Director Toby Jay Spencer-Davies Board of Directors K.M. Jamieson, Mike Bayman, Walid Akawi, Neil Davies, Rob Corder, Mary Serafin

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Do you think that establishing a forum for petrochemical exporting countries is good for local producers?

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Refining & Petrochemicals Middle East September 2010

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News 5

News

SEPTEMBER 2010

Qatar swoops on Algerian assets

Qatar Petroleum takes 10% stake in new 1.4m tonne ethane cracker project in Arzew Qatar Petroleum (QP) has joined the Franco-Algerian partnership between Algeria’s state-owned Sonatrach and French integrated oil major Total in a joint venture project to construct a 1.4m t/y ethane cracker in Arzew, on the western coast of Algeria, according to an unnamed source close to Sonatrach. “The Algerian government has accepted the entrance of QP in the project, which will hold 10% of the project,” the source told Refining and Petrochemicals Middle East. The project has an estimated CAPEX of US$3 billion and encompasses the construction of a new ethane cracker and three polyolefin production lines. Initially, Sonatrach had awarded a contract to Total to construct the ethane cracker, in which Total had a controlling 51% stake of the project, and Sonatrach 49%. However, new government regulations dictate that local partners must control the majority of any project with foreign companies, which has forced Total to relinquish part of its share. This situation has affected the development of the project which was originally slated for completion in 2013. “Now the Algerian and the French government have reached an agreement allowing QP to control 10% of the project, Total 39% and Sonatrach 51% of the project,” the Algiers-based source said.

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The ethane cracker in Arzew will be linked to the liquified natural gas plant which will provide the ethane feedstock to the proposed cracker.

“The partners will resume work on the project very soon, as the government does not want any further delay in the project,” he said. “The project is considered critical to the Algerian government’s downstream ambitions.” Total declined to confirm financial information relating to

the project, but said it was still 100% behind the project. “We continue talks with Sonatrach and we remain totally committed to the project,” Burkhard Reuss, petrochemical communication manager at Total told Refining and Petrochemicals Middle East.

The industrial city of Arzew (pictured) is home to much of Algeria’s downstream production.

QP and Sonatrach declined the invitation to comment. The proposed cracker will have a 1.4m t/y of ethane capacity, and will produce 1.1m t/y of ethylene. The ethylene will be processed into 410 000 t/y of mono ethylene glycol, 350 000 t/y of high density of polyethylene (HDPE) and 450 000 t/y of linear low density of polyethylene (LLDPE), principally slated for export. The LNG 1 and 2 plant at Arzew will provide ethane feedstock to the cracker. Total won the project in 2007 beating off competition from SABIC. The Saudi Arabian chemical giant said it remains interested in establishing a project in Algeria, and is keen to benefit from cheap feedstock and its proximity to the European markets.

Refining & Petrochemicals Middle East September 2010

6 News

Aramco-Dow JV is on track

FEED work of the project expected to be completed by mid 2011

KNPC contains crude oil leakage near Al-Ahmadi

Saudi Aramco and The Dow Chemical Company have announced that their joint venture petrochemical project continues to make progress with the front-end engineering and design (FEED) work expected to be completed in mid-2011, Saudi Aramco said in a statement. The two partners confirmed that they have decided on Jubail Industrial City as the planned site location for the project. The decision comes after having evaluated a broad set of variables, which includes anticipated infrastructure benefits and potential business integration opportunities. Jubail Industrial City is the largest industrial complex of its kind in the world. It is located in the eastern province of the Kingdom of Saudi Arabia. Abdulaziz Al-Judaimi, Saudi Aramco’s vice president

Kuwait National Petroleum Company (KNPC) said that a limited oil leak occurred early August during a transportation operation to one of its oil tankers near AlAhmadi Refinery. KNPC’s acting director of public relations and information, Ahmad Al-Muzaiel, said the leakage has been contained, noting that emergency teams were at the scene and had stopped the leak quickly. “In total around 10 barrels of crude oil have leaked,” the acting director of public relation said. The official added that specialised emergency teams in cooperation with the naval forces in the area had managed to contain the spread of crude at the site. Al-Muzaiel noted that other teams were also dispatched and were in charge of cleanup operations which reached near the shores areas.

The project was originally slated for Ras Tanura but has since been relocated to Jubail.

responsible for the project, said: “We continue to execute the project. The commitment of both partners demonstrates the strategic importance of this project and the benefits of investing in the Kingdom of Saudi Arabia.” Dow senior vice president Jim McIlvenny commented: “The project has and continues to benefit from the shared dedication

and hard work of top talent from Dow and Saudi Aramco. The project team will continue to evaluate all variables that could impact the ultimate investment decision and the relevant stakeholders.” The partners have not disclosed yet, whether the name of the project will be changed or keep its initial one Ras Tanura Integrated Petrochemical Project (RTIP).

GPCA regrets Indian ADD QPIC profits decline 18% The petrochemicals and chemicals industry in the Gulf region strongly opposes the recent determination of India’s Ministry of Commerce to apply anti-dumping duties on exports of polypropylene from the Gulf region, said Dr Abdulwahab Al-Sadoun, secretary general of the GPCA. According to the disclosure report issued by India, the Indian Government decided to apply anti-dumping measures against polypropylene exports from Oman and Saudi Arabia. The secretary general of the GPCA said the decision is not justified because GCC companies are neither dumping products in India nor causing injury to the Indian petrochemical industry.

Al-Sadoun said the Indian anti-dumping authorities decided to take the unprecedented approach of rejecting the local price of feedstock used to manufacture polypropylene because the price when sold in Saudi Arabia is “considerably lower” than the price available in India. He observed that for obvious commercial reasons, including proximity to the source and low local production and distribution costs, the price of feedstock in Saudi Arabia, as in the Gulf region generally is more competitive than in other countries including India. He confirmed that WTO rules do not allow India to use ADD measures to protect its industry from fair trade competition.

Petrochemicals Middle East September 2010

Qurain Petrochemicals Industries Company (QPIC) announced a net profit of US$5.72m for the first half of 2010 ended 30 June 2010, compared to $32.6m in the same period of 2009. The decline in earnings is largely due to lower petrochemical prices in the first half of 2009 and pre-operating expenses of associate companies, namely The Kuwait Aromatics Company, the company said. Commenting on the results, Sheikh Mubarak Abduallah AlSabah, Chairman of QPIC said: “This year we had some significant pre-operating expenses in addition to the fact that we are coming out of the petrochemical downturn of 2009. As a result,

we expect 2010 to have very modest returns. However, all of our plants in Kuwait are now fully operational and we expect the returns we are seeing this year from our plants to be reflected in our profits in 2011.” “Overall, our income was inline with our expectations and we have seen our shareholder equity increase by 20% around $104m compared to the same period last year. QPIC also enjoys a solid cash position that will allow it to take part in potential opportunities in the sector,” he said. Dividend income from Equate and The Kuwait Olefins Company totalled $26million compared with $39.77million earned in the previous year.

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News 7

ERC signs US$2.35bn deal

New debt will be used to finance its Cairo refinery expansion project The Egyptian Refining Company (ERC) has signed up with five institutions to raise US$2.35 billion in senior debt to finance construction of its $3.7 billion secondphase oil refinery in the greater Cairo area, the company said. In addition to the senior debt package, which has been subscribed by Japan Bank for International Cooperation, Nippon Export and Investment Insurance, the Export-Import Bank of Korea, the European Investment Bank and the African Development Bank, the company has raised subordinated debt of $225 million from Mitsui and Company, which is part of the consortium of contractors building the refinery, and AfDB. The refinery will produce four million tonnes of refined products per annum when completed,

including 2.3 million tonnes of Euro V diesel, the cleanest fuel of its type in the world. “We are delighted to announce the debt package for what we believe stands as one of the largest project finance deals ever assembled in Africa,” said Citadel Capital MD Marwan Al Araby. ERC is a joint venture between private equity firm Citadel and the state-owned Egyptian General Petroleum Corporation. EGPC controls 15% of the project. “ERC has won outstanding backing from leading global institutions because it will have a notable effect on both Egypt’s economy and on the environment, particularly in the Greater Cairo Area. It has similarly enjoyed the full backing and support of the Government of Egypt in particular,” Al Araby said.

News of the debt package came just weeks after the International Finance Corporation announced it would invest equity of $100 million in the project. The refinery, to be located in the Greater Cairo district, will sell its production to EGPC under a 25-year offtake agreement at international prices.

Marwan Elaraby, Managing Director of Citadel Capital.

Qapco opens new warehouse in Lebanon Qatari Deputy Prime Minister and Minister of Energy and Industry, Abdullah bin Hamad Al Attiyah, recently inaugurated Qatar Petrochemical Company’s (Qapco) Logistics Services Establishment in Tripoli, Lebanon. High ranking officials from Qatar and Lebanon attended the ceremony. Al Attiyah, who is also the board chairman of Qapco said that Qatar is proud of its distinguished economic and political relations with Lebanon, and that opening the company’s warehouse in Lebanon would further boost and enhance bilateral relations between the two countries. “We look with great admiration at the economic progress and development that Lebanon has been witnessing, despite the hardships

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the country has experienced in the past years. Such achievements came due to its peoples’ strong will and determination to succeed,” he said. Dr Mohammed Yousef Al-Mulla, Qapco is boosting its logistics network across the Middle East. general manager and board memQapco’s global marketing netber of Qapco, said that Qapco has work currently consists of 28 overgood presence in the Lebanese seas representative offices and market, since it opened its repre- logistics services establishments. sentative office in 2006. The offices are located throughout “Opening our Logistics Ser- Asia, Northern Africa and Austravices Establishment in Lebanon lia. “We hope that we can now will definitely help us meet our have faster access to our customcustomers’ increasing demands, ers, and that the high quality prodas our exports of petrochemi- ucts and excellent services will cal products are reaching up to be up to their expectations,” said 20 000 MTA,” he added. Al Mulla.

Briefs Saudi Minister of Commerce and Industry, Abdullah bin Ahmad Zainal Alireza issued a decision approving the declaration of founding Aramco-Total Arabian Services Company, as a closed stockholding company. The planned Jubail-based company’s paid up capital is US$533 000 divided into 200 000 shares. Pars Petrochemical Company in Assalouyeh, Iran, exported 137 000 tonnes of liquid gas and styrene monomer to East Asian countries in the period between June 22-July 22. Pars Petrochemical Complex is widely thought to be the first processing phase of Assalouyeh’s South Pars gas field. A Chinese consortium is to finalise a US$1 billion financing deal with the Iranian National Petrochemical Company (NPC) to fund Iranian petrochemical projects, during the third quarter of this year. The cash injection will be allocated to the top priorities in Iran’s petrochemical sector, Mehr News Agency reported. Kuwait’s Petrochemicals Industries Company (PIC) is investing US$10bn in the next five years in major downstream projects in Kuwait and Asia, according to Maha Mulla Husain, PIC’s chairman and managing director. “We plan to establish the third olefin project in Kuwait, and an oil refinery in China,” she said.

Petrochemicals Middle East September 2010

BUILD&PROJECTS

Sipchem commits to new EA plant The US$106 million ethyl acetate plant is expected to be commissioned during 2013 Saudi International Petrochemical Company (Sipchem) said that it has signed agreements with French chemicals company Rhodia to build a new ethyl acetate (EA) plant in Saudi Arabia. As part of its Phase-III expansion programme, Sipchem is to construct and operate the 100 000t/y ethyl acetate plant in Jubail Industrial City. The agreements included a technology license agreement, a marketing agreement and a term sheet for ethanol procurement with Rhodia. The project is expect to cost US$106m, and is completely owned by Sipchem. Sipchem said that access to Rhodia’s EA technology and

MBM to build US$400m polysilicon plant in UAE MBM Holdings, a Dubaibased investment company, said it will invest US$400 million to build a plant in the UAE to manufacture polysilicon. “The proposed plant will produce 2 500 tonne per year of solar-grade polysilicon, and it will be the first factory in the region to produce polysilicon when completed in early 2012,” the company said. A new company has been created to develop the project, MBM Solar Holding, a JV between MBM Holdings and Lancaster Holdings International, a closely-held company that acquires underperforming businesses in Asia.

The project is the first for Rhodia in the region and will produce 100 000t/y of ethyl acetate.

know-how will ensure that the quality and cost of production of the EA plant will meet and exceed world class standards. The EA plant will also be designed as a swing facility to produce butyl

acetate as well. The EA plant is expected to be commissioned during 2013. “This deal is a first step in our cooperation with Sipchem and in the region,” Kamel Vincent,

ABB wins $20m power contract from SADAF ABB has won a US$20 million contract from Saudi Petrochemical Company (Sadaf) to implement a power factor correction and power management solution at the company’s Jubail manufacturing complex, the company said in a statement. ABB’s solution will help Sadaf improve its network efficiency and, significantly reduce the electricity losses while improving the stability of its power supply. “Petrochemical facilities are very energy intensive and any variation in the power factor will result in higher losses and reduced transmission capacity,” said VeliMatti Reinikkala, head of ABB’s process automation division. “By providing reliable power factor

Refining & Petrochemicals Middle East September 2010

correction solutions and infrastructure, we are helping our customers such as Sadaf to optimise the productivity and efficiency of their operations as well as realise significant cost savings.” ABB’s contract is a lump sum turnkey project which includes the construction of a new substation for installation of power factor correction equipment, the supply of a power management solution to be integrated along with existing high and medium voltage electrical system into the plant’s electrical grid, as well as the installation and commissioning activities. The power factor correction solution will consist of nine banks of correction equipment totaling 109 8 MVAR.

Rhodia’s Phenol Solvents president told Refining and Petrochemicals Middle East. “The project has already started in terms of engineering studies and the plant should be operationel early 2013,” he said. The feedstock required to produce ethyl acetate is acetic acid, which will be obtained from Sipchem’s affiliate, International Acetyl Company. The ethanol will be imported from international markets with the assistance of Rhodia. “The markets for the product are mainly the paints, coating, and automotive industries, but ethyl acetate is also used in most of the consumer and industrial goods markets,” he said.

KNPC awards $400m LSTK contract to Tecnimont Maire Tecnimont announced that it has been awarded a contract to develop an acid-gas removal plant (AGRP) for Kuwait National Petroleum Company (KNPC). The project will be executed on a Lump-Sum Turnkey contract basis for approximately US$400m and expected to be completed by 2014. The contract foresees the provision of engineering, procurement, construction and commissioning (EPCC) services for a brand new process train of gas handling and sweetening facilities - a new AGRP unit. The new AGRP facilities will be capable of handling as much as 230 million cubic feet-a-day of gas and 78 000 barrels a day of condensates.

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OPERATIONS&MAINTENANCE

NatPet starts commercial production

Production at the propylene and polypropylene plants reached 32 850 tonnes per month Saudi joint stock company, Saudi Alujain Corporation said that its subsidiary National Petrochemical Industrial Company (Natpet) has started commercial production at its propylene and polypropylene plant in Yanbu Industrial City, the company said in a statement to the stock exchange. â&#x20AC;&#x153;This key milestone is achieved subsequent to the Propane Dehydrogenation (PDH) plant acceptance with noted exceptions, and after witnessing stable and safe running of the PDH and PP plants for two consecutive months from the date of successfully completing the minimum

performance test on 5th August,â&#x20AC;? the statement read. The monthly production of the propylene and the polypropylene plants in Yanbu, during that period reached 32 850 tonne per month (equivalent to 394 200 tonne per year). The company started commissioning its project last November, which was initialy supposed to start in early 2008, but due to the technical problems the company faced, Natpet was obliged to postpone the commercial start up till the second quarter 2010. NatPet is expected to produce 400 000 tonne per year of poly-

NatPet produces 400 000t/y of polypropylene, and it exports it mainly to Asia and Turkey.

propylene, which is sold under an off take agreement signed

with SABIC and Noble, to market its product in Asia and Turkey.

Kayan starts MEG and PP Petro Rabigh resumes operation at HOFCC unit plants commissioning Rabigh Refining and Petrochemical Company (Petro Rabigh) said that its high olefin fluid catalytic cracking (HOFCC) had broken down due to a problem in one of the valves, and that it resolved the issue on August 6. In a statement published on the website of the Saudi stock exchange (Tadawul), the company said that the problem had forced stoppage of production of ben-

zene and polypropylene from the company complex in Rabigh. The company said that it had enough benzene and polypropylene inventories at its warehouse which allowed it to cover the shortage during that period. The HOFCC plant at Petro Rabigh is one of the largest in the world. It produces 900 000t/y of propylene, which is used to produce 700 000t/y polypropylene.

PetroRabigh undertook a 48-hour maintenance programme at its oxygen and nitrogen plants.

Refining & Petrochemicals Middle East September 2010

Saudi Kayan has started commissioning its mono ethylene glycol and polypropylene plants at the company complex in AlJubail Industrial City, on the Eastern coast of Saudi Arabia. The company said in statement published to the Saudi Stock market that it started the commisioning production on August 4th. Kayan said in early July that it started commissioning its olefin plants, which the company will use as part of its feedstock for the ethylene glycol and the polypropylene plants. Saudi Kayan confirmed it was seeking further bank financing, with the help of SABIC, to cover an astonishing US$2.4 billion rise in the building costs of the complex.

Kayan is located in Al-Jubail industrial City.

The Saudi Kayan operation is a joint venture company between Saudi Basic Industries Corporation (SABIC), which controls 35%, Al-Kayan Petrochemicals, which controls 20% of the company, while 45% of Kayan is listed on the Tadawul.

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SCIENCE&TECHNOLOGY

SABIC ups investment in ME research

Funds to support innovation in downstream sector allocated to Umm Al-Qura University Saudi Basic Industries Corporation (SABIC) has announced that it has provided annual research funding to Umm Al-Qura University. This support represents part of SABIC’s wider program to enrich Saudi Arabia’s research and technology capabilities and will see collaboration with several other flagship universities in the coming times. SABIC’s growing relationship with Umm Al-Qura University, which is located in the Holy City of Makkah, will address a number of the country’s relevant industrial research needs and will help achieve technology advancement in a sustainable manner, through education.

“SABIC’s programmes to support research and innovation at universities have evolved significantly over time and cover a wide range of areas such as chemicals, petrochemicals, metals, fertilizers, polymers and industrial catalyst applications,” said Dr. Abdulrahman Al Ubaid, SABIC’s executive vice president of technology & innovation. “These programs have now expanded even further to also support research on safety, environment, health, pollution and the recycling of industrial waste through scientific methods.” “SABIC’s collaboration with Umm Al-Qura University will be essential towards building

The research remit has been expanded to cover safety, environment and health issues.

synergies in research, education, and enterprise,” said Dr Abdulrahman Al Ubaid. “In addition to harnessing science and

technology to address the global challenges of our time – for the benefit of Saudi Arabia and beyond,” Dr Al Ubaid said.

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Refining & Petrochemicals Middle East September 2010

EQUIPMENT&MACHINERY

Flowserve nets KSA pumps contract

Saudi Aramco orders pumps, valves and support services for Yanbu export refinery Flowserve announced it has received final approval from Saudi Aramco on a master purchase agreement to supply pumps, valves and services for the Yanbu Export Refinery Project (YERP). Under the terms of the corporate procurement agreement (CPA) established between Flowserve and Saudi Aramco, Saudi Aramco plans to make significant future purchases of Flowserve pumps, valves and value-added services. Flowserve said it expects to begin booking orders under the CPA later in 2010. “Flowserve has made significant investments in the Kingdom of Saudi Arabia, including service, repair and manufacturing

facilities to support the oil and gas industry, and to help ensure premium service can be provided in-country,” said Tom Ferguson, president, Flow Solutions Group. Under construction on the west coast of Saudi Arabia, YERP will be a 400 000 bpd, full-conversion refinery being built in Yanbu Industrial City. “This agreement reinforces Flowserve’s ongoing commitment to delivering valve products and services in Saudi Arabia through our local facilities,” said Tom Pajonas, president, Flow Control Division. “This overall Flowserve strategy is supported by the fact that the project will require a majority of the Flowserve control

Saudi Aramco plans to make significant future purchases of Flowserve pumps and valves.

valves to be produced at our new Dammam valve and actuator facility, which will open in the third

quarter of 2010.” When completed, the facility will be one of several Flowserve has in the region.

Yokogawa releases new optical spectrum analyser Yokogawa Meters & Instruments Corporation will release the AQ6370C optical spectrum analyser. Featuring enhanced optical performance and signal processing capabilities. “This new instrument will be used in research and development and manufacturing to measure the optical characteristics of optical communications equipment and components,” the company said in a press release. The AQ6370C achieves a 76dB stray light suppression ratio and is guaranteed by Yokogawa to achieve this level of performance, an industry first. The AQ6370C also achieves a 73-dB dynamic range. It also features a number of enhancements and succeeds our top performing and market lead-

ing AQ6370B. The AQ6370C has both standard and high performance versions. Its increased measurement accuracy and speed will help to increase measurement efficiency and reduce development and production costs of operators. The new product includes different features and specifications. “The AQ6370C is the first ever instrument in this industry to be guaranteed to achieve a 76-dB stray light suppression ratio,” the company said. “Even when used in normal mode (as opposed to high dynamic mode), this instrument achieves this high stray light suppression ratio, thereby reducing measurement time,” according to a Yokogawa spokesperson.The AQ6370C is equipped with a high

Refining & Petrochemicals Middle East September 2010

performance monochromator that can resolve an optical signal with a best-in-class 0.02 nm wavelength resolution and 73-dB dynamic range. “This improves the accuracy of optical spectrum measurements made with the AQ6370C by removing optical noise that

originates near a measured signal,” added the source. “Highspeed 0.2 second measurements at a 100 nm wavelength span are effective in measuring spectra having multiple steep peaks such as those in DWDM2 systems, as well as weak signals,” the company added.

The new AQ6370C optical spectrum analyser has a high performance monochromator.

www.arabianoilandgas.com

SALES&SHIPMENTS

RasGas ships first cargo to Portugal

Qatar sends LNG on single spot sale to Iberian coast marking 14th export partner to date RasGas has delivered its first supply of liquefied natural gas (LNG) into Portugal. The spot sale cargo was delivered to an affiliate of Galp Energia SPGS, in Portugal, from the LNG tanker Al Deebel. “RasGas has supplied LNG to 14 different countries and we continue to look for opportunities to deepen existing relationships and further diversify our portfolio of customers,” said RasGas marketing executive Khalid Al Kuwari. Earlier in the year RasGas started LNG output from its massive train 7 production facility. The facility has capacity to chill enough natural gas to produce 7.8 million tonnes per year (tpy) of LNG for export. Qatar started three equally large facilities last year. The trains are the largest in the world. “RasGas currently connects the reservoirs of Qatar’s North Field to customers around the

Qatar’s vast natural gas processing and liquification plants should be complete by the end of 2010, bringing capacity to 77mn t/y.

world via seven LNG trains, 27 long-term chartered ships including Q-Flex and Q-Max LNG carriers and access to regas ter-

minals in Europe and the US,” Al Kuwari said. “Today’s historic cargo delivery demonstrates our credentials

as a globally trusted supplier of LNG, and builds on our reputation for operational and contract flexibility,” he concluded.

Kuwait’s KUFPEC signs a SABIC increases MEG deal to export fuel to Egypt prices to $880 per tonne Kuwait Foreign Petroleum Exploration Company (KUFPEC) said that it has signed a deal to export gas oil and aircraft fuel to Egypt for a period of three years. KUFPEC’s managing director for international marketing Abdulatif Al-Houti told KUNA the deal would be put into activation as of next January, stressing that this will help petroleum cooperation between Kuwait and Egypt.

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KUFPEC’s branch manager in Egypt, Said Safan, affirmed the importance of such deal to bolster bilateral relations, adding that KUFPEC was involved in other petroleum ventures in Egypt. Established in 1981 by its parent company, Kuwait Petroleum Corporation (KPC), KUFPEC engaged in upstream and downstream activities outside Kuwait, active in Africa, and Middle East.

Saudi Arabia Basic Industries Corporation (SABIC) has increased Asian Contract Prices (ACP) of mono ethylene glycol (MEG) for September at US$880 per tonne. MEGlobal has nominated its September contract price for MEG for Asia at $870/mt levels. MEG contract prices argenerally set by the three major players of the industry, which includes SABIC, MEGlobal and Shell Chemicals Company.

SABIC is the largest MEG producer in the world, with a production capacity exceeding 5.345 million t/y, through its 10 production units located in Al Jubail Industrial City and in Yanbu. SABIC signed a deal last year with a Dutch storage and terminal operator to rent MEG storage tanks at the port of Zhanjiagang, East China, as it aims to improve delivery of the products to end users, and reduce shipment delays.

Refining & Petrochemicals Middle East September 2010

Our contribution to clean energy is cleaning energy. Natural gas is one of the most important energy sources. Presently, one quarter of the world’s energy demand is supplied by natural gas which is predominantly transported via pipeline. However, rising demand combined with waning reserves calls for the exploration of new natural gas sources. Given in most instances the remote location of new sources, transport is frequently only possible by ship. As a consequence, LNG (liquefied natural gas) is becoming an increasingly important transport option. Although LNG is a very clean energy source, liquefaction requires refrigeration to a temperature of –160° C before transport is possible. In this condition, the gas has only 1/600 of its original volume and can be transported more economically. To ensure the cleanest possible energy source the natural gas can be purified using Lurgi’s Omnisulf ® process prior to liquefaction. This process involves a combination of various technologies designed to meet even the most stringent purity requirements. Contact us and we will be pleased to deliver a solution tailored to your specific needs.

Build on our technologies. Call us: +49 (0) 69 58 08-0 www.lurgi.com

1176_e

A member of the Air Liquide Group

Visit us at Stand 11520

QAPCO Exclusive Interview 15

UP AND RUNNING Dr Mohammed Yousef Al-Mulla, managing director of Qapco says that newly inaugurated projects will enhance Qapcoâ&#x20AC;&#x2122;s position as a major petrochemical player in the Middle East

Dr Mohammed Yousef Al-Mulla, board director and managing director of Qapco. www.arabianoilandgas.com

Refining & Petrochemicals Middle East September 2010

16 QAPCO Exclusive Interview

atar Petrochemical Company (Qapco) is enjoying many benefits that allow it to be one of the major players in the Middle East, taking advantage of the easy access to feedstock and governmental support. This has helped the company complete major expansion projects to boost its market position. State-owned Qatar Petroleum (QP) has the responsibility for distributing feed-gas to various consumers in Qatar, of which Qapco is one of the customers. “The ethane feedstock to Qapco is currently sourced from onshore oilfields and the giant north gas field sources, through three NGL plants, NGL-1,2 and NGL-4,” Dr Mohammed Yousef Al-Mulla, board director and managing director of Qapco, tells Refining and Petrochemicals Middle East. Qapco’s gas processing facilities consist of recovering ethane from Stripped Associated

Gas (SAG) and Ethane Rich Gas (ERG). “Qapco receives enough ethane feedstock for the production of ethylene and polyolefin’s. Thanks to the huge reservoir of natural gas available in the North Field, looking to the future, we do not expect any shortfall in the feed supply,” explains Dr. Al-Mulla. The current progress on North Field natural gas development projects at Ras Laffan, including the Dolphin project; Al Khaleej EGU project (AKG), GTL projects and

NGL plants means there is plenty of ethane available for Qatar’s downstream and petrochemical industries. “Our current design production capacity of ethylene and low density poly ethylene (LDPE) is 720 000 t/y and 400 000 t/y respectively, though we are able to produce higher than the design with ethylene at about 800 000 t/y and LDPE 405 000-410 000 t/y,” says Dr. Al-Mulla. The company has completed its expansion plans successfully,

“THE LDPE-3 PROJECT IS NOW UNDERWAY, AND IT IS FORECASTED TO BE COMPLETED BY END OF 2011. AFTER COMPLETION OF THIS PROJECT, THE QAPCO’S TOTAL LDPE PRODUCTION CAPACITY WILL BE INCREASED UP TO 700 000 T/Y” MOHAMMED YOUSEF AL-MULLA, MANAGING DIRECTOR, QAPCO

The Qapco cracker unit and polyethylene plant is located at Mesaieed industrial city in Qatar, about 40Km south of Doha, sits at the heart of the nation’s petrochemical ambitions.

Refining & Petrochemicals Middle East September 2010

www.arabianoilandgas.com

QAPCO Exclusive Interview 17

Mohammed Yousef Al-Mulla is the managing director at Qapco.

www.arabianoilandgas.com

Refining & Petrochemicals Middle East September 2010

18 QAPCO Exclusive Interview

including the Qatofin project which produces linear low density polyethylene (LLDPE). The Qatofin project was inaugurated on 24th November 2009, and started up production of low linear density polyethylene (LLDPE), with a designed capacity of 450 000 t/y. Qapco is the major shareholder of Qatofin as it controls 63% of the company, while Total Petrochemicals of France holds 36% with QP controlling 1%. Qapco has also started up the Ras Laffan Ethane Cracker (RLEC). “RLEC started up on 31 March, 2010 and produces some amount of ethylene,” Al-Mulla says. “As is the case with new plants, we have initial issues, which we hope to sort out very soon,” he adds. RLEC is a joint venture between Qatofin which holds 45.7%, Q-Chem II controlling 53.3% and QP holding 1% in the project. RLEC is expected to produce 1.3million t/y of ethylene, expandable to 1.6 million t/y. About 700 000 t/y of the produced ethylene will be allocated to Q-Chem II and 600 000 mtpa to Qatofin. RLEC crack ethane is supplied from Al Khaleej and Dolphin gas projects to feed the

Qapco’s current production capacity of ethylene and low density polyethylene is 720 000 t/y and 400 000 t/y respectively.

sponsor’s downstream derivative units. The ethylene produced by RLEC is transported to Messaeed via a 120-kilometre pipeline to feed Q-Chem and Qapco projects in Messaeed. Qapco has invested more than $1 billion to execute these two projects. “The total estimated budget allocated for Qatofin and RLEC is about $1.35 billion,” Dr.Al-Mulla reveals. The company is also expanding its LDPE project, as it aims to almost double its capacity. Al-Mulla says that the LDPE-3 project is underway and it is expected to be completed by the end of 2011. “After completion of this project, Qapco’s total LDPE production capacity will be increased up to 700 000 t/y,” Dr Al-Mulla says. Following the start up of its Qatofin and RLEC

projects, Qatofin exported the first ethylene shipment from the Ras Laffan Olefins Company (RLOC) on 30 June 2010. The first shipment contained 4 500 metric tonnes of ethylene, and was shipped by NORGAS, the ethylene shipping contractor. The company serves clients around the world, through a well established marketing network. “Our global marketing network stretches to most strategic markets in the Middle East, Asia, Far East and Europe,” says Al-Mulla. “Now, we have faster access to over 4 500 customers in about 85 countries worldwide as we opened 26 self operated offices and five regional warehouses,” he says. “Our goals are to establish a global marketing network that includes operating new offices and warehouses across different global territories, thereby offering our services.” he concludes.

“QAPCO’S TOTAL LDPE PRODUCTION CAPACITY WILL BE INCREASED UP TO 700 000 T/Y WHEN COMPLETING THE EXPANSION” DR. MOHAMMED YOUSEF AL-MULLA, MANAGING DIRECTOR, QAPCO Refining & Petrochemicals Middle East September 2010

www.arabianoilandgas.com

20 Iraq Country Profile

RISING FROM THE ASHES Iraqâ&#x20AC;&#x2122;s government has launched a massive investment drive to boost its domestic refining capacity. However, more needs to be done to attract international capital, writes Abdelghani Henni

Getty Images

Refining & Petrochemicals Middle East September 2010

www.arabianoilandgas.com

Iraq Country Profile 21

raq was among the first countries to establish a refinery in the Middle East, building the first refinery at Alwand in 1927 with a capacity of 10 000b/d. This was followed by the construction of the 6000 b/d Haditha refinery in 1949, later expanded by 10 000 b/d. However, it failed to keep its leadership position due to political instability and a series of wars in the past 32 years, dating back to the Iraqi-Iranian war in 1978 and including 13 years of embargo. Saadallah Al Fathi, who has worked throughout various departments of the Ministry of Oil in Iraq and became director general of the Daura refinery (1976-1980), and president of the Refineries and Gas Industry Administration (1980-1986), told Refining and Petrochemicals Middle East that much of the damage from the Iran-Iraq war has never been repaired. “Refineries in Iraq suffered through three wars and 13 years of sanctions,” says Al Fathi, who currently works as an advisor to Dome International Petroleum. “The repairs were modest and very little fresh investment was made,” says Al Fathi. Iraq has three main refineries including Baiji in the north, Daura near Baghdad and Basra in the south, with combined capacity of about 570 000 b/d. The majority of these refineries are hydroskimming refineries, one of the simplest process types but also the least efficient, consisting of atmospheric distillation, naphtha reforming and treating processes, as opposed to the

high olefin fluid catalyst cracking (HOFCC), and FCC refineries. There are also smaller regional distillation units with Merox treaters which treat LPG, kerosene or jet fuel by oxidizing mercaptans to organic disulfides. “Beside these refineries, lube oils production continues in three major refineries, based on furfural extraction and MEK dewaxing,” explains Al Fathi. “Tetraethyl lead (TEL) is still used to boost octane,” he explains. TEL is a common antiknock additive/octane booster in gasoline (petrol). TEL usage was largely discontinued in Europe and North America because of the toxicity of lead and its deleterious effect on catalytic converters. The need for improvement is underlined by the EIA. “Iraqi refineries, with a maximum capacity of almost 600 000 b/d, have antiquated infrastructure, and their output does not reflect the current demand mix,” said a recent EIA report on Iraq. “Despite improvements in recent years, the sector has not been able to meet domestic demand for most refined products, and the refineries produce too much heavy fuel oil,” it read. The result is that Iraq relies on imports for about 25%

of the petroleum products it uses, with total consumption averaging about 600 000 b/d in 2008. Many other factors have affected the refining sectors in Iraq, including the lack of continuously power supply which prevents normal operation of the refineries. “Looting and pillage in the aftermath of the 2003 invasion and occupation, difficulties in the export of fuel oil products also hampers the operations, along with the lack of a strong central coordinating authority in the country,” Al Fathi explains. The refining sector in Iraq also suffers from the continuation of outdated control mechanisms, with no supervisory body in place. In addition, the quality of gasoline is poor, as the it is leaded and has low octane HISTORICAL DEVELOPMENT Year

Location

1927 capacity 10 000b/d

Alwand

1949, 6000b/d

Haditha

1953, 4000b/d

Al-Muftiya

1955

Daura

1972

Basra

1982

Baiji

“IRAQ HAS PLANS FOR FIVE NEW REFINERIES, AS WELL AS PLANS FOR EXPANDING THE EXISTING DAURA AND BASRA AND BIAJI REFINERIES” IMAD NASSIF MAKKI, OIL REFINING SENIOR EXPERT, OAPEC

A view of the Shuaiba oil refinery near the port of Basra, 550 km south of the capital Baghdad.

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Refining & Petrochemicals Middle East September 2010

22 Iraq Country Profile

Don’t Miss Iraq Mega Projects Conference & Exhibition When: 26- 28 October Where: Istanbul, Turkey For more info go to: www.cwcimp.com

level, while diesel and oil have a high sulfur content. Moreover, the sector is not adept at conserving energy and observing environmental compliance. “Iraqi refineries suffer from poor utilisation rates, says Al Fathi. “In recent years, the rate of utilisation has not been more than 50- 60%.”

Saadallah Al Fathi, advisor at Dome International Petroleum, and ex-president of Iraq’s Refineries & Gas Industry Administration.

To alleviate product shortages, Iraq’s 10-year strategic plan for 2008-17 aims at increasing refining capacity from 600 000 b/d to 1.5 million b/d. “Iraq has plans for five new refineries, as well as plans for expanding the existing Daura, Basra and Biaji refineries,” says Imad Nassif Makki, oil refining senior expert at the Organization of Arab Petroleum Exporting Countries. The scope of work involved in rehabilitating the existing refineries includes the power generation and integration of steam requirements for all refineries as well as increasing the conversion ratio and overall complexity. “There could be additional units to further improve yields and product specifications,” Al Fathi says. “It also aims to maintain, rehabilitate and modernise existing refineries including the control systems,” adds the expert. The Iraqi government has revealed plans to build five new refineries in the country. “The new refineries will add 840 000bpd, and will be located in Karbala (140 000 bpd), Nassiriyah (300 000 bpd), Kirkuk (150 000 bpd), Maysan (150 000 bpd) and East Bagdad with a capacity of (100 000bpd),” says Makki. Referring to facilities at Karbala, Kirkuk, Maysan, and Nassiriyah, Iraq’s Oil Minister Hussain Al-Shahristani said that “the

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Strategic plan

Feedstock storage facilities at the Iraqi oil refinery of al-Zubair, 30 kilometres south of the southern port city of Basra.

Imad Nassif Makki, senior oil refining expert at the Organization of Arab Petroleum Exporting Countries (OAPEC).

Refining & Petrochemicals Middle East September 2010

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24 Iraq Country Profile

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One of Iraq’s ageing oil refineries situated on the outskirts of Kirkuk. The region has proved a relatively safe operating environment, and is earmarked as one of the primary upgrade candidates.

investment in the new refineries will be around US$20 billion. Each one will cost around $4 billion.” The building of new refineries around the world has slowed dramatically, and sometimes banned due to environmental legislation. But in Iraq, nothing will stop the government from executing such projects. “Refinery investments in Iraq are guaranteed more than anywhere else in the world,” said Al-Shahristani in early July, adding that his country wants “real partners.” “With the planned new refineries, Iraq has a leading position in the region’s downstream capacity development,” says Yassir Ghiyati, sales manager at Haldor Topsoe, which is involved in refining projects in Iraq. The country has recently awarded several contracts in connection with the development of its new refineries. The Shaw Group has been awarded two feasibility study contracts in connection with the development of the 150 000b/d Kirkuk refinery and the 150 000 b/d Misan refinery. Technip from France is undertaking the front end engineering and design (FEED) work of the 150 000b/d Karbala refinery.

Foster Wheeler won the feasibility study for the 300 000b/d Nasiriya refinery. “We will develop the configuration of the new refinery to meet the client’s processing objectives, evaluate proprietary technologies, prepare a report covering the feasibility of the project and the design basis of the refinery facilities, engage the selected licensors and prepare the front-end engineering design package for the total project,” explains Stephen Culshaw, managing director, Commercial Operations, Foster Wheeler Energy Limited and a founder member of the Iraq Britain Business Council. To secure the necessary funds to finance these projects, Iraq is considering different options, which include direct governmental allocations as well as establishing joint

Refining & Petrochemicals Middle East September 2010

Stephen Culshaw, Managing Director, commercial operations, Foster Wheeler Energy.

www.arabianoilandgas.com

Iraq Country Profile 25

Getty Images

A coalition force helicopter flies past a flared gas from the tower of a refinery near Baghdad.

Yassir Ghiyati, sales manager at Haldor Topsoe, which is involved in refining project in Iraq.

“NOW THE GOVERNMENT HAS PROPOSED A NEW PRIVATE INVESTMENT LAW TO ENCOURAGE PRIVATE COMPANIES TO INVEST IN IRAQ’S DOWNSTREAM SECTOR” SAADALLAH AL FATHI, ADVISOR AT DOME INTERNATIONAL PETROLEUM

ventures. In an effort to attract investment, Al-Shahristani said Iraq will allow investors to set prices for refined products, as well as offering a 5% discount on oil and on the land on which the refineries are to be built. “There hasn’t been much success in the last few years in getting direct allocations from the ministry budget,” says Al-Fathi. “Now the government has proposed a new private investment law to encourage private companies to invest in Iraq’s downstream sector,” he adds. The private investment law also offers a forty year lease on land, and allows the investor to market the products in and out of Iraq, but with priority provisions for the ministry to buy the product. In order to qualify for government incentives, Iraqi and foreign companies www.arabianoilandgas.com

interested in the refining sector must posses proven financial and technical capabilities, and 75% of staff should be Iraqi nationals. But even with these incentives, analysts say that the law needs to contain more to attract the required investment needed. “The private investment law must be made more realistic to attract any interest,”

$20bn

The budget Iraqi government intends to invest to upgrade and build new refineries in different parts of Iraq

observes Al-Fathi. “Refineries must be planned with economic considerations in mind and not the wishes of political groups.” In spite of the criticism from Iraqi experts, these proposed projects will open great opportunities for engineering and licensing companies in the revitalisation and expansion of Iraq’s refineries. “The Iraqi oil market is currently undergoing a huge fast track development programme, and this offers excellent opportunities for technology and catalyst companies.” says Ghiyati. The same view is shared by Foster Wheeler. “We first worked in Iraq in the 1930s,” says Culshaw. “We see Iraq as a very important marketplace for Foster Wheeler, and one to which our particular expertise and track record in executing large, complex projects in challenging locations make us particularly well-suited. Security is of course a concern and this is regularly reviewed.” However, due to the current political and security situation in Iraq, executing these proposed projects seems to be very difficult. “Above all, Iraq must get out of its current predicament and regain real independence,” says Al Fathi. “Otherwise, even the best intentions will not be good enough.”

Refining & Petrochemicals Middle East September 2010

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Air Liquide 27

CRACKING MOLECULES Increased downstream activity in the region has created major business opportunities for service companies, says Jacques de Thezy, CEO of Air Liquide in the Middle East

Air Liquide invested $80 million in Kuwait building an oxygen plant for Equate.

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Refining & Petrochemicals Middle East September 2010

28 Air Liquide

Jacques de Thezy, CEO Air Liquide MENA.

rocessing feedstock requires an array of specialised reactors, which include catalysts, oxidants and different industrial gases to break the links between the hydrocarbon molecules of the feed. Air Liquide is one of the major providers of industrial gases to downstream producers. “We serve many industries including the petrochemical and refining sectors,” says Jacques de Thezy, chief executive officer of Air Liquide in the Middle East and North Africa. “Most of the time industrial gases are used as process gases, for example, carbon monoxide is one of the molecules that we use, along with oxygen which is used to oxidise ethylene, hydrogen is used in the process of refining,” he says. “These industrial gases are at the heart of the process,” he adds. The company supplies its products to different petrochemical companies in the region. “We supply oxygen to Equate Petrochemical in Kuwait, carbon monoxide to Sipchem’s acetic acid plant in Saudi Arabia and nitrogen to the Sohar refinery in Oman,” Thezy explains. The company has a presence in much of the GCC region. “Within three years, we have established a presence in Qatar, Kuwait,

85% Air Liquide delivers 85% of its gas products through pipelines or on site facilities to its customers.

Oman, UAE and KSA,” says the CEO. The company has established a production facility in each country. “Because our product can’t be transported, we have a production facility in every country,” he adds. While feedstock cost advantage is the main motive of investment for international petrochemical producers in the region, Air Liquide’s business model doesn’t rely solely on this as it uses air as the feedstock. “We process the air to different gases through a distillation process and then separate the different molecules before supplying it. For hydrogen or carbon monoxide, we need a feedstock which is natural gas, naphtha or LPG, as it should be hydrocarbon based.” De Thezy says that the products are sold locally due to difficulty in transportation. Commenting on this, de Thezy says: “We don’t make money out of the difference between the feedstock and the end product.” Though it is a newcomer to the region, Air Liquide has scooped several contracts with major downstream players in the regions. “In Kuwait we invested US$80million to build an oxygen plant as we have signed a 20 year contract with Equate Petrochemical to supply the company with oxygen,” says the CEO. In Qatar, the company won a contract to build the world’s largest helium unit. “It is a double award contract, one related to the technology and the second is about the product off take,” says de Thezy. “You need very specific know-how to liquefy the helium, which naturally comes with natural gas.” The new helium facility will have a production capacity of 83 million cubic metres of helium per year. “The technology used to purify and liquefy helium at very low temperature (-269o C) is a propriety Air Liquide advanced technology,” he adds. Air Liquide was awarded the EPC segment for the $500 million contract, and is expected to award the subcontract soon.

“THE MAIN CHALLENGE WE FACE HERE IN THE MIDDLE EAST IS THE SHORTAGE OF SKILLED PEOPLE” JACQUES DE THEZY, CEO AIR LIQUIDE, MENA Refining & Petrochemicals Middle East September 2010

www.arabianoilandgas.com

30 Air Liquide

Air Liquide also signed an off-take agreement with RasGas and QatarGas. “We signed a 50% off-take agreement with the project owners,” says de Thezy. “Helium is one of the rare products that we ship to consumers in India, Japan and China, for different industrial purposes including in electronics or hospitals,” he explains. “The project is on track and expected to go on stream by 2013 in Ras Laffan,” he adds. To sell the product to the international market, the company will transport the product from Qatar to the UAE ready for global transhipment. “We will ship the helium from Jebel Ali port, using a fleet of containers,” he adds. The company’s business model is based on creating a production facility in the industrial zones of each country, and then set up pipelines for different clients. “In every country, we set up our plants in the industrial zones, like in Sohar, Oman; Shuaiba, Kuwait; Mesaieed, Ras Laffan in Qatar or Jubail in Saudi Arabia, we set up a

production facility and then we lay down a pipeline to supply all our customers in the same area,” he explains. Air Liquide has 100% ownership of the majority of its projects in the region, and rarely goes into joint venture with locals as is the case with major global petrochemical companies. “In most of the cases, we entirely own our projects,” says de Thezy. Most advanced chemicals and petrochemicals firms looking to grow their business in the Middle East are faced with the stark reality of having to mine a select pool of qualified, able and talented recruits, as well as enticing new blood into the industry. “It is true, the main challenge we face here in the Middle East is the shortage of skilled people,” says de Thezy. “We are still growing here in the region mainly thanks to the petrochemicals industry, and our related CO2 business is also expanding too,” he colncludes.

Air Liquide’s Middle East business strategy hinges on creating production facilities in industrial zones or downstream clusters.

36% of Air Liquide’s revenue comes from gas applications which preserve life and the environment

Refining & Petrochemicals Middle East September 2010

www.arabianoilandgas.com

32 Laboratory Equipment

INSIDE THE LABORATORY In downstream facilities the presence of testing labs is critical to ensure the quality of end products, RPME investigates regional labs, testing capbilities and equipment ranges Intertek is a regional leader in the development and early adoption of advanced testing techniques.

Typical analyses includes checking of chemical and physical properties of feedstocks and end-products. Laboratory operators use a variety of equipment and instruments to perform these tests.

n the petrochemicals and refining industry plant operators need to ensure the quality of their products, as well as its conformity to the international standards. To ensure these standards are met

all major downstream producersâ&#x20AC;&#x2122; have laboratories in-house to make the necessary tests and analysis. In refineries and petrochemical plants the laboratory will mainly concentrate on testing

Refining & Petrochemicals Middle East September 2010

the in-process samples and final products. â&#x20AC;&#x153;Quality control is one of the most important functions within any refinery or petrochemical plant,â&#x20AC;? says Dr. HansFriedrich Enderle, manager for physical and

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Laboratory Equipment 33

mechanical application testing at LyondellBasell’s Hoechst Industrial Park, in Frankfurt, Germany. “To ensure the best quality, we undertake both mechanical and chemicals tests,” he explains. Every laboratory usually performs the analysis of feed, intermediate and final products of the plant. “Typical analyses includes checking of chemical and physical properties such as sulphur content, water content, trace impurities like oxygenates or inert gases, metals content, flash point, vapour pressure, octane number and so on,” says Raj Makhamale, marketing manager at the Dubai based Gulf Bio Analytic Company. In a refinery, the main tests are based on the products cut in the distillation or cracker units. “The tests vary from density, flash point, vapour pressure, viscosity, and pour point to “high-end” analysis such as distillation, PIONA, carbon residue, and cold properties, for example,” says Ravi Parameswaran, Middle East laboratories manager, based at Intertek’s Sharjah operation. For the production of petrochemical products, the intermediate analyses mainly assess the process conditions and the product formulation. “Composition of the product is

“PRODUCT SPECIFICATIONS DEPEND ON CUSTOMER REQUIREMENTS AND CAN VARY FROM COUNTRY TO COUNTRY. NTRY. FOR GASOLINE, TEST REQUIREMENTS INCLUDE CLUDE DISTILLATION, DENSITY, SULPHUR, AROMATICS” MATICS” RAVI PARAMESWARAN, MIDDLE EAST LABORATORIES BORATORIES MANAGER AT INTERTEK determined in stages through gas chromatography mass spectrometry (GC-MS) which identifies specific compounds,” explains Parameswaran. Batches of the finished product are certified according to the results of tests conducted against the complete specification for the product. “Product specifications depend on customer requirements and can vary from country to country. As an example, for gasoline, the test requirements include distillation, density, sulphur, aromatics and olefins, oxygenates, and mercaptan sulphur,” says Parameswaran. “Whereas jet fuels used in aircrafts, the tests would include density, distillation, freeze point, conductivity, and lubricity,” he explains. While the majority of the analysis can be done in a normal laboratory environment,

Raj Makhamale, manager at Gulf Bio Analytic. Company.

Independent Materials Testing, Analysis and Consultancy for the Refractories & Associated Industries Testing UÊ* ÞÃ V> ]ÊV i V> ]Ê iV > V> ]Ê iÀ> } V> UÊ -/ ÊEÊ -Ê ÊÌiÃÌ }Ê>Û> >L i UÊ- Õ >Ì Ê vÊ«À ViÃÃÊV ` Ì Ã Consultancy UÊ >ÌiÀ > ÊÃi iVÌ ÊiÛ> Õ>Ì UÊ*À `ÕVÌÊ`iÛi « i Ì UÊ iÃ } Ê>ÃÃiÃÃ i Ì UÊ+Õ> ÌÞÊ>Õ` ÌÃÊ vÊ >ÌiÀ > Ê > `Ê ÃÌ> >Ì UÊ > ÕÀiÊ> > ÞÃ Ã Structural Modelling Service Training Expert Witness Service

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Refining & Petrochemicals Middle East September 2010

34 Laboratory Equipment

A laboratory operator performing chemicals tests at the Intertek facility in Sharjah, UAE.

there are exceptions. “Some special testing is done inside a fume chamber to ensure that dangerous fumes are exhausted out. Typically, the plant will have its own internal protocols for the feed and intermediates and a second set of protocols for the final product which is similar to that desired by the buyer of the products,” says Makhamale. All tests are conducted within a set of prescribed conditions. “Generally, a

Ravi Parameswaran, laboratories manager for

Gulf Bio Analytical group sales director Zoeb Merchant and Raj Makhamle, marketing manager.

laboratory follows internationally approved procedures such as ASTM, IP, UOP, BS, and AASHTO for conducting the tests,” says Parameswaran. Some of the process analysis procedures are also developed by licensors such as UOP, or companies such as BP or Shell. “These methods are developed and validated by the issuing authority based on their research, validation and “round robin” test data collated during tests that have been conducted,” Parameswaran adds. In order to perform these tests, laboratory operators use different types of equipment. Mechanical equipment is used to measure physical properties of petrochemical or petroleum products; the chemical properties are used to identify contaminants or the composition of the mixture. “Instruments used for analysis are gas chromatographs, inductively coupled plasma, mass spectrometers, X-Ray fluorescence, FTIR, UV-VIS, distillation units, flash point testers, viscosity meters, HPLC or Ion chromatographs and many more equipment,” says Makhamale. The selection of the laboratory equipment depends on the tests it has to perform and the test method that will be used; this often depends on the composition of the sample. “As the test methods and the product composition differ, the equipments used for the analysis will also differ,” says Parameswaran. “Some equipment used in

the testing, such as density meters and gas chromatographs, can accommodate several test methods and can be modified, or fine-tuned, to meet the test conditions of the sample. Accordingly, the equipment can be used in refineries and petrochemical plants,” Parameswaran explains. These are critical instruments for producing accurate, reproducible and reliable results. Not all manufacturers of instruments can offer solutions that are required by the downstream industry. “Wrong results can lower the price of the product or create damage to very expensive catalysts used in the process. This loss can run into millions of dollars,” says Makhamale. In order to avoid these loses, the buyer of laboratory equipment has to have a good understanding of the test method to be employed, along with other key factors such as safety considerations, limits of detection, frequency of the analyses, and the laboratory set-up according to the new test requirements. “Armed with the answers to these questions, the buyer should be looking for brand name, quality of the equipment, supporting test methods, such as ASTM, UOP and IP, buyer’s relationship with the manufacturer many other factors,” says Parameswaran. “Based on this information the buyer can assess the options and, according to budget, decide on the right equipment,” concludes Parameswaran.

Intertek’s Middle East testing facilities.

Refining & Petrochemicals Middle East September 2010

www.arabianoilandgas.com

ted n i o p p a l ofďŹ cia

the ily a d w o sh

he publis

Dammam, KSA on 10th-12th October 2010

Advertising in the show daily is the best way to reach exhibitors and visitors at this dedicated show. Available each morning, every day of the exhibition Delivered to each exhibitor every day Available at all entrances to the exhibition for visitors and delegates

For advertising in the show daily, please contact: David Wheeler Sales Manager Tel: +971 4 2108582 Email: david.wheeler@itp.com

SOAGE

2010 200 265 i dd 1

To book a stand at SAOGE, contact: Jude Slann Commercial Director Tel: +971 4 2108693 Email: judith.slann@itp.com

Giulia Malcangio SAOGE Exhibition Manager Tel: +39 0761 527976 Email: gm@ies.co.it

7/29/2010 3 52 54 PM

36 Technology Tech Focus Focus

PLAYING TAG Introducing RFID solutions to downstream operations can make a huge difference to staff safety according to Mike Meranda, CEO of Tagstone

ith activity levels ramping up again in the downstream sector across the Middle East, plant operators are continuing to introduce new technologies to increase operational and production efficiency, as well as reducing costs and improving worker safety. Given this backdrop, many service providers have flocked to the region to present their cutting edge solutions and technologies. The offerings of these service companies differ, but their main objective is to get a slice of the multi billion US dollar downstream projects. “We offer our clients with many intelligence solutions to help them reaching their objectives in operating safely and efficiently,” says Mike Meranda, chief executive officer at the Dubai based Tagstone. The company offers several technologies using Radio-frequency identification (RFID), biometrics, CCTV, GPS, and many other intelligent solutions that help operators run plants more safely.

The solutions Tagstone offers can be used in different phases of production, from personnel tracking and safety to optimising production, asset tracking to equipment maintenance to product transportation and distribution phases. “RFID can be used in the exploration and production stage, the refining process, in transportation and distribution, and in personnel management processes,” he explains. “One of the key solutions that we can provide to downstream companies is the ability to quickly locate workers, particularly in emergency situations,” explains Meranda. Though the company offers many solutions for clients in the Middle East, it does not yet manufacture locally. “We don’t have a production facility here in the Middle East,” says Meranda. “What we do is identify the best in class technology around the world and then we import it here and implement it. We work with a number of clients in the upstream

Refining & Petrochemicals Middle East September 2010

Mike Meranda, CEO of Tagstone

www.arabianoilandgas.com

Technology Focus 37

and the downstream sectors, including the ADNOC group of companies,” he says. The company’s involvement in different industrial sectors helped it to develop specialised solutions for different process industries. “With experience in the automotive, oil and gas, and downstream industries, we have special insights into the particular challenges faced by regional organisations, which help us to develop solutions that help the improvement of the business process,” he explains. One of the key application of Tagstone’s solution is in the supply chain, which tends to be highly labour-intensive and costly. “The instant visibility provided by RFID enables companies to streamline delivery operations, minimise costly vehicle and driver downtime, and optimise asset performances,” says Meranda. “Using such fleet management solutions, oil companies can not only save time and money, but also track the delivery and movement of their crude oil or refined goods tankers,” he adds. Tagstone’s technology is based on wireless solutions which run autonomously, making it attractive to companies in the industry which run various dangerous processes. “Our technology is completely automatic and wireless,” the CEO says. “Our TagSECURE solution can play an important role in increasing operational and production efficiency, reducing costs and improving worker safety. The tracking of people and objects, coupled with the RFID tags’ ability to withstand harsh conditions make this technology suitable to use throughout the downstream sector,” Meranda explains. As the company’s solutions are deployed in different environments, there are associated challenges explains Meranda. “The key technological challenge we face with refinery and petrochemicals plants is that various technologies have to be carefully tuned to fit the environment where there is heavy metal content or heavy liquid content,” says Meranda. “Metals tend to reflect radio frequency, while liquids tend to absorb it,” Meranda says. Regardless of these issues, Meranda very much believes simplicity of implementation and utilisation is the key.

www.arabianoilandgas.com

“OUR TAGSECURE SOLUTION CAN PLAY AN IMPORTANT ROLE IN INCREASING OPERATIONAL AND PRODUCTION EFFICIENCY, REDUCING COSTS AND IMPROVING SAFETY” MIKE MERANDA, CEO OF TAGSTONE

Radio frequency identification tags can be carefully tuned to work in heavy metal and heavy liquid environments.

Ganesh Pattabhiraman, services direct at Emerson.

The volume of steel in refining plants can pose challenges to standard RFID systems, but careful tuning can overcome this.

Refining & Petrochemicals Middle East September 2010

38 Events Preview

Dr Abdulwahab Al-Sadoun, secretary general of the Gulf Petrochemical and Chemical Association.

Refining & Petrochemicals Middle East September 2010

www.arabianoilandgas.com

Events Preview 39

Petchem Arabia, held in Abu Dhabi in October last year, attracted major international players in the downstream sector. The major theme of last year’s event was refinery integration.

NETWORK OPPORTUNITIES Downstream industry events kick off in earnest this September, so make sure you are up to speed on what the industry has to offer

ith the combined summer and Ramadan lull behind us, three major events and conferences are set to take place in the coming weeks. Top spots for October and September’s schedules includes the first regional fertiliser convention, the second petrochemical supply chain forum and Middle East Chemical Week. The Gulf Petrochemical and Chemicals Association (GPCA) will inaugurate the events season, with the First GPCA Fertiliser Convention taking place on 28-30 September 2010 in Dubai.

www.arabianoilandgas.com

The event will concentrate on fertiliser markets, focusing in particular on demand in key regions of the world, the supply of main nutrients, and key issues for food security. A stellar panel will address technological developments in the large-scale production of nitrogen fertilizers, which are used in greater volume than any other, and are manufactured in large quantities by GPCA members and companies in the Gulf, including SABIC and MA’ADEN from Saudi Arabia, Al-Ruwais Fertiliser Company (Fertil) from Abu Dhabi, (QAFCO) in Qatar, PIC from Kuwait and GPIC from the Kingdom of Bahrain.

“Adverse weather, severe droughts and fires, particularly in Eastern Europe, has prompted a concern about the supply of commodity grain and subsequently resulted in a crop price increase, which in turn could create incremental demand for fertilisers in Event: The First GPCA Fertiliser Convention Where: Intercontinental Hotel, Dubai United Arab Emirates When: 28-30 September 2010 Webpage: www.gpca.org.ae

Refining & Petrochemicals Middle East September 2010

40 Event Preview

Event: The Second GPCA Supply Chain Conference Where: Gulf Hotel, Manama, Bahrain. When: 24th – 26th October 2010 Webpage: www.gpcasupplychain.com The events organised by the GPCA attract major industry players and experts who want to network with industry peers.

the short to mid-term future. Given these market conditions, the GPCA is organising this event to address the supply-demand balance and the role the GCC could play to meeting the future demand for fertiliser in global markets,” said Dr Abdulwahab Al-Sadoun, secretary general of the GPCA. “The conference will bring together the regional industry leaders, their customers and service providers to discuss issues surrounding fertiliser demand trends and recent technological production process advancement as well as highlight optimal fertiliser application to ensure higher crop yields,” he added. In addition, the GPCA is hosting the second GPCA Supply Chain Conference, which will be held between 24th and 26th October 2010 in the Kingdom of Bahrain. As the only Middle East supply chain event presented by the industry, for the industry, this year’s GPCA Supply Chain Conference again brings together leaders from across the Gulf, under the theme “Serving Vibrant Global Markets: Implications for Gulf Supply Chain Management.” The conference is organised under the patronage of Abdulhussain Mirza Oil and Gas Affairs Minister, and chairman National Oil and Gas Authority (NOGA), Bahrain. The

conference will provide a platform for Middle East and global participants in the chemical industry to exchange ideas and best practices in an age of fast-changing industry dynamics and increasingly exacting social accountability. “Between 2009 and 2015, the GCC members will increase their production capacity by 70%, adding 51.6million tonne to its annual capacity. During the same period, GCC exports will increase by 50%, from 38.2 million tonne in 2009 to 57.2million tonne in 2015, an increase averaging 10% per annum. Managing the significant increase in export volume and managing hazards are the key challenges,” said Al-Sadoun. “The second GPCA Supply Chain Conference will address the supply and demand in the GCC for all specified shipping modes, the GCC port and the different shipping modes highlighting key Event: The Middle East Chemical Week (MECW) Where: The Gulf Hotel, Manama, Kingdom of Bahrain When: 10th – 13th October 2010 Webpage: www.wraconferences.com

Refining & Petrochemicals Middle East September 2010

Event: ADIPEC 2010 Where: Abu Dhabi Exhibition Centre, Abu Dhabi - United Arab Emirates When: 1st- 4th November 2010 Webpage: www.adipec.com

challenges and opportunities in this sector,” Al-Sadoun explained. In October, The World Refining Association decided to incorporate the 5th Annual Petchem Arabia Conference and 3rd Annual Middle East Fertilizer Symposium, under one brand name called The Middle East Chemical Week (MECW), which will held between the 10th and 13th of October in Bahrain. The MECW offers the opportunity for investors, petrochemical and fertilizer producers, NOCs, IOCs, technology and solution providers and governments to identify sustainable solutions to the global challenges facing the petrochemicals and fertilizers industries. A second raft of events take place in November and December, including the region’s largest energy and downstream related event, ADIPEC 2010, in Abu Dhabi, two events in Istanbul, namely Iraq Mega Projects and Iraq 2010. The year rounds off with the GPCA Forum and the Refining Technology Conference, which will be held in Dubai and Abu Dhabi respectively.

www.arabianoilandgas.com

HSE Focus 41

BREATH EASY WITH NEW ESCAPE HOOD Avon Protection to launch sulphur dioxide protection hood to Middle East customers at ADIPEC 2010

ue to the long distance toxic effect of a potential sour gas and sulphur dioxide release, it is essential that production and construction site workers in the oil and gas industry have respiratory protective equipment available to them at all times. With this in mind Avon Protection, a part of Avon Rubber, has developed the world’s most compact NIOSH certified HS Filter Escape Hood, which has been designed to protect individuals in their safe escape from a toxic emergency, and will be on show for the first time at ADIPEC between 1-4 November. Avon’s NH15 Filter Escape Hood has been designed to meet the latest oil and gas industry safety challenge time standards of 100 minutes protection at an on-site HS concentration level of 5 000ppm. It is quick and easy to use – from opening the packaging through to donning the hood, the wearer can be safe in less than 30 seconds. Once donned, the NH15 provides the user with a wide and clear view of the scene, as well as the ability to easily recognise and communicate with colleagues. In areas of high humidity, it has been designed to minimise condensation and fogging levels within the hood – very important if you are in the midst of an emergency.

Further benefits the NH15 has over other respiratory protection include it being able to fit all head sizes, plus it can accommodate all facial features such as beards, turbans and long hair as well as equipment such as spectacles and goggles. It is compact and lightweight, and can be carried round on a utility belt or stored in confined spaces. Finally, it has a five year zero inspection and maintenance shelf life. All of this combines to make the NH15 Emergency Hood one of the safest, most cost efficient pieces of respiratory equipment available to the oil and gas industry. Steve Windley, Avon Protection’s Regional Sales Manager to the Middle East, explains: “Here at Avon Protection, we have been working with leading HSE providers in the Middle East to design the most compact HOS/SO filter escape hood which meets the oil and gas industry’s latest safety challenge times for high ppm levels of toxic gases that would be present during a rig or refinery emergency.”

The new NH15 Filter Escape will be launched at ADIPEC.

Middle East product debut:

ADIPEC www.arabianoilandgas.com

Refining & Petrochemicals Middle East September 2010

42 Market Survey: Pumps

PUMP ACTION A dynamic downstream scene has led pump manufacturers and service providers to align regional strategies to meet the needs of refining and petrochemical producers

ew investment and upgrading of existing petrochemical and refining projects in the Middle East are driving a substantial portion of the industrial pumps market in the region. Rising demand for compressors and vacuum pumps in particular, as well as increased use of customised products for greater automation and integration of production processes are some of the key factors contributing to market growth. This has led leading pump suppliers and manufacturers to more aggressively target their offering to meet downstream operatorsâ&#x20AC;&#x2122; needs. Key markets in the Saudi Arabia, UAE, Qatar, and Kuwait are driving

regional growth for the multi-billion dollar pumps industry, which has picked up some of the slack caused the global recessionary environment. Multinational companies such as GE Oil & Gas have established a major a field office presence of some of these promising markets, and has found that proximity pays dividends in this increasingly cost-driven industry. Pump providers not traditionally associated with the industry are subsequently going out of their way to get a slice of the marketâ&#x20AC;&#x2122;s growth potential. Some of the newcomers to the region have opened engineering and manufacturing shops, and they are making efforts to diversify their coverage to include more industrial sectors.

Refining & Petrochemicals Middle East September 2010

www.arabianoilandgas.com

Market Survey: Pumps 43

GE OIL & GAS Anticipating a future surge in demand in the Middle East’s rapidly growing pumps market is definitely the name of the game for GE Oil & Gas. The company’s Pumps & Valves platform manager for turbomachinery, Emanuele Santo, is a firm believer that there is much to be gained from having its commercial teams and application and field service engineers in the region. “We continue to build our local footprint and as part of our regionalisation strategy we are implementing a local organisation that will support streamlined project execution and services delivery for our entire customer base across the Middle East.” “We have a strong backlog of sales for projects in the Middle East and over the next two years we will install almost 100 large and medium size pumps around Abu Dhabi alone,” he says. Pump sales in 2008-2009 demonstrated a strong presence in India, North America and Africa for the company which has more than 18 000 centrifugal pumps installed around the world. But it anticipates a moderate

slowdown in the North American market with focus increasingly shifting to the Middle East, Russia and China. “Regardless of oil and gas industry segment, the demand for pump equipment has remained strong and is projected to continue growing for a few more years especially in key regions, including the Middle East. This is mainly driven by two factors. Firstly, refinery capacity shifting to Asia and the Middle East, and secondly, incremental reserves being more expensive,” according to Santo. “Until oil prices increase to make exploiting new reserves profitable, the focus will be on developing the enhanced oil recovery processes through water or CO2 re-injection,“ he adds. He alludes to the tough economic climate saying that customers worldwide are having to re-evaluate project economics much more closely but that his company has a healthy backlog of projects to maintain its manufacturing and service operations. “While the global financial crisis certainly has impacted the upstream and downstream

markets, we have been able to alleviate the situation thanks to some major oil boosting projects and multiproduct shipping in the midstream market,” he says.“We are fully focused on the oil and gas industry and applied adjacencies such as carbon capture and storage, waste to energy, concentrated solar power and geothermal, as well as supplying turbomachinery equipment for industrial power generation.”

Sample shot of one of GE’s oil and gas pumps. pss

LEWA PUMPS Sriram Iyer, regional manager of LEWA pumps and systems believes the current market trend is on consolidation and cost reduction. “The market has grown over the years due to the increasing business of oil and gas,” he says. “Now that oil and gas have cut back their requirements, the fall out is a drastic reduction in the number of projects and also more cut backs in project costs.” National oil companies and their associated EPC contractors in the UAE and Saudi Arabia form the bulk of the customers and revenue for the German company. Iyer says that the current market is getting to be cost driven and in the long term, the company will need to look at various means to localise the production and have the advantage of being near the customer.

He says that at the moment EPCs and oil companies are reaping the benefit of lower market demand. He adds that there is overcapacity in the region and that it would require another two to three years for demand to match with the supplies. A lot of smaller oil and gas companies and EPC contractors are quite active in countries like Yemen, Iraq, India etc. Iyer says that previously the returns in these areas were not very attractive for these companies. With the downward trend, these areas are being more aggressively pursued for exploration and production. Despite the rapidly changing and somewhat uncertain market conditions, Iyer is buoyant about the future for LEWA. “For the year 2010-2011, we expect the downturn in the oil and gas industry to be

reversed by end of 2010.This is showing up in the number of budget enquires that we are receiving. So, somewhere in the middle of 2011, we expect EPC orders for pumps and other equipment in the oil and gas segment.”

Sriram lyer, regional manager of LEWA pumps and systems.

www.arabianoilandgas.com

Refining & Petrochemicals Middle East September 2010

44 Market Survey: Pumps

TORISHIMA SERVICE SOLUTIONS Japan’s Torishima Pumps Manufacturing Co. which has installed over 6 000 pumps in the Middle East, and primarily operates in the desalination sector, is looking to diversify its business in the region further by also moving into the oil and gas sector. The company’s service arm, Torishima Service Solutions which already has a manufacturing and servicing workshop in Abu Dhabi will soon be opening a brand new 10 000m2 facility in Dubai. The new facility is part of Torishima’s plan to beef up its engineering presence and service capability for its regional pump operations. The upcoming service centre in Dubai will have the capability to work over and repair pumps from any provider worldwide.

The company’s overall strategy for the region is to serve Torishima and non-Torishima customers in the Middle East. Along with the Dubai facility the company’s workshop in Abu Dhabi is to establish a foothold in the Emirate’s oil and gas sector and branch out further into the industry. ”This will serve as an excellent platform to leverage our position as both the number one supplier of pumps along with spares, repairs, service and technical support,” says John Houston, sales and business director for Torishima Service Solutions in Dubai. “The equipment and expertise will be second to none, and what we willl be able to do here with a local provision n will be very attractive to end-users of pump equipment,” he concludes.

John Houston, sales and business director for Torishima Services Solutions.

Pumps are critical for refineries and petrochemical plants.

Refining & Petrochemicals Middle East September 2010

www.arabianoilandgas.com

Market Survey: Pumps 45

GATES ENGINEERING & SERVICES Gates Engineering & Services is an industrial pump rental and sales service. The company says that the UAE today is one of the its most thriving markets in the MENA region. Gates has regional offices in Saudi Arabia, Qatar, Oman and the Kingdom of Bahrain have also contributed to its overall regional revenues. Gates provides its services to a range of customers within the different industries it serves. The company provides high power (HP) and ultra high power (UHP) water jetting pumps to national oil companies, oilfield service providers and rig refurbishment contractors. The company’s global headquarters, is located in the Jebel Ali Free Zone in Dubai and encompasses a fullyfledged production shop and warehouse facility,

which the company says helps it meet operational requirements from its regional offices and also from branch offices in Australia, China, Brazil, Turkey, India and the US. Like many other companies in the current downturn, when upstream projects had a setback in terms of progress, their related industries also felt the pinch. The company’s biggest challenge in the current market is the ability to deliver on customers’ time and budgetary constraints in terms of manufacturing, supply chain and pricing structures. It is a

known fact that when oil and gas projects had a setback in terms of progress, all other related industries also felt the pinch,” the company said in a statement. The company says its long-term business strategy, which has been sharpened in the early stages of the recession as it reached out to as many customers in as many industries, is to streamline greater collaborative efforts within the pumps business by expanding its sales and rental fleets worldwide and working with other product and service lines to provide integrated solutions to its customers.

An ultra tra high-pressure pump from Gates Engineering & Services.

www.arabianoilandgas.com

Refining & Petrochemicals Middle East September 2010

46 Number Cruncher

Downstream Data

Most listed petrochemical companies saw share prices declining through August, But leading firms from Qatar and Egypt posted significant gains LISTED COMPANIES IN THE SAUDI STOCK MARKET Price on July,19th (US$ per share)

Price on August,19th (US$ per share)

Change %

Saudi Basic Industries Corporation (SABIC)

23.00

22.67

-1.47

Saudi Arabian Fertilizer Company (SAFCO)

35.47

36.60

3.10

Saudi Kayan Petrochemical Company (Kayan)

4.64

4.45

-4.19

Rabigh Refining and Petrochemical Company (Petrorabigh)

6.75

6.13

-10.00

Yanbu National Petrochemical Company (YANSAB)

10.00

9.47

-5.63

National Industialization Company (TASNEE)

7.23

7.04

-2.65

Saudi Industrial Investment Group (SIIG)

4.68

4.41

-6.04

Saudi International Petrochemical Company (SIPCHEM)

5.75

6.00

4.22

Sahara Petrochemical Company (SAHARA)

4.88

4.93

1.08

Advanced Petrochemicals Company (Advanced)

5.21

4.59

-13.66

Nama Chemicals Group (NAMA)

2.48

2.49

0.53

Alujain Corporation (ALUJAIN)

3.39

3.97

14.77

Methanol Chemicals Company (CHEMANOL)

3.68

3.56

-3.37

Petrochem

3.87

4.24

8.81

LISTED COMPANIES IN THE KUWAITI STOCK MARKET Price on July,19th (US$ per share)

Price on August,19th (US$ per share)

Change %

Qurain Petrochemical Industries Company (AL-QURAIN)

0.69

0.65

-5.38

Boubyan Petrochemical Company (BOUBYAN)

1.86

1.75

-6.00

Ikarus Petroleum Industries (IKARUS)

0.46

0.44

-3.17

LISTED COMPANIES IN THE QATARI STOCK MARKET Price on July,19th (US$ per share) Industries Qatar

26.90

Price on August,19th (US$ per share) 28.02

Change % 4.02

LISTED COMPANIES IN THE OMANI STOCK MARKET Price on July,19th (US$ per share) Oman Chlorine S.A.O.G. (CHLORINE)

0.92

Price on August,19th (US$ per share) 0.92

Change % 0.00

LISTED COMPANIES IN THE EGYPTIAN STOCK MARKET Price on July,19th (US$ per share)

Price on August,19th (US$ per share)

Change %

Abu qir Fertilizers

34.89

36.68

4.87

Sidi Kerir Petrochemicals Company

2.09

2.21

5.40

Refining & Petrochemicals Middle East September 2010

www.arabianoilandgas.com

Number Cruncher 47

1250 1150

800

1050

CFR: Cost and Freight

1450

16/08/10

03/07/10

16/05/10

FOB: Freight On Board

1350

PPF (CFR FAR EAST)

per tonne, underpinned by bullishness in global polyester sales.

1150 US$/tonne

US$/tonne

1250 1150 1050 950

1050

Propylene prices have

950 850

800 750 700

900

650

1100 1000

1250

900

16/08/10

03/07/10

16/05/10

27/03/10

06/02/10

19/12/09

25/10/09

06/09/09

20/07/09

15/04/09

25/02/09

03/06/09

16/08/10

03/07/10

16/05/10

27/03/10

19/12/09

25/10/09

06/09/09

20/07/09

03/06/09

06/02/10

16/08/10

03/07/10

16/05/10

27/03/10

06/02/10

16/08/10

03/07/10

16/05/10

27/03/10

06/02/10

19/12/09

25/10/09

400

06/09/09

750

20/07/09

500 03/06/09

850 15/04/09

600

25/02/09

950

stabilised at $1250 per tonne in August. Scheduled and unplanned shutdown of plants in the region had caused a shortage of supply offered for export.

PVC prices rose to $960 per tonne in August. Market players expect prices to soften in the coming months.

700

19/12/09

1050

800

25/10/09

US$/tonne

1150

MEG

06/09/09

US$/tonne

1350

20/07/09

HDPE (CFR FAR EAST)

07/01/09

Polypropylene prices

03/06/09

16/08/10

03/07/10

16/05/10

27/03/10

06/02/10

19/12/09

25/10/09

06/09/09

20/07/09

03/06/09

350

15/04/09

400

600

25/02/09

450

650 07/01/09

500

700

1450

prices have increased to $1120 per tonne, backed by the supply shortage due to the prolonged shutdown of some production facilities in the Middle East and low production rates.

550

750

declined to $1150 per tonne. Analysts expect limited supply and strengthening derivatives such as propylene oxide to provide some support.

Polyethylene have (CRF FAR EAST)

600

15/04/09

800

15/04/09

850

07/01/09

US$/tonne

950

07/01/09

1000

NAPTHA

25/02/09

PVC (CFR FAR EAST)

25/02/09

16/08/10

03/07/10

16/05/10

27/03/10

06/02/10

19/12/09

25/10/09

06/09/09

20/07/09

03/06/09

550

15/04/09

750

25/02/09

650 07/01/09

850

07/01/09

750

1050

Ethylene prices have reached $880 per tonne, continuing gains throughout August, supported by strong crude gains. MEG prices rose to $750

PROPYLENE (FOB FAR EAST)

1250

1350

US$/tonne

27/03/10

06/02/10

19/12/09

25/10/09

16/08/10

03/07/10

16/05/10

27/03/10

06/02/10

19/12/09

25/10/09

06/09/09

20/07/09

550

03/06/09

650

300

15/04/09

400 25/02/09

750

07/01/09

500

06/09/09

850

20/07/09

600

950

03/06/09

700

15/04/09

US$/tonne

900

Benzene prices reached $820 per tonne, amid uncertainty in crude futures markets which dampened sentiment in the benzene sector.

ETHYLENE (FOB FAR EAST)

25/02/09

1000

US$/tonne

1350

BENZENE (FOB FAR EAST)

07/01/09

1100

(HDPE Injection)

Source: www.argaam.com

www.arabianoilandgas.com

Refining & Petrochemicals Middle East September 2010

40 The Big Picture 48

Saudi Aramco is commited to the project.

Aerial view of Saudi Aramco’s existing refinery at Yanbu.

A VIEW FROM YANBU

Despite the withdrawal of ConocoPhillips, Aramco is going ahead with the Yanbu Project

he importance of upgrading the existing Yanbu refinery for Saudi Arabia has led Saudi Aramco to go ahead with the project alone, in spite of the withdrawal of ConocoPhillips from the $10 billion-plus refinery project. Saudi Aramco has signed several contracts with local and international contractors for the detailed engineering, procurement and construction (EPC) of the Yanbu‘ Export Refinery Project at Yanbu‘ Industrial City, on the western coast of the Kingdom. “Signing these contracts represents a critical milestone for the Yanbu‘ Export

Refinery Project and will pave the way for many other major activities in the Yanbu‘ area,” said Motassim Al-Ma’ashouq, executive director of new business development. The project is one of a number of downstream projects that Saudi Aramco is pursuing, and demonstrates the company’s commitment to meeting future worldwide fuel demands. As part of its long-term strategy, Saudi Aramco is now making downstream investments following a massive upstream program that increased the company’s crude oil production capacity to 12 million barrels per day.

Refining & Petrochemicals Middle East September 2010

The project will build a grassroots refinery on a site of about 5.2 million square metres. The refinery will process 400 000 bpd of Arabian Heavy crude and produce 90 000 bpd of gasoline, 263 000 bpd of ultra-lowsulfur diesel, 6 300 metric tonnes per day (mtd) of coke and 1 200 mtd of sulfur. The upgraded refinery will use existing Saudi Aramco facilities to receive crude oil and export the refined products. To execute the project, Aramco has incorporated Red Sea Refining Company, which will be responsible for the execution and operation of the project.

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