Middle East’s refineries on upgrades, region launches new plants
Companies in the Middle East have announced petrochemical and hydrogen projects.
QatarEnergy and its partner Chevron Phillips Chemical — a joint venture between Chevron and Phillips 66 — awarded a contract for early site works for a petrochemicals project in Ras Laffan that is expected to boost Qatar’s polyethylene production capacity by more than 60%.
The award to Consolidated Contractors Company marks the start of the execution phase of the Ras Laffan petrochemicals project, which is expected to begin production in 2026, QatarEnergy said in a statement.
First announced in 2019, the project will feature the Middle East’s largest ethane cracker, with 2.08 million mt/year capacity, along with two high-density polyethylene units.
Meanwhile, Japan’s ENEOS and Mitsui agreed with the UAE’s Abu Dhabi National Oil Co. to launch a joint study to evaluate the development of a large commercial 200,000 mt/year clean hydrogen supply chain between the UAE and Japan, the companies said in a joint statement.
The project aims to export blue hydrogen from the UAE to Japan in the form of methylcyclohexane (MCH) as a carrier once developed.
The three companies aim to develop the project in two phases, with the first phase utilizing by-product hydrogen from ADNOC’s system in the Ruwais Industrial Area in Abu Dhabi and the second using greenfield blue hydrogen production from natural gas. They will conduct technical and engineering verification of a hydrogen production facility with a capacity of 50,000 mt/year and a feasibility study on the potential to expand this facility to commercial production of 200,000 mt/year.
The latest hydrogen supply-chain development came a day after Japanese refiner Cosmo Oil said it has signed an agreement with ADNOC, in partnership with Fertiglobe, for the purchase of blue ammonia produced in Abu Dhabi.
ADNOC has been beefing up ties with Japan and working on ammonia and hydrogen deals with the Asian country as part of the UAE’s plans to supply 25% of the world’s low-carbon hydrogen by 2030.
In other news, oil product stockpiles at the UAE’s Port of Fujairah dropped from a six-month high June 13, led by a 22% plunge in heavy distillates and residue levels from the week before, Fujairah Oil Industry Zone data showed.
Total inventory was down 11% weak on week at 17.94 million barrels on June 13, the port data provided exclusively to S&P Global Commodity Insights showed.
Inventories were 24% lower year on year.
Stocks of heavy distillates and residues used as fuels for power generation and marine bunkers stood at 8.10 million barrels June 13, down 22% from a week earlier and the lowest since mid-February. Heavy distillate stocks were also 35% lower than a year earlier.
New and ongoing maintenance
New and revised entries
** A basic overhaul has finished for the isomax, HPU 2, sulfur production and amine connector units at Iran’s Isfahan refinery, the National Iranian Oil Refining and Distribution Company said on its website June 14. “For the basic overhaul, 22 working days had been foreseen … but the operation [was] completed ahead of the schedule,” a refinery official said. Feedstock for the isomax unit amounts to 22,500 b/d to produce gasoline, LPG, kerosene, gas oil and aviation turbine kerosene. The hydrogen unit 2 takes 7,000 kg [on a daily basis], he said. The refinery’s overhaul is carried out every three years, he said, adding that the refinery had 24 units that undergo the process according to a specific schedule.
** Saudi Arabia’s Ras Tanura refinery has scheduled maintenance for June, sources told S&P Global Commodity Insights, with one source saying one of the Ras Tanura jetties has also works for about 10 days starting mid-June. Saudi Aramco was not immediately available to comment. The refinery carried out partial works on diesel units in February-March.
** Work on the steam boilers at Syria’s Homs refinery is 90% complete, according to the refinery. Recently, the country’s oil minister Bassam Toumeh inspected the refinery to check the progress on maintenance contracts. He also inspected the gas filling unit and maintenance of the steam turbine for power generation at the refinery, which is carrying out staggered maintenance.
** Kuwait’s Mina al-Ahmadi Petroleum Corp. is not likely to shut for a planned turnaround in 2022, after a fire and subsequent maintenance work ended late 2021, a source close to the company said.
** Maintenance at Bapco’s Sitra refinery in Bahrain, which is currently undergoing large-scale modernization, has been pushed back due to the impact of the COVID-19 on logistical timelines, according to sources familiar with the matter. “Sitra is fully functioning now, but schedules have changed due to COVID-19. They were originally planned for Q1 and Q2 … but they have been pushed to later in Q3 and Q4,” a company source said. The refinery is expected to undergo a major shutdown in the second half of the year for up to four weeks.
New and revised entries
** Iran’s Abadan refinery is set to raise gasoline production to 15 million l/d by 2025 from the current level of 8-12 million l/d, according to its managing director Hakim Ghayem. The second phase of the refinery’s upgrade has been divided into two parts, its first will come on stream in the coming months and the second — which will add 3 million l/d of gasoline — will be completed within three years, Ghayem said. “The second part of the second phase will build KHT, GHT, ISOM, NHT, CCR [naphtha, gasoil and kerosene hydrotreaters, isomerization and continuous catalytic reformer] units … with an investment of $1.7 billion,” he said, adding that “this will increase production capacity of gasoline, LPG and gasoil.” “The first part of the second phase of Abadan refinery upgrade will become operational within the coming months with an investment of $1.1 billion … this part includes HPU, HCU, LPG, CDU/VDU [hydrogen, hydrocracker, crude oil distillation/vacuum distillation] units, and will add 210,000 b/d to the existing capacity,” Ghayem said. Gasoline will account for 27.9% of the plant’s new 210,000 b/d unit, with gasoil and heavy cuts like fuel oil at 30% and 24%, respectively. “In the old unit, fuel oil held a 40% share in the basket,” he said. Instead of shutting down three old units, they will be renovated and put back in service. This will increase the refining capacity from 360,000 b/d to 450,000 b/d in the first phase, and if needed to 540,000 b/d. The 210,000 b/d distillation unit at Iran’s Abadan refinery is due to come on stream by Sep. 23 and is expected to be fully operational by late March 2023.
** Construction of a new fluid catalytic cracking unit at Iraq’s Basrah refinery has started, a company official said. The 34,500 b/d unit is funded via Japanese ODA loans from the Japan International Cooperation Agency, S&P Global reported earlier. The upgrade of the Shuaiba refinery also includes a vacuum distillation unit (55,000 b/d) and a diesel desulfurization unit (40,000 b/d). In addition, the capacity of Shuaiba is due to be expanded to 280,000 b/d. The installation and construction of a fourth CDU with 70,000 b/d capacity, an LPG unit, water treatment unit and an additional boiler, which collectively constitute the expansion project, was at an advanced stage when the work was suspended in March 2020 due to the pandemic-induced lockdown. The expansion is now expected to be completed by October 2022.
** The 100,000 b/d gasoil purification unit in Isfahan oil refinery will go on stream in the Iranian month starting June 22, the National Iranian Oil Engineering and Construction Company said on its website. The company had earlier said the operationalization would start by September 2022. A daily amount of 300 mt of sulfur will be eliminated from the produced gasoil, with sulfur in gas oil reducing from 6,000 ppm to below 50 ppm. The gasoil purification, along with a desulfurization unit, is part of the upgrade of the 81,000 b/d residue hydrotreating unit, or RHU, which will help the refinery produce 100,000 b/d Euro 5 spec diesel. The residue hydrotreating unit upgrade project in Iran’s Isfahan refinery has made 32% progress, the National Iranian Oil Engineering and Construction Company’s website reported in May 2022. The unit’s output will be used to feed a new RFCC unit.
** Bahrain’s Sitra refinery modernization program is “80%-85% complete” and could be operational by “next year,” the country’s oil minister Sheikh Mohammed bin Khalifa al Khalifa said in May. “We built a new line and retired some of our older units because we still have units from 1935,” the minister said. The final capacity of the refinery will be 400,000 b/d, with a nameplate capacity of 380,000 b/d, Khalifa added. Khalid Buhazza, general manager of marketing at the Bahrain Petroleum Company said the refinery should be ready to process 400,000 b/d by late 2023 and, when the upgrade is complete, it will focus on producing middle distillates like diesel and jet fuel, with its fuel oil output set to decrease significantly. The upgrade will allow Bahrain’s sole processing facility to handle new crudes, including heavier grades. The startup of the $7 billion upgrade and expansion of Sitra had been delayed by almost 18 months due to labor and supply shortages resulting from coronavirus-related delays.
** A new structure will be added to Iran’s 25,000 b/d Kermanshah refinery to triple its capacity with a $930 million investment, NIORDC’s website reported May 2022, citing Farhad Kaviani, the refinery’s managing director. . “A 50,000 b/d plant is due to be built next to the current one to this end … and the existing plant will continue its production. The primary studies have been carried out and the new refinery will go on stream in three years,” Kaviani said. The new refinery will produce more gasoline, including Euro 5 specification gasoline, and less fuel oil. It will also reduce sulfur in the mazut or heavy, low-quality fuel oil it is producing, Kaviani added.
** A third catalytic cracker unit, or RFCC, will be built at Iran’s Bandar Abbas refinery. It will enable the refinery to produce 60,000 b/d of Euro 5 gasoline and 350,000 mt/yr of propylene. Separately, the project to upgrade the quality of heavy products at Iran’s Bandar Abbas was 40% complete. Several units were foreseen in this project, including solvent de-asphalting, DAO purification, delayed coker, calcined coker, as well as downstream units such as for purification of naphtha and gasoil. Other units will produce and purify propylene, LPG, tar, and hydrogen. Fuel oil production in the plant’s basket will be cut below 10%, with Sulfur reaching up to 1%.
** Iranian Persian Gulf Star mulls further expansion. The condensate refinery eyes to add 90,000 b/d to the current nameplate refining capacity, Mohammadali Dadvar, managing director of the Persian Gulf Star Refinery said. “The plant’s initial design envisaged 360,000 b/d of gas condensates. Right now, with the implementation of an expansion project, the capacity has reached 450,000 b/d. We can raise this to 540,000 b/d in the future,” Dadvar said.
** Iraq’s government decided North Refineries Co. should upgrade Haditha refinery and work directly with Honeywell. The government plans to build two units of total capacity of 20,000 b/d at the site, which will raise the capacity of the plant to around 35,000 b/d. International companies will be approached to bid for building an additional 35,000 b/d at the refinery, which will raise its overall capacity to 70,000 b/d.
** Three consortia, including seven major international companies, have submitted bids for the expansion of Jordan’s Zarqa refinery. The capacity will be raised from 100,000 b/d to 120,000 b/d, while the project is also aimed at improving the quality of oil products by reducing the output of heavy fuel oil which currently constitutes 20% of the refinery production, by converting it into light products. Jordan Petroleum Refinery Co. has awarded a contract to US engineering company KBR for the design of a new residue hydro-processing unit.
** Abu Dhabi National Oil Co. is working on a crude flexibility project, or CFP, at its Ruwais refinery. Upon completion in 2022, the CFP will allow ADNOC to process up to 420,000 b/d “of heavier and sourer grades of crude oil” at the refinery.
** Iran’s Imam Khomeini, also known as Arak oil refinery, signed a Eur290 million technological deal with the Research Institute of Petroleum in July 2021, in a bid to produce 90,000 mt of needle coke on an annual basis, upon launching a coker unit. Expectations are “that the needle coke production at Imam Khomeini refinery becomes operational in March-May 2025,” Gholamhossein Ramezanpour, managing director of the plant said. In addition to producing needle coke, the project will “cut down” the fuel oil production at the refinery from below 10% currently to zero. As a result of the upgrade, the refinery will produce Euro 4 and 5 gasoline and diesel. In 2019, the National Iranian Oil Products Refining and Distribution Company and the state-owned Iranian Mines and Mining Industries Development and Renovation, or IMIDRO, signed an agreement for the production of sponge and needle coke in Bandar Abbas and Arak refineries. Both refineries are building coke units.
** Ecomar Energy Solutions has agreed to expand its refinery and build new storage capacity at Fujairah. Refinery capacity will be increased to 62,000 b/d from 22,000 b/d currently, and inland storage capacity will be increased more than fivefold to 1 million cu m in the phase 3 expansion, which should be completed by the end of 2024. Ecomar’s refinery will add an additional CDU, bringing the total to two CDUs.
** Iran will accelerate the expansion and upgrade of the Shiraz refinery. The expansion, which started in 2017, was due to be completed in three years but was slowed down due to sanctions. The first phase of the expansion and upgrade will involve upgrading the gasoline quality, with the second phase involving a diesel upgrade. An isomerization unit and diesel hydrotreater will be built. Shiraz has around 50,000 b/d current capacity and the expansion will add 26,000 b/d.
** Following a major upgrade project, Iran’s Tabriz refinery expects to reduce its fuel oil production. The refinery currently produces 4 million l/d (1.416 million mt/year) of fuel oil, which is primarily used as a feedstock for tar. The refinery is expected to reduce fuel oil production from around 25% of product output to below 5%.
** A gas condensate project is under construction in Iran as part of eight planned 60,000 b/d condensate refineries around Siraf, Bushehr province.
** There is a program in Syria’s ministry of oil for the Homs Refinery to reach the highest possible production capacity.
** Iraq plans to rehabilitate and develop the Baiji complex north of Baghdad, where three refineries were damaged during the war with the Islamic State group. Currently, one refinery is operating at 70,000 b/d, a second 70,000 b/d unit and a third 140,000 b/d facility should become operational. The third refinery would take the total capacity at the Baiji complex back to 280,000 b/d, making it again the largest facility in the country.
** Iraq’s oil ministry announced plans to upgrade the country’s 20,000 b/d Qayyarah refinery, with the aim of adding a second 70,000 b/d production unit that would take the total capacity of the plant to 90,000 b/d.
** Iraq has added another 10,000 b/d of refining capacity after completing the rehabilitation of a CDU at the Kasik refinery in the north of the country. Rehabilitation work continues at the refinery’s other 10,000 b/d CDU.
** Saudi Arabia’s Rabigh Refining and Petrochemical Co., or Petro Rabigh, has awarded US-based Jacobs a contract to provide front-end engineering and design work, as well as project management consultancy, for a fuel oil upgrade project dubbed “Bottom of the Barrel.” The refinery is in the process of launching the phase 2 expansion, which adds 15 chemical units to the Petro Rabigh complex.
** Saudi Aramco plans to complete a $2.5 billion clean fuels project at its Ras Tanura refinery. Work on the clean fuels project at Ras Tanura started in 2018.
** Saudi Aramco has awarded a contract to KBR to provide technology, license, basic engineering design and equipment for its solvent de-asphalting for the Riyadh refinery residue upgrading and clean fuels project.
** US engineering company CB&I has been awarded a $95 million contract for the expansion and modernization of Sasref.
New and revised entries
** Iraq’s new Kerbala refinery is expected to start processing crude oil in the first quarter of 2023. Work on the new plant, construction of which is about 90% complete, has picked up recently, sources said. The Kerbala refinery in central Iraq is built by a consortium led by South Korean company Hyundai. It was due for completion by the end of 2021, but construction has been delayed owing to pandemic-triggered lockdowns.
** Saudi Aramco has reduced exports of high sulfur vacuum gasoil after its Jazan Refinery Complex started production and exports of ultra-low sulfur diesel, market sources said in early June. Before it started producing ULSD in May, Saudi Aramco typically sold two to three cargoes of high sulfur vacuum gasoil, with each clip being 450,000-525,000 barrels, fuel oil traders said. Market sources said there has been no tender for June loading. Saudi Aramco said in December 2021 that the plant was in the final commissioning phase, refining at half of its full capacity. The refinery had previously been expected to be commissioned at the end of 2019 and be ready for full operations in the second half of 2020.
Located in the far south of Saudi Arabia on the Red Sea about 60 km from the Yemeni border, the refinery has been a target of several missile attacks by Houthi rebels in Yemen, although Saudi Arabian officials have said they intercepted all attempted strikes.
** The first part of Kuwait’s new Al-Zour refinery is expected to be operational in July with full ramp-up set in the first quarter of 2023, a person familiar with the matter said. The first phase, one of three planned for the refinery, will start in July and includes the processing of about 200,000 b/d of crude. Al-Zour started test runs in 2020 and was initially expected to come online by the end of 2021, but this was then extended to June 2022, S&P Global reported previously. The refinery has six trains of the world’s largest atmospheric residue desulfurization (ARDS) units.
** Oman’s Duqm is expected to start trial operations in Q1 2023 following COVID-19 construction delays, Talal al-Awfi, CEO of OQ told Oman News Agency. Work on the refinery is almost 90% complete, Awfi said. The Special Economic Zone of Duqm is the site of several energy infrastructure projects under development and construction, including crude storage facility and a hydrogen project. The refinery has been under construction since 2018. The refinery, which will cost more than $8 billion, has faced numerous delays since construction started in 2018.
** Iran has started engineering studies and financial talks with banks to build a refinery on the island of Lavan in the Persian Gulf. The refinery will produce oil products in its first phase and petrochemical products in the second phase. The 150,000 b/d refinery will have a solvent production unit and a new distillation unit. The new refinery will be located next to an existing plant.
** The National Iranian Oil Products Refining and Distribution Company said in April 2022 that after completion of studies in a Syrian refinery the project is close to the financing stage. In October 2017, oil ministry news service Shana reported that Syria has signed a $2.6 billion contract with Iran, Venezuela and Malaysia to build a 140,000 b/d refinery near the city of Homs in Al-Farkas. Venezuela owns 33% of the refinery’s revenue, Iran and Malaysia take 26% and Syria will have the remaining 15%, it said.
** Iran will start construction of a new 300,000 b/d refinery Shahid Soleimani. The refinery will be located next to the Persian Gulf Star refinery. It will produce gasoline, diesel, jet fuel, fuel oil and its petrochemical side will have propylene, ethylene and paraxylene production. Soleimani refinery will be fed with heavy crude oil. The project is due to be completed in around five years. The first phase is scheduled for completion between October 2026 and March 2027 and the second phase a year later.
** Iran plans to build a new plant in the southwestern, oil-rich province Khuzestan. Design and construction will start in the next Iranian year (2022-23).
** Iran has launched the first phase of a 70,000 b/d extra heavy crude plant in the Persian Gulf’s Qeshm island. “This is the first extra heavy oil refinery in the country that in its first phase has a refining capacity at 35,000 b/d of extra-heavy oil,” oil minister Javad Owji said. The primary product of the plant, built by Pars Behin Qeshm Oil Refining Co., is bitumen. Naphtha, kerosene and gasoil are added to the basket during the distillation process. The second phase will add another 35,000 b/d.
** China’s CNCEC will build a refinery and petrochemical complex in southern Iraq. The 300,000 b/d refinery will be built at the port of Fao on the Gulf. The refinery will be offered under the Build Operate Transfer, or Build Own Operate Transfer investment model. The petrochemical facility could be integrated into the refinery at a later stage.
** Brooge Energy Ltd. said in July 2021 that it had signed an agreement to sublease land to Blue Ocean Energy FZE over 20 years, on which it will construct a 25,000 b/d modular refinery in the UAE’s Fujairah. Blue Ocean Energy will be responsible for building the refinery and financing the cost of construction, while Brooge will oversee operating the refinery and earning revenue from tolling fees on a take-or-pay basis. It will be focused on the production of VLSFO. Brooge Energy has said it expects the plant to be developed, constructed, installed, and operating by Q1 2022.
** The Iraqi oil minister has awarded a consortium to build a new 100,000 b/d refinery in the Dhi Qar province. The original project envisaged a 300,000 b/d plant, but this was later reduced to 150,000 b/d and subsequently to 100,000 b/d. The refinery is expected to be built with integrated production units such as a fluid catalytic cracking unit and a catalytic reforming unit, and will be able to produce refined oil products that meet Euro 5 grade specifications
** Iraq is seeking to encourage investors to finance “investment refineries,” in several locations, including Zubair and Fao in the south. Iraq is in talks with Eni to build a 300,000 b/d refinery near the Zubair oil field operated by the Italian company in the southern part of the country. The first phase of the project includes commissioning 150,000 b/d by 2025.
** Iraq aims to build a new refinery in Basrah province.
** Iraq’s oil ministry is seeking investors for a 100,000 b/d refinery in Wasit province, a 70,000 b/d refinery in Samawa province and a 70,000 b/d refinery in Kirkuk. It has also added a 70,000 b/d site at Diwaniya, in Qadisiya province, south of Baghdad, a new 150,000 b/d project to be built in the west Anbar province. Work has yet to start on the 150,000 b/d Missan refinery.
** Angola’s state-owned oil company, Sonangol, is working with Iraq’s ministry of oil to build a complex refinery in Mosul. The discussions between Sonangol and the ministry are for a refinery with a capacity of 100,000-150,000 b/d of complex products.
** Canada’s Pacific Future Energy has been awarded a contract to build a 150,000 b/d refinery outside the southern Iraqi town of Nassiriya.
** Canada Business Holdings’ 300,000 b/d ultra-low sulfur fuel oil refinery project at Duqm, Oman, will process residue from OQ and Kuwait Petroleum International’s 230,000 b/d Duqm refinery project, CBH CEO Moses Solemon said. “The CBH refinery complements the Oman-Kuwait refinery. Therefore, we are in synergy and not in competition,” Solemon said. The company is targeting the end of 2023 for the refinery to process its first batch of products.
** Iran’s Khatam al-Anbiya has started construction work on a 120,000 b/d plant to process gas condensate from the offshore South Pars gas field.
** Iran is aiming to start construction of the Anahita oil refinery in the western province of Kermanshah designed to process 150,000 b/d of crude oil.
** Kuwait may add a new refinery in the south of the country, which could add 130,000-160,000 b/d of capacity.