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Dutch IGCC pioneers chalk up pain and gain Emergency response is behind schedule in the European public sector A new refining industry in Europe's Asian Corridor Commission proposes milestone energy proposal Replace fuel oil with distillate? Cancelled projects will sustain margins “Marine distillate not fuel oil from 2010” Branson's biofuels megastore You heard it here first: refinery CO2 storage a reality in Norway Buncefield 2: Investigation critical Where now for Swedish Class 1 diesel My slow awakening to climate change The luckiest motorist alive Safety row goes on over Europe's largest LNG terminal New WHO guidelines on city air quality put focus on diesel Would LNG really 'evaporate harmlessly' in an accident? Another lesson in the thermobaric bomb Spare a thought for the oil-rich But will the good times keep on rolling? Carbon storage and the zero emissions refinery Everything just changed E85 and high octane gasolines The problem of small-minded young engineers New Permit Regulations Biodiesel newbuilds and a new green superfuel Spilled wine and our split industry Drilling down into the prospects for IGCC The beginning of the start of the end of oil | But will the good times keep on rolling For every person who says a glass of water is half full, you’ll find one who says it’s half empty. Right now it seems like the oil industry’s cup is running over, but the same seems to apply. For some these are dynamic, exciting times for refiners. Let’s expand. Let’s build, they say. For others, today’s margins are a peak on a roller coaster ride and they’re bracing themselves for a decent in global fuels demand. To coin another cliché, people were always saying during the IT bubble that in a gold rush it’s best to sell shovels. In today’s booming market for engineering and construction contracts, the full order books are naturally welcomed by vendors. But it’s another matter if you want something built. As usual, it all depends on points of view. And in the run up to this month’s European Refining Technology Conference in Vienna, I’ve been collecting those. The GT Forum team in the UK kindly opened up the inner workings of their conference, this year in its tenth successful year, and introduced me to the industry experts that contribute ideas and advice during the process of setting the agenda of the meeting. And I spoke to some keynoters and regular attendees as well. One of the advisers is Josef Lichtscheidl who is Head of Process Technology, Refining, at OMV: “On stage, the programme has been decided for some time, but during the breaks I think there’ll be just one topic of discussion. Is the high oil price here to stay and, if it is, what will be the impact on demand for oil products and on the future refinery configuration?” A lot of people have been wondering when high fuel prices will actually start to register on consumers, who have seemed remarkably determined to keep on buying bigger, thirstier four-wheel-drive cars, for example. Dr Lichtscheidl can already see this happening in Austria. People are starting to favour smaller cars and there are rumours that the country’s automated road toll system for trucks may be extended beyond motorways and even to passenger cars. “My personal view is that we’ll see a slower growth in diesel in this region than was forecast only a year ago,” he says. “There will be logistical improvements and efficiency gains and if prices stay high, we’ll see a lot more movement towards biofuels and biomass.” OMV, Central Europe’s largest oil company and growing, has its eyes on aggressive growth towards the east. A Central European neighbour is Antal Kastona, Chief Technologist, Refining at the Slovnaft Bratislava Refinery, which is part of Hungarian MOL group. MOL too is seeking growth through investment. “The Mediterranean region is hungry for product. China is sucking in product and the US also. And Turkey is growing almost as fast as China,” he says. Both OMV and MOL have been among the bidders for Turkish refiner, Tupras. “We have the money and we want to invest in refining in other parts of the European region. If it’s worthy and it is on sale we’ll consider it. In my personal opinion (not MOL’s), I would even consider a new refinery construction to be justified. Utlisation rates are very high,” he says. There’s a twist though. It’s nice being a successful mid-size player with healthy cash flow. But only MOL’s rapidly increasingly capitalisation – it’s grown tenfold over the last decade or so – has so far prevented it falling prey to an aquisition itself. The Russian oil industry has targeted MOL in the past. I got a contractor’s viewpoint on the refining market from the CEO of Foster Wheeler’s Global Engineering & Construction (E&C) Group, Umberto della Sala. “The majority of the markets served by our E&C business are in an investment phase of their business cycle,” says Mr della Sala. “It’s creating the strongest market we’ve experienced in years. Our second quarter was our best bookings quarter in seven years.” He says that although, on the whole, the industry is very upbeat, there’s still a legacy from the years when refining profitably was a tough, long-distance event. “Even in today’s market, refiners’ appetites for what I would call strategic investment are still influenced by years of trying to plan ahead in a volatile price and margin environment. I think there’s still a mindset that the ‘bubble could burst’,” he says. “Much of the refining work we’ve done over the last few years has been clean-fuels related. This ‘wave’ of investment is coming to an end in western Europe and the US, although it is now ‘rippling out’ into the Middle East, North Africa and Asia Pacific as countries in these areas tighten their own fuel specifications and also seek to keep their export markets. “Additionally, refiners in Eastern Europe and the Former Soviet Union are now upgrading their refineries to meet European Union specifications. We’re working on a number of hydrogen projects related to clean fuels production in this region, including in Serbia, Belarus, and Russia. “In fact, some European refiners are investing now to meet the EU Auto Oil V specifications which come into force in 2009. We are working on a hydrotreating project at the Mazeikiai Refinery in Lithuania, which is a strategic project designed to meet these planned specifications,” And the flip side to the rosy picture Foster Wheeler is faced with? You guessed it. Getting projects off the ground. Although he’s certainly upbeat about what the current $1.3 Bn investment project at his site will achieve, Dawood Nassif, Technical Manager at Bahrain’s Bapco refinery says those charged with executing a large investment programme in the current environment face some major headaches. “We are already seeing problems getting steel and basic materials,” says Dr Nassif. “We are struggling to get E&C contractors and there’s a tremendous shortage of skilled people.” • Tim Lloyd Wright, HP’s European Editor, has chaired international downstream conferences, edited refining publications, and reported for UK newspapers and BBC Radio. Tim also runs a motivation and lifestyle business in Sweden which has created 12weekfitness.com. | |||||||
Download Energy Industry Resumé with work samples Profile: Tim Lloyd Wright MA Here you'll find a brief profile of my work with international energy, transport and associated environmental issues. Energy trends articles You heard it here first: refinery CO2 storage a reality in Norway From the archive... Over-processed fuel leaves oil tankers adrift | ||||||||
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