Thursday, December 23, 2010

Fourth refinery to oil Singapore's hub status

Consortium led by Hin Leong Trading looking to invest in US$6-8b greenfield project
Ronnie Lim Business Times 22 Dec 10;

(SINGAPORE) The Republic could soon see its long- awaited, fourth world-scale refinery. Expected to cost a massive US$6-8 billion, the planned greenfield project will help boost the status of the global oil refining and trading hub here - the third largest after Houston and Rotterdam.

A consortium - led by Singapore's biggest local oil trader Hin Leong Trading, and comprising one of China's top four national oil companies and also possibly a European partner - is currently studying the investment, BT has learnt.

Formed just a few months back, the group is apparently looking at establishing a 300,000-500,000 barrels per day (bpd) refinery on Jurong Island.

Capacity-wise, this will place it between the 290,000 bpd Singapore Refining Company (SRC) facility (equally owned by PetroChina and Chevron) and Shell's 500,000 bpd Bukom refinery.

ExxonMobil's 605,000 bpd facility is the largest here.

Given the space constraints on Jurong Island, BT understands that the consortium hopes to build the project on land that is available next door to Hin Leong's S$750 million Universal Terminal (UT) in the island's Meranti sector. The synergies with the UT facility will provide the refinery greater operational efficiency.

UT's 2.28 million cubic metres of storage will also give the project immediately available tankage (both for crude oil feedstock and refined products) as well as jetties for very large crude carriers (VLCCs) and product tankers.

Sources said the high- tech refinery is meant to produce 'green' transportation fuels like ultra-low sulphur gasoline and diesel, as well as other products including naphtha.

The green fuels will cater to a growing market segment which the older Western refineries are unable to serve adequately, while naphtha will help feed the increasing petrochemical investments here.

ExxonMobil's US$5 billion second petrochemical complex will, for instance, be starting up by mid-2011 - bringing Singapore's total ethylene production from four crackers here to 4.1 million tonnes per annum (tpa).

The Economic Development Board (EDB) has been trying to promote another refinery investment here to help provide naphtha feedstock for a targeted six million tpa of ethylene production.

Senior Minister of State (Trade & Industry and Education) S Iswaran has also earlier indicated that with new rival refining hubs emerging, Singapore needs to expand its existing refineries or attract new ones to maintain its share of global refining capacity.

'This is necessary to provide the critical volume of export-oriented refining throughput, creating the liquidity needed to anchor oil trading and price discovery activities here,' he said.

The planned refinery project is clearly the next stage in integrated Hin Leong Trading's plan to become a leading Asian oil major. Along with oil trading and lubricants blending, Hin Leong also operates an international tanker fleet of 70 tankers including a dozen new VLCCs, under Ocean Tankers.

It has apparently managed to rope in one of the big four Chinese national oil companies into the project, but no name was disclosed.

As PetroChina (which has a 35 per cent stake in UT) already has a half share in the SRC refinery here, this suggests that one of the others - SinoChem, Sinopec or CNOOC - could be involved in the refinery.

BT understands that memoranda of understanding for the refinery have been signed, with the consortium likely to comprise 2-3 partners. The consortium intends to embark on front-end engineering design shortly once it gets the nod for the investment, including from the authorities here.

Trader Hin Leong plans mega refinery in Singapore

Wed Dec 22, 2010 10:59am GMT

*Project well passed study stage - source

*Awaiting Singapore government approval

*Eyes tie-up with a Chinese oil major - source

*New refinery to raise Singapore's capacity by a third

(Adds comments, details)

By Chen Aizhu

SINGAPORE/BEIJING, Dec 22 (Reuters) - Top Asian trader Hin Leong Trading has submitted a proposal to the Singapore government to build a large state-of-the-art refinery, two industry sources with direct knowledge of the plan said on Wednesday.

The plant, expected to cost $6-$8 billion, is slated to process at least 500,000 barrel-per-day of oil and take a maximum of three and a half years to build, possibly in partnership with a Chinese state oil firm, the sources said.

"All the infrastructure is ready...The key is if the government decides that Singapore needs another big refinery," one of the sources told Reuters. "The project is good to go, all it needs is an agreement of the Singapore government to proceed."

Earlier this year, the Singapore government unveiled a 10-year masterplan to make Jurong Island Asia's leading chemicals hub.

The refinery is expected to be a top-class facility, in the mould of Reliance's plants in India, producing green fuels such as ultra-low sulphur gasoline, diesel and naphtha.

The plant is to be located next to Hin Leong's $570 million Universal Terminal, Asia's largest commercial oil storage facility with 2.3 million cubic metres capacity, which can park two very large crude carriers at the same time.

"There could be a business case if the refinery is geared towards petrochemicals, such as in the production of naphtha," said Tilak Doshi, Principal Economist with Singapore's Energy Studies Institute.

The UT facility will provide the refinery more operational efficiency, giving immediately available storage both for crude oil and refined products.

The planned greenfield project will increase Singapore's refining capacity by a third from the current total of about 1.4 million bpd.

Singapore already has three refineries -- ExxonMobil's 605,000 bpd, Royal Dutch Shell's (RDSa.L) 500,000 bpd and Singapore Refining Co's 290,000 bpd, which is jointly-owned by PetroChina and Chevron Corp.

One of China's four national oil firms -- PetroChina , Sinopec Corp , CNOOC or Sinochem Corp -- could be Hin Leong's partner for the massive investment and the trader may also rope in a European partner, the Singapore Business Times reported.

PetroChina, Asia's largest oil and gas firm, already owns 35 percent stake in Hin Leong's 14 million-barrel Universal Terminal storage facility.

The Chinese energy giant also owns nearly half of the 295,000-bpd Singapore Refining Co. Still, the source said PetroChina has enough room to expand further in the Asian oil hub given its financial strength.

"PetroChina has only 140,000 bpd capacity here. Look at what Shell has, 500,000 bpd; and Exxon, 600,000 bpd."

(Additional reporting by Yaw Yan Chong, Francis Kan and Nopporn Wong-Anan; Editing by Manash Goswami)

Wednesday, December 22, 2010



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