Teshie Township, Others To Experience Power Outage On Saturday
Power Distribution Services (PDS) has released the list of areas which are expected to experience power outage on Saturday, 2nd June, 2019.
The areas area Ashaley Botwe, Islamic University, Spintex, Animal Husbandry, Coca Cola, Hydro Foam, Baatsona, Trassaco Estates, Regimanuel Estates and Nmai Djorn.
The rest are Adjiringano, Papaye and Teshie.
According to PDS, the cut in power supply to the above areas is to enable the expansion works on the Tema Motorway intersection.
Devon Energy Leaves Canada, Sells All Oil Assets
U.S. Devon Energy announced on Wednesday an agreement to sell its Canadian business to Canadian Natural Resources for C$3.8 billion, or US$2.8 billion, as part of its plan to focus on growing its oil production in the United States.
As part of the exit from Canada, Devon Energy will sell its heavy oil assets, most of which are located in Alberta, with net production averaging 113,000 oil-equivalent barrels in Q1 2019. Proved reserves at Devon’s assets were around 409 million barrels of oil as of end-2018.
In February this year, Devon Energy said that it would be looking to sell its Canadian assets to become a high-return U.S. oil growth business in what analysts described as a ‘long-overdue’ announcement from the U.S. oil company.
Back then, various analysts expected a wide range for what a potential price tag for Devon’s Canadian assets would be—those ranged from as low as US$2.6 billion (C$3.5 billion) to as high as US$6.66 billion (C$9 billion).
The deal with Canadian Natural Resources announced today is expected to close by the end of this quarter and is contingent upon customary terms and conditions, Devon Energy said in a statement.
Devon Energy will use the proceeds from the Canadian asset sale to cut its debt.
“This transaction creates value for our shareholders by achieving a clean and timely exit from Canada, while accelerating efforts to focus exclusively on our high-return U.S. oil portfolio,” Devon Energy’s president and CEO Dave Hager said.
For Canadian Natural Resources, the acquisition of Devon’s Canadian assets is a good fit to its current asset portfolio.
“These high quality assets complement our existing asset base and provide further balance to our production profile, while not increasing the need for incremental market access out of western Canada, as it is already existing production,” Canadian Natural’s President Tim McKay said in a statement.
Source: Oilprice.com
Saudis Raise Oil Prices To Asia As Demand Spikes
Emboldened by strong prompt demand amid tighter oil supply due to the U.S. sanctions on Venezuela and Iran, the world’s top oil exporter Saudi Arabia is expected to raise the prices of the crude grades it sells on its premium market, Asia, for July, trade sources told Reuters on Thursday.
If the Saudis do raise next week the official selling prices (OSPs) of all their crude oil grade selling in Asia, this would be the third consecutive month in which Saudi Arabia would have increased the prices of its oil for Asian customers.
The tighter supply globally has pushed the Middle East crude benchmarks to multi-year highs, so it’s not unjustified for Saudi Arabia to raise its prices again, especially as demand is strong for prompt supply, according to Reuters.
The Saudis could raise the price of their flagship Arab Light crude grade by up to $1 per barrel, which would lift the price to the highest level since January 2014, according to a Reuters survey of four refinery sources.
Saudi Arabia usually sets the OSPs for its crude grades at the start of each month for deliveries for the next month and as a rule, it doesn’t comment on its monthly oil prices.
Last month, Saudi Arabia increased its prices for all crude grades for Asian buyers with delivery in June as a supply crunch resulting from U.S. sanctions on Iran and Venezuela opened an opportunity to boost revenues.
The price for Arab Light with a June delivery date is now the highest in almost a year, with Arab Medium selling at the highest price since the end of 2013, and Arab Heavy at a six-year high.
Heavy grades are in particularly great demand among Asian refiners and supply is falling because of Venezuela’s continued production decline and political woes that are aggravating the situation.
Source: oilprice.com
China Installs Tallest Wind Turbine
Zoomlion Heavy Industry Science & Technology Co has broken the record for China’s tallest impeller of 152 metres, breaking the previous record of 140 metres set earlier this month.
At the height of 152-meters, the newly installed impeller is the tallest flexible steel fan tower in China and will contribute to the 46 tower Yangzhou Wind Farm project’s output to 100MW in total, the tech company said in a statement. Read more: S.Africa: two giant wind projects to come online in August 2020
“The recently installed impeller, which is currently the tallest wind turbine in China, presented a new challenge for our crawler crane which was required to operate in difficult terrain. The result is a testament, not just to the incredible skill of the engineering crew and our on-site service team, but also the functionality and quality of our machinery,” said Zhiwei Luo, Manager from Zoomlion Crawler Crane.
The ZCC9800W crawler crane, designed for unique and challenging engineering projects, is one of the most advanced on the market. The light-weight and modular design comes mechanized for ultimate versatility and can be disassembled, separated into multiple segments and transported conveniently across a variety of roads and terrains to be re-assembled on site.
As Zoomlion’s latest 4.0 flagship model, the IoT enabled ZCC9800W is constructed from advanced materials to meet the demands of the Intelligent Manufacturing (IM) era. The optimized structure and innovative combination boom can reach 178 meters, with a maximum hoisting height of 180 meters.
“Wind power is an emerging clean source of power, but to utilise this source efficiently, we need to develop advanced dependable equipment continually,” Luo said.
TICO T2 Cuts Down Electricity Generation By 50%
Mechanical challenges have forced operators of one of the thermal plants within the Aboadze power enclave in the Western Region to cut down on electricity generation by 50 per cent.
Workers of the TICO/TAQA T2 thermal plant claim management disregarded technical advice to shut down the plant for repair works when oil leakage was detected in one of the valves, leading to fire outbreak.
According to them, the 330-megawatt capacity plant has since November 2018 been generating only 150 megawatts of electricity on an average due to what they claim to be managerial indiscretion.
On 19th September 2018, management’s attention was drawn to oil leakage on the HRSG 32 bypass stop valve and advised to shut down it down to repair the leaks.
But according to the workers who spoke on condition of anonymity, management ignored advice from the team on duty.
As a result, there was a fire outbreak which rendered the HRSG 32 unavailable for days causing huge financial loss to the company.
On November 3, 2018, the workers say the STG MSCV also failed. This rendered the STG Unit unavailable for over three months because spare parts were said to be unavailable on site.
According to the workers, the technical team alerted management ahead of time, but nothing was done about it.
“Due to this 311,040mwhrs was lost in the 108 days the STG MSCV failed. But we could have fixed the problem in just six days if the necessary spare parts were available” one of them said.
An accessory gear failure on the GT31 unit on December 20, 2018 resulted in forced outage for over four months, something they attributed to bad managerial decision.
“The original manufacturer of the GT31 unit, which is Flender, was billed for repair works. Unfortunately, management kept postponing the schedule and this resulted in a failure of the generator bearings of the GT31”.
The workers who are not happy by the way management has been handling what they say are “avoidable incidents”, planned to demonstrate to push for the removal of the Managing Director, Ernest Osafo and the Plant Manager Nellissery Krishman.
Executives of the local chapter of ICU, however, managed to convince the workers to suspend the planned demonstration.
A compromise was reached between the workers and the executives, which was that only the executives were to wear red arm bands to register their disquiet over the “bad management decisions”.
But seven of the fourteen executives were subsequently interdicted for three months over alleged illegal industrial action among other things.
“You have been interdicted with immediate effect pending investigations into your involvement in the event which occurred on 17th May to 24th May, 2019 in respect of the following: illegal industrial action, breach of collective agreement, breach of standing negotiating committee rules and unfair labour practice”, an interdicted letter signed by Ernest Osafo General Manager of TICI/TAQA read in part.
Deputy Plant Manager Joseph Ackon said the plant is currently operating at 50 percent of its capacity because of maintenance works being carried out.
Meanwhile, when contacted to comment on the matter, Mr. Osafo said “TAQA has received various allegations and all have been noted,” and said that they take “the issues seriously and will work with all its stakeholders to investigate”
The investigation, he said, will be to find out what has gone on and ensure a resolution to the matter.
On the interdiction, he said, stated the seven executives were interdicted because they “violated rules of engagement”.
He declined to comment on why he has failed to recuse himself being a party to the allegations.
But the workers who are not convinced by the explanations, have threatened to stage a walkout if the 7 union executives are not recalled.
Source: 3news.com
Ghana: Interdicted TICO Workers Petition Energy Ministry To Investigate Their Management
Seven interdicted executives of the Workers Union at the Takoradi International Company, TICO/TAQA, operators of the 330 megawatts T2 combined-cycle plant in the Aboadze Power enclave of the Western Region, have called on the Energy Minister to investigate their General Manager, Ernest Kofi Osafo for allegedly mismanaging the plant and mistreating workers.
The workers who spoke on condition of anonymity say they now want the Abu Dhabi Group owners to replace their leadership or pay them off.
The 330 megawatts combined cycle plant, generally referred to as T2, is operated by the Takoradi International Company, TICO/TAQA, which is a subsidiary of the Abu Dhabi National Energy Company with VRA owning ten percent.
According to one of the interdicted workers, the plant has been operating at one-third of its full capacity of 330 megawatts since October 2018 due to alleged mismanagement by the General Manager, Ernest Kofi Osafo, and the Plant Manager, Nellissery Krishman.
“It has to do with managerial decisions which are preventing the plant from running at its full capacity from time to time. This affects me as a worker and as a Ghanaian. We all know the effects of power instability on individuals and business, therefore we have a duty to act on such. Some of the managerial deficiencies that are not helping and workers are not happy include a filter which was found not working on 30th January this year.”
“Maintenance was expected to have been done after we informed them, rather, instead of asking for the plant to be shut for maintenance, they were looking for high productivity and money. Therefore the plant was allowed to operate till the filter house collapsed and about 160 out of the 330 megawatts was lost. There was also an issue with the by-pass stop valve which we brought to the attention of the management led by Mr. Ernest Kofi Osafo, as the hydraulic was leaking.”
“Again, instead of allowing the plant to be shut-down for maintenance work to be done, they allowed the plant to operate until there was a fire outbreak. These and many others are what is making the workers unhappy which they wrote to the company CEO in Morocco to investigate. Instead of management waiting for that investigation to be done, they went ahead to query some individuals. This is why some of the executives expressed their displeasure with such managerial deficiencies by putting on the red armbands even though we have been working all throughout.”
Meanwhile, the General Manager of the Takoradi International Company, Ernest Kofi Osafo, indicated that the interdiction of the seven union executives is justified, insisting they have breached the labour laws by their conduct.
Source: Citinewsroom.com
Norway Launches Fresh Offshore Licensing Round
The Norwegian Ministry of Petroleum and Energy on Wednesday announced the APA 2019 licensing round, comprising the predefined areas with blocks in the North Sea, the Norwegian Sea, and the Barents Sea.
The award in predefined areas round is one of two equal licensing rounds on the Norwegian continental shelf. The scheme was introduced in 2003 to facilitate exploration in geologically mature parts of the Shelf.
Norway’s Minister of Oil and Energy Kjell-Børge Freiberg said: “We are continuing our practice of offering regular concessions on the NCS to provide the industry access to new acreage. Awarding prospective acreage is a central element in the Government’s policy. I believe the oil companies are well motivated to continuing exploring the NCS.”
The application deadline for the APA-2019 is 12:00 on August 27, 2019. The Ministry stated that the aim was to award new production licenses in the announced areas at the beginning of 2020.
The predefined areas (APA acreage) has been expanded by a total of 90 blocks – five in the North Sea, 37 in the Norwegian Sea, and 48 in the Barents Sea.
“The expansion of the APA-area is important to ensure effective exploration of larger parts of the NCS, including the Barents Sea. The expansion will give the companies access to new opportunities that can enable value creation, employment and technology development,” Freiberg added.
The APA area includes the geologically most mature parts of the Norwegian continental shelf. Exploration mainly focuses on smaller discoveries that would not justify an independent development but may be profitable if developed in conjunction with other discoveries or utilizing existing or planned infrastructure.
Source: offshoreenergytoday.com
Eni Expands In Mozambique With three New Offshore Licenses
Italian oil company Eni has acquired rights to explore and develop offshore blocks A5-B, Z5-C and Z5-D, located in the deep waters of Angoche and Zambezi Basins offshore Mozambique.
Through a farm-in agreement, signed with ExxonMobil Mozambique Exploration & Production Limitada and authorized by Mozambican institutions, Eni’s subsidiary Eni Mozambico acquires a 10% stake in the three blocks, the company announced on Wednesday.
Block A5-B is located about 1,300 kilometers northeast of the capital Maputo, in a completely unexplored area off the city of Angoche. It has an area of 6,080 square kilometers, at a water depth of between 1,800 and 2,500 meters.
Blocks Z5-C and Z5-D cover a total area of 10,205 square kilometers, at a water depth between 500 and 2,100 meters, in a scarcely explored area facing the delta of the Zambezi River, about 800 kilometers to the north-east of the capital Maputo.
The three blocks, assigned under the 5th Licensing Round, are operated by ExxonMobil (40%), in partnership with the Mozambican State company Empresa Nacional de Hidrocarbonetos (ENH, 20%), Rosneft (20%), and Qatar Petroleum (10%).
It is worth reminding that Qatar Petroleum signed a farm in deal with ExxonMobil to acquire a 10 percent stake in blocks A5-B, Z5-C and Z5-D in December 2018. This marked QP’s entry into the country.
“With this acquisition, Eni further strengthens its presence in Mozambique, a country of strategic importance for the company,” Eni said.
In the 5th Licensing Round, Eni Mozambique was also awarded operatorship of Block5A-A, adjacent to block A5-B, with a 59.5% stake. Other partners are Sasol (25.5%) and ENH (15%).
A farm-out agreement enabling Qatar Petroleum to acquire a 25.5% participating interest in Block A5-A, reducing Eni shares to 34%, is pending authorization by the Mozambican authorities.
Source: offshoreenergytoday.com
Why Most Refineries In sub-Saharan Africa Fail To Report Profits
On annual basis, millions of dollars of tax-payers money are spent on oil refineries within sub-Saharan Africa (SSA), in the name of repairs and turn-around maintenance. Yet these refineries are unable to work close to installed capacities, forcing the region to continue importing almost all the refined oil products it consumes.
These refineries have failed to run efficiently and profitably to be able to meet the energy needs of its citizenry. For instance, records from the Nigeria National Petroleum Corporation (NNPC) shows that between 2017 and 2018, the country’s three refineries made a total loss of approximately $740 million. And in a related development, Ghana’s 45,000 barrel per day (bpd) refinery made a loss of over $20 million from a single transaction in November 2018 when it attempted to refine one million barrel of crude from Nigeria.
Lately, it is rare to find a domestic refinery in SSA reporting profits and sustainability, compared to their peers in more liberalized markets. This phenomenon has been blamed on corruption, mismanagement, ownership structure, bureaucracy, pricing regime, funding and technical factors et cetera.
But irrespective of the rationale, refineries basically make their profit from the difference between the price of crude refined and the sale price of the products produced, referred to as crack spread. The crack spread is a good approximation of the margin a refinery earns, reporting as negative if the price of refined products falls below that of crude oil.
And so to be internationally competitive, refineries leverage on their operational efficiency, since they have little or no control over the price of their input or their output.
Economies of Scale
Economies of scale and efficiency are important variables in refinery profitability. The facility size does matter, as it creates an opportunity to spread fixed costs (e.g.maintenance, labour, insurance, administration, currency depreciation) over many barrels. And since the refining sector within the oil industry have the slimmest profit margins due to the expense of the refining process, and that they have little or no influence at all over the price of inputs or the outputs; refineries must rely on operational efficiency for their competitive edge through constant innovation, upgrading and optimization of capacity to produce more outputs from fewer inputs.
As a result, key factors such as refining capacity, capacity utilization rates, and complexity (configuration) have been identified as ultimately influencing the profitability of refineries, aside supply, demand, location and leadership et cetera.
Refining capacity refers to the given capacity of total crude charge input which a refinery is built to handle before the crude is converted into other consumable products. Utilization rates shows the extent to which the installed refining capacity is used to refine crude oil. It is the relationship between the actual output produced with the installed refining capacity, and the potential output which could be produced with it, if capacity was fully utilized. Complexity is a decisive factor in the type of crude oil a facility can refine and the quality of refined products produced. It literally refers to its ability to process a wider range of crude oils types into value-added products, and the flexibility to adjust to changing markets and local fuel specifications.
Refining Capacity
Facilities with larger refining capacity (size) are more efficient, better able to withstand cyclical swings in business activity and spreads fixed costs over a larger number of produced barrels. Most refineries in the Middle East, Canada, Asia, Europe, and the United States are typically large in size, ranging from 100,000 bpd to 1.2 million bpd, and capable of producing high quality products at much lesser prices, relative to the refining capacities recorded in SSA which ranges between 10,000 bpd and 210,000 bpd.Taking a refining capacity of 100,000 bpd as a leading-order benchmark for economic refineries in a liberalized market, it is obvious that a large number of existing and planned refineries in SSA cannot be economic and profitable. To the extent that while new refinery projects are pronounced each year as capacity addition, almost all fail to progress beyond the initial project announcement as they fail to attract the required investment from the private sector; thus leaving the huge finance cost solely on government to bear.
The unattractiveness in the smaller projects are due to the commissioning of several world-scale refineries in especially Asia and the Middle East which the smaller ones cannot favorably compete with; as the global refining sector trends towards fewer, but larger refineries.
Utilization Rate
Compared to refineries in Asia, Middle East, Europe, Canada, the United States, and North Africa that recorded a utilization rate of between 73% and 91% in 2017, Sub-Saharan Africa refinery throughput rates averaged 776,000 bpd through 2017, with a corresponding overall capacity utilization of 49.5%; down from 54.2% in 2016, as a result of erratic and unpredictable operations. Whereas refinery operation rates remain higher in Eastern and Southern Africa (ESA) and North Africa (NA), West and Central Africa (WCA) generally experienced much lower operation rates. Cote d’Ivoire, Chad, Niger, Gabon, Angola, Cameroun, and Congo refineries operated between 56% and 88% in 2017. The three State refineries in Nigeria utilized just between 14% and 24% of capacity; with Ghana operating under 2% of capacity.
The rationale for the unscheduled plant outages that have impacted refinery capacity utilization rates in SSA are familiar stories of mechanical problems, lack of feedstock, delays in delivery of feedstock, lack of ullage, delay in receiving spare parts for routine maintenance, and power supply failure. Subsidies on fuels have also contributed to the low capacity utilization at some refineries in the region, especially those in Nigeria. In its 2014 Africa Oil and Gas Report, KPMG noted that problems in the refining industry on the continent includes poor maintenance and operational problems, aside theft and corruption.
Higher refining capacity utilization rates are necessary because they results in higher production of refined products over a given period, and directly influences the revenues of refining segments. Since the refinery business involves high fixed costs, higher capacity utilization rates remains a key factor that drives profitability. Generally, a sustained 95% utilization rate is considered optimal as rates above that drives costs to rise due to process bottlenecks. A rate below 90% suggests either that some units are down for planned or unplanned repairs or that production was reduced following a drop in profit margins or demand.
Complexity
A simple refinery (“topping” refinery) is essentially limited to basic crude oil distillation; for separating the crude oils into refined products, but not meant to modify its natural yield patterns. A hydro-skimming refinery is also quite simple, and is mostly limited to processing light sweet crude into gasoline, and not heavy oil. It allows for meeting Sulphur specifications, but unable to modify the natural yield patterns of the crudes. By contrast, a complex refinery entails expensive secondary upgrading units such as catalytic crackers, hydro-crackers and fluid cookers to modify and improve the natural yield patterns of crudes. These refineries are configured to process a wider range of crude oil types, treat residual oils and converts them to lighter products, process bitumen from oil sands, adjust to changing markets and local fuel specifications, have a high capacity to crack and coke crude ‘bottoms’ into high-value products, and removes Sulphur to meet environmental requirements.
The complexity influences the input cost, the unit output, and the revenue stream; thus impacting the profitability of a refinery, as a highly-complexed refinery is associated with lower costs than a low-complexity refinery because it can process cheaper crude oil. Additionally, highly complex facilities produces more of light fuels such as Naphtha, Jet fuel, Gasoline, and gases which are more expensive than heavier fuels. In other words, complex and flexible refineries generates cost savings by taking advantages of the price differences between heavy and light crude oils, and more valuable light products. And a refinery’s capability to adjust its product yields to meet changes in demand has a huge impact on its profitability. Most U.S. refineries, just like the most recent refineries elsewhere (Asia, Middle East, South America) are already conversion or deep conversion refineries. However, this is not the case for existing refineries in SSA, which are mostly topping, and hydro-skimming types.
Conclusion
The global refining industry is witnessing a change in investment patterns, with a strong growth in investment for capacity expansion, and for the upgrading and modernization of facilities to produce more outputs from fewer inputs, aside meeting strict environmental requirement.
Serious refiners are relying on operational efficiency to gain competitive edge since they have little or no control over the price of their input or their output. They have understood that profitable operations that deliver adequate returns on investment and ensures sustainability are a function of a complex set of variables such as refining capacity, capacity utilization rates, and complexity (configuration).
Written by Paa Kwasi Anamua Sakyi, Institute for Energy Security © 2019
The writer has over 22 years of experience in the technical and management areas of Oil and Gas Management, Banking and Finance, and Mechanical Engineering; working in both the Gold Mining and Oil sector. He is currently working as an Oil Trader, Consultant, and Policy Analyst in the global energy sector. He serves as a resource to many global energy research firms, including Argus Media.
As a result, key factors such as refining capacity, capacity utilization rates, and complexity (configuration) have been identified as ultimately influencing the profitability of refineries, aside supply, demand, location and leadership et cetera.
Refining capacity refers to the given capacity of total crude charge input which a refinery is built to handle before the crude is converted into other consumable products. Utilization rates shows the extent to which the installed refining capacity is used to refine crude oil. It is the relationship between the actual output produced with the installed refining capacity, and the potential output which could be produced with it, if capacity was fully utilized. Complexity is a decisive factor in the type of crude oil a facility can refine and the quality of refined products produced. It literally refers to its ability to process a wider range of crude oils types into value-added products, and the flexibility to adjust to changing markets and local fuel specifications.
Refining Capacity
Facilities with larger refining capacity (size) are more efficient, better able to withstand cyclical swings in business activity and spreads fixed costs over a larger number of produced barrels. Most refineries in the Middle East, Canada, Asia, Europe, and the United States are typically large in size, ranging from 100,000 bpd to 1.2 million bpd, and capable of producing high quality products at much lesser prices, relative to the refining capacities recorded in SSA which ranges between 10,000 bpd and 210,000 bpd.Taking a refining capacity of 100,000 bpd as a leading-order benchmark for economic refineries in a liberalized market, it is obvious that a large number of existing and planned refineries in SSA cannot be economic and profitable. To the extent that while new refinery projects are pronounced each year as capacity addition, almost all fail to progress beyond the initial project announcement as they fail to attract the required investment from the private sector; thus leaving the huge finance cost solely on government to bear.
The unattractiveness in the smaller projects are due to the commissioning of several world-scale refineries in especially Asia and the Middle East which the smaller ones cannot favorably compete with; as the global refining sector trends towards fewer, but larger refineries.
Utilization Rate
Compared to refineries in Asia, Middle East, Europe, Canada, the United States, and North Africa that recorded a utilization rate of between 73% and 91% in 2017, Sub-Saharan Africa refinery throughput rates averaged 776,000 bpd through 2017, with a corresponding overall capacity utilization of 49.5%; down from 54.2% in 2016, as a result of erratic and unpredictable operations. Whereas refinery operation rates remain higher in Eastern and Southern Africa (ESA) and North Africa (NA), West and Central Africa (WCA) generally experienced much lower operation rates. Cote d’Ivoire, Chad, Niger, Gabon, Angola, Cameroun, and Congo refineries operated between 56% and 88% in 2017. The three State refineries in Nigeria utilized just between 14% and 24% of capacity; with Ghana operating under 2% of capacity.
The rationale for the unscheduled plant outages that have impacted refinery capacity utilization rates in SSA are familiar stories of mechanical problems, lack of feedstock, delays in delivery of feedstock, lack of ullage, delay in receiving spare parts for routine maintenance, and power supply failure. Subsidies on fuels have also contributed to the low capacity utilization at some refineries in the region, especially those in Nigeria. In its 2014 Africa Oil and Gas Report, KPMG noted that problems in the refining industry on the continent includes poor maintenance and operational problems, aside theft and corruption.
Higher refining capacity utilization rates are necessary because they results in higher production of refined products over a given period, and directly influences the revenues of refining segments. Since the refinery business involves high fixed costs, higher capacity utilization rates remains a key factor that drives profitability. Generally, a sustained 95% utilization rate is considered optimal as rates above that drives costs to rise due to process bottlenecks. A rate below 90% suggests either that some units are down for planned or unplanned repairs or that production was reduced following a drop in profit margins or demand.
Complexity
A simple refinery (“topping” refinery) is essentially limited to basic crude oil distillation; for separating the crude oils into refined products, but not meant to modify its natural yield patterns. A hydro-skimming refinery is also quite simple, and is mostly limited to processing light sweet crude into gasoline, and not heavy oil. It allows for meeting Sulphur specifications, but unable to modify the natural yield patterns of the crudes. By contrast, a complex refinery entails expensive secondary upgrading units such as catalytic crackers, hydro-crackers and fluid cookers to modify and improve the natural yield patterns of crudes. These refineries are configured to process a wider range of crude oil types, treat residual oils and converts them to lighter products, process bitumen from oil sands, adjust to changing markets and local fuel specifications, have a high capacity to crack and coke crude ‘bottoms’ into high-value products, and removes Sulphur to meet environmental requirements.
The complexity influences the input cost, the unit output, and the revenue stream; thus impacting the profitability of a refinery, as a highly-complexed refinery is associated with lower costs than a low-complexity refinery because it can process cheaper crude oil. Additionally, highly complex facilities produces more of light fuels such as Naphtha, Jet fuel, Gasoline, and gases which are more expensive than heavier fuels. In other words, complex and flexible refineries generates cost savings by taking advantages of the price differences between heavy and light crude oils, and more valuable light products. And a refinery’s capability to adjust its product yields to meet changes in demand has a huge impact on its profitability. Most U.S. refineries, just like the most recent refineries elsewhere (Asia, Middle East, South America) are already conversion or deep conversion refineries. However, this is not the case for existing refineries in SSA, which are mostly topping, and hydro-skimming types.
Conclusion
The global refining industry is witnessing a change in investment patterns, with a strong growth in investment for capacity expansion, and for the upgrading and modernization of facilities to produce more outputs from fewer inputs, aside meeting strict environmental requirement.
Serious refiners are relying on operational efficiency to gain competitive edge since they have little or no control over the price of their input or their output. They have understood that profitable operations that deliver adequate returns on investment and ensures sustainability are a function of a complex set of variables such as refining capacity, capacity utilization rates, and complexity (configuration).
Written by Paa Kwasi Anamua Sakyi, Institute for Energy Security © 2019
The writer has over 22 years of experience in the technical and management areas of Oil and Gas Management, Banking and Finance, and Mechanical Engineering; working in both the Gold Mining and Oil sector. He is currently working as an Oil Trader, Consultant, and Policy Analyst in the global energy sector. He serves as a resource to many global energy research firms, including Argus Media. PDS Asked My People To Bring Their Bills For Reduction But Some Refused-Krobo Paramount Chief
Nene Sakite II(seated) in a handshake with John-Peter Amewu(right), Energy Minister of Ghana
The Paramount Chief of Manya Krobo Traditional Area, Nene Sakite II, is in shock as to why his subjects were protesting against the Power Distribution Services (PDS), despite the latter’s repayment plan to ease the payment of their outstanding electricity bills.
According to him, about two years ago, when some residents of Kroboland complained of exorbitant electricity bills, there was a stakeholders’ meeting and ECG, then, alluded to that and so promised to rectify the anomaly, which they did.
He said those who went to the offices of ECG and now PDS, had their bills reduced proportionally and wondered why some of his subjects refused to do same, but decided to fight, leading to a commotion in the area.
Addressing the Energy Minister, the sad looking Konor told his guest that they had not rested on the issue, saying that they had been meeting all the time.
He said all the stakeholders had held another meeting with a whole lot of people from around to put their heads together to find lasting solutions to the pressing issue.
“We are all concerned about high tariffs. Yes. When this thing happened about two years ago, ECG and now PDS, did confirm that there was a mistake. They found a lapse somewhere, and they were correcting it, so we all had to send our bills and anybody who suspected anything, needed to send their bills. Quite a number of people did and their payments went down substantially.
“I know there are some people who have not had the opportunity yet to bring their bills, so I am urging all Krobos to bring their bills to PDS to be looked at. It is very important that…I will prefer people will bring their bills, and when they go there and nothing is done about it, then, we will know what our response should be.
“If you don’t send your bills over there and there is a problem, I don’t know how we are going to solve it. Some people are doing it, some are not. I am just pleading to my sons and daughters that we are not going to rest until we are able to get to the bottom of this to get the problem resolved. We are all working hard.”
Ghana: Low Data Quality Disincentive To Attracting Oil Giants In Bidding Process – Amewu
John-Peter Amewu, Energy Minister of the Republic of Ghana
Energy Minister John Peter Amewu has said significant data gaps and low data quality are disincentives to attracting major oil giants in Ghana’s oil and gas bidding process.
According to Mr. Amewu, the recent bidding process for some oil blocks in the Western Region has not been satisfactory as a result of challenges including gaps in the legislative instruments as well as low quality of data on the blocks.
Mr. Amewu said, “Our basins are largely not de-risked, significant data gaps and low data quality still exist, and many companies continue to site our fiscal regime as disincentives. The recent results of Ghana’s first licensing round, although not satisfactory in terms of the response rate, has confirmed the fears about a developing industry and the risk associated with frontier areas.”
The Minister was speaking at the legislative review stakeholder meeting held in Accra last Friday.
Interacting with stakeholders Mr. Amewu said, “It is clear to us that you have serious concerns about the legal, regulatory and fiscal environment governing the oil and gas industry. As a country, we also have concerns about the operations of industry players, and therefore our policies and regulations have been designed to maximize value for the country and our people.”
He added, “However, we cannot both remain stuck to our positions whilst there is great potential for win-win arrangements.”
“As a government committed to private sector development, we are prepared to change course. We are determined to formulate and implement market-friendly policies to make Ghana competitive.”
He added, “This is particularly important because oil and gas projects have become very expensive, upstream investments are not increasing faster, and the threat of the green revolution to the prospects of hydrocarbon-based economic development, have led us to reconsider our strategy for the accelerated growth of our oil and gas industry.”
He, therefore, urged the stakeholders to make input into the review process so that government can have a concrete strategy in attracting major oil and gas players into the country.
The nonexistence of reliable data and low level of documentation on exploratory fields continue to have a negative impact on the quest by the government to bargain higher returns from global oil exploration companies.
It will be recalled that some 14 oil and gas firms expressed interest in the first licensing and bidding process for some oil blocks in the Western basin but some of these companies including ExxonMobil pulled out as a result of poor data.
The situation has compelled the Ministry of Energy to conduct a strategic legislative review for the oil and gas industry.
The review process began with stakeholders and industry players seeking to examine the government’s new policy to accelerate growth in the sector to help meet its target of one million barrels per day.
PDS-Krobos Impasse Over Electricity Bills: The Inside Story
Nene Sakite II, Konor of Manya Traditional Council
Contrary to what the public has been made to believe that the recent happenings in the Manya Krobo area has to do with exorbitant electricity bills or fight for free electricity allegedly promised by Dr. Kwame Nkrumah, the first President of Ghana, energynewsafrica.com can state on authority that the underlying issue is not electricity bills as being bandied about.
This portal can state that the issue of electricity bills or supposed free electricity allegedly promised by Dr Kwame Nkrumah was used as a vehicle by those behind the United Krobo Foundation to achieve a certain agenda, which, we can say for now that, has failed.
Information available to energynewsafrica.com from a grapevine indicates that half of the six divisional councils which form the Manya Krobo Traditional Council have some bone of contention with Nene Sakite II, who is the Konor of the Paramountcy.
The divisions, which currently have issues with the Konor, include Dom, Manya and Piengwua.
Our sources indicated that these divisional chiefs have tried to use several means before the electricity issue and having failed, have now latched onto the alleged exorbitant electricity bills to fan discontent in Krobokand
Checks conducted by this online indicate that the Krobos had been paying for electricity long ago until the United Krobo Foundation, formerly known as the Voice of United Krobo Force, birthed a claim that they were promised free electricity by Dr Kwame Nkrumah and by that, started inciting the gullible Krobos to refuse to pay for electricity.
According to our grapevine sources, when the United Krobo Foundation (UKF) came with this claim, the Konor challenged the group to prove its claim before he supported them, but the group failed to give concrete evidence by way of MOU.
Our sources said because the Konor did not support the idea, the divisional chiefs, which are against him allegedly, teamed up to instigate violent clashes in the area so that they would turn around and claim that the Konor had failed in ensuring that there was peace in the area, thereby pushing for his removal from the stool.
Interestingly, the agitations are emanating from only the areas that have issues with the Konor.
It is, therefore, not surprising that none of the leadership of the towns such as Kpongunor and Yohe have not condemned the intolerant and unlawful acts of the youth, whose actions are giving the entire Kroboland a sour publicity.
It is public knowledge that the then ECG had series of engagements with all the stakeholders in the area to come to terms with them and see how best they could repay their accumulated bills.
Despite the flexible repayment terms the then ECG offered these agitating residents, they refused to adhere to the terms because they apparently knew the agenda they had kept under the carpet.
According to documents available to this portal, at a point the United Krobo Foundation demanded that the then ECG cancelled all the electricity bills they owed from 2014 to 2017, but their demands were rejected.
The question to ask is: Why did the United Krobo Foundation ask for the cancellation of almost four years’ electricity bills, when they know that it could not be possible? Is it because they have an agenda, and so those demands they made? If there were no agenda, why would they now accept to pay all the outstanding debts, something they had refused earlier?
A journalist, who is abreast with issues in the Krobo area, spoke to this portal, admitting that although he was aware of some fracas between some of the divisional chiefs and the Paramount Chief, he could, however, not confirm whether the so-called outrageous electricity bills were being used as a vehicle to fuel the chieftaincy ‘battle’.
Energynewsafrica.com’s Michael Creg Afful, who was in the Krobo area, on Sunday, gathered that the paramountcy sought the support of some political figures to intervene to resolve the matter but they declined to dabble in chieftaincy issues.
Interestingly, energynewsafrica.com was present when Energy Minister John-Peter Amewu visited Odumase to commiserate with the family of Thomas Partey, who lost his life in the course of the recent clashes, and also see Nene Sakite II, Konor of Manya Krobo Traditional Area.
Addressing the Energy Minister, the visibly distraught looking Konor told his guest that about two years ago when some residents made allegations that their electricity bills were on the higher side and protested, the then ECG convened a meeting in which it acknowledged the anomalies and promised to correct them, which they did.
He continued that the company came up with a road map which had flexible repayment plan, explaining that those who took their electricity bills to ECG were given reduction, but others also refused.
“We have not been resting on this issue. We have been meeting all the time. All the stakeholders, and as a matter of fact, tomorrow (today) afternoon, we are holding another meeting with a whole lot of people from around and we want to put our heads together to find lasting solutions to the issues we have been talking about.
“We are all concerned about high tariffs. Yes. When this thing happened about two years ago, ECG and now PDS, did confirm that there was a mistake. They found a lapse somewhere, and they were going to correct it, so we should all bring our bills and anybody at all who will suspect anything, should bring their bills. Quite a number of people did and their payments went down substantially.
“I know there are some people who have not had the opportunity yet to bring their bills, but I am urging all Krobos to bring their bills to PDS to be looked at. It is very important that…I will prefer people will bring their bills, and when they go there and nothing is being done about it, then, we will know what our response should be.
“If you don’t bring your bills over there and there is a problem, I don’t know how we are going to solve it. Some people are doing it, some are not. I am just pleading to my sons and daughters that we are not going to rest until we are able to get to the bottom of this to get the problem resolved. We are all working hard…the stakeholders, the leadership and representatives of the Regional Minister, everybody involved, and that is what I like about this, and very soon we will see better results.”
Below is the previous road map
US Tells Hong Kong To Lookout for An Oil Tanker Carrying Iranian Oil
The United States has urged Hong Kong to be on the lookout for an oil tanker carrying Iranian oil presumably that may be on its way to China, in violation of US sanctions against the Middle Eastern country, according to Reuters.
China has historically been Iran’s largest crude oil customer, although China has significantly increased its crude oil purchases from Saudi Arabia since the onset of US sanctions.
The oil tanker, known as the Pacific Bravo (formerly Silver Glory), was originally headed to Indonesia, Refinitive Eikon data showed, according to Reuters, but changed course on Monday to head toward Sri Lanka.
The Pacific Bravo flies under the Liberian flag, but a senior US official claims the oil tanker is owned by China’s Bank of Kunlun, which is the official handler of money between China and Iran. Bank of Kunlun is owned by CNPC’s financial arm, CNPC capital.
“Anyone who does business with this ship, the Pacific Bravo, would be exposing themselves to U.S. sanctions,” the senior official said, adding that the US will “enforce our Iran sanctions quite aggressively and quite consistently.”
The news comes as Indian news outlet ThePrint reported on Tuesday that India would ultimately resume purchases of Iranian crude oil despite the sanctions. India is Iran’s second-largest crude oil purchaser.
While India and China may be bold enough to thumb their noses at US sanctions on Iran’s crude oil, they may have difficulty finding willing insurers and shipping companies to do the same.
Iran has been consistently adamant that the United States would be unable to drive its oil exports to zero, and has engaged in covert shipments of oil and fuel, including forging documents to subvert the United States’ plan to restrict its oil exports.
Source: Oilprice.com
Occidental Aims To Sell Anadarko Assets As Debt Jumps With Deal
Occidental Petroleum hasn’t closed the acquisition of Anadarko yet, but analysts are already speculating about which Anadarko assets Occidental could divest to cut part of the debt it has taken on from the transaction and to focus on the core assets after the deal—Anadarko’s prime U.S. shale acreage.
The sooner Occidental delivers on its non-core asset sales, the sooner it can start consolidating complementary assets with Anadarko to achieve synergies and regain some favor with investors, shareholders, and the market, mergers and acquisitions (M&A) analysts and bankers tell Reuters.
When Oxy announced earlier this month that it had entered into a deal to buy Anadarko—outbidding Chevron—Occidental said it “expects to reduce debt over the next 24 months through free cash flow growth, realizing identified synergies and executing a planned portfolio optimization strategy with $10-15 billion of divestitures over the next 12-24 months; $8.8 billion of which has already been agreed through the transaction with Total.”
The deal with Total, however, may not go as smoothly as initially expected, after Algeria’s Energy Minister Mohamed Arkab said over the weekend that the North African country would not allow Total to acquire Anadarko’s assets, because Algeria’s government had not been consulted on the matter and is now ready to exercise its pre-emption right.
Algeria quickly came down off that stance, with its energy minister acquiescing enough to say it was open to a “good compromise” for a Total/Anadarko deal, according to S&P Global Platts.
According to analysts who spoke to Reuters, Occidental’s most likely asset sales could be Anadarko’s pipeline business and the assets in the Gulf of Mexico. Anadarko’s GoM position may be worth at least US$6 billion, and potential buyers could be some of the biggest players with experience in the Gulf of Mexico such as Exxon, Shell, Chevron, and Total, analysts tell Reuters.
If the deal with Total for Anadarko’s African assets goes through and Oxy sells the offshore assets, it would likely reach its US$10-15 billion asset sale target, Matt Sallee, portfolio manager at Tortoise Capital Advisors, told Reuters.
When Occidental approached Anadarko in late April with a bid countering Chevron’s, rating agency Moody’s said that the proposed deal would add almost US$40 billion of debt to OXY’s capital structure. Moody’s placed OXY under review for downgrade, noting that if the acquisition closes and crude oil prices remain supportive, “OXY would likely emerge from the review with a weakly positioned investment grade rating.”
Source: Oilprice.com