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AN ITP MEDIA GROUP PUBLICATIONNEWS 05 Check out all the major actions that took place regionally and globally in the downstream industry OPINION 24 Digital innovations in downstream assets May 2022 VOLUME 15 / ISSUE 05 18 SPECIAL FEATURE The impact of Russia- Ukraine conflict on Asian Refineries 26 WRITE UP The Journey to Energy Efficiency and Net-Zero PROJECT FOCUS 34 Everything you need to know about Ruwais Refinery’s SRU replacement PROJECT LISTINGS 39 The major downstream projects taking place across the region REGULARS 18 05 10 2432 10 Cover Story Vimal Kapur, president and CEO Honeywell Performance Materials and Technologies, talks about how renewable energy can be more impactful 32 STUDY A special report on the impact of European crisis on the GCC chemical industry 3 Refi ning & Petrochemicals Middle East May 2022www.refi ningandpetrochemicalsme.com ContentsSailing through the storm Published by and © 2022 ITP MEDIA GROUP FZ-LLC. PO Box 500024, Dubai, UAE Tel: +971 4 444 3000 Web: www.itp.com Offices in Abu Dhabi, Dubai, London & Mumbai ITP Media Group CEO Ali Akawi Managing Director Alex Reeve Publishing Group Publisher Nicky Dawson Editorial Group Editor Carla Sertin Editor Deepak Sharma Tel: +971 4 444 3617 email: deepak.sharma@itp.com Art Director Amjad Ayche Designer Tofiq Memon Advertising Group Publisher Nicky Dawson Tel: +971 4 444 3244 email: nicky.dawson@itp.com ITP Live General Manager Ahmad Bashour Tel: +971 4 444 3549 email: ahmad.bashour@itp.com Photography Senior Photographers: Efraim Evidor, Adel Rashid Staff Photographers: Ajith Narendra, Fritz John Asuro, Yuliya Petrovich, Jessica Samson Production & Distribution Group Production & Distribution Director Kyle Smith Production Manager Denny Kollannoor Production Coordinator Manoj Mahadevan Circulation Circulation Executive Rajesh Pillai Distribution Coordinator Avinash Pereira Marketing Director of Awards & Marketing Daniel Fewtrell ITP Group CEO Ali Akawi CFO Toby Jay Spencer-Davies Subscribe online at www.itp.net/subscriptions The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. The opinions and views contained in this publication are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting on information contained in this publication, which is provided for general use and may not be appropriate for the readers’ particular circumstances. The ownership of trademarks is acknowledged. No part of this publication or any part of the contents thereof may be reproduced, stored in a retrieval system or transmitted in any form without the permission of the publishers in writing. An exemption is hereby granted for extracts used for the purpose of fair review. Deepak Sharma Editor Editor, Refining & Petrochemicals Middle East As we approach the middle of the year, the global refi ning and petrochemicals industry is grapping with the escalation of geopolitical tensions in Eastern Europe, following a two -year period of volatility due to Covid-19 pandemic. As a result of the Russian-Ukraine confl ict, global supply chains of essential commodities are in complete disarray, and the prices of all key commodities are at a near record high. This has put infl ationary pressure on the global economy, which may ultimately result in a recession. Economists are now worried that the steep rise in prices for food and fuel may spur a greater risk of unrest in some regions, particularly in Sub-Saharan Africa and Latin America. It may also threaten food insecurity in the Middle East and Africa. Industry captains, analysts, traders, and other key stakeholders in the global downstream industry are worried that the confl ict may have a profound impact on the world’s race to reach net-zero greenhouse gas emissions. However, there are some positive developments too. According to media reports, Europe’s bid to reduce dependence on gas imports from Russia may serve to accelerate the transition to clean power. Spotlighting the importance of renewable energy in achieving desired emission levels, the cover story of this month focuses on how technology can help make renewable energy more aff ordable and more impactful. In this issue, we also focuses on the impact of digitalisation in the refi ning and petrochemicals industry, and on the impact of geopolitical tensions in Europe on the GCC downstream industry. 4 www.refi ningandpetrochemicalsme.com Editor’s Comment Refi ning & Petrochemicals Middle East May 2022For all the latest refining and petrochemical news from the Middle East, visit our website: www.refiningandpetrochemicalsme.com Masdar signs agreements to develop green hydrogen plants in Egypt Saudi Arabia contemplates buying a share in Thyssenkrupp Saudi Arabia’s Public Investment Fund is contemplating buying a stake in Thyssenkrupp AG’s hydrogen unit, as the world’s largest exporter of hydrocarbons aims to switch to greener forms of energy production, Bloomberg reported, quoting people familiar with the matter. According to the report, the sovereign wealth fund is now in the early stages of considering a potential investment in the German multinational conglomerate’s Nucera business. PIF is in the process of overhauling its investment portfolio in order to better prepare the world’s largest crude exporter for a post-oil future. It’s currently buying everything from football clubs to electric carmakers. Nucera is engaged in the business of developing hydrogen gas plant, which uses renewable energy sources like solar and wind. Earlier this year, Thyssenkrupp has announced that it is planning to lists its subsidiary Nucera, which might worth up to $5.4 billion. The report also noted that talks are currently in their early stages, and no fi nalization has yet been made. Both the PIF and the Thyssenkrupp spokesperson declined to comment on the Bloomberg report. Thyssenkrupp has already started its operations in Saudi Arabia by building a green hydrogen plant that will power the $500 billion NEOM megaproject. UAE clean energy company Masdar and Hassan Allam Utilities, the investment and development arm of the leading Egyptian conglomerate Hassan Allam Holding Group, have signed two Memorandums of Understanding (MOU) with Egypt’s state-backed organisation to cooperate on the development of green hydrogen production plants in the Suez Canal Economic Zone and on the Mediterranean coast. The MOUs were signed in the presence of Mostafa Kamal Madbouly, prime minister of Egypt, Dr Sultan bin Ahmed Al Jaber, UAE minister of industry and advanced technology, several senior government offi cials from both the countries and the representatives of several private companies, Masdar said in a statement posted on its website. “Masdar and Hassan Allam Utilities will set up a strategic platform that aspires to take a leading role in the development of green hydrogen production plants in the Suez Canal Economic Zone and on the Mediterranean coast in Egypt, targeting an electrolyser capacity of 4 gigawatts (GW) by 2030, and output of up to 480,000 tonnes of green hydrogen per year,” the statement noted. The agreements will contribute to strengthening the strategic partnership between the UAE and Egypt in renewable energy and green hydrogen, as the two countries prepare to host the COP27 and COP28 climate conferences and boost their active role in climate action and carbon emissions reduction, it added. Both the companies believe that Egypt has the potential to become a hub for green hydrogen production in the future. It has abundant solar and wind resources that allow the generation of renewable power at a highly competitive cost, which is a key enabler for green hydrogen production, and its proximity to Europe and global shipping lines will also allow them in targeting the bunkering market. Commenting on the development, Mohamed Jameel Al Ramahi, chief executive offi cer of Masdar, said: “These agreements represent a vital step forward in the development of the green hydrogen economy for both the UAE and Egypt, and will play a signifi cant role in our two nations’ decarbonisation eff orts. “By working with partners such as Hassan Allam Utilities, we can help the green hydrogen market achieve its full potential over the coming years and play its part in supporting the global energy transition.” 5 Refi ning & Petrochemicals Middle East May 2022www.refi ningandpetrochemicalsme.com UpdateGlencore and General Motors sign multi-year cobalt supply agreement Toyo wins contract for a biomass-fi red power plant project in Japan Commodities major Glencore and General Motors Co (GM) have signed a multi- year sourcing agreement as part of which Glencore will supply GM with cobalt from its Murrin Murrin operation in Australia. In a statement posted on its website, GM said: “Cobalt is an important metal in the production of EV batteries, and the cobalt processed from Australia will be used in GM’s Ultium battery cathodes, which will power electric vehicles such as the Chevrolet Silverado EV, GMC HUMMER EV and Cadillac LYRIQ.” Cobalt, a metal that makes up only 0.001% of the earth’s crust, is known for its heat- resistant properties. It is added to lithium- ion battery cathodes to improve energy density and battery longevity. The company further noted that the agreement builds on a commitment both companies share to create strong, sustainable and resilient supply chains through collective industry and multi-stakeholder platforms. Both Glencore and GM are members of the Responsible Minerals Initiative (RMI), and Glencore’s Murrin Murrin operation Toyo Engineering Corporation has bagged a contract from Japan-based Tomatoh Biomass Power GK to construct a 50MW biomass power plant in Tomakomai Shi, Hokkaido, Japan. is conformant with the OECD-aligned Responsible Minerals Assurance Process, GM said in the statement. Commenting on the development, Jeff Morrison, vice president of global purchasing and supply chain at GM, said: “GM and our suppliers are building an EV ecosystem that is focused on sourcing critical raw materials in a secure sustainable manner. Importantly, given the critical role As part of the contract, Toyo will carry out EPC work on a full turn-key basis that includes engineering, procurement, construction and commissioning services for a power generation unit. of EVs in reducing the carbon footprint of the transportation sector, this agreement is aligned with our approach to responsible sourcing and supply chain management.” By the end of 2025, GM plans to have the capacity to build 1 million electric vehicles in North America and has taken a series of actions to create a new and more secure EV supply chain, including projects targeting key EV materials and components. The company will build the biomass- fi red power plant using wood biomass fuel. In a statement Toyo said that the power generation facility is a highly effi cient biomass-fi red plant based on the reheat system. Over the years, the company has positioned itself strongly in the fi eld of infrastructure development related to power generation plants. To date, the company has completed 10 projects in the fi eld, having shifted its focus on renewable energy projects such as biomass power generation and photovoltaic generation projects in Japan. The latest contract award from Tomatoh Biomass Power GK makes it Toyo’s 11th project. The Japanese EPC giant has completed two 50MW biomass-based power generation projects that have started commercial operations. In addition, the company is currently working on six 50MW and two 75MW projects. 6News Refi ning & Petrochemicals Middle East May 2022www.refi ningandpetrochemicalsme.comSABIC acquires additional 50% shares in Scientifi c Design Company Petronet plans an LNG import facility to meet India’s energy demand Petronet LNG Ltd, the operator of the world’s largest liquefi ed natural gas (LNG) import terminal, is considering setting up a new facility in India to meet the rising energy demand in Asia’s third-largest economy, according to a media report. Petronet operates a 17.5 million tonnes a year LNG import facility at Dahej in Gujarat, India’s westernmost state, and another 5 million tonnes facility in the southern state of Kerala.It is now looking to set up a fl oating LNG import terminal in the eastern state of Odisha, Indian newswire Press Trust of India (PT) said in a report. “We believe gas demand will continue to grow and we will need avenues to meet such requirement,” PTI said while quoting Petronet LNG CEO AK Singh. With limited domestic production, India meets most of its gas demand through imports. “We could possibly look at setting up a fourth LNG import and regasifi cation terminal,” Singh said, without giving details. India’s natural gas consumption will have to rise to over 500 million standard cubic meters per day (mmscmd) from the current 165 mmscmd to achieve its goal of raising the share of natural gas in the country’s primary energy basket to 15% by 2030 from the current 6.7%. With domestic production of gas barely meeting half of the current consumption, India’s import of gas in the form of LNG is Global chemical giant SABIC has acquired an additional 50% stake in the Scientifi c Design Company from its joint venture partner and the catalysts manufacturer Clariant. “This transaction gives SABIC full ownership of Scientifi c Design, which is a leading licensor of high- performance process technologies and catalysts producer,” the chemical giant wrote in a statement. “The acquisition will deepen its growth in the Specialties market,” the statement noted. Last year, the Saudi-based company repositioned its specialties division as a stand-alone strategic business unit to unlock organic and inorganic growth opportunities that are independent of feedstock dynamics, the statement noted. According to Clariant, its 50% share in the joint-venture was valued at $130 million, and together with a profi t-sharing agreement, its net cash infl ow from the deal including the transaction cost will be $ 139.4 million. The catalysts producer plans to use the proceeds of the divestment to invest in growth projects within the core business areas, execute the strategy along with sustainability and innovation, fund the performance improvement programs as well as strengthen Clariant’s balance sheet to reach and defend a solid investment grade rating, Clariant said in a statement. SABIC is a diversifi ed chemicals company headquartered in Riyadh, Saudi Arabia, and has recorded a net profi t of $ 6.15 billion in 2021. likely to grow signifi cantly in future, the PTI report said. India would need 35 to 40 million tonnes of additional LNG imports between 2020 to 2040, it added. (1 million tonnes of LNG is equal to 3.60 mmscmd). 7News Refi ning & Petrochemicals Middle East May 2022www.refi ningandpetrochemicalsme.comSaudi Aramco’s Luberef refinery aims to raise $1bn from IPO Worley wins contract to study green hydrogen project in Oman Saudi Aramco Base Oil Co, which is also known as Luberef, is planning to raise more than $1 billion through an initial public off ering, according to a report by Bloomberg quoting unnamed sources. The report noted that HSBC Saudi Arabia and SNB Capital were advising on the off ering, which would comprise a 30% stake owned by Jadwa Investment. Luberef is a limited liability company established in 1976 and is owned by Saudi Aramco (70%) while the remaining 30% of shares are held by Jadwa Investment Group. The company operates two base oil refi neries in Jeddah and Yanbu to produce approximately 550,000 tonnes of oil lubricants per year. Jadwa Investment purchased ExxonMobil’s 30% stake in Luberef in 2007, which reportedly makes it the fi rst to enter a joint venture with Saudi Aramco. Luberef will join the long list of several Aramco subsidiaries that are already listed on the Saudi stock exchange. These Australia-based industrial engineering solutions company Worley won a contract from Green Energy Oman to conduct feasibility studies to develop a green hydrogen energy project in Oman. “We’ve been contracted by Green Energy Oman (GEO), an international consortium, to support their 25-gigawatt (GW) low- carbon fuels project, the company said in a statement. Worley will provide concept feasibility study services to develop GEO’s defi ned green hydrogen energy project. This includes optimising around 25 GW of wind and solar generation, as well as the production, storage, and export include Saudi Basic Industries Corp and Rabigh Refi ning & Petrochemical Co., the Bloomberg report said. Last month, Luberef signed a Memorandum of Understanding (MOU) of green ammonia. The GEO project consortium comprises OQ, the Sultanate of Oman’s global integrated energy company; InterContinental Energy (ICE), a dedicated green fuels developer; and EnerTech (ETC), a Kuwait government-backed clean energy investor and developer. “In addition to defi ning the project components, our study will identify opportunities to enhance the in-country value delivered from the expected 10-year project implementation period,” Worley noted in a statement. “This includes employment and development for Omani nationals and value with Air Liquide Arabia to evaluate the possibility of producing green hydrogen through electrolysis powered by renewable energy sources located in the Yanbu Industrial City. addition through local manufacturing and supply by Omani companies across the supply chain.”The overall project aims to produce over 1.8 million tonnes of low- carbon green hydrogen which can produce up to 10 million tonnes of green ammonia per annum, supporting the local economy and global market by exporting green ammonia to help other countries decarbonise their economies. According to Dr Hans Dieter Hermes, vice president of clean hydrogen at Worley, “Hydrogen has the potential to decarbonize hard to abate sectors where there’s no obvious alternative. This project enables Oman to use their natural resources to produce green fuels for self-use and export, and supports our purpose of delivering a more sustainable world.” “The GEO team, together with our technical specialists, are at the vanguard of mega-scale green fuels project development. The work being undertaken will place Oman at the forefront of such projects, maximizing the utilisation of Oman’s natural resources of wind and solar to produce green fuels, and build the country’s associated industry,” said Najla Zuhair Al Jamali, CEO of alternative energy at OQ. 8News Refi ning & Petrochemicals Middle East May 2022www.refi ningandpetrochemicalsme.comEni signs deal to boost LNG exports to Italy Crude oil supply from Russia to fall by 3 million barrels per day in May: IEA Italian energy major, Eni has signed a deal to boost gas production in Egypt and also to boost liquefi ed natural gas supplies to Europe. The move comes at a time when Europe, and Italy in particular, are scouting for alternative gas imports to cut their reliance on Russian gas as the war in Ukraine escalates, the Italian major wrote in a statement. Earlier this week, Italian Prime Minister Mario Draghi signed a similar deal with Algeria to increase imports from the African country to help replace some of the 29 billion cubic metres Italy receives from Russia. The Italian major discovered the Zohr gas fi eld in Egypt in 2015 and has signed exploration and production agreements with the state-owned Egyptian Natural Gas Holding Company (EGAS) to boost gas production in the country while stepping up exploration at existing and new fi elds. EGAS chairman Magdy Galal, and Guido Brusco, COO of natural resources of Eni, signed a framework agreement to maximise gas production and LNG exports to Europe, the statement noted. “The agreement aims to promote Egyptian gas export to Europe, and specifi cally to Italy, in the context of the transition to a low carbon economy,” the Italian major said in a statement. “This agreement, together with the one signed for the restart of Damietta liquefaction As a result of sanctions imposed by the US and its allies, crude oil supply from Russia is expected to decline by around 1.5 million barrels per day(bpd) in April, potentially touching 3 million bpd in May, the International Energy Agency (IEA) in its monthly oil report. “Russian oil supply and exports continue to fall. So far in April, roughly 700,000 per day of production has reportedly been shut- in,” IEA wrote in its report. “We assume these losses will grow to an average of 1.5 million bpd for the month as Russian refi ners extend run cuts, more buyers shun barrels and Russian storage fi lls up. From May onwards, close to 3 million bpd of Russian production could be offl ine due to international sanctions and as the impact of a widening customer-driven embargo comes plant last year, will provide LNG cargoes for overall volumes of up to three billion cubic metres in 2022 for Eni LNG portfolio bound to Europe and Italy,” the statement noted. Earlier this year, Egypt’s ministry of petroleum awarded fi ve new exploration licences in the Eastern Mediterranean Sea, Western Desert, and Gulf of Suez. Both the parties agreed to valorize Egyptian into full force,” said the IEA report. The report also highlighted that some buyers, most notably in Asia, have increased purchases of sharply discounted Russian barrels, while traditional customers are cutting back. gas reserves by jointly increasing exploration activities for identifying opportunities to maximise natural gas production in the short term, Eni said. The statement also noted that Eni will optimize the exploration campaigns in existing blocks and the newly acquired acreage in the Nile Delta, Eastern Mediterranean and Western Desert regions. “For now, there are no signs of increased volumes going to China, where refi ners have cut runs as a recent surge in Covid cases and new restrictions have dented oil demand,” IEA said in the report. The report also noted that despite the disruption to Russian oil supply, the combined impact of lower demand expectations, steady output increases from OPEC+ and non OPEC+ countries, and massive stock releases from IEA member countries should prevent a sharp defi cit from developing. The IEA said that the global oil markets struggling to navigate supply losses and dislocations stemming from Russia’s invasion of Ukraine received much- needed support from the US and its allies’ coordinated stock releases. 9News Refi ning & Petrochemicals Middle East May 2022www.refi ningandpetrochemicalsme.comNext >