Refining & Petrochemicals Middle East - July 2010 by ITP Business Publishing

NEWS, DATA AND ANALYSIS FOR THE E RE REFINING EFI FINING NING NI NG A AND ND P ND PETROCHEMICAL ETRO ETRO ET ROCH HEM EMIC ICAL INDUSTRIES ICA

JULY 2010

PLANT SENSATIONS HOW THE RIGHT INSTRUMENTATION CAN AVOID COSTLY SHUTDOWNS

COUNTER ATTACK

Hamad Al Terkait, CEO of Equate Petrochemical Company

GCC PLASTICS PRODUCERS DEFEND GREEN CREDENTIALS

KUWAIT’S EXPORT EARNER

How Equate Petrochemical Company rakes in over 80% of the nation’s non-oil revenues An ITP Business Publication, licensed by Dubai Media City

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Contents 1

IN PRINT

24 EQUATE TAKES OFF Hamad Al-Terkait, president and CEO of Equate, defends subsidised gas supplies in spite of Kuwait’s energy crunch.

July 2010 Volume 03 Issue 07

28 REFINED TOUCH

5 REGIONAL NEWS

Bakhit Al-Rashidi, deputy managing director of Kuwait National Petroleum Company says fourth refinery will go ahead.

QPIC launches new project • Borouge to build a polypropylene resins plant • SABIC gets $1bn loan • KPI readies for Vietnam

32 MAINTENANCE TIME

8 MIDDLE EAST MARKET UPDATE

Operational costs can be brought under control with a rigorously adhered to maintenence schedule say out panel of experts.

Build & Projects • Operations & Maintenance • Science & Technology • Equipment & Machinery • Sales & Shipments

38 NUMBER CRUNCHER

14 THE COUNTER ATTACK

Refining and Petrochemicals Middle East provides market data and analysis for the region’s listed downstream companies.

The first GPCA Plastic Summit highlight the positive aspect of plastic and how its use can reduce carbon footprint in the world.

40 FACE TO FACE

18 PLANT SENSATIONS

Anil Menon, energy industry leader at DuPont in the Middle East says petrocehmical companies are helping to harness solar energy.

Though instrumentation makes up only 5% of total installed plant cost, poor choices can lead to catastrophic downtime.

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Refining & Petrochemicals Middle East July 2010

2 Online

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MOST POPULAR NEWS

1 Ex-Saudi Aramco chief takes on Halliburton job 2 Saipem awarded US$900 million Kuwait gas deal 3 $20 billion fund derails BP’s 2010 dividend plans 4 Foster Wheeler nets FEED for refinery in Iraq 5 Saudi Aramco signs storage deal with Okinawa firm

EDITOR’S CHOICE

The GPCA Plastic Summit

BP’s American Nightmare

Arabianoilandgas.com picture gallery takes you behind the scene of the first GPCA Plastic Summit, the plastic conference held in Dubai, UAE.

Arabianoilandgas.com investigates BP’s poor record in North America, including it’s tragic refinery blaze and mounting upstream problems in the GoM.

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BREAKING NEWS AND VIEWS FIRST

SAUDI ARAMCO PRESIDENT WARNS STAFF TO STAY PRUDENT

CAPITAL COSTS BLAMED FOR CONOCO’S SHAH WITHDRAWAL

Aramco division heads warned to stay focused on budget and quality during an address from their president and chief executive officer, Khalid Al Falih.

“Capital concern” is being touted as the major reason behind the decision of ConocoPhillips to pull out from the US$10bn Shah gas field in Abu Dhabi last April.

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SAIPEM AWARDED US$900 MILLION KUWAIT GAS DEAL

Exclusive interview with Markus Wildi, president of The Dow Chemical Company in the ME. arabianoilandgas.com

WEB FORUM

QATARGAS 3 & 4 MARK MAJOR MILESTONES AT RAS LAFFAN

Saipem has been awarded an onshore contract worth approximately $900 million to build a new gas booster station in West Kuwait.

Qatargas has taken a major step towards completing work for its Qatargas 3 and 4 ventures with the ‘Mechanical Acceptance’ of offshore gas production platforms.

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Refining & Petrochemicals Middle East July 2010

DOW’S DEALMAKER

E JOIN TH E T A B DE

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4 Comment

Registered at Dubai Media City PO Box 500024, Dubai, UAE Tel: 00 971 4 210 8000, Fax: 00 971 4 210 8080 Web: www.itp.com Offices in Dubai & London ITP Business Publishing CEO Walid Akawi Managing Director Neil Davies Managing Director ITP Business Karam Awad Deputy Managing Director Matthew Southwell Editorial Director David Ingham Editorial Energy Group Editor Daniel Canty Tel: +971 4 210 8255 / daniel.canty@itp.com Editor Abdelghani Henni Tel: +971 4 210 8661 / abdelghani.henni@itp.com Contributors Florian Neuhof. Advertising Commercial Director Jude Slann Tel: +971 4 210 8693 / judith.slann@itp.com Sales Manager Stephen Hamer Tel: +971 4 210 8771 / stephen.hamer@itp.com Studio Group Art Editor Daniel Prescott Art Editor Simon Cobon Design Team Angela Ravi, Lucy McMurray Photography Director of Photography: Sevag Davidian Senior Photographers: Efraim Evidor, Jovana Obradovic Staff Photographers: Isidora Bojovic, George Dipin, Murrindie Frew, Lyubov Galushko, Shruti Jagdesh, Mosh Lafuente, Ruel Pableo, Rajesh Raghav Production & Distribution Group Production Manager Kyle Smith Deputy Production Manager Matthew Grant Production Coordinator Devaprakash Managing Picture Editor Patrick Littlejohn Image Editor Emmalyn Robles Distribution Manager Karima Ashwell Distribution Executive Nada Al Alami Circulation Head of Circulation & Database Gaurav Gulati Marketing Head of Marketing Daniel Fewtrell Marketing Manager Annie Chinoy ITP Digital Director Peter Conmy ITP Group

Kuwait is stuck between the hammer of the parliament and the anvil of its media

ne of the things that sets Kuwait’s downstream industry apart from other Middle Eastern countries is the influence of the national assembly and local media. In a country with a small population like Kuwait, national assembly members supervise the work of the government, though sometimes they go beyond their responsibilities to show the electorate that they are there. In some cases, deputy members use local media to covey their message, voice their demands, and to settle disputes between the different rivals factions. Recently I read in Al-Qabas, a daily newspaper, that an anonymous source in the Kuwait Petroleum Corporation (KPC) is planting fictitious stories relating to the gas supplied to Equate and other petrochemical companies in local media, in order to get rid of the current management as KPC nears a reshuffle. Also, I remember in 2008 that the K-Dow deal and the fourth refinery project were a subject of a fierce media attack from all Kuwait newspapers. Every day, articles were published on the fourth refinery tenders and the breaches surrounding it, all attributed to meddlesome unnamed sources. It is good to have parliament and media supervise the work of the government, but using media to settle disputes is unacceptable. It needs to assert self control and a bit of thought before publishing any story that may ruin the economy and the reputation of the country.

Chairman Andrew Neil Managing Director Robert Serafin Finance Director Toby Jay Spencer-Davies Board of Directors K.M. Jamieson, Mike Bayman, Walid Akawi, Neil Davies, Rob Corder, Mary Serafin

Abdelghani Henni, editor e-mail: abdelghani.henni@itp.com

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Refining & Petrochemicals Middle East July 2010

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News 5

News

JULY 2010

MTBE taints Rabigh naptha output

Company says problem solved but declined to disclose reasons behind polluted products Saudi Arabia’s Petro Rabigh said that it has identified the reason behind the contamination of naphtha with MTBE, an official source from the company told Refining and Petrochemicals Middle East. “We identified the reason behind the contamination of the naphtha,” said the source who declined to disclose the reason behind this contamination, but he ensured that the naphtha now is clean. Earlier June, Petro Rabigh said that it was conducting investigations into why its naptha product is rich in MTBE. “Evidence of MTBE has been detected in naphtha and technical analyses were ongoing to identify the source,” said Eyad Ajaj, manager at Petro Rabigh, a joint venture between Japan’s Sumitomo Chemical and Saudi Aramco. “However, Petro Rabigh does not produce MTBE nor does Petro Rabigh use it at any stage in the production process,” he said. Petro Rabigh produces 2.9m t/y of naphtha, from its complex located in Rabigh, on the Western coast of Saudi Arabia. Methyl tert-butyl ether, or MTBE, is a chemical compound which is a volatile, flammable and colorless liquid that is immiscible with water. MTBE is a gasoline additive, used as an oxygenate to raise the octane number, although its use has declined

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Petro Rabigh produces 2.9 million tonne per year of naphtha, from its complex located in Rabigh, on the Western coast of Saudi Arabia.

around most of the developed world in response to environmental and health concerns. Earlier June 200 000 tonnes of Rabigh naphtha grade for July loading were found to contain more than eight times the level of MTBE allowed in open-spec naphtha. “Normal MTBE content in the open-spec grade is very little, generally less than 50ppm, but the MTBE content in Rabigh is more than 400ppm,” according to traders based in Asia. “MTBE finding its way into naphtha can happen during discharge and pipeline transfers among other things,” he added. Traders reported that a long-range vessel was already

loaded with the MTBE-tainted Rabigh grade, and was at the Red Sea port. “The cargoes can be still be sold, but they will have to be sold at huge discounts because they are off-spec after all,” said a Southeast Asian trade source told Reuters. “You will need to have huge tanks to blend these volumes back to the right specifications (for cracking purposes),” explained the source. Saudi Aramco, Asia’s top naphtha supplier, sells five different naphtha grades for 2010 loading, namely A180, Rabigh, Jubail, A310 and Jeddah. Some 10 years ago, Saudi Arabia’s A180 naphtha grade had

more than 150 times more MTBE than the normal levels, Reuters reported. It has set premiums for JulyDecember 2010 lifting at $17.00$21.00 a tonne to its own price formula on a free-on-board (FOB) basis, with Rabigh being the most expensive among the different grades. Its buyers of the various grades include Cargill, Itochu, Marubeni, Chevron, Shell, PetroChina and new lifter ConocoPhillips. MTBE contains high levels of oxygenates which can degrade the reactor’s catalyst. Naphtha is usually purified from oxygenates of sulfur before being used in the naphtha cracker.

Refining & Petrochemicals Middle East July 2010

6 News

QPIC launches new project

Khalid bin Khalifa appointed as new CEO of Qatargas

Qurain Petrochemicals Industries Company (QPIC) announced the establishment of United Petrochemical Company (UPC). QPIC controls 90% and United Industries holds the remainder. UPC has received all required licenses from the Public Authority for Industry for the purpose of establishing PTA and PET plants in Kuwait. The project will become Kuwait’s first PTA/PET production plant. PTA is used in the production of such products such as film, fiber, with the majority of the production used for PET production. The production of PET is then mainly used in the making of plastic water bottles and food packaging. Annual global consumption of PTA is expected to reach 60 million tonnes by 2015, from 38 million tonnes in 2008. The world-

Qatargas board of directors chaired by his excellency Abdullah Bin Hamad Al-Attiyah, Deputy Premier and Minister of Energy and Industry of Qatar, has appointed Sheikh Khalid Bin Khalifa Bin Jassim Al-Thani as CEO of Qatargas Operating Company Limited (Qatargas) replacing Faisal AL-Suwaidi. Prior to his appointment Sheikh Khalid was the Director of Ras Laffan Industrial City (RLIC).

The US$700m United Petrochemical project will produce PET

The plant is estimated to cost US$700 million and will utilise paraxylene as feedstock.

scale petrochemical plants are estimated to cost US$700 million and will utilise paraxylene (PX) produced by the Kuwait Aromatics Company, in which Qurain owns 20%. The Kuwait Paraxylene plant began production in December 2009 and produces 820 000 t/y of paraxylene

“The PTA/PET project is part of QPIC’s long term strategy focused on developing downstream petrochemical projects in the regions and utilizing its assets to enhance returns to shareholders” said Sheikh Mubarak Abdullah Al Mubarak Al Sabah, the QPIC Board Chairman.

Sheikh Khalid replaces Faisal Al-Suwaidi.

Borouge to build a polypropylene resins plant

Saudi’s SABIC gets $1bn loan from Alinma Bank

Borouge has announced its intention to build a second manufacturing plant in China at the signing of an agreement with the Nansha Municipal Government. The company inaugurated its first compounding plant in Shanghai early this year. “It is our intention to be a reliable and secure long-term supplier to the rapidly growing automotive and appliance industries in China and therefore we have decided to invest in a second compounding plant that produces tailor-made resins in close proximity to our customers,” said William Yau, CEO of Borouge’s Marketing Company.

Saudi based Alinma Bank has grant a US$1 billion credit facility to Sabic, the bank said. “The facility will fund some of SABIC’s petrochemical projects as part of its strategic plans to enhance financing performance, boost competitiveness and help it achieve its expansion and growth strategy,” Alinma said. It did not disclose the terms of the facilities, saying only they complied with Islamic law. Sabic’s financial arm Sabic Capital delayed last month a benchmark dollar bond issue due to jitters that hit global credit markets over fiscal problems in some euro zone countries.

The construction of the second plant is expected to be completed in 2012, with an expected capacity of 105 000 t/y of compounded polypropylene resins, the base materials for which will be supplied from Borouge’s plant in Abu Dhabi, the company said. The new compounding plant will benefit from the application research and development centre being established in Shanghai and the locally funded Innovation Centre being built in Abu Dhabi. Borouge has opened an office in Guangzhou at the beginning of 2010, and a logistics hub located in Guangzhou is currently being started-up.

Refining & Petrochemicals Middle East July 2010

It was not immediately clear if there was a link between the Alinma deal announced early June and the delay in SABIC Capital’s delayed bond issue. Ratings agency Moody’s assigned the planned bond an A+ rating and said it understood it would be used to refinance or repay debt at SABIC Innovative Plastics Holding, the renamed GE Plastics. SABIC Capital was established in 2008 to look after the financing and tax operations of SABIC’s investments in Europe and the United States after the acquisition of DSM Petrochemicals and GE Plastics.

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News 7

KPI to award Nghi Son deal

KPI controls 35.1% of the US$6.2bn integrated project in Vietnam State-run Kuwait Petroleum International (KPI) and its Vietnamese and Japanese partners are making preparations for the signing of the EPC contract for their jointlyowned Nghi Son refinery and petrochemical project, Kuwait news agency reported. Cao Hoai Duong, deputy director of the Nghi Son Oil Refinery and Petrochemical Company, said that many contractors from Japan, South Korea, Italy and the US have put in bids for the project. “Although the value of the contract will only be made public in October, it will be the largest petrochemical project of its kind in Vietnam.” KPI, a subsidiary of Kuwait Petroleum Corporation, established a joint venture in April 2008 with the government-owned PetroVietnam and Japanese firms of Idemitsu Kosan Co. and Mitsui Chemicals. KPI and Idemitsu evenly own a 35.1% stake in the joint project, with PetroVietnam and Mitsui putting up 25.1 % and 4.7 %.

Nghi Son integrated complex will process 200 000 bpd of Kuwaiti crude supplied by KPC.

The planned US$6.2bn Nghi Son Petrochemical Refinery Complex, which will cover about 330 hectares in Nghi Son Economic Zone, is expected to be the largest refinery in Vietnam. The refinery is designed to process 100% Kuwaiti crude supplied by KPC with a daily refining capacity of 200 000 bpd, 1.5 times higher than the capacity of the 140 000bpd Dung Quat oil refinery.

Kuwaiti Oil Minister Sheikh Ahmad Al-Abdullah Al-Sabah inspected the construction site last September and vowed to continue concerted and enhanced efforts with Kuwait’s partners in bringing a successful conclusion. Once it is operational in 2014, the refinery will annually churn out 2.3 million tonnes of petrol, 3.7 million tonnes of diesel and a significant amount of liquefied gas.

TKOC posts US$222m profit in Q1 2010 Equate Petrochemical Company and The Kuwait Olefins Company (TKOC) announced that their combined profits for the first quarter of 2010 reached $222 million during the first quarter. Commenting on this matter, Equate CFO Abdulkarim Mubarak said such results were ratified by the board of directors during a meeting held earlier in June. Mubarak added that the results were realized due to the petrochemical market’s noticeable positive performance and the company’s distinguished performance,

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noting that the board has lauded EQUATE’s environment, health and safety (EH&S) performance as it has recently won, for the second consecutive year, the Gold Award from the American Society of Safety Engineers (ASSE) for GCC’s private sector companies. During 2010, the plants were operated at their full production capacity for the first time since startup. All plants were officially inaugurated by His Highness the Amir of Kuwait in conjunction with Kuwait’s celebration of National and Liberation Days. Equate Petrochemical Company is the single operator of Greater

Equate, which includes TKOC, Kuwait Paraxylene Production Company (KPPC), The Kuwait Styrene Company (TKSC).

Abdulkarim Mubarak, CFO of Equate.

Briefs The Capital Market Authority announced the imposition of a US$15000 penalty on Saudi International Petrochemical Company (SIPCHEM) due to its violation of clause (c) of Article (26) of the Listing Rules. The company published it’s initial financial statements for the period closing on 31/3/2010, in a local newspaper on 18/4/2010 before disclosing them to the market. Saudi Kayan Petrochemical expects to start up its new 650 000 t/y ethylene glycol unit in Al Jubail industrial city, on the eastern coast of the kingdom earlier than expected - in September or October. The schedule was brought forward from the original start-up date at end 2010 to 2011 due to a smooth construction process. The Kuwaiti parliamentary financial and economic committee has given the thumbs up to a bill authorising the creation of Kuwaiti shareholding companies that would undertake the establishment of oil refineries in the country. Arya Sasol Petrochemical has delayed a shutdown at its 1m t/y cracker in Assaluyeh to check machinery parts partly as another plant in the country was still offline. Source close to the company said that the plants will be closed after the restart of the 1.1m t/y ethylene cracker at Marun Petrochemical in Bandar Imam industrial zone.

Refining & Petrochemicals Middle East July 2010

BUILD&PROJECTS

Borouge awards three contracts

The awarded EPC contracts worth $2.6bn and will increase production to 4.5m t/y Three engineering, procurement and construction (EPC) contracts for the Borouge III expansion, including those for the major polyolefins plants, worth a total of $2.6bn, have been awarded, Borouge said in statement. A Tecnimont/Samsung Engineering consortium has won the US$1.255bn contracts for two polyethylene (PE) and two polypropylene (PP) units and the $400m contract for a 350 000 t/y low density polyethylene (LDPE) unit, it said. The contracts were awarded on a lump sum turnkey basis. The two linear low density (LLD)/ high density (HD) PE units will have capacities of 540 000 t/y each. The two PP plants will have capacities of 480 000 t/y each. The

The two linear low density and high density PE units will have capacities of 540 000 t/y.

LDPE unit will use LyondellBasell’s Lupotech T process “associated with” Borealis’s LDPE W&C (Wire and Cable) process, Tecnimont said in separate statement. Borouge said also that it had awarded a $935m contract for

utilities and off-site facilities for the project expansion at Ruwais in Abu Dhabi to Hyundai engineering and Construction. The contract to build the 1.5m t/y Borouge III ethane cracker was previously awarded to Linde.

Borouge said it was currently tripling its polyolefins capacity at Ruwais to 2m t/y with an on-stream date for the Borouge II facilities of mid-2010. The additional 2.5m t/y of polyolefins capacity is planned to be on-stream in 2013. Tecnimont was the main contractor for the polyolefins unit for Borouge I, completed in 2001 and in 2007 was awarded the contracts for the polyolefins unit for Borouge II as well as for a de-bottlenecking project. It completed the front end engineering and design (FEED) contract for Borouge III at the start of this year. Borouge is a joint venture between the Abu Dhabi National Oil Company (ADNOC), and the Austrian based Borealis.

Foster Wheeler scoops refinery contract in Iraq

Aramco invites firms for Jizan refinery deals

Foster Wheeler announced that its global engineering and construction group has been awarded a feasibility study and front-end engineering design contract by the Iraqi Ministry of Oil for a new grassroots refinery at Nassiriya in southern Iraq. The proposed refinery will have a capacity of 300 000 barrels per day. The contract value for this project was not disclosed and will be included in the company’s secondquarter 2010 bookings, Foster Wheeler said in statement. Foster Wheeler will develop the configuration of the new refinery to meet the client’s processing objectives, evaluate proprietary technologies, prepare a report covering

Saudi Aramco is looking for firms to manage the construction of the Jizan refinery. Engineering firms have submitted their prequalification documents, which also include the FEED and project management services (PMS) early June, Reuters reported. The refinery, with a planned capacity of 250 000-400 000 bpd is among new plants Saudi Arabia is planning to build as it looks to boost domestic refining capacity. “Aramco is still evaluating options to decide on the capacity of the refinery,” a source said. In January, Saudi Arabia said Aramco would build the refinery at Jizan.

the feasibility of the project and the design basis of the refinery facilities, engage the selected licensors and prepare the front-end engineering design package for the total project. “This award reflects our position as a leading refining contractor. We believe that the very balanced and objective approach we apply to refinery investment planning and technology evaluation, our long and successful track record in refining project execution, and the in-depth technical expertise and experience of our refining consultants have again delivered a winning combination,” said Umberto della Sala, president and chief operating officer, Foster Wheeler.

Refining & Petrochemicals Middle East July 2010

Saudi Arabia had hoped the refinery would be built and owned entirely by the private Saudi sector, a first in the world’s top exporter. The refinery is far from Saudi Arabia’s producing fields and is part of a wider development plan for the impoverished southern region. Meanwhile, Saudi Aramco has extended for the fourth time the date to submit bids to build a solids handling unit at its 400 000 bpd Yanbu refinery. The deadline for bids for the unit, which will produce 6 300 metric t/d of coke and 1 260 metric t/d of sulfur, is now July 6, said the sources.

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OPERATIONS&MAINTENANCE

Sipchem starts up acetyls complex

The 345 000 t/y carbon monoxide plant is considered as the largest in the world Saudi International Petrochemical Company (Sipchem) has started up commercial production from its acetyls complex plants in Jubail Industrial city. The complex includes a carbon monoxide plant with an annual production capacity of 345 000 t/y and an acetic acid plant with a production capacity of 450 000 t/y. The carbon monoxide plant is considered the largest of its kind in the world. Its production will be used as feed for the produc-

tion of the acetic acid and some other future products. The acetyls complex which represents the second phase of the company’s development includes in addition to the above mentioned plants, the vinyl acetate monomer plant with an annual production capacity of 330 000t/y and is expected to start commercial operation next month. The second phase projects are considered as a real addition for the company’s diversification of its products and the increase of its profits.

Sipchem’s acetyls complex includes a carbon monoxide plant and an acetic acid plant.

Kuwait shuts down refinery after fire

Salalah Methanol starts commercial production

A fire at a pipeline at Kuwait’s 270 000 b/d Mina Abdullah refinery in early June injured two workers and closed the whole facility for a day, with three fire fighters also being evacuated from the subsequent extinguishing operations due to smoke inhalation. The blaze started at a pipeline belonging to the hydrogen production unit as it was being taken offstream for scheduled maintenance together with four other units. The standstill has not affected loading schedules at Kuwait’s export facilities or domestic supply depots, given ample amounts of refined products in storage. “Kuwait seems to have the dubious distinction of seeing the most workers injured or killed in the entire Gulf region,” said Samuel Ciszuk, ME energy analyst. at IHS Global Insight.

Salalah Methanol Company (SMC) has started up commercial production at its 1.095m t/y methanol plant in Salalah free zone in Oman, the company said in statement. “The Performance test of the plant, audited by the Independent Engineer of the lenders, was successfully completed in May. Production has continued since those testes were completed at levels exceeding design plant production rates and shipments of methanol are ongoing through the Port of Salalah,” the company said. Production rates have achieved 104% of design in ongoing stable operation. Plant operation is now focusing on continued refinement of the operation for increased production, energy efficiency and emissions adjustments. The regular plant operating procedures

Refining & Petrochemicals Middle East July 2010

of laboratory sampling and testing, inspection, safety inspections and maintenance are now in full implementation. Plant effluent operation is online and operating to design requirements. With the project completed, the sub contractors are completing minor outstanding works and demobilising from site. Over the next two months the temporary construction facilities will be demobilised and the site cleared of construction surplus. The feedstock for the production of methanol is dry sweet natural gas supplied by Ministry of Oil and Gas through the existing pipeline that is already operational. SMC will own, operate and maintain the plant. SMC is a JV between Oman Oil Company (90%) and Vitol’s subsidiary Oman International Trading company holding 10%.

Cabot opens new facility in Dubai Cabot Corporation has opened its black masterbatch manufacturing facility in the Jebel Ali Free Zone, Dubai. The plant has an initial production capacity of 25 000 t/y with provision to expand to 75 000 t/y in the future. Production is scheduled to commence in August 2010. The Dubai plant allows Cabot to better meet increasing demand for masterbatch in the Middle East, Europe and Asia Pacific regions. “Within the Middle East there is already a strong demand for polyethylene and polypropylene compounds for use in building infrastructure for water supply, electricity, and telecommunications projects. These are key applications for black masterbatch. This new site offers significant quality and service advantages to Middle East producers who are global exporters of compounds,” said Sean Keohane, cabot vice president and general manager for the performance Segment.

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SCIENCE&TECHNOLOGY

GE & KFUPM launch research center The partners will work collaboratively to research and develop advanced fuel solutions King Fahd University of Petroleum and Minerals (KFUPM) and GE announced an agreement to establish a new fuel research center to be located on the university grounds in Dhahran, Saudi Arabia. The GE Energy Fuel Research Center will focus on furthering the understanding of alternative fuels produced in Saudi Arabia and identify ways to overcome technical barriers and promote the use and distribution of these fuels. The program is expected to further the region’s capabilities for maximizing the utilisation of alternative fuels and increase fuel efficiency for power plant and refinery applications. Increasing power

KPC green lights petrochemical research center Kuwait Petroleum Corporation (KPC) said its board approved the establishment of a center for oil and petrochemical research, part of its strategy and in line with the government program. The center will be conducting research on future challenges facing Kuwait oil sector to gaurantee good operations and utilisation of hydrocarbon resources on medium and long terms. “The center will provice high-quality training for Kuwait employees to use modern technology in oil and petrochemical industries,” accoding Sheikh Talal Al-Khaled Al-Sabah. official,

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The center will focus on furthering the understanding of alternative fuels produced.

generation efficiency and decreasing fuel consumption is vital to promoting energy sustainability and supporting the Kingdom’s national development strategy. “The GE Energy Fuel Research

Center reflects the university’s objectives to partner with leading global companies like GE, to develop groundbreaking initiatives that can support the Kingdom’s industrial growth and develop-

Aker Solutions to provide PVC licenses in China Two chinese companies have opted for Arkema’s PVC production processes for its new plants to be located in Xining City, People’s Republic of China. As part of the cooperation agreement reached in November 2008 with Arkema, Aker Solutions will prepare the basic engineering for a 230 00t/y PVC suspension production plant and a 35 000 t/y PVC emulsion. “The licensing agreement concluded with Qinghai Salt Lake Industry Group for three licenses confirms the remarkable quality of Arkema’s PVC production processes, which makes them one of the most efficient PVC technologies in the world. Our partnership with Aker Solutions, one of the world’s leading engineering and construction groups, has undoubtedly been

a key element in the choice made by this Chinese manufacturer,” states Otto Takken, Vice President of Arkema’s Vinyl Products business segment. “The choice made by Qinghai Salt Lake Industry Group Co., Ltd for Arkema’s technology in combination with Aker Solutions’ solid expertise in designing and executing projects in China, is a further illustration of the successful partnership between our companies,” says Johan Cnossen, SVP - Europe, Middle East and Africa for Aker Solutions’ Process and Construction business. The licensing agreement covers the operation of the Arkema technologies, basic engineering, and technical support for the plants’ startup.

ment, and contribute to fulfilling the Kingdom’s national development strategy,” said Dr. Khaled Al Sultan, KFUPM Rector and CEO. “Fuel flexibility and efficiency can be a cornerstone for the continuing growth of the energy industry, a key component for a diversified and prosperous Saudi economy. Initiatives and commitments, such as the ones made by GE today, can go a long way toward achieving a sustainable energy future for the Kingdom,” added Dr. Al Sultan. Through the center, which is due to open later this year, GE will work collaboratively with KFUPM to research and develop advanced fuel management solutions.

Total SAS acquires AE Polysilicon Total announced that its subsidiary Total Gas & Power USA (SAS) has acquired a 25.4% interest in U.S. startup AE Polysilicon Corporation (AEP), which has developed an advanced technology to produce polysilicon for photovoltaic panels. The acquisition is being made through a reserved capital increase. Founded in 2006, AEP has developed an innovative, low-carbon, energy-efficient process, consuming substantially less energy than standard methods. It operates continuously to produce cost-competitive granular polysilicon. The initial phase of the state-ofthe art polysilicon production facility is in the commissioning phase today and is scheduled to begin commercial production this year. When operating at full capacity, the initial phase will produce up to 1 800 t/y of granular polysilicon.

Refining & Petrochemicals Middle East July 2010

EQUIPMENT&MACHINERY

Elite coriolis meter launched in ME

The new Emerson coriolis meter is well suited for gas metering and refinery blending Emerson Process Management has unveiled the highest flow rate coriolis meter available. The latest Micro Motion ELITE Coriolis meter covers 10”-12” (DN 250300) line sizes and can handle flow rates over 3 200 tonnes/ hour. This new meter adds to the existing 1/10”-8” (DN2-DN200) ELITE line size range, enabling Emerson to deliver the industry’s broadest coriolis offering. Manufacturers are challenged with reducing production costs and optimizing processes in tough applications that demand high, reliable production rates. Mechanical meters, with moving parts, rotating components, and ongoing maintenance require-

ments, don’t necessarily deliver the robust performance needed. High flow rate applications demand the best possible accuracy in all conditions, especially when measuring high-value material. This latest large size ELITE High Capacity meter is ideally suited for pipelines, ship/rail loading and unloading, crude oil custody transfer, mud logging, marine, LNG, gas metering, and refinery blending. ELITE High Capacity Coriolis meters have no moving parts to break or wear, deliver ±0.10% mass and volume flow liquid accuracy, ±0.0005 g/ cc density accuracy, and ±0.35% gas flow accuracy. Micro Motion ELITE High

Refining & Petrochemicals Middle East July 2010

The new flow metter is ideal for refineries.

Capacity Coriolis meters deliver measurement performance for applications ranging from 6”

(DN150) to 12” (DN300) process connections. ELITE High Capacity Coriolis meters have been thoroughly tested in downstream applications with results exceeding customer expectations. Micro Motion Coriolis flowmeters lead the industry in quality, measurement performance, and reliability, and are part of Emerson’s broad range of intelligent, digital field devices that power the PlantWeb digital plant architecture. Further cost savings, increased plant availability, and enhanced safety and environmental compliance are achieved when the flowmeters are integrated into the PlantWeb digital plant architecture.

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SALES&SHIPMENTS

Air Products signs contract with GAC

GAC Qatar will provid a specialised shipping and logistics services for Air Products GAC Qatar has signed a deal with international gas producer Air Products USA to handle helium deliveries from Qatar to the UAE, the company said in statement. The new deal sees GAC Qatar providing a wide range of specialised shipping and logistics services to support the movement of helium. “It marks the start of a relationship with the group that could lead to new opportunities for mutually beneficial business,” said Ravindu Rodrigo, GAC Qatar’s commercial manager.

Cristal Global ups TiO2 prices for July Cristal Global (Cristal) has announced that it will increase prices on all of its anatase and rutile Tiona and Cristal titanium dioxide (TiO2) products sold in certain regions staring from July 1st. In Europe the company said that it will increase the price by US$185 per tonne compared to June prices, while in the Middle East and Russia, it will be sold at $100 per tonne higher than June offers. Prices for the Asian markets will be increased by $150 per tonne compared to June.Prices for all Tiona and Cristal titanium dioxide (TiO2) products will increase by $100 per tonne. Cristal Global, is a subsidiary of Saudi Tasnee, and it is world’s second-largest producer of titanium dioxide.

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“Air Products and GAC make a good match,” he added. “Both are truly global, put a premium on quality and invest in the best people to work for them. We hope that this contract will be just the start of a long and profitable relationship.” Air Products has nearly 19 000 employees in more than 40 countries worldwide, serving the industrial, energy, technology and healthcare sectors with a portfolio of atmospheric gases, process and specialty gases, performance materials, equipment and services.

GAC Qatar will handle helium deliveries of Air Product from Qatar to the UAE.

Agility opens Borouge Logistics hub in Shanghai Agility has opened of new logistics hub in Shanghai which receive and distribute up to 600 000 tonnes of polyolefins annually from Borouge’s plant in Abu Dhabi, the company said in the statement. Agility Public Warehousing Company Abu Dhabi designed, constructed and owns this state of the art facility and will manage operations and distribution to the Asian market over the next ten years. The Shanghai Logistics Hub will receive polymer resins in bulk containers directly from the Borouge Middle East gateway situated at Ruwais in Abu Dhabi. These polymers are used in a wide range of applications including pipe systems, wires and cables, automotive components and advanced packaging as well as household white goods.

Adjacent to the Logistics Hub is a 30 000 sq m compound manufacturing unit (CMU) which produces 50 000 tonnes of polymer compounds each year. Agility Public Warehousing Company Abu Dhabi, a joint venture between Agility, Mubadala Investment Company and Al Dahra, designed the building infrastructure and service connections that support the CMU. “The world manufacturing footprint of the petrochemicals industry is in major change with production in the Middle East expected to more than double by 2015. The Shanghai Logistics Hub successfully demonstrates the key role Agility is playing in facilitating trade and investment flows and opening gateways from the Middle East to Asia and emerging markets,” said Philip Browitt, Chairman of the Agility Chemical Specialty business.

SABIC reduces July ACP of MEG Saudi Arabia Basic Industries Corporation (SABIC) has reduced July Asian Contract Prices (ACP) of mono ethylene glycol (MEG) for at US$850 per tonne, a $120 reduction compared to June prices. MEG contract prices are generally set by the three major players of the industry, which include SABIC, MEGlobal and Shell Chemicals. SABIC is the largest MEG producer in the world, with a production capacity exceeding 5.345million t/y, through 10 production units located in Al Jubail Industrial City and in Yanbu. The company signed a deal last year with Dutch storage and terminal operator to rent MEG storage tanks at the port of Zhanjiagang, in the eastern part of China, as it aims to improve the delivery of the products to end users, and reduce the delay in deliveries.

Refining & Petrochemicals Middle East July 2010

14 GPCA Plastics Summit 16

THE COUNTER ATTACK The first GPCA plastics summit highlighted the positive aspects of plastic and how its use can reduce the world carbon footprint

Dr. Abdulwahab Al-Sadoun, secretary general of GPCA.

Refining & Petrochemicals Middle East July 2010

www.arabianoilandgas.com

GPCA Plastics Summit 15

Advanced Petrochemical Company hosted the luncheon.

from Tasnee A high profile delegation mit. sum was present at the

Senior executives of major playe rs were present attended the even t.

Khaled Al-Mana, SABIC executive vic e president, polymers .

CEO of Manfred Klepacz, Group. ng ldi Ho jhi Al Ra

n what could be considered as a counter attack against initiatives to ban plastics bag in some countries in the region like UAE and Oman, Gulf Petrochemicals and Chemicals Association (GPCA) organised its first plastics summit in Dubai. More than 300 delegates from all over the world representing the different segments involved in the plastic industry attended the event. Major regional petrochemicals producers were also present in the event including Saudi Arabia Basic Industries (SABIC), Petro Rabigh, Advanced Petrochemicals, Tasnee and Natpet from Saudi Arabia, Equate from Kuwait, Borouge from the UAE and Qapco from Qatar. The two days summit focused primarily on the positive aspects of the plastic industry and its importance in the region, as at least 25% of the global plastics industry will be based in the Middle East by 2011. Moayyed Al Qurtas, chairman of GPCA plastics committee, and vice chairman and CEO of TASNEE, started off proceedings with a welcome address in which he reflected on the importance of plastics in our world and as a driver of growth and diversification in the Gulf economy. Al Qurtas noted that the GPCA Plastics summit’s high-level agenda offered a good opportunity for the Middle East to further consider ways to drive sustainable growth through socially responsible initiatives. www.arabianoilandgas.com

One of the keynote speeches was presented by Khaled Al-Mana, SABIC executive vice president, polymers, about the growth opportunities and challenges for plastics conversion in the GCC, a special industry-segment focused of the conference’s main theme of sustainable growth across the value chain. “From the GCC perspective, We are looking at a booming sector with aboveGDP growth over the next five years and the addition of more jobs to the 60 000 workers already employed by about 1 100 enterprises throughout the region,” Al-Mana said. Al-Mana noted that he saw growth opportunities in two major areas including durable products for the construction industry and recyclable solutions for the packaging industry. He pointed out that SABIC would soon open a new customer support and application development center in Riyadh. “The new center will focus on engineering plastics to help local customers design and manufacture new products not produced in the GCC countries today,” he said. The summit was an opportunity for technology developers to showcase their products and to defend the benefits of using plastics in different applications. In his presentation about polyolefin technology development and its role in fostering

innovation and sustainability, Massimo Covezzi, senior vice president, research and development at LyondellBasell, illustrated the positive characteristics of polyolefins in reducing the carbon dioxide footprint. “HDPE pipes have gradually replaced

GPCA PLASTICS AWARD To show the commitment of the GPCA to support the plastic producers in front of the current attacks, Abdulwahab Al-Sadoun, secretary general of GPCA announced the establishment of the plastic innovation award, which is open to plastic converters, research and development centers, regional universities and vocational institutes. “The plastics industry makes a significant contribution to our welfare by enabling innovation, enhancing quality of life and facilitating resource efficiency and climate protection,” said Dr. Al-Sadoun. “The Gulf Industry’s position as a global hub for the production of plastic resin is large and will be growing markedly over the next five years so it is imperative that we reward those who have made a significant contribution to this phenomenal growth.” The first three winners in the contest will be rewarded with the winner receiving a cash prize of US$27 226 and a winner’s certificate; the first runner-up will receive $13 600, while the second runner-up will get $6800.

Refining & Petrochemicals Middle East July 2010

16 GPCA Plastics Summit

300 delegates attended the su mmit.

ent, senior vice presid Massimo Covezzi, at nt me op research and devel LyondellBasell.

traditional materials like steel eel and wood, wood this replacement reduced the carbon footprint in total life cycle by - 9.3kg CO2/ Kg product,” he said. Covezzi also referred to the usage of plastics in different industries like automotives and packaging industries. “In the automotive industry, the usage of polypropylene in the bumper reduced its thickness, weight and enhanced the safety by 40%,” he said. “It also reduced the carbon footprint in total life- cycle by -4.6kg CO2/ kg product.” The usage of plastic in transportation sector reduces fuel consumption according to Covezzi. “Polymers save transportation weight and fuel and this reduces the carbon footprint and emission as well,” he explains. Manfred Klepacz, the Chief Executive Officer of Al Rajhi

300

Number of delegates who attended the conference

Refining & Petrochemicals Middle East July 2010

The summit attracted all the players involved in the plastic industry.

“CONSUMER RESPONSE AND BEHAVIOUR, NOT PLASTIC BAGS PER SE, IS RESPONSIBLE FOR THE IMAGE OF THE PLASTIC BAG AS A POLLUTER” HUGO VERLOMME, ENVIRONMENTALIST Holding Group talked about requirements for growth of the plastics value chain from a converter’s perspective, focused on the advantages of the GCC for converters and measures that need to be put into place to ensure continued growth including investing beyond technology and developing a culture of service. The video speech of environmentalist and author of The Plastic Bag War, Hugo Verlomme was one of the most important presentations, as it hit the nail on the head. “Consumer response and behaviour, not plastic bags per se, is responsible for the image of plastic bag as a polluter of the environment and the sea,” said Verlomme. Verlomme said that recycling, and educating the public and students are among the efforts that should be taken in order to solve the issue.

The future trend of plastic industry and protectionism measurements were among the topic discussed during the summit. George Hanna, president of HIPRO Consulting, said in his presentation about competitiveness, structure and future of the gulf converter industry, that it will be very difficult for local converters to export to Europe as the market there is saturated and sophisticated market. Speaking about the protectionism measurement, Hanna said that these actions will be reduced less and less in the future. “The event was an excellent opportunity to meet the targeted clients, as end users and plastic converters are present in the conference,” said Muayad Saleh, board member at Advanced Company. The same view was expressed by exhibitors from Tasnee, Equate and Petro Rabigh. www.arabianoilandgas.com

If the list is too long to remember, donâ&#x20AC;&#x2122;t forget one name:

Your gateway to the Petrochemicals and Chemicals Industry in the Middle East. Gulf Petrochemicals & Chemicals Association Tel: +971 4 321 74 44 Fax: +971 4 321 76 77 P.O.Box: 123055 Dubai-UAE

www.gpca.org.ae

18 Plant Instrumentation

PLANT SENSATIONS

Instrumentation can account for 5% of total plant cost, but getting it wrong can have seismic effects on the smooth running of your downstream and refining operations

n a process industries like petrochemicals and refining, the utilisation of instrumentations in different phases of production is very important in helping plant operators to monitor the production process. Theoriticaly speaking, instrumentations are a collection of instruments which are used for the purpose of observation, measurement and control. Refining & Petrochemicals Middle East July 2010

Instruments include many varied contrivances which can be as simple as valves and transmitters, and as complex as analyzers. Instruments often comprise control systems of varied processes. The control of processes is one of the main branches of applied instrumentation. “Petrochemicals companies and refineries require different instruments including temperature, level, flow and analytical

instruments, as well as automations systems, control valves and regulators and many other instruments,” says Philip Bond, vice president of Rosemount Measurement at Emerson. “Within each of these groups we have a comprehensive range of technologies to meet the many applications that exist on our customers plants,” he explains. From very basic measurements up to highly demanding and critical applications, www.arabianoilandgas.com

Plant Instrumentation 19

instruments are there to ensure the best performance of the plant. “If a fluid flows through a pipe, reacts in a reactor, or is stored in a tank, instruments can help to accurately and reliably measure and control the pressure, temperature, level and flow of the process,” says John Emmett, export manager Moore Industries. This allows the owners and operators of petrochemical plants and refineries to safely control their processes in the most efficient and cost-effective way to meet their quality and output requirements. Beside its main role to measure field parameters, instrumentations are responsible for providing the ability to modify some field parameters. “In general the instrumentation helps to run the plant in a cost optimized (max yield, min downtime) way. Even though the instrumentation is only 3 to 5% of the total investment in a process plant, these are the “eyes” and “ears” for the process operators,” says Jens Winkelmann, head of sales in the Middle East at Endress and Hauser. Given the importance of instrumentations within the plant, there are many factors to be considered when selecting an instrument. The accuracy of the device is clearly important but should be considered along with a number of other key factorsm, says experts. “These include how long a device will continue to measure and control the process with the accuracy it provided when it was new, and how much notice it will give you if it starts to lose performance,” says Bond. “Some of the greatest value comes when a device can predict a problem with itself, or even the process to which it is connected, in time for the operator to take action without impacting the process,” he explains. Therefore quality, reliability and repeatability, combined with predictive diagnostics that extend into the process, are the keys to making a good instrument buying decision. “Lifetime cost which means buying it, installing it, maintaining it, replacing it are the key aspects buyers should take into consideration while buying instruments for their plants,” observes Winkelmann. As all www.arabianoilandgas.com

products used in process industries, instrumentations should meet requirements and specifications of the industry standards, which varies from a region to another. “There are different specifications for different processes e.g. ambient or high temperature and or pressure, special wetted materials that withstand the process media, hazardous area designs specific to the installation which is usually intrinsic safe or explosion proof,” explains Winkelmann.

Generally, instruments producers design their products to fit the targeted industry. “Our instruments are designed and built to withstand both the demands of the application as well as the environmental conditions in, or surrounding, the plant. They are employed in a wide variety of industries including oil and gas (offshore and onshore), petrochemical and chemical,” says Bond. “There are many common features regarding an instrument’s design

Reliability and accuracy should dictate instrument selection.

Chris Chant, Okazaki Manufacturing Company.

Intelligent instrumentation solutions can actually reduce maintenance bills and help reduce unplanned shutdowns.

Refining & Petrochemicals Middle East July 2010

20 Plant Instrumentation

“EVEN THOUGH THE INSTRUMENTATION IS ONLY 3 TO 5% OF THE TOTAL INVESTMENT IN A PROCESS PLANT, THESE ARE THE EYES AND EARS FOR THE PROCESS OPERATORS” JENS WINKELMANN, HEAD OF SALES MIDDLE EAST AT ENDRESS AND HAUSER

Okazaki Thermowells instrument for temperature measurment.

The Coriolis flowmeter with true 2-wire technology by Endress and Hauser.

that make it suitable for many applications and, in most cases, options are available should any specific customer requirements need to be met,” he adds. As competition in the market is very tough between different players, innovation is the main aspect that differ between instruments providers. “We have put a tremendous amount of resource and effort into providing up front information about what is happening, or about to happen, in our customer’s processes. Our aim is to enable our customers to run safer and more efficient plants,” says Bond. “Simply put, if you can’t see it you can’t measure it and if you can’t measure it you can’t control it,” he adds. Integration of instrumentations is one of the innovation solutions that developers are offering to their clients. “We have just introduced a new level measurement device which combines a capacitive sensor and guide wave radar in the same unit. This is unique in the market and will solve many headaches that were there so far, for example for interface measurement when emulsions occur. In many separator vessels this appears,” says Winkelmann. One of the aspects that purchase managers

generally look at before taking decision is the cost, which is generally between 3% between 5% of the total investment; it can be between a few hundred USD and US$500.000 for a total custody transfer metering system. “This varies on a project basis, dependant on how many instruments are required, installation costs and commissioning costs,” says Chris Chant, business development manager at Okazaki Manufacturing Company. The downstream industry booming in the Middle East made it a destination of choice for major international instrumentation manufacturers, as regional downstream companies are cash-rich and have been investing heavily in new projects during the recent downturn of the global economy, compared to depressed markets in Europe and the US. “We continue to be the beneficiary of this trend and we believe this bullish outlook will be sustained for the next five years,” concludes Pierre De Vuyst, senior executive vice president, Yokogawa Middle East.

Philip Bond, vice president of Rosemount Measurement at Emerson.

Instrumentation can account for up to 5% of plant costs.

Refining & Petrochemicals Middle East July 2010

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22 Special Report: Kuwait

REVIVING AMBITIONS Kuwait took an early lead in the Middle Eastern downstream industry, but political infighting has prevented it from maintaining this position

uwait is one of the biggest investors in the downstream industry in the Middle East, as the country takes advantage of the abundance of feedstock at its disposal to diversify the national economy. The Kuwait Petroleum Corporation (KPC) is the state-owned entity responsible for Kuwait’s hydrocarbon interests throughout the world. The KPC operates through a series of specialised subsidiaries in Kuwait and across the world, with activities encompassing all aspects of the hydrocarbon industry. All of these subsidiaries are fully-owned by corporation. The Petrochemical Industries Company (PIC) is the investment arm of KPC in the petrochemicals sector, while the refining sector is supervised by the Kuwait National Petroleum Company (KNPC). In 1964, the Kuwait Chemical Fertilizer Company was called into life. The company was originally a joint venture between PIC, who held a controlling 60% stake, and BP and Gulf, who held 20% each. The company started production in 1966 in its liquid ammonia, sulfur ammonium, acetic acid plants, while a urea plant started production in 1967. Five years later, PIC expanded its fertilizer capacity with two new urea and ammonia plants.

Refining & Petrochemicals Middle East July 2010

In 1973, PIC acquired the BP and Gulf stakes in the company, which was then integrated into PIC’s operations. PIC became the largest fertilizer producer in the Middle East after completing a fourth expansion in 1984, pushing Saudi Safco from the top spot. Safco managed to regain its position as leading fertiliser producer in 2007. After consolidating its lead in the fertiliser industry, Kuwait’s began to look at petrochemicals projects. PIC signed a contract with Union Carbide in 1989 to establish 80 000 t/y polypropylene plant, which was then increased to 100 000t/y, and started production in 1997. The company sourced propane feedstock from the FCC unit of the Shuaiba refinery. In 1997, the Equate Petrochemical Company, a JV between PIC and Union Carbide Corporation (UCC), started production of its first olefin project, producing ethylene, polyethylene and ethylene glycol. Dow Chemical acquired Union Carbide in 2001 and became the new partner after acquiring UCC.The alliance with Dow helped Kuwait to launch massive expansion projects increasing its petrochemicals production. Further production increases are limited by a shortage of ethane gas, however. To overcome this problem, Kuwait has been

importing natural gas by vessel in April 2010, and will continue doing so for seven months, importing an average of 500 million cubic feet (14.2 million cubic meters) per day in the period through to October.

K-DOW PROPOSED JV The US giant Dow Chemcial signed a pivotal agreement with PIC to create the US$17.4bn K-Dow petrochemicals joint-venture back in December 2007. The JV was supposed to start operations in January 2009, manufacturing and marketing polyethylene (PE), ethylenamines, ethanolamines, polypropylene (PP) and polycarbonate (PC). As part of the agreement, Dow was to sell PIC a 50% share in five of its global businesses, worth approximately $19bn, with PIC paying the US Company $9.5bn. The project was cancelled by the Kuwait Supreme Petroleum Council due to profiteering and other irregularities by officials involved in the deal, according to local media.

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Special Report: Kuwait 23

The Equate petrochemical refining complex in Shuaiba.

The Water Towers: Kuwait’s iconic structures.

KPC signed contracts with three international firms to supply the gas, one of which is Royal Dutch Shell. In February, state-owned Kuwait Oil Co signed a five-year technical service contract with Shell to develop difficult gas reserves discovered in 2006. In March 2006, Kuwait announced the discovery of one trillion cubic metres (35 trillion cubic feet) of non-associated natural gas and immediately began work on the field. The gas imported by Kuwait Petroleum

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Corporation (KPC) to supply the Ministry of Electricity is a different gas to that used by petrochemical companies, including Equate, according to Saad Al-Shuwayyeb, CEO of KPC. “The gas imported by KPC and then pumped to the Ministry of Electricity is of the slim type and of high price. The petrochemical sector is supplied with another type of gas, which is ethylene-rich. They are totally different types,” AlShuwayyeb said during Kuwait’s transparency forum held in April. The State currently produces around four million cubic metres a year of free gas, but it is behind on its target and has been facing technical problems. Kuwait plans to raise its annual output of free gas to 28.4 million cubic metres by 2015. Kuwait is also producing around 284 cubic metres per day of associated natural gas alongside its oil output, which is used wholly to operate power and water desalination plants. The state’s plans to import gas by pipeline from neighbouring nations have failed. One of the critical issues facing the energy sector in Kuwait is the intervention of the National Assembly in different projects. In December 2008, the Kuwait Supreme Petroleum Council (SPC) decided to reverse its prior approval of the agreement between Dow and PIC to enter

into the US$17bn K-Dow Petrochemicals 50-50 joint venture. Three months later, Kuwait decided to scrap the $15bn fourth refinery project, stating that KNPC didn’t adhere to the tenders’ committee regulations. The project had faced opposition from several deputies, who alleged there were violations, particularly in handing out a package to Fluor without a tender. Some deputies threatened to question former oil minister Mohammad Al Oliam if he went ahead with signing contracts. The government bowed to pressure and asked the Audit Bureau to investigate whether the tender process showed irregularities. The bureau’s report was not made public but according to local media it concluded that the project was not feasible. After the cancellation of the project, KNPC lived up the project and it expects to receive the approval for the project in the next three months, according to Bakhit Al-Rashidi, deputy managing director of KNPC (see interview with him in page 23-24). Another issue facing the downstream industry in Kuwait are the recurrent incidents within KPC facilities, were more than three incidents occurred within the last 12 months, a far higher average than that recorded by KPC’s peers in the region.

Refining & Petrochemicals Middle East July 2010

24 Special Report: Kuwait

Hamad Al-Terkait, president and CEO of EQUATE.

Refining & Petrochemicals Middle East July 2010

www.arabianoilandgas.com

Special Report: Kuwait 25

WINNING EQUATION Hamad Al-Terkait, president and CEO of Equate Petrochemical Company says the business model of his company is different to that of his regional peers

ccounting for more than 60% of Kuwait’s non-oil revenue, Equate Petrochemical Company plays an important role in adding value to the country’s oil-based economy. Equate is a joint venture between Kuwaiti public and private sectors companies and Dow Chemical. It has recently inaugurated a major expansion project, EQUATE II, in February 2010, 13 years after the first facility in Shuaiba began production. The event represents another milestone in the cooperation between the two partners, and was widely overlooked following the cancelation of a US$17bn K-Dow project in December 2008. “The partnership with Dow was excellent before and after the inauguration of Olefins II, as Dow has a stake in all of our projects, with the exception of the aromatics project,” says Al-Terkait. “Our collaboration with Dow goes back to 2001 when it acquired Union Carbide Corporation (UCC), one of Equate’s founders. Being one of the world’s top companies in production, technology and operating systems, Dow has proven to be a better partner than UCC,” explains Al-Terkait. Equate differs in its partnership structure compared to other JV in the Middle East. “Equate both manufactures and markets its products, while most partnerships in the Gulf are based on a 50:50 share, with each partner marketing its own split by its own means,” says Al-Terkait. “When Equate’s foreign partner was chosen, it was stipulated that Equate handles all operations and marketing, this is why we have the Equate Marketing Company (EMC).” EMC is based in Kuwait with three sales offices in Hong Kong, Singapore and Beijing. It markets over 1.5 million tonnes of products per year. “This give us a global presence, another addedvalue factor of a company that contributes over 80% of Kuwait’s non-oil exports.” Equate receives feedstock from the

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national oil company, Kuwait Petroleum Corporation (KPC) at a reduced price, including ethane for olefins plants and naphtha for its aromatics project. “It is untrue that Equate receives subsidies gas. It is in reality a preferred rate offered to all shareholders (BPC, Dow and QPIC) during the first 10 years of operating, not only to Dow. After that, gas pricing depends on oil prices. Due to that, Kuwait’s gas rate is higher than that of other Gulf countries. Kuwaiti prices are now closer to Canadian prices,” explains Al-Terkait. “Since 2007, the first 10 years of preferred rate have ended; now prices are changed annually based on global oil and gas prices. As for Olefins II, the 10 years of operating will end during 2018.” The company faced problems with gas supplies in May 2009, which forced it to reduce production. This situation posed questions about KPC’s ability to meet its commitments to supply gas to Equate. “There was a fire at a KNPC refinery which provides feedstock to different clients including Kuwait’s petrochemical and power

plants,” explains Al-Terkait. “Since fixing this issue, gas allocation to all our projects has been constant and we are now operating normally, which proves gas supply is not an issue,” he reassures. Equate ability to launch new projects is very limited, as such a decision would have to be taken by PIC, the parent company of Equate. “Currently we have just started commercial production from Equate II, and we are in full operation,” says Al-Terkait. “So far, there’s nothing specific, but we have many plans. As for EQUATE III, the decision is in the hands of Petrochemical Industries Company and other partners as Equate has no right to launch investments, it only handles planning and research, as well as operations and marketing,” he says. Also, the availability of feedstock is another issue halting future expansion as Kuwait signed a four year LNG contract with Shell and Vitol. Kuwait has begun receiving LNG imports in April and will receive 500 million cubic feet a day between April and the end of October. “All of Kuwait’s

EQUATE receives feedstock at a preferred rate during the first 10 years of operation, after which prices will change annually.

Refining & Petrochemicals Middle East July 2010

26 Special Report: Kuwait

petrochemical projects rely on the availability of gas and once it’s available, projects of Equate’s scale can be established,” he says.

Boosting throughput 2009 was a remarkable year in the history of the company, as it started several major expansion projects, including the 225 000 t/y polyethylene (PE) project in June, along with new 450 000 t/y ethyl benzene styrene monomer (EBSM) plant in August. The total cost of the expansion projects was estimated at $5bn. More than a third of the contractors involved in the project were local. Major international contractors who were involved in the project included Fluor and Air Liquid. More than 85% of the project’s funds were through local and regional banks. “We had closed our financing deals in 2006, at that time the lending market was good and there was liquidity, so none of

EQUATE II INCLUDES: Olefin 2 project Cost: U$2.1bn Products: ethylene, ethylene glycol Styrene project Cost: $610m Product: styrene Aromatics project Cost: $2.1bn Products: Benzene, Paraxylene Major International services providers Dow: METEOR™ EO/EG Process. Air Liquide: to supply oxygen, nitrogen and compressed air for 20 years. Fluor: EPC contractor of the projects.

Refining & Petrochemicals Middle East July 2010

EQUATE’s 2010 performance so far has exceeded production and business targets.

our projects were affected by credit crunch,” says Al-Terkait. Moreover, the company saved about $330m during the execution of its projects by integrating the utilities of the different facilities, the president and CEO proudly points out. Equate also operates the Greater Equate project, which includes the Kuwait Paraxylene Production Company (KPPC), the Kuwait Olefins Company (TKOC) and the Kuwait Styrene Company (TKSC). Asian markets are the main destination of the company’s products. “We are diversifying our presence for different markets, and in different geographical areas including South East Asia, the Middle East and China,” says Al-Terkait. “The company’s annual sales to local Kuwaiti plastic manufacturers have increased by 200% between 1998 and 2009,” he reveals. “During that period, the volume of local sales has increased from 11 000 t/y to over 35 000 t/y in 2009 with a value of over $30 million.” With the increase of its capacity, and the diversification of targeted markets, supply chain issues have become more prominent. “Supply chain difficulties is a big challenge in the whole region, as all

people complain about constraints related to this issue,” says Al-Terkait. “The problem is mainly linked to congestion in the Jebel Ali port in the UAE, as the port serves all GCC countries.” Looking ahead, the CEO is optimistic about the future of the industry and the performance of his company. “2009 was better than expected. In the current year, much capacity is coming on stream but we expect it to be similar or better than 2009,” he predicts.

Safe Haven The involvement of parliament in economic decision-making is unusual for political systems in the region, yet it is common in Kuwait. This frequently exasperates the specialist technocrats and industrialists who run the oil and petrochemicals industries. Although Equate has significant freedom to act as an independent entity, Al-Terkait would prefer the level of autonomy granted to the petrochemicals industry in Saudi Arabia. “I wish KPC would get autonomy from the Oil Ministry to avoid politicisation,” he says. “This would enable it to operate as an independent commercial entity.”

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GPCA Fertilizer Convention Working towards Global Food Security FORECASTING FERTILIZER DEMAND – STRATEGIES FOR SUPPLY

29-30 September 2010, Dubai www.gpca.org.ae/fertilizerconvention The Gulf Petrochemical and Chemicals Association (GPCA) is delighted to announce the inaugural GPCA FERTILIZER CONVENTION taking place on 29-30 September 2010 in Dubai. GPCA Fertilizer Committee member companies: • GPIC – Gulf Petrochemical Industries Co. • FERTIL– Ruwais Fertilizer Industries • MA’ADEN – Saudi Arabian Mining Company • OMIFCO – Oman India Fertilizer Company • PIC – Petrochemical Industries Company • QAFCO – Qatar Fertilizer Company • SABIC – Saudi Basic Industries Corporation Endorsed by:

Media Partners:

• Hear fertilizer demand forecasts from industry experts • Overview of key consumer regions • Network with key fertilizer producers

Co-organised by:

28 Special Report: Kuwait

REFINED TOUCH Bakhit Al-Rashidi, deputy MD of KNPC, says the company’s fourth refinery has been approved, and that the K-fuel project will help Kuwait meet international standards

he Kuwait National Petroleum Company (KPNC) is the most controversial amongst the Kuwait Petroleum Corporation’s (KPC) subsidiaries, and the preferred target of attacks from the local media. There is a reason for this: KPNC is in charge of the most critical project in Kuwait, the US$15bn fourth refinery project which is expected to be revived soon. The refining sector in Kuwait is operated by the KNPC, the local refining and gas processing arm of the KPC, which owns 100% of the company. The company operates three refineries in Kuwait. “We have three complex refineries in Kuwait with a total refining capacity of 936 000 bpd,” explains Al-Rashidi. “ The Shuaiba refinery is the smallest refinery with a capacity of 200 000 bpd, followed by the Mina Abdullah refinery with 270 000 bpd and the third is the Mina Al-Ahmadi refinery with 460 000 bpd.” KNPC is also in charge of gas processing operations in the Gulf state, it operates a big processing complex with three trains. “We have three identical trains, with a capacity of 560 million cubic feet per day; which together have a total capacity of 1.6bn cubic feet of gas processing capacity. Plus two gas treating plants for sulfur removal,” says Al-Rashidi. These gas treating plants are located in Shuaiba with a processing capacity of 150 million cubic feet per day, while the second one is located in Mina Al-Ahmadi with a capacity of capacity of 200m standard cubic feet per day.

The company produces 936 000bpd of refined products, but it doesn’t conform to the Euro 4 or the Euro 5 specifications which dictate the content of sulfur in diesel. The content of sulfur should be less than 10ppm in order to be marketed in Europe. “Until now, we don’t produce Euro 4 or Euro 5 standards diesel or gasoline within Kuwaiti refineries, but we are producing it through our international arm, Kuwait International Petroleum (KIP),” explains Al-Rashidi. Not meeting European specifications does not prevent KNPC from selling its products internationally, says the managing director, as the company mainly targets the Asian markets, which do not impose such stringent requirements. “Our customers are in the Far East and they don’t require the 10ppm quality.” But the exclusive focus on the Asian markets is of temporary nature. “We target

The fourth refinery dilemma

$845mn The expected cost of the K-Fuel project. KNPC operates three major refineries in Kuwait.

Refining & Petrochemicals Middle East July 2010

the East due to the lower transportation costs. However, after the start up of our new projects in 2015 and 2016, we will be targeting all markets around the world,” Al-Rashidi reveals. Looking ahead, the company intends to upgrade its refining system to meet all international requirements. “We launched the K- Fuel project, which will upgrade the current fuel quality to meet the level of products required by 2013. Whatever the specification, we will produce it.” KNPC has already completed the FEED stage of the K-Fuel project, and expects to award the contracts in the next few months. “We will go ahead with the project some time this year, as we have already completed the FEED stage,” says Al-Rashidi. The K-Fuel project includes the upgrading of two refineries to produce low sulfur diesel meeting the 10ppm specifications, and to reduce sulfur content in the fuel oil to less than 1% compared to current 3.5%.

KNPC is in charge of the construction of the fourth refinery project, which the government counts on to meet the increasing local demand on fuel oil for power generation. The company has come under heavy attack from the media for its role in the 615 000 barrels per day Al Zour refinery project. The project also faced opposition from several deputies, who alleged that there were violations of the tendering proceedure. In the most prominent example of malpractice, a contract handed to Fluor without a tender. Some deputies threatened to question former oil minister Mohammad Al Oliam if he went ahead with signing more contracts. The government bowed to pressure and asked the Audit Bureau to investigate whether the tender process showed irregularities.

www.arabianoilandgas.com

Special Report: Kuwait 29

The number of projects being currently executed by KNPC

The bureau’s report was not made public, but according to local media reports it concluded that the project was not feasible. Consequently, the company in March 2009 cancelled contracts worth $8.4bn that had been awarded to four South Korean firms, one Japanese firm and the US contractor Fluor. But, due to the increasing demand on fuel oil for electricity generation and refined products, the Kuwaiti government is expected to give the green light in the next few months. “The fourth refinery is an approved project. However, we are reviewing the project with the Supreme Petroleum Council,” says Al-Rashidi. “We had intensive meetings with the planning and strategic committee over the last two months, and we have provided all the data and necessary information on the strategic importance of the refinery for Kuwait,” he adds. “Now we expect to receive approval within the next three months.” While the cancelled contract was awarded on a cost plus basis, KNPC haven’t yet decided the basis on which it will be awarding the new refinery. “Whether lump sum turnkey (LSTK) or cost plus basis, everything will depend on the market situation,” says Al-Rashidi. “If the market is up, we go on cost plus, if the market down we go on LSTK.” The cancellation of the fourth refinery project was a disaster for Kuwait’s reputation as a target for investment, as political interventions undermined the trust in the process. But Al-Rashidi is remarkably confident that foreign investors will eventually understand the reasons behind the cancellation. “It is our system and we have to live with it,” says Al-Rashidi. “I think that after some time, people will understand this especially as it is a multibillion dollars project.”

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Bakhit Al-Rashidi, deputy managing director of KNPC and chairman of Kuwait Aromatic Company

Refining & Petrochemicals Middle East July 2010

30 Special Report: Kuwait

PRIVATE POWER

Qurain controls stake in Equate Petrochemicals Company.

Mubarak Abdullah Al Mubarak Al Sabah, chairman of Qurain Petrochemicals Company says operating as a private company has real advatages in Kuwait

ompared to governmental sector in the State of Kuwait, private investments in downstream sector are still in their infancy. One of the active private players is Qurain Petrochemical Industries Company (QPIC), which is listed in the Kuwaiti stock market. “The establishment of QPIC by the Petrochemical Industries Company (PIC) followed Kuwait Petroleum Company’s (KPC) strategic initiative to encourage more private sector engagement in major petrochemical projects in Kuwait,” Sheikh Mubarak Abdullah Al Mubarak Al Sabah, chairman of QPIC, tells

$700mn Cost of the new PTA/PET project QPIC was established by PIC and then it was privatised.

Refining & Petrochemicals Middle East July 2010

Refining and Petrochemicals Middle East. Qurain Petrochemicals is focused on investing directly and indirectly in companies producing, trading and storing chemical and petrochemical products and related by-products, including aromatics, olefins and polyolefins. Qurain receives feedstock for its different projects in Kuwait from KPC, which is not subsidised like Qatar and in Saudi Arabia. “Feedstock is provided by the government, while there is no subsidies in Kuwait, being located at the doorstep of the source is an advantage in itself,” he explains. QPIC is engaged in several projects in Kuwait and outside Kuwait. “We have two associate companies, United Oil Projects (UOP), and the Kuwait Aromatics Company, which we hold 20% stake. The Kuwait Aromatics Company (KARO) owns 57.5% of the Kuwait Styrene Company,” Al Sabah explains. “Our major investments are the plants in Kuwait, which include Equate, the

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Special Report: Kuwait 31

Kuwait Olefins Company (EQUATE II), and the Kuwait Aromatics Co. (KARO),” he adds. The Kuwait Olefins Company (TKOC), which includes aromatics and styrene plants is a long term investments for the company, and expected to enhance the income of QPIC in the near future. “The average pay-back period for a world-scale petrochemical plant is between 6-7 years. Having said that, TKOC started production in late 2008 and despite the global economic crisis, TKOC witnessed solid profits in its first year of operations,” says Al Sabah. “The aromatics and styrene plants have begun production in late 2009 and we expect the plants to perform well in their first year of operations,” he adds. Qurain now is looking for investment opportunities in the Middle East and North Africa (MENA) region, which remains the favourite investment region for QPIC. “We are continuously seeking new opportunities in the petrochemical sector, locally and in the MENA region,” says Al Sabah. “As part of our long-term strategy, QPIC will be investing in the GCC and the North African region, our first project outside Kuwiat is the methanol project in Algeria,” Al Sabah explains. The Algerian project is expected to produce 1 million tonnes per year of methanol, the Almet consortium which controls 51% of the project won the contract back in 2007. Qurain owns major stake in project, in joint venture with Sonatrach. The project is expected go on stream in 2013. Other members of the Almet consortium include local company Sotraco, Mitsui of, Lurgi and PPSL. The company was anticipating signing the contracts for the project in April 2010, as all agreement were in place, but recent embezzlement case that senior management of the Algerian national oil company Sonatrach were involved in, has idled the progress of the project. “The project in Algeria is progressing, but understandably major changes with the leadership at Sonatrach have slowed down the progress temporarily. However, both Qurain and our Algerian partners remain committed to the development of the project,” he explains.

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Despite the difficulties the company is facing with its project in Algeria, Qurain is committed to all of its projects. “QPIC’s projects are profitable long-term investments and we do not expect to exit in the near future,” he says. As part of its investment strategy, Qurain has launched a new project. “We have recently established United Petrochemical Company and received all required licenses for the development of PTA & PET plants in Kuwait,” says Al Sabah. “The project will become Kuwait’s first PTA/PET production plant and will use paraxylene from our Aromatics plant.”

Qurain controls 90% of the newly established company, while United Petrochemicals Company holds 10% of the project. The project will cost US$700mn. Speaking about the future of the petrochemical market, Al Sabah sees improvement in the market compared to 2009. “2010 is expected to be a stable year, with positive results. As credit markets improve and banks begin lending again, QPIC will aim to expand its petrochemical and oil and gas investments,” he adds. “Our net profits in 2009 were up 226% to $24.62m compared with the 2008 loss of $19.41m.” he concludes.

“FEEDSTOCK IS PROVIDED BY THE GOVERNMENT, WHILE THERE IS NO SUBSIDIES IN KUWAIT, BEING LOCATED AT THE DOORSTEP OF THE SOURCE IS AN ADVANTAGE IN ITSELF”

Sheikh Mubarak Abdullah Al Mubarak Al Sabah, chairman of QPIC is optimistic about the future of his company.

Refining & Petrochemicals Middle East July 2010

32 Downstream Maintenance

If your reactive maintenance bill is accounting for more than 5% of your scheduled plant maintenance cost, something is drastically wrong with your plan

CLEAN BILL

OF HEALTH

Using Tube Techâ&#x20AC;&#x2122;s darTT technology to clean a Vertical Combined Feed Exchanger.

Refining & Petrochemicals Middle East July 2010

www.arabianoilandgas.com

Downstream Maintenance 33

perating without unexpected shutdown is the ultimate demand of petrochemicals and refinery operators, as a week of down time could cost a facility up to US$10m, and being down may impact other phases of the production chain. Some parts of the refinery or the plant are subject to frequent failure compared to others, due to different reasons including lack of servicing as per specifications, which often results in part failure. To avoid these failures, a “turnaround” period is generally planned, which is a periodic inspection and overhaul of the units of a refinery or chemical plant, including safety checks, preventive maintenance, and repair. “It typically requires the shutting down of all or part of a refinery or chemical plant for a period of up to several weeks,” says Hussain Ali Mattar, plant engineer at Aluminum Bahrain (ALBA) and member of the gulf maintenance association. Maintenance is pretty wide concept and normally consists of three types of maintenance including predictive, reactive and proactive maintenance. “Maintenance strategy would involve a combination of predictive, preventive and proactive maintenance,” says Ganesh Pattabhiraman, services direct at Emerson. Proactive maintenance is a strategy for stabilizing the reliability of a refinery. Its central theme involves directing corrective actions aimed to at root causes of failure, not active failure symptoms, faults, or machine wear. The reactive maintenance is a form of maintenance in which equipment and facilities are repaired only in response to a breakdown or a fault. Because of the potential for loss of production, reactive maintenance is at odds with just-in-time

production, which is generally called as a fire fighting maintenance. Meanwhile, the predictive maintenance (PdM) is the technique which helps to determine the condition of in-service equipment in order to predict when maintenance should be performed. With all these options between the hands of plants and refineries operators, views of maintenance experts differ from company to another. “We recommend proactive maintenance strategies where operators can work with specialist industrial cleaning contractors to ‘out engineer’ their fouling problems,” says Mike Watson, technical director at Tube Tech. “Operators need to put aside the cost in order to look at new innovation because heat exchanger technology and the cleaning methods used to clean heat transfer equipment are often 60+ years old. It is time for a change – time for speculative investments to be made in order for larger profits to be accumulated in the mid to long term,” he explains. Meanwhile, other companies prefer predictive maintenance, as it offers cost savings over routine or time-based preventive maintenance, because tasks are performed only when necessary. “Best in class companies rely a lot more on predictive maintenance than on preventive or proactive maintenance put together. The goal should be to keep reactive maintenance to the minimum, say 5% or lower,” says Pattabhiraman. All parts of a refinery or petrochemicals plant are subject to failure. “Failures generally occur in rotating and fixed equipment. Both are managed through a site’s reliability and inspection efforts. Emphasis is placed on health and safety, environmental impact and,

“FAILURES GENERALLY OCCUR IN ROTATING AND FIXED EQUIPMENT. BOTH ARE MANAGED THROUGH A SITE’S RELIABILITY AND INSPECTION EFFORTS”

lastly, lost production,” says Fred Mackie, senior consultant for Solomon Associates. Mechanical equipments are subject to frequent failure compared to automatic. “Frequent failures happen in mechanical equipment, typically rotating machinery. Among the devices, more frequent maintenance is required in control valves as compared to instruments,” explains Pattabhiraman. Furthermore, the plant which is most often deemed impossible to clean include crude heat exchangers, furnace tubes, convection fins on furnaces and hairpin (u-tube) heat exchangers. “The reason for this is because the technology to clean them is not available other than through a specialist industrial cleaning contractor,” observes Watson. To avoid these eventual failures related to rotating equipmen, on line measurements as well as tools to analyze the measurements are available, this includes vibration monitoring, as well as temperature and corrosion monitoring. “There are excellent analysis tools and packages that use these measurements to provide early warning on an impending failure. This helps the maintenance team an opportunity to address the root cause before the problem becomes serious enough for the equipment to fail,” says Pattabhiraman. With the development of

Ganesh Pattabhiraman, services direct at Emerson.

FRED MACKIE, CONSULTANT, SOLOMON ASSOCIATES

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Refining & Petrochemicals Middle East July 2010

34 Downstream Maintenance

Cleaning a heat exchanger tube face with high pressure water jet, one of the many services often outsourced to a third party specific plant maintenance company.

technology, today’s digital smart instrumentations have built-in diagnostics to monitor the health of the devices. For instance, a smart positioner used with control valve can detect travel deviation, supply pressure loss (resulting from leakage), excessive friction and many other useful information, while it is still on line and working. “Some devices go beyond monitoring just their own health. They are capable diagnostics of such as impulse lines, primary elements, temperature sensors etc. There are yet others, that can provide early warning of a process upset,” he adds. In addition, wireless technology has made it possible to economically bring more signals to the control room than before, parameters that were only measured locally and had to be manually collected and less frequently before. Equipped with this additional information, one can take better decisions based on real data for doing maintenance. The harsh environment in the Middle East has a tremendous impact on maintenance in several ways, as extreme heat and at times

Refining & Petrochemicals Middle East July 2010

Hussain Ali Mattar, plant engineer at Aluminum Bahrain.

dusty conditions puts a lot of strain on the maintenance staff while doing maintenance in the field as compared to other regions in the world. “Fatigue can limit the efficiency of maintenance staff,” says Mackie. According to industry data compiled by Solomon Associates, the cost of turnarounds has risen by 15% annually from 2000 to 2008, largely as a result of labour cost increases, material cost increases, and scope of work increases during this period. The number of work hours devoted to turnarounds, for example, increased by 10% annually during this period. “The average cost ranges from $10 to $60 million US, with between 0.3 to 1.8 million work hours,” observes Mackie. The boom of the downstream industry in the region has opened door for maintenance provider, as their services are in demand in the region. “We have seen growing demand on our full range of on-line and on-site services, geared to facilitating maintenance and repairs with minimum downtime and maximum focus on safety and reliability,” concludes Graham McKay, general manager of Furmanite Middle East.

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36 Positive Material Identification

AVOIDING FAILURE Richard Ritchie, Director at SGS Industrial Services says improved positive material identification is a cost effective way to avoid small problems with huge effects identification

s the common wisdom says, prevention is better than cure. Asset Integrity Management Programs not only enable facilities to keep operating, but also can extend the life time of assets and facilities. Systematic inspection, detection and correction of failure conditions before they occur, or before they develop into major defects, can avoid unplanned downtime or even catastrophic disasters, as well as help reduce maintenance costs. Improved Positive Material Identification (PMI) allows plant operators and maintenance experts to make informed decisions on non-conforming components. In most cases, an effective PMI approach can generate savings far beyond the cost of the program.

Richard Ritchie, Director at SGS Industrial Services.

Refining & Petrochemicals Middle East July 2010

What is PMI? Positive Material Identification (PMI) is the determination, with certainty, of the material in use and the confirmation that it is the correct

material for the service. Missing or unclear material certificates, or incorrect materials used in a service, can increase risk, impacting maintenance, safety and operations. Each component material in the wrong service represents a near miss. PMI is the solution. It identifies the wrong material in service by determining the alloy composition of materials such as stainless steel and high alloy metals. This can be accomplished either before beginning plant operation, or after start-up of operating units. In the latter case, the process takes place years after commissioning and is also known as Retro-PMI. The benefits of Retro Positive Material Identification assessment are substantial reduction in the risk of catastrophic failure in operating facilities, protection of employees and the surrounding community against risk to health or safety and finally, avoidance of lost profit due to unscheduled outages. There are two methods of Positive Material Identification: X-ray refraction and Optical

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Positive Material Identification 37

Emission Spectrography. With the X-ray Fluorescence (XRF) principle, the fact that each chemical element emits X-rays at a unique energy is applied. The XRF equipment contains radioactive sources, or a low voltage x-ray generator, which sends out radiation. The exposed material then temporarily emits element specific radiation back, generating a different energy level for every element. This energy is detected and measured, thus identifying the alloy elements. The disengaged radiation is very low and extra safety measures are not necessary. The important advantage of the XRF-method is that it can be executed in service without damaging the material. The results are available directly after the inspection. The other method is called Optical Emission Spectrography (OES). The spectrography equipment consists of a probe which releases a spark that is used to vaporize a small amount of the material being analyzed. The atoms and ions in this vapor produce a spectrum which can be optically detected and measured for calculations to determine the components of the material. OES instruments are larger in size and use Argon gas to improve accuracy. It is, however, the only reliable way to measure carbon outside of the laboratory.

What are the benefits of improved PMI? A traditional PMI approach faces several challenges. It is usually conducted fully or partially manually, with attendant probability of human mistakes during the data collection and data processing. As PMI testing technology has advanced, improved instrumentation has become more common, which is generally combined with software developed specifically to address PMI issues. PipeWrxTM for instance is a new and revolutionary software system meeting the need for plant operators to detect, record and present clear and precise information about the asset integrity. It makes the identification, analysis and tracking of every single component in every unit possible, unlike the traditional approach where only a fraction of components can be evaluated. In addition to the productivity improvements such software provides, the quality and the reliability of the data processing can be optimized. Usually every component which does not meet requirements should be

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â&#x20AC;&#x153;IMPROVED POSITIVE MATERIAL IDENTIFICATION (PMI) ALLOWS PLANT OPERATORS AND MAINTENANCE EXPERTS TO MAKE INFORMED DECISIONS ON NON-CONFORMING COMPONENTSâ&#x20AC;? RICHARD RITCHIE, DIRECTOR AT SGS INDUSTRIAL SERVICES replaced after identification. However, in some cases, practice has shown that not all critical components call for corrective action. A material may not meet the engineering specifications written years ago, but still can prove to have fitness-for-service. The fit-for-service assessment is a special type of appraisal carried out to determine if the product or installation can fulfill its stated purpose - typically until the next shutdown - or if repair or replacement is needed in order to continue service as specified. When applying the fit-for-service approach, all potential failure modes are identified and an assessment is conducted to ensure that the conditions for failure are not reached during the intended operation of the asset. In this way critical components can be classified as: OK for current operating conditions, requires monitoring, replace and flagged for engineering review Experience reveals that the number of components needing replacement is surprisingly low compared to the total amount of critical components. In some cases corrosion monitoring must be strengthen or the engineering specifications must be revised. For

example, a recent retro-PMI assessment allowed the operator to replace only 3% of the 7% non-conforming components which represented significant cost and time savings. An improved PMI approach, in light of prescribed operating parameters and goals clearly affects the reliability of the data collected. It can reduce both the effort needed for the identification and the cost of remedying discovered discrepancies by categorizing discrepancies for corrective action. The positive contribution of electronic data management is not limited to data collection and analysis. Once discrepancies are classified as to corrective action needed, actionable reports can be generated. PipeWrxTM enables improvements in communication, reporting and assessments to support improved and actionable decision making to enhance safety, productivity and profitability. With state-of-the-art applications which also can be integrated into standard industry software, plant operators and maintenance experts can easily manage inspection and maintenance planning and reduce the costs and the effort required for these activities.

PMI is the determination, with certainty, of the material in use and confirmation that it is the correct material for the service.

Refining & Petrochemicals Middle East July 2010

38 Number Cruncher

Downstream Data

Most listed petrochemical companies saw share prices declining through June, amid a decline of petrochemical products prices. LISTED COMPANIES IN THE SAUDI STOCK MARKET Price on May,19th (US$ per share)

Price on June,19th (US$ per share)

Change %

Saudi Basic Industries Corporation (SABIC)

25.60

24.33

-5.21

Saudi Arabian Fertilizer Company (SAFCO)

35.27

33.93

-3.93

Saudi Kayan Petrochemical Company (Kayan)

5.33

5.00

-6.67

Rabigh Refining and Petrochemical Company (Petrorabigh)

8.11

7.28

-11.36

Yanbu National Petrochemical Company (YANSAB)

11.44

10.67

-7.25

National Industialization Company (TASNEE)

7.55

6.88

-9.69

Saudi Industrial Investment Group (SIIG)

5.87

5.01

-17.02

Saudi International Petrochemical Company (SIPCHEM)

6.27

5.84

-7.31

Sahara Petrochemical Company (SAHARA)

6.47

5.63

-14.93

Advanced Petrochemicals Company (Advanced)

5.89

5.49

-7.28

Nama Chemicals Group (NAMA)

2.96

2.60

-13.85

Alujain Corporation (ALUJAIN)

4.01

3.49

-14.89

Methanol Chemicals Company (CHEMANOL)

4.12

3.83

-7.67

Petrochem

4.51

4.19

-7.64

LISTED COMPANIES IN THE KUWAITI STOCK MARKET Price on May, 19th (US$ per share)

Price on June,19th (US$ per share)

Change %

Qurain Petrochemical Industries Company (AL-QURAIN)

0.68

0.60

Boubyan Petrochemical Company (BOUBYAN)

1.89

1.79

-14.12 -5.88

Ikarus Petroleum Industries (IKARUS)

0.53

0.47

-11.94

LISTED COMPANIES IN THE QATARI STOCK MARKET Price on May, 19th (US$ per share) Industries Qatar

29.34

Price on June, 19th (US$ per share) 28.49

Change % -2.99

LISTED COMPANIES IN THE OMANI STOCK MARKET Price on May,19th (US$ per share) Oman Chlorine S.A.O.G. (CHLORINE)

0.95

Price on June, 19th (US$ per share) 0.94

Change % -0.56

LISTED COMPANIES IN THE EGYPTIAN STOCK MARKET Price on May,19th (US$ per share)

Price on June, 19th (US$ per share)

Change %

Abu qir Fertilizers

38.92

36.53

-6.55

Sidi Kerir Petrochemicals Company

2.32

2.12

-9.89

Refining & Petrochemicals Middle East July 2010

www.arabianoilandgas.com

Number Cruncher 39

1100 1000

1050

US$/tonne

1150

800 700

Benzene has continued

ETHYLENE (FOB FAR EAST)

1250

900

its downtrend reaching $805 per tonne. Plunging crude values was the key factor pushing prices down.

950

CFR: Cost and Freight

1450

30/05/10

18/04/10

06/03/10

FOB: Freight On Board

1350

PPF (CFR FAR EAST)

PROPYLENE (FOB FAR EAST)

1250

1350

MEG prices have plunged for the eighth week in row reaching $720 per tonne, on the back of weak crude values, and decline of demand.

1150 US$/tonne

US$/tonne

1250 1150 1050 950

1050 950 850 750

1000

1250

900

30/05/10

18/04/10

06/03/10

23/01/10

12/12/09

25/10/09

15/09/09

03/08/09

23/06/09

01/04/09

18/02/09

13/05/09

30/05/10

18/04/10

06/03/10

23/01/10

12/12/09

25/10/09

15/09/09

03/08/09

13/05/09

01/04/09

23/06/09

30/05/10

18/04/10

06/03/10

23/01/10

12/12/09

25/10/09

15/09/09

03/08/09

23/06/09

30/05/10

18/04/10

06/03/10

23/01/10

12/12/09

400

25/10/09

750

15/09/09

500 03/08/09

850 23/06/09

600

13/05/09

PVC prices dropped to $945 per tonne. Largely hampred by languid demand from key downstream construction sectors.

700

950

01/04/09

07/01/09

800

13/05/09

1050

Polypropylene prices have plunged to $1255 per tonne, due to the firm propylene feedstock prices, and concerns about the new economic sanctions in Iran.

MEG

01/04/09

US$/tonne

1150

18/02/09

have declined to $1125 per tonne, the lowest level in 12 months. Due to the decline of ethylene values.

07/01/09

US$/tonne

1350

(CRF FAR EAST)

declined to $1060 per tonne, the lowest level in seven months. Amid a lower feedstock prices, and uncertainty about the outlook of the market.

Polyethylene prices

1100

HDPE (CFR FAR EAST)

07/01/09

NAPTHA

18/02/09

850 800 750 700 650 600 550 500 450 400 350

07/01/09

30/05/10

18/04/10

06/03/10

23/01/10

12/12/09

25/10/09

15/09/09

03/08/09

23/06/09

13/05/09

01/04/09

US$/tonne

1450

18/02/09

07/01/09

US$/tonne

PVC (CFR FAR EAST)

Propylene prices have

18/02/09

30/05/10

18/04/10

06/03/10

23/01/10

12/12/09

25/10/09

15/09/09

03/08/09

23/06/09

13/05/09

550

01/04/09

750

18/02/09

650 07/01/09

850

1100 1050 1000 950 900 850 800 750 700 650 600

23/01/10

12/12/09

25/10/09

15/09/09

30/05/10

18/04/10

06/03/10

23/01/10

12/12/09

25/10/09

15/09/09

03/08/09

23/06/09

13/05/09

01/04/09

18/02/09

03/08/09

550

23/06/09

650

300

13/05/09

400

declined to $910 per tonne, hitting a nine month low. This is mainly due to low feedstock prices and the availability of spot cargoes.

01/04/09

750

18/02/09

Ethylene prices have

500

07/01/09

850

600

07/01/09

US$/tonne

1350

BENZENE (FOB FAR EAST)

(HDPE Injection)

Source: www.argaam.com

www.arabianoilandgas.com

Refining & Petrochemicals Middle East July 2010

40 Face to Face

HARNESSING THE SUN Anil Menon, energy industry leader at DuPont in the Middle East, says petrochemical products are vital in making the leaps forward solar cells need to become viable

DuPont is a market driven science company putting our science to work by creating sustainable solutions essential for people everywhere. Operating in approximately 80 countries, we offer a wide range of innovative products and services for markets including oil, gas, petrochemical and refining sector. Originally founded in 1802, we have a long history of technology innovation. In 2008, we opened an office in Abu Dhabi to be closer to our customers based in the Middle East. This is the second office in the UAE and the seventh in the region along with offices in Cairo, Dammam, Dubai, Istanbul and Jeddah. It demonstrates our commitment to support and participate in the new economic, industrial and scientific developments in the Middle East, and is a reflection of customer demand for our diverse offerings.

The Middle East is one of the fastest growing markets for DuPont today. Putting science to work, we are well positioned for accelerated and sustainable growth in the Middle East region. The Middle East Energy market is extremely important to us. The GCC region holds approximately 40% of the global oil reserves and 23% of the gas reserves and so this is one of the most important opportunities for us. We must also not forget the importance that solar energy could potentially play in the region i.e. in an area that is blessed with plenty of sunshine all year round. We offer a wide range of innovative products and services for both the upstream and downstream sectors as well as in alternate energy spaces such as solar, wind, bio-fuels and other sectors. We recognize that the Middle East energy market is a substantial and growing market

Refining & Petrochemicals Middle East July 2010

with an increased need for innovative science-based solutions.

We offer a wide range of highly specialised solutions, products and services for the unique challenges of the upstream and downstream and renewable energy business. Our sustainable products and solutions are engineered to keep operations working at peak efficiency, enhancing productivity and reducing downtime, even in the most extreme operating environments. We use science to ensure the safety of people with the most proven and trusted safety, risk management tools and personal protection products in the industry. We also offer world-class solutions to help reduce air emissions, improve water quality and usage, formulate cleaner fuels and develop the latest in alternative energy. Our products are key to the manufacture of both crystalline silicon and thin film solar cells and modules. They include films, resins, encapsulation sheets, flexible substrates and conductive pastes, as well as high-performance seals for solar cell manufacturing equipment. The company is investing in capacity expansions to support the explosive industry growth and the development of new, innovative technologies to address different applications within the industry.

annually and employ more than 8500 scientists and engineers for R&D activities in over 75 research and development centres worldwide. 2009 was a recordbreaking year for DuPont in innovation. We generated almost $10 billion (39% of the total) revenue from products launched between 2005 and 2009. We also launched more than 1 400 new products and filed almost 2 086 U.S. patents.

We are rapidly expanding our foot print in the region by employing more and more customer-facing technical specialists and sales and marketing people. We want to be as close to our customers as possible.

R&D is at the core of DuPont innovations. We are constantly innovating and creating new products. We invest $1.4 billion

Anil Menon.

www.arabianoilandgas.com

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