Revamps, modernization and expansion come as oil glut continues

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Announcements over the past few weeks from refiners modernizing, revamping or expanding refineries around the world show the impact the crude oil stockpiles are having on the downstream industry.

On Friday, Petrofac announced they had been awarded a $2-B engineering, procurement and construction (EPC) contract for a new refinery being planned in Oman by Duqm Refinery and Petrochemical Industries. The new refinery is being developed over 2,000 acres and is expected to have a capacity of 230,000 bpd of oil once completed.

Also in the Middle East, Iran’s Tabriz Oil Refining Company awarded SK Engineering & Construction a $1.6 B contract to update the company’s 1976 refinery in Tehran. The modernization is aimed at increasing the refinery’s gasoline and diesel production capacity.

One of the world’s top importer of crude, India, is also expanding refining capabilities. Friday, Indian Oil Corp announced they plan to spend $2.4 B increasing capacity at its Gujarat refinery. The expansion will increase capacity to 360,000 bpd by the end of 2021. The refinery has five crude units, but the company wants to replace four of them with a single 300 Mbpd crude unit.

Also driving upgrades is the International Maritime Organization’s (IMO) sulfur cap regulations set to go into effect in 2020. Shell announced last week that the company is considering expanding the capacity of its German refineries to make oil products that meet the sulfur cap.

Uganda has agreed preliminary terms with a consortium of investors, including General Electric, to build and operate the country’s first refinery. An export pipeline is under development with completion scheduled for 2020, so the government is keen on building a refinery to process the oil once it starts flowing.

Looking at Europe, Amec Foster Wheeler announced Monday that it had been awarded a FEED contract from Total subsidiary, Total Raffinage France, for its Donges refinery. Total has stated that the Donges refinery lacks desulphurization capacity.

With more expansions and modernization announced daily, refining companies are doing what they can to keep up with the continued oil glut. But, with increased capacity, will the overstock continue down the line, creating a glut on refined product supplies?

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