Phillips 66: Melaka Refinery

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Conoco and Phillips 66 announced on November 18, 2001 that their boards of directors had unanimously approved a definitive agreement for a "merger of equals". The merged company, ConocoPhillips, became the third-largest integrated U.S. energy company based on market capitalization and oil and gas reserves and production. On November 11, 2011 ConocoPhillips announced that Phillips 66 would be the name of a new independent oil and gasoline refining and marketing firm, created as ConocoPhillips split into two companies. ConocoPhillips kept the current name of the company and concentrated on oil exploration and production side while Phillips 66 included refining, marketing, midstream, and chemical portions of the company. Photo: Hugh Pickens all rights reserved.

by Hugh Pickens, Ponca City Oklahoma


The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal


Corporate


Strategic and Financial


Business Segments


Stock Market


Reference

Refining Business Segment


Increasing Profitability in Refining Business Segment


Detailed Look at Ponca City Refinery


Other Phillips Refineries


Other Locations


Contents

Master Index of Articles about Phillips 66

The 587 foot tall Mammoet PTC 140 crane, seen here from North First Street, towers over the Refinery Complex in Ponca City. The supercrane was used to move two new 232 ton coker reactor units within the refinery on September 29, 2013. Phillips was willing to invest $70 million in the two new coker reactor units because the Ponca City Refinery is one of the best run, safest, and most profitable of Phillips' fifteen worldwide refineries and Garland wants the refinery in Ponca City to continue to run smoothly and profitably. This photograph of the supercrane in Ponca City was taken from almost two miles away from the crane. Photo: Hugh Pickens All Rights Reserved.
Hugh Pickens, an analyst who closely follows Phillips 66, speaks with Phillips CEO Greg Garland (right) about the disposition of the North Tower, South Tower, and Research West at Phillips' Ponca City Refinery after Garland's speech to the Bartlesville Chamber of Commerce on August 13, 2014.

by Hugh Pickens, Ponca City Oklahoma


The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal


Corporate


Strategic and Financial


Business Segments


Stock Market


Reference

Refining Business Segment


Increasing Profitability in Refining Business Segment


Detailed Look at Ponca City Refinery


Other Phillips Refineries


Other Locations


Melaka Refinery

Melaka Refinery' The PSR-2 refinery in Melaka, Malaysia, is a joint venture with Petronas, the Malaysian state oil company. Phillips 66 owns a 47 percent interest in the joint venture. The medium, highsulfur crude oil processed by the refinery is sourced mostly from the Middle East. The refinery produces a full range of refined petroleum products and capitalizes on hydrocracking and coking technology to upgrade low-cost feedstocks to higher-margin products. Photo Credit: Hyrdrocarbons Technology

News and Views from the Melaka Refinery

November 12, 2014: Phillips to Sell Maleka Refinery for $635 Million

FuelFix reported on November 12, 2014 that Phillips has made a deal to sell its 47-percent stake in a Malaysian refinery for $635 million in cash that is expected to close at the end of 2014. “This divestiture allows us to redeploy resources to more strategic areas of our business,” said Larry Ziemba, executive vice president of refining for Phillips 66, in a written statement. Dean Acosta, a spokesman for Phillips 66, said the firm won’t have a refining presence in Asia after the deal closes. “We continually evaluate the assets in our portfolio to identify opportunities to significantly enhance returns,” Acosta said in an email. “We do that through portfolio management as well as improving margins on our current assets.”[1]

October 29, 2014: Sale of Maleka Refinery is an Ongoing Process

Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that the sale of the Melaka Refinery is an ongoing process. "We have an ongoing process at Melaka. And I think our expectation is certainly end of this year, first quarter next year, that we'll complete that process."[2]

August 29, 2014: Second Unit Shut Down at Maleka Refinery

MSN reported on August 29, 2014 that Petronas is running the 100,000 barrels-per-day (bpd) Malacca refinery it jointly owns with US oil company Phillips 66 at a lower rate than usual after unexpectedly shutting a secondary unit. The refinery's crude distillation unit (CDU) will be running at a lower operating rate than normal from August 21 to September 8 while the secondary unit is being repaired, one of the sources said. Petronas operates two CDUs at the Malacca petroleum complex that run as standalone operations. It solely owns a 100,000-bpd CDU that mainly processes sweet crude.[3]

February 14, 2014: Garland Says Phillips Expects to Sell Maleka Refinery in 2014

Greg Garland told security analysts at the Credit Suisse Global Energy Summit on February 12, 2014 that Phillips expects to sell Maleka and Whitegate in 2014. "We've gotten very good at selling the good things. I told Clayton we're going to have to get very good at selling the not-so-good things. Certainly [we] have a process underway with Whitegate. We have a process underway with Melaka. What I would say in that you should expect that we will draw those processes to a conclusion in 2014.[4]

October 30, 2013: Garland Says Phillips Still Looking to Sell Its Interest in Melaka Refinery

Garland told analysts at the third quarter earnings conference on October 30, 2013 that Phillips is still looking at "selling possibly our Whitegate refinery in Ireland and our interest in the Melaka refinery in Malaysia, and so those efforts continue. We’re in the process of evaluating specifically the opportunities around Whitegate. So I think those have been the pieces of portfolio for us that long-term are really where the strategic interest is."[5]

July 15, 2013: Melaka Refinery Crude Unit Restarted

Business Times reported on July 15, 2013 that the crude distillation unit at Phillips' Melaka refinery has restarted after being shut since mid-June. he unit, which processes 100,000 barrels per day (bpd), was shut after a fire at the refinery and was expected to be restarted by early July but the refinery has been hit with "technical issues" which caused the CDU to be shut longer than expected. "There was an issue with the steam chamber which is where the fire happened, but it affected the CDU as well," said a source familiar with the matter. The downtime in Melaka resulted in imports of about 1.2 million barrels of gasoline pushing the Asian gasoline margin on July 12 to more than a four-year high of US$16.74 a barrel, a trader estimated. Besides a base oil plant, there are two CDUs in the Melaka refinery that run as standalone operations.[6]

January 30, 2013: Phillips Writes down $564 Million in Equity on Melaka Refinery

Greg Garland told analysts during the fourth quarter earnings conference on January 30, 2013 that had Phillips had taken a charge of $564 million for the impairment of our equity investment in the Melaka refinery. "This impairment was based on significantly lower estimated future refining margins in the region, driven primarily by expected increases in future crude oil pricing over the long term. As such, we determined that the fair value of our investment in Melaka was lower than our carrying value and that this loss in value was other than temporary."[7]

December 13, 2012: Phillips Likely to Sell its stake in Melaka Refinery in Malaysia

Reuters reported on December 13, 2012 that Greg Garland told reporters on December 13, 2012 that Phillips will likely look to sell its Whitegate refinery in Cork, Ireland, and its stake in the 2 Melaka refinery in Malaysia. Phillips plans to retain stakes in the refineries it owns in the United Kingdom and Germany. "We don't envision growing in the Asian refining space," said Garland.[8]

References



Master Index of Articles about Phillips 66

The North Tower and the South Tower, part of Phillips 66's Refinery Complex in Ponca City, contain over 250,000 square feet of Class A office space that is essentially unused. Research West contains another 230,000 square feet of unused Class A office space. Photo: Hugh Pickens
Ponca: A Core Asset. Phillips CEO Greg Garland told members of the Bartlesville Chamber of Commerce on August 27, 2013 that the refinery at Ponca is a 'core asset' of Phillips 66. The refinery in Ponca City "is making very good money for us," Garland told his Bartlesville audience. Garland added that he expects gas demands in the U.S. to decline by 20 percent in the next 10 years, but that demand for refined products in South America and Africa will more than offset that decline.

by Hugh Pickens, Ponca City Oklahoma


The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal


Corporate


Strategic and Financial


Business Segments


Stock Market


Reference

Refining Business Segment


Increasing Profitability in Refining Business Segment


Detailed Look at Ponca City Refinery


Other Phillips Refineries


Other Locations

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