Phillips 66: Melaka Refinery

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Phillips 66 has 15 refineries globally and 2.2 million barrels a day of capacity. "When we think about our refining business we like to think about it in four segments. One is the Mid-Continent, about 21% of our capacity is there. Margins have been very strong in this area, as you know. Our largest region is the Gulf Coast, about 33% of our capacity is there.We have large economy of scale here. We have very complex refineries on the Gulf Coast. The Western US and Pacific region is about 20%, includes our interests in the Melaka refinery.The West Coast has typically had high margins historically, but the last couple years has been challenged in part due to the economic slowdown in California." Derivative Photo: Hugh Pickens

Phillips 66 has 15 refineries globally and 2.2 million barrels a day of capacity. "When we think about our refining business we like to think about it in four segments. One is the Mid-Continent, about 21% of our capacity is there. Margins have been very strong in this area, as you know. Our largest region is the Gulf Coast, about 33% of our capacity is there.We have large economy of scale here. We have very complex refineries on the Gulf Coast. The Western US and Pacific region is about 20%, includes our interests in the Melaka refinery.The West Coast has typically had high margins historically, but the last couple years has been challenged in part due to the economic slowdown in California."[1][2][3]

Contents

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

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]

Phillips 66 Worldwide Refineries

Phillips has the following worldwide refineries:[9]

Country Name Location Capacity (KBD) Nelson Complexity Factor Clean Product Yield
Gulf Coast US Alliance Refinery (AL) Belle Chasse, LA 247 12.5 86%
Eastern US and Europe Bayway Refinery (BW) Linden, NJ 238 8.4 90%
Central US Billings Refinery (BI) Billings, MT 118 14.4 89%
Central US Borger Refinery (BG) Borger, TX 146 12.3 89%
Western US and Asia Ferndale Refinery (FN) Ferndale, WA 105 7.0 75%
Eastern US and Europe Humber Refinery (HU) North Linconshire 265 11.6 81%
Gulf Coast US Lake Charles Refinery (LC) Westlake, LA 239 11.2 69%
Western US and Asia Los Angeles Refinery (LA) Carson, CA/Wilmington, CA 139 14.1 87%
Western US and Asia Melaka Refinery in Malaysia (ME) Melaka 58 9.3 83%
Eastern US and Europe MIRO Refinery in Germany* (MI) Karlsruhe 56 7.9 85%
Central US Ponca City Refinery (PC) Ponca City, OK 187 9.8 91%
Western US and Asia San Francisco Refinery (SF) Rodeo, CA and Santa Maria, CA 120 13.5 83%
Gulf Coast US Sweeny Refinery (SW) Old Ocean, TX 247 13.2 87%
Eastern US and Europe Whitegate Refinery in Ireland (WG) Cork 71 3.8 65%
Central US Wood River Refinery (WR) Roxana, IL 306 12.5 85%
  • Denotes joint ventures. Crude capacity reflects that proportion.

Master Index for Phillips 66 Articles

References

About the Author

Hugh Pickens

Hugh Pickens (Po-Hi '67) is a physicist who has explored for oil in the Amazon jungle, crossed the empty quarter of Saudi Arabia, and built satellite control stations for Goddard Space Flight Center all over the world. Retired in 1999, Pickens and his wife moved from Baltimore back to his hometown of Ponca City, Oklahoma in 2005 where he cultivates his square foot garden, mows nine acres of lawn, writes about local history and photographs events at the Poncan Theatre and Ponca Playhouse.

Since 2001 Pickens has edited and published “Peace Corps Online,” serving over one million monthly pageviews. His other writing includes contributing over 1,500 stories to “Slashdot: News for Nerds,” and articles for Wikipedia, “Ponca City, We Love You”, and Peace Corps Worldwide.

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