Jordan Petroleum Refinery Company to Undertake $2.2 Billion Refinery Expansion

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Researched by Industrial Info Resources (Sugar Land, Texas)--Jordan has decided to undertake capacity expansion operations at the refinery owned by Jordan Petroleum Refinery Company Limited (AFM:JOPT) (JPRC) (Amman, Jordan), at an estimated investment of $2.2 billion. After exploring several options, including total dependence on imports as well as greenfield ventures, the government decided to augment the capacity of the existing refinery.

The expansion will augment the capacity of the refinery from the present 105,000 barrels per day (BBL/d) to 131,000 BBL/d. In a bid to regulate the oil market monopolized by the refinery for the last five decades, the government has initiated a bidding process to shortlist a partner firm for the expansion. About 15 proposals have been received from companies expressing interest in the venture. However, present concessions offered to JPRC also have been extended, thereby preventing other investors from importing oil into Jordan.

The scope of upgrade operations includes process refinements to comply with the latest European emissions standards, in addition to replacing older components with units capable of producing unleaded gasoline and a low sulfur diesel variant, with less than 50 parts per million of sulfur content.

In September this year, the Jordanian Ministerial Council opted to clear the fourth expansion project at JPRC's Zarqa refinery, allowing JPRC and its partner Infra Mena, an investment fund, exclusive concession for the next 15 years, which defeats the intention of a free market. Deutsche Bank AG (NYSE:DB) (Frankfurt, Germany) will act as the financial advisor to Infra Mena, while Technip Ads (OTC:TKPPY) (Paris, France) will be the technical advisor for the venture. The Social Security Corporation of Jordan is also likely to participate in the venture.

Jordan, which is a net importer of energy, spends about 20% of gross domestic product earnings on imports. In an attempt to tap alternate sources of energy, Jordan is exploring production of shale oil stored in deep-seated sand/shale in the earth's crust. The Jordanian shale oil, upon further processing, would yield oil crude, which needs to be refined to obtain a second-grade diesel, gasoline or heating oil variant. Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) has initiated a long-term venture for the exploration of potential deep shale oil deposits in Jordan. It is reported that the venture costing more than $50 billion would run for up to 14 years.

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