Technip Secures Management Contract for Shell's Rheinland Connect Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Technip SA (OTC:TKPPY) (Paris, France) recently secured an engineering, procurement and construction (EPC) contract for the first phase of the "Connect" project being implemented by Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) in Germany. The Connect project refers to Shell's plans to integrate two of the company's existing refineries in Germany to create the Rheinland refinery. With a crude-oil processing capacity of 17 million tons per year, the facility will be the largest refinery in the country. The contract will be executed by Technip's office in Dusseldorf, Germany, and is scheduled for completion by the end of 2010. The financial terms of contract have yet to be disclosed.

The Rheinland refinery was formed in 2002 from the merger of a refinery in Wesseling, earlier operated by the German oil refiner then known as RWE DEA AG (Hamburg, Germany) and Shell's refinery in Cologne-Godorf. RWE DEA is now part of RWE AG (OTC:RWEOY) (Essen, Germany).

The Cologne-Godorf refinery forms the northern plant and has a capacity of 10 million tons per year, while the Wesseling refinery forms the southern plant and has a capacity of 7 million tons per year. The northern unit produces unleaded solid fuels, bitumen, benzene and fuel oil. The southern unit produces petroleum products such as aromatics, methanol and olefins used as feedstock in the petrochemical industry. The two refineries are operated by Shell's local office, Shell Deutschland Oil GmBH (Hamburg, Germany).

Phase I of the Connect project will involve modification of process units and construction of new facilities at the Wesseling refinery. The desulfurization and hydrogen-producing units in the southern plant at Wesseling will be modified to enable desulfurization of gas oil produced in the northern plant at Cologne-Godorf. The project is part of Shell's long-term plans to enhance production capacity of low sulfur gas oil. In 2008, Technip provided the basic design package for Phase I of the project and is currently developing design packages for the additional phases.

The Rheinland refinery is considered one of the four supersites in Shell's worldwide operations. The northern and southern units are located six kilometers apart and are spread over an area of 440 hectares. Feedstock for the northern plant is procured from the Rotterdam crude oil pipeline, while the southern plant procures feedstock from the Rotterdam pipeline and the North-West oil pipeline from Wilhelmshaven. About 38% of the products manufactured in the integrated facility are distributed through ships, 28% through tanker trucks, 21.7% through a pipeline exiting the factory, and 1% through rail network. About 11% of the products from the refinery are transported through a pipeline to LyondellBasell Industries (Rotterdam, Netherlands), the world's largest manufacturer of polypropylene and Europe's largest producer of polyethylene.

In April 2008, Shell entered into an exclusive partnership agreement with Aker Solutions ASA (OSL:AKSO) (Lysaker, Norway) for the provision of engineering services to Shell's four refineries in Germany. The scope of the agreement includes provision of services to the Rheinland refinery, the 4.6-million-ton-per-year Hamburg-Harburg refining facility, and the 4.5-million-ton-per-year Heide refinery. The $144 million contract is valid for a period of five years, with provisions for future extensions in two-year increments.

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