March 27, 2010

Bitumen Supply Challenges

Tight deadline and many challenges, Esorfranki Civils was working around the clock to ensure that the stretch of the R21 highway between Pomona road and the R24 split, in Kempton Park, east of Johannesburg, would be ready before the start of the 2010 FIFA World Cup.

Senior site agent for the project Morné Barnard said during a site visit on Friday that this section of work near the OR Tambo International Airport had to be completed by May 28, before the World Cup starts on June 11.

This formed part of the work package J of the Gauteng Freeway Improvement Project (GFIP), which Esorfranki Civils was responsible for.

The highway was being widened to four lanes on each side, while a number of bridges had to be lengthened and refurbished and some pedestrian bridges removed.

Barnard highlighted that the supply of bitumen was one of the greatest challenges it was facing at present.

Despite placing orders for bitumen two to three weeks ahead of time, not enough supply was coming through, as many of the oil refineries that supplied the bitumen were undertaking maintenance shutdowns for the World Cup period.

He noted that while about 1 000 t/d of bitumen was required by the road construction industry, only about 30 t/d to 70 t/d was currently being delivered.

Barnard said that it had informed the South African National Roads Agency Limited (Sanral) of the potential delays that this could cause.

It would meet with Sanral again next week regarding this matter.

Esorfranki also noted that another challenge was the electrical cabling that had to go underneath this stretch of road, while nearby reservoirs that were leaking were also hampering the project.

Meanwhile, Barnard said that the heavy rains experienced in the Kempton Park area during January had delayed the overall work package J project by about two months.

While the area usually got about 136 mm of rain in January, about 400 mm of rain had been recorded in January this year.

The entire project, which involved the 12 km between the Pomona road off-ramp and the Rietfontein interchange, would be completed by April 2011.

Edited by: Mariaan Webb

March 23, 2010

Recycling of Roads in Singapore- The LTA Way

IN FUTURE, some roads here will be made of materials recycled from old roads that have been torn up.

Yesterday, the Land Transport Authority (LTA) relaxed its requirements to allow such material - such as recycled asphalt-pavement waste - to be used in road construction.

It did so after constructing a portion of Tampines Road with a mix of recycled materials and testing it successfully from March to August last year.

LTA found the road's riding quality, structural performance and environmental impact to be the same as those of conventional roads made from bitumen and natural-granite aggregates.

Mr Lim Bok Ngam, LTA's deputy chief executive of infrastructure and development, said that with such recycled- waste products, "we can reduce our reliance on natural imported construction materials".

Yesterday, to encourage the adoption of such sustainable construction materials, the Building and Construction Authority launched a $15-million Sustainable Construction Capability Development Fund, which will give grants to contractors who use the materials.

They include recycled concrete aggregate, and are cheaper than natural alternatives.

The push to use alternative building materials stems from previous sand bans in January 2007 and last May, when Indonesia and Cambodia, respectively, cut off sand exports to Singapore.

Launching the fund yesterday, Ms Grace Fu, Senior Minister of State for National Development, said she hoped that it would reduce the demand for natural construction materials.


March 18, 2010

Kenya produce no bitumen but imports

NAIROBI (Reuters) - Kenyan oil firm KenolKobil is importing 80,000 metric tonnes of crude oil at a cost of $55 million to cover shortfalls in regional bitumen and fuel oil supplies, it said on Wednesday.
The cargo, which is expected to dock in the Kenyan port of Mombasa early next month, is a private initiative outside of the east African nation's Open Tender System where marketers compete to import crude on behalf of the entire industry.

"Since mid-2009, there has been no bitumen production in the country, and marketers have been forced to import expensive stocks to feed the local market," KenolKobil said in a statement.

"Supplies of some fuel oil grades have also been insufficient, thus affecting some major consumers' operations and forcing them to turn to more costly energy sources."

KenolKobil's cargo of Arab Medium crude will be in addition to a total of 160,000 metric tonnes being imported in April through the tender system, the firm said.

The company operates in several markets in Africa.

Source- Reuteurs..

Change in Price and As usual Irregularities on Bitumen

After an alleged scam in the construction of the stretch from Jagraon bridge to Ferozepur road was unearthed, the municipal authorities got into action mode, marking an inquiry into the matter.

Municipal commissioner A K Sinha has asked joint commissioner M S Jaggi to carry out the probe into the alleged irregularities and submit his report by Monday.

The matter came to light when city-based RTI activist Kuldeep Singh Khaira had sought information regarding payments made for construction of a road from Jagraon Bridge to Ferozepur Road. The information gathered reportedly revealed that the project had led to substantial losses of Rs 6,09,958.59 to the state exchequer.

“An inquiry has been marked and only after I check the records will things become clear,” said Jaggi.

Hailing the probe, Khaira urged authorities to conduct it in an unbiased and impartial manner. “The guilty must be punished,” he added.

Khaira had alleged that municipal officials had called tenders on the basis of Rs 25,507.74 per metric tonne of 60/70 grade bitumen and Rs 23,738.39 per metric tonne of 80/100 grade bitumen from Panipat Refinery.

However, the RTI reply revealed that there were large-scale irregularities in payment, which led to huge losses to the exchequer.
The RTI information also revealed that Rs 69,38,480.20 in the name of difference in rate of bitumen had been made to contractors in relation to the bills prior to the period of issue of work-order.

Since Khaira had demanded a list of officials handling the construction work, the names revealed under RTI are former municipal commissioner G S Ghuman, director local bodies S K Sharma, assistant commissioner Vinod Sharda, XEN H C Salaria, SE Dharam Singh, SDOs Kulwant Singh, Jarnail Singh, V B Khanna, Ranjit Singh, Vinod Anand and Vijay Khanna.

Source- Times of India

Turning Bitumen into Light Crude - at What Price ?

BP Plc will pick up a majority stake in ailing Canadian oil sands company Value Creation Inc, a property for which Reliance Industries too was said to be in race.

Earlier, it was reported that RIL had made a $2 billion bid for majority stake in Value Creation. Though, the company spokesperson declined to confirm if it had actually put in a bid.

Canada's oil sands has the largest crude reserves outside the Middle East.
The news comes within days of RIL's takeover bid for bankrupt chemical maker LyondellBassel being snubbed by its management.

RIL, flush with cash from sale of natural gas from its eastern offshore KG-D6 field, was said to be in negotiations to buy a majority stake in Alberta-based oil sands minnow.

Value Creation is a privately-held company that owns 430 square miles of leases in the oil sands region of Alberta.

The largest block of leases, Terre de Grace, covers around 290 square miles in the western part of the Athabasca region. The company, which is reported to be in financial difficulties, also owns proprietary upgrading technologies to turn bitumen into refinery-ready light crudes.
London-based BP was said to have initially made a lower $1.2 billion bid but Value Creation did not disclose what was final acquisition price.

Value Creation said BP will make "significant capital contributions" to the Terre De Grace project, that lies about 300 miles north of Calgary, but any final price will be determined after further exploration and drilling defines the size of reserves on the property.

BP, which sold a half interest in its Kirby oil sands property to Devon Energy recently, also holds a half share in a oil sands and refining venture with Husky Energy.

The Terre de Grace property is expected to be developed with in-situ thermal technology, which pumps steam into the ground to liquefy deposits of tar-like bitumen so it can flow to the surface.

"This partnership blends a strong asset, world-class operator, high caliber talents and market security, besides financial stability," said Value Creation chief executive officer Columba Yeung in the statement.

The Terre de Grace field is expected to start production of oil in 2011 and has the potential to yield over 300,000 barrels of oil a day, Value Creation says on its Web site.
"This transaction provides Value Creation with a clean, debt-free balance sheet," the company statement said.

Value Creation retains 100 per cent control over its other significant oilsands leases (including the large Tristar block, south of Fort McMurray), Heartland Upgrader assets and patented proprietary technologies.

Soruce- Press Trust of India

March 10, 2010

Material or Workmanship?

Excitement over maintenance work on Owairaka's ring road is turning sour for one mountain user.

Auckland city councillor Cathy Casey says about six of the road's worst potholes were fixed, but within two days the bitumen had lifted.

The Mt Albert resident says she is curious to know what the criteria is for filling potholes on the "unsafe road".

"It's the worst feature on the mountain. It looked to me to be a very random allocation of fill.

"One pothole was filled, another not," she says.

"Is it bad workmanship or bad materials? What is the criteria for doing a job?

"This is what gives the council the reputation that we don't care about our maunga."

Council's park services manager Mark Bowater says because the extent of repair work was minor, the contractor used cold mix asphalt that unfortunately failed in two of the potholes.

He says although that has not happened in previous repairs, any additional pothole repair will now use hot asphalt.

"Sections of the Owairaka Domain ring road are deteriorating in condition, and are currently being planned and prioritised for more extensive replacement within the next two years," he says.

Council officers will report back to the council in April about whether it is feasible to allocate an $8 million budget for volcanic cone protection.

Currently $2.1m is budgeted for Maungawhau Mt Eden's development while the remaining 22 volcanic cones get $457,000.

The budget has also received attention from local iwi who recently signed an agreement that would give them ownership and co-management of natural features with Auckland's new council.

Ngati Whatua o Orakei trustee Ngarimu Blair says the current allocation reflects an imbalance between what is promised and what is spent.

"It is extremely worrying. We may be left with very little budget to do much. The remains of pa on the maunga are as important as Inca ruins or Stonehenge."

Mayor John Banks met locals last Saturday at Owairaka to get a better understanding of the problems.


Eight were Caught

The South African Competition Commission has referred seven companies and one trade association to a tribunal that will adjudicate on whether they colluded to fix prices for bitumen. However, the defendants say the agreement was designed to provide price stability and transparency.

The Commission opened its investigation in January last year when Sasol and its subsidiary Tosas - two of the companies named - applied for leniency in exchange for information about price fixing in the sector. The two companies have since been granted conditional immunity from prosecution, and the Commission is not seeking to fine them.

According to Sasol and the Commission, prices were fixed by Chevron, Engen, Masana Petroleum Solution, Sasol Shell, Total and Tosas through meetings held under the auspices of the South African Bitumen and Tar Association (SABITA).

However, a statement from SABITA said, "Under scrutiny is a matter that was initiated around 2001 with the intent to bring about a transparent mechanism that would deal with the rise and fall of the bitumen component in asphalt costs. As road building contracts could span lengthy periods, a mechanism was sought to minimise uncertainty of input costs, resulting largely from externalities such as crude costs and exchange rate fluctuations.

"Due to various parties not being able to reach agreement, this however was never implemented as intended. The intent of this initiative was to bring about a transparent mechanism between contractors and client bodies that would deal with input cost fluctuations and never to flout competition law."

However, a statement from the Commission said, "In its investigation the Commission found that the respondents engaged in collusive conduct from around 2000 until at least December 2009. The respondents collectively determined and agreed on pricing principles, including a starting reference price and monthly price adjustment mechanism."

The Commission has already agreed a fine of ZAR 13 million (US$ 1.76 million). It is asking the tribunal to fine Chevron, Engen, Shell, Total and SABITA 10% of their annual revenues.


March 9, 2010

New Projects Need More Bitumen

Cape Town - In recent years bitumen sales have risen sharply in response to greater demand, owing to the large infrastructure projects that the state has undertaken.

In 2008 bitumen sales rose 20.5% to 383 031 tons. Sales growth from 2005 to 2007 was 6%, 17.6% and 3.1% respectively. This followed a 4.4% slump in 2004, as reported by the Southern African Bitumen Association (Sabita).

Sabita is an industry body that represents bitumen suppliers and consumers, as well as consulting engineers.

Bitumen, one of the ingredients going into building a tar road, is in the news after the Competition Commission referred an investigation into price-fixing in the bitumen industry to the Competition Tribunal.

The Commission recommends a fine of 10% on the turnover of companies it believes guilty of price-fixing.

The companies concerned are Chevron, Engen, Shell and Total. Masana Petroleum has pleaded guilty and paid a fine of R13m. Sasol and Tosas applied for indemnity when at the beginning of last year they came clean to the commission.

This followed a comprehensive internal investigation by Sasol to expose all possible violations of competition legislation.

The oil company said its involvement in the alleged bitumen price-fixing had merely been of a technical nature and not secretive. It had been precisely at the request of bitumen consumers, such as road-building contractors.

Professor Don Ross, a guest lecturer at the University of Cape Town's economics department, who was doing research for Sabita, says in a report that bitumen represents a relatively small portion of total road-building costs.

At least 75% of the costs of building and maintaining a tar road is made up of wages, transport, machinery, measuring and paint.

Ross says 90% of the bitumen produced in South Africa is used in state-funded road-construction projects. In 2007 Sabita assured government that the refineries had sufficient capacity to meet the expected increased demand owing to the extensive infrastructure programmes in preparation for the 2010 World Cup soccer tournament.

Bitumen stocks can be increased by using more of the crude oil residue from the refining process. A certain percentage of this residue is used as heavy bunker fuel oil, among other things. Ross says bitumen production in South Africa has been stable for the past 10 years, despite severe fluctuations in the price of crude.



March 8, 2010

Shell Never Give Up to Fixing the Price.


In September 2006, the European Commission fined Shell $137m for their role in a cartel that fixed the price of bitumen. According to a report published in the Houston Chronicle, “the EU Commission said the company was an instigator, took the leadership in the cartel and was a repeat offender”. The report went on to state that “Shell’s fine was increased by 50 percent because of its involvement in previous cartels and another 50 percent for instigating and leading the cartel.” A BBC news report revealed that Shell has previously been fined by the EU Commission for price-fixing in other markets (PVC and propylene). An article in The Daily Mail stated that Shell’s fine was increased by lOpc for “obstructing the probe”. On 29 November 2006, it was reported that the European Commission was imposing “its second-largest cartel fine against Shell, Dow Chemical, ENI, Unipetrol and Trade-Stomil.” The fine was imposed for “fixing prices of synthetic rubber, used mainly in tyre production.” According to an article in The Times newspaper, “Shell’s fine, as well as ENI’s, was increased because it was a repeat offender.” All three of the featured quotations are from The Times article. According to a BBC News report, also published on 29 November 2006, Royal Dutch Shell Plc was fined 160.8 million euros. (EXTRACT from Wikipedia)

The fines apparently did not deter Shell from deliberately engaging in price fixing cartels despite all the false claims of integrity, honesty and transparency in the Shell Business Principles. Today we publish news of Shell’s participation in a further price fixing cartel…


March 5, 2010

Another Bitumen Scam-In Pakistan

Federal Interior Minister Rehman Malik has been acquitted of corruption and misuse of authority charges by the Accountability Court.

Allowing the acquittal application during proceedings on Thursday, the court observed that given that no objections were raised by the National Accountability Bureau (NAB) deputy prosecutor general as well as the attending circumstances of the case, there was no probability of the applicant being convicted, and hence, he has been acquitted of charges levelled against him.

Malik was accused of exerting his influence as additional director of the Federal Investigation Agency (FIA) in 1995 to favour his brother-in-law’s firm. “This is triumph of justice,” claimed the interior minister soon after the verdict was announced. He alleged that he was politically victimised by former senator and Ehtesab Bureau Chief Saifur Rehman, and criminal proceedings were initiated against him at Rehman’s behest.

According to the NAB reference, Malik had gotten 50,000 metric tons of asphalt/bitumen allocated for his brother-in-law Zaheer Ahmed Nasir, a managing director of NSR industries, from the ministry of petroleum and national resources at a very low rate. It was alleged that Malik was instrumental in obtaining the permit, and in allowing the transfer of the same to Afghanistan sans central excise duty and income tax.

NAB alleged that the private firm obtained asphalt without payment of central excise duty and other charges, which totalled Rs4,877,400, and the consignment was not sent to Afghanistan but it was sent to tribal areas for its ultimate sale in the local market.

The applicant’s counsel, Khawaja Naveed Ahmed, submitted that the Supreme Court’s three-member bench, while dealing with the co-accused case, observed that there is no evidence that shows that the applicant committed any breach of trust as public servant. He said that the primary witness of the prosecution, G.A Sabri, had voluntarily exonerated the applicant from all allegations levelled in an affidavit.

The counsel submitted that the quota was allocated by the then-petroleum minister, who occupied a higher post and could not be under the influence of an additional director of the FIA. Ahmed said that a series of politically-motivated criminal cases were registered against the applicant, as he refused to become an approver against slain PPP chairperson, Benazir Bhutto.

Ahmed said that the applicant has nothing to do with the allocation of bitumen to NSR Industries, submitting that had there been any influence by the applicant, the price could have not been increased fromUS$105 to US$160 per metric ton.

He submitted that there is no likelihood of any conviction against the applicant, and further proceedings would be against the provision of justice and a sheer waste of time for the court. He prayed the court to acquit the applicant from the reference in the interest of justice.

NAB Deputy Prosecutor General Aslam Butt had also conceded before the court that no case is made out against the applicant and did not raise an objection on the application.

The Accountability Court, which had reserved the judgment after hearing the closing arguments on February 12, observed that there is no probability of conviction of the applicant in view of attending circumstances and no objection by the NAB deputy prosecutor general. Allowing the application, the court acquitted Rehman Malik of corruption and misuse charges.


The Annual Event of Price Fixing for Bitumen By Big Boys

Oil giants tarred for bitumen price-fixing - Sasol admits to collusion in return for conditional immunity from prosecution

Pls refer our previous posting where in Shell was fined by EU Authorities last year for the same reason more than 300 million Euros.. Still the colloboration takes place means, the money involved is much more than that..

The Competition Commission has referred its findings of price-fixing in the supply of bitumen by major oil companies to the Competition Tribunal, it said yesterday.

The companies include Chevron SA, Engen, Shell SA, Total SA, Masana Petroleum Solutions, the Southern African Bitumen Association, Sasol and Tosas. "Bitumen products are mainly used in road construction to tar and rehabilitate roads, which is mainly sold to government entities," the commission said.

The investigation was initiated on January 12 last year, following an application for leniency by Sasol and its subsidiary Tosas.

"In its application Sasol admitted that, together with its subsidiary, Tosas, it had colluded with its competitors and was granted conditional immunity from prosecution provided it co-operates with the commission in its investigation and prosecution."

Sasol yesterday said it regretted its contravention of competition law but said its involvement "was technical nature, not secretive".

The world's largest oil-from-coal producer said its competition law compliance review in January last year revealed initial concerns of non-compliance with competition laws relating to Sasol Oil.

The company's launch of the competition law compliance review was sparked by a fine of over R3-billion it had to pay for leading what the European Union dubbed a paraffin mafia in 2008.

The commission said it had asked the tribunal to impose an administrative penalty of 10% on each of the firms involved, except for Sasol and Tosas.

"Settlement terms have been agreed in principle with Masana whereby it admits guilt and will pay a penalty of R13-million.

"The settlement agreement will be referred to the tribunal for confirmation shortly."

The Commission found that the respondents engaged in collusive conduct from around 2000 until at least December 2009.

"The respondents collectively determined and agreed on pricing principles, including a starting reference price and monthly price adjustment mechanism.

"This was facilitated through meetings convened by Sabita, as well as through correspondence through Sabita and direct communication between oil companies."

The commission said the conduct resulted in final customers being charged prices which were not competitively determined.

Commissioner Shan Ramburuth said the uncovering of the cartel was "another important step in the commission's work in addressing anti-competitive conduct affecting infrastructure development".


March 2, 2010

DHL Transports Bitumen

DHL Supply Chain has been awarded a contract worth €33.6m over five years, by Petroplus, formerly known as BP Bitumen. The company will handle all order management, customer services and movements of bitumen at elevated temperatures, to quarries and asphalt manufacturing plants throughout the UK.

The contract was awarded to DHL following a nine year relationship. Under the terms of the renewed contract, DHL will be implementing a number of sustainability initiatives that have been tried and tested under the company's GoGreen strategy. These include a programme to reduce fleet fuel usage through:

•Reducing the speed limit on vehicles to 85kph and gear and valve resetting to match top speed
•Driving and vehicle examination training
•Maximizing load size to enable fewer deliveries
Many of the sustainability initiatives being implemented by DHL are also intended to yield significant cost savings; the mileage and fuel monitoring programme promises a €100,000 cut in fuel costs within just one year.

Peter Clement, UK Logistics and Supply Chain Manager for Petroplus said: "DHL has an exemplary track record in health and safety and the on-time delivery of goods to our customers. We're delighted that this commitment to our business is going to be extended to support our sustainability goals. DHL's proposed combination of technical innovation and behavioural change is exactly what we were looking for from a partner.