ConocoPhillips Said to Plan Halt of German Refinery

By Nidaa Bakhsh

April 9 (Bloomberg) -- ConocoPhillips will shut its German oil refinery, the country’s third largest, in the fourth quarter for maintenance, two people familiar with the situation said.

Work on the Wilhelmshaven plant will start in October and last 6 to 10 weeks or possibly longer, the people said, declining to be identified because the information is confidential.

The maintenance work, which occurs every five years, will affect all the refinery’s units, one of the people said. Bill Stephens, a ConocoPhillips spokesman based at company headquarters in Houston, declined to comment on refinery operations.

The Wilhelmshaven plant, which uses oil mainly from the North Sea, can process 260,000 barrels a day, according to the company’s Web site.

Refiners typically conduct maintenance in the spring before gasoline demand rises in the summer, and also in the autumn to meet winter demand for gasoil, a form of heating fuel.

ConocoPhillips, the second-largest U.S. refiner after Valero Energy Corp., was forced to cut runs at the plant last quarter because of weakening demand for fuels. It also reduced operating rates in the second and third quarters of 2008 as the price of gasoline fell below Brent oil, its raw material, cutting profits for refiners.

Refining Margins Shrink

Refiners processing Brent in northwest Europe may have earned $5.18 a barrel yesterday, compared with $9.57 on Feb. 3, according to data compiled by Bloomberg.

ConocoPhillips may invest in a new coker, a hydrocracker and hydrogen units at the Wilhelmshaven refinery to increase fuel production, it said in a March 11 presentation. The upgrade will also allow the company to use heavier, high-sulfur crudes from Russia, Willie Chiang, senior vice president of refining, marketing and transportation, said in the presentation.

Hydrocrackers are used in diesel production. Cokers convert heavy crudes into lighter products such as gasoil and naphtha, used in gasoline and petrochemicals.

“We’re currently proceeding through the permitting process, and we’re hoping to get our estimates in the next few months to lead us to a final investment decision here later this year,” Chiang said on March 11.

To contact the reporter on this story: Nidaa Bakhsh in London at nbakhsh@bloomberg.net