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Reuters: Shell sees Tex. refinery expansion decision in ’07

Fri Oct 6, 2006 9:33am ET

NEW YORK, Oct 6 (Reuters) – Shell Oil Co. said on Friday it expects a final decision on whether to go ahead with a plan to double the size of its joint venture oil refinery in Port Arthur, Texas, by sometime next year.

Motiva Enterprises LLC, a joint venture between Shell and Saudi Aramco, has said it plans to boost its 285,000 barrel per day Port Arthur plant to around 600,000 bpd by 2010, and has already hired engineers and ordered some equipment for the project.

“We have not yet made a final investment decision on the project, but we’re moving ahead,” said David Sexton, president of Shell Oil Products. “The final decision to formally agree to the project will probably come next year.”

Sexton said the recent decline in refining profit margins from record heights was not a concern for the project, but added that the outlook for the refining business could worsen by the end of the decade when a number of refinery projects around the world come on line.

“Margins from a historic perspective are very good. They are good today and will probably be good for some period of time,” he said. “Over time, though, we think margins will moderate.”

Motiva said in August it had contracted engineers Bechtel Corp. and Jacobs Engineering Group Inc. (JEC.N: Quote, Profile, Research) for help in the planned expansion of its refinery in Port Arthur.

Shell is the U.S. unit of Royal Dutch Shell Plc. (RDSa.L: Quote, Profile, Research)

© Reuters 2006. All Rights Reserved.

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