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Introduction To The Economics of Oil Refining

This document provides an overview of oil refinery economics. It discusses how refineries process crude oil into valuable transportation fuels and other products through separation, breaking down, reshaping and recombining hydrocarbon molecules. It also examines factors that affect refinery costs, including variable costs, fixed costs and environmental regulations. Additionally, the document explores refinery profitability drivers like the cost of crude oil inputs versus the price of refined outputs and crack spreads. The final section provides a brief introduction to linear programming models used in refinery planning and economics.

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Abdo Majid
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265 views4 pages

Introduction To The Economics of Oil Refining

This document provides an overview of oil refinery economics. It discusses how refineries process crude oil into valuable transportation fuels and other products through separation, breaking down, reshaping and recombining hydrocarbon molecules. It also examines factors that affect refinery costs, including variable costs, fixed costs and environmental regulations. Additionally, the document explores refinery profitability drivers like the cost of crude oil inputs versus the price of refined outputs and crack spreads. The final section provides a brief introduction to linear programming models used in refinery planning and economics.

Uploaded by

Abdo Majid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Contents:

1. Introduction to the economics of oil refining


2. Refining capacity
3. Refining costs Estimation Capital costs, coasts Estimation
(Variable cost, Fixed cost), Factors Affecting Refinery costs.
4. Refining Margins
5. Refining types and complexity.
6. Refinery Economie Evaluatio: cash Flow Diagram, Time Value of
Mony, Inflation, Taxation and After- tax Cash Flow, Profitabilty
and project Evaluation.
7. Refinery Value Drivers: Cost of Inputs vs Price of Outputs, Crack
Spreads.
8. Global Trends
9. Refinery Planning: Liner Programming overview, Refinery linear
programming models, economics and planning of Refining
processesand process economics crud oil evaluation, production
planning, product blending, Shutdown planning, Configuration
studies, Technology evaluation
1. Introduction to the economics of oil refining

Refineries process crude oils, which have different types of hydrocarbons with
carbon chains of different lengths, into a broad range of refined products. The
refining process separates, breaks, reshapes and recombines the molecules of
crude oil into value-added products such as gasoline, diesel and flyings fuel. These
essential transportation fuels typically account for 75 percent of output. The
remaining 25 percent cmprise home heating oil, lubricants, heavy fuel oil, asphalt
for roads and feedstocks that the petrochemical industry transforms into
hundreds of consumer goods and products and from plastics to textiles to
pharmaceutical products.
Refinery processing units perform three functions:
1. Separation of the different types of hydrocarbons contained in the
feedstocks.
2. Conversion of separated hydrocarbons into more desirable or higher-value
products.
3. Treatment of the products to remove unwanted elements and contaminants
such as sulphur, nitrogen and metals.

Figure number one, according to the producer of crude oil for each country,
which of course varies structurally from one place to another and to provide
insight into the economics of refining business and to described the factors that
affect investment decisions and determine the profitability of the refinery.

2. Basic Refinery Economics


In many businesses, profits or losses result primarily from the difference between
the cost of inputs and the price of outputs. In order to have a competitive edge, a
business must make higher-value products using lower-cost inputs than
competitors. In the oil refining business, the cost of inputs (crude oil) and the price
of outputs (refined products) are both highly volatile, influenced by global,
regional, and local supply and demand changes. Refineries must find the sweet
spot against a backdrop of changing environmental regulation

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