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RE: Global Oil Collapse May Halt Refinery Construction

Home Forums Refining Community Refinery News Global Oil Collapse May Halt Refinery Construction RE: Global Oil Collapse May Halt Refinery Construction


Charles Randall

Here is update based on Woodmac/FT views on the pushback to refinery construction projects from demand collapse. The 4 of 5 stated here is only for Grassroots refineries & the 30 of 160 construction projects going ahead are way too low and focused on conventional not heavy crude refineries.  The ratios for processing heavy oil, upgraders and coker expansion or additions are much higher than these although several of those in planning or financing stages fall into some of the categories that Woodmac is talking about.
Also I think Woodmac may have missed that some of the cancellations and/or delays are positional in nature, that is with the rapid drop in cost of raw materials (which led the 2X-3X cost increase in projects for the 2006-2008 time frame) have several of the very large projects eyeing a revision in cost to capture these savings.
The collapse in refiners profit margins and crack spreads is a short term issue that no one bases a project economics upon but helps get it past financial stages – projects that are casualties of this factor were marginal, non-strategic or lacked financing to begin with.

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