Project Proposal on

Refinery Economics
Energy Economics 13th October, 2010

Submitted to: Prof. Rasananda Panda Course Instructor (Energy Economics)

Submitted By: Hardik Shroff (20091014) Khushboo Shah (20091020) Rizwana Hussain K(20091040) Tilak Yagnik (20091054)

Refinery Economics Page 2 .  To understand the crude and refined products pricing mechanism.are expressed by a single barrel of crude oil basis. Objective of Study  To understand fundamentals of refinery macroeconomics  To understand the fundamental factors that affect refinery product prices and margins. Now refinery margins which are defined as the differentiation between the cost of raw material and the product profits . weather and competition between retailers and from other fuels. the larger the operating costs that are connected with more complicated refinery. This makes many refinery economic decisions difficult. there has been significant volatility in the profitability of petroleum refining. the higher the product will cost. actions by OPEC and governmental regulations. This factor causes the value of crude oil to be depended on the intricacies of the refinery. The various plants and various blended products are interrelated. Modern refinery operations are very complex because of feedstock sources and qualities. And hence the paper would be much in wider global context and not specific to Indian Refineries only.Background Refinery economics are largely a function of supply and demand. Feedstock prices (crude oil) are influenced by the above demand factors. multiples sources of feedstock. sophisticated processing technology and increasingly stringent product specifications. Product prices are determined by a variety of factors such as the economy. Rationale The rationale behind this study is to deal with the problem of high volatility in refinery margins due to the demand and supply of product prices as well as the feedstock prices to enhance the refiner¶s profitability. but require a means to determine the interrelated effects on the entire refinery. However. Because individual process units or product blends often cannot be evaluated in isolation. Scope of Study Source of data is largely primary. Over the past decade.  To understand the demand and supply impact on refiner¶s profit.

 NIKOLARAS. Day to day operations optimization Operations and Optimization Tools .Simulators and LP Models 4. articles and information on internet. Cost estimation 6. Environmental studies 8. Geddes. journals. K. To list a few:  Clarke. (2010). Production planning 3. The µsmart refinery¶: Economics and technology. Petroleum Refining Technology and Economics. K. India¶s Downstream Petroleum Sector. C. Technology evaluation. Investment studies/ Economic Evaluation. Product blending and pricing 5. Refinery Margins and Crack Spreads 7. San Antonio: USA Refinery Economics Page 3 .Approach to the problem The project would emphasize to cover following aspects of the refinery economics: 1.. IS REFINERY PROFITABILITY ENTERING A NEW ERA?  White D. In D.  Refinery Economics and Planning. (2007). paper presented at the NPRA annual meeting March 23-25 2003. Data collection / Literature Review The data collection will be mostly confined to secondary sources like various books. IEA. Crude oil evaluation 2. Economic drivers 9.

php/RFTS.bismarcktribune.php  http://www. Online References Refinery Economics Page 4 .com/index.invincible-energy. description of crude oil quality and crude oil selection methods) o Refining Trends  Fuel oil Price History (Crude oil price Trend)  Refined Product Pricing (Trend)  Refining Costs and yields  Refining Margins (Trend) o Economic Environment and demand prospects (Refined products supply and demand) o Refiner¶s Option and Economic Options (Refining Economics value drivers) o Refiner¶s Decision  Appendix o List of Abbreviations o List of Figures o List of Tables *This is content part and is subject to  http://www.Report Format The format of the report comprises of:  Front Page  Executive Summary  Chapter Plan* o Typical Fuels Refinery (Basic Introduction to Refining) o Crude oil yields (The refined products that yield from crude oil.

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