Applies to: oil and condensate refineries. Such projects:
- Are technically complex
- Contain significant equipment and material which may need to be imported
- Produce large volumes of the product.
- Produce products which are sold on the open market (crude oil is sometimes processed on a toll basis
- Generate small profit margins
- Earn foreign exchange generated from the sale of the product in international markets
- Have annual maintenance shutdown which will reduce revenues and variable operating costs for about a month
- Are subject to straightforward taxation calculations.
How Promoter handles Oil Refinery Projects
Promoter produces and estimate of the investment cost, taking into account the feedstock analysis.
In the case of a hydroskimming oil refinery, where there may be up to a dozen products, it assumes that the crude unit splits the products into four groups, LPGs, gasolines, middle distillates and fuel oils.
IMPORTANT In view of the small margins and technical complexity of a refinery, it is important that the design is carried out by specialists who can determine the optimum cut points, yields, capital and operating costs. Sometimes this work is best carried out with a special linear program (LP) which is used to optimize the design. The results are then used in Promoter. However, there are occasions when Promoter is a more appropriate optimizing programme. It has been used, for instance, to optimize the capacity and start date of a large but technically simple refinery.
Typical Project Cash Flows
The cash flows are similar to a downstream project. However, the costs and revenues dwarf the capital investment and it is often more instructive to view the margins rather than the full cash flows. And the working capital is a significant part of the initial investment.