Crude Oil Refinery Market Analysis

1. Introduction

Oil accounts for one third of the global primary energy consumption. From the 13 billion tons of oil equivalent of primary energy, we get only 9 billion tons in final energy, after accounting for transformation and transport losses. The oil industry, because of its complexity, it is divided on two big sectors: upstream and downstream. Generally unprocessed crude oil is not usefull for industrial applications, and is processed into an oil refinery into petroleum products. Oil refineries are part of the chemical industry. Refineries present complex plants, with big number of installed units, in order to optimize production and efficiency, and to satisfy environmental regulations. Oil refineries rely only on crude oil as a feedstock,

Downstream sector

Downstream sector covers the refininf part. After various chemical processes, the crude oil in transformed into many petroleum products that are required on the market. The most important economic element to assess the work of a refinery is the refinery margin. It can be gross and net. Gross refinery margin equals to value of products coming out of refinery, minus the cost of incoming product – crude oil. Net margin equals to gross margin minus variable production costs. Net margin of a refinery in the best indicator of its operation from economic point of view.

The raw material entering in oil refineries is crude oil. In a barrel of crude oil, the composition is aproximately 85% carbon elements, 10% of hydrogen, which together make 95% hydrocarbons. The rest 5% goes to impurities. The sulfur level in the crude oil is a key parameter for crude selection and crude prices. The higher level of sulfur, it is more difficult to treat the crude oil and obtain products according to the specifications. There are manyspecifications for products to be placed on the market. For different fuels there are different specifications. For example for the jet fuel used in airplanes there are over 30 specifications. Most important specifications for petroleum products are: density, octane number, cetane, sulfur content, cold flow

All this products are highly demanded on the market, but in different quantities. As it is shown in Fig.4 the biggest demand is for diesel and gasoline, used in transport. Fig.3 Share of products obtained from refinery

In order to achieve this ratio of final products, additional units and processes in refineries are introduced. After the primary destilatian in Crude Destilation unit (CDU), heavy products are fed into Vacuum Destilation Unit (VDU). The vacuum distilate is treated in Fluid Catalytic Cracker (FCC) or Distillate Hydro Cracker (DHC). With additional units the complexity of the plant increases. The measurement for complexity in refineries is Nelson complexity index (NCI). NCI describes a seasure of the secondary conversion capacity of a petroleum refinery compared to the primary distillation