The primary focus will be on how markets, technology, finance and regulations impact the refining business profitability. A free powerpoint ppt presentation displayed as a flash slide show on id. Within energy sector 5 other industries have achieved higher gross margin. Find out about the margin improvement opportunities european refining and chemical leaders were exploring at our recent seminar in amsterdam. He was then seconded to malaysia refining company jv between petronas and phillips 66 in melaka, malaysia for about 5 years. Within north america, recent demand for refined petroleum products has been flat to declining and is forecast to con. A brief look at the refining capacities will reflect the kind of. The future of oil refining profit margins 3 local drivers on top of global factors, local supply and demand determines the marginal capacity that must run in order to meet demand. Written by experts with both academic and professional experience in refinery operation, design, and evaluation, petroleum refining technology and economics, fifth edition is an essential textbook for students and a vital resource for engineers. Prior to joining ihs markit, he was attached with phillips 66 in malaysia for about 8 years and worked in refinery technical, operations, economics and planning. It is ideal for refinery planning personnel, refinery.
Introduction to refinery economics is an online training course that provides an overview of the economics of refining. Over the past year, refining profit margins have been quite volatile. Oil refinery offsites automation opportunities to improve. Ppt refinery economics powerpoint presentation free to. Does our refinery reliability program focus its efforts on the highest margin units. Sgs will offer aspentechs pims, orion a refineryscheduling application and mbo a multiblend optimisation tool software to clients as part of its supply chain and businessimprovement solutions. Sgs will offer aspentechs pims, orion a refinery scheduling application and mbo a multiblend optimisation tool software to clients as part of its supply chain and business improvement solutions. Economic drivers have shifted from feed rate to conversion. Oil refinery offsites automation opportunities to improve profitability. Profitability improvement in the oil refinery a case study of bongaigaon refinery and petrochemicals.
Even if there was a substantially higher future margin in the range previously mentioned, the irr could still be under 15%. What it really measures is whether the refinery will make money at the margin i. How refining margins are key indicators of refining. The marginal capacitys yield sets localproduct prices and relative crudeoil prices based on quality and yields in the marginal configuration.
Uop has the knowledge and experience to help in the development and design of your refinery project. He has an extensive background in petroleum refining technology and optimization. Optimizing the hedging strategy for oil refining companies 8 the currency risks and associated cash flow and financial reporting impacts are depicted below. Pretax margin total ranking has deteriorated compare to previous quarter from to 35. Refinery economics these are the places where currently refineries exist in india. One way to represent the economics of a refinery is to calculate itsrefinery gross margin. Customize reports that provide instant visibility into the metrics that determine your success. Although the us chemical process industires cpi, reduced its emissions by 56. The role of process engineering in order to sustain profitability, refineries must focus on leveraging process simulation technology and capabilities to achieve bestinclass operational excellence, explains sandeep ram.
Oil refinery offsites l automation opportunities to improve profitability 5 the key to refinery profitability is being able to plan, schedule and optimize the operations based on realtime information with feedback on what is currently happening and what has actually been done, in order to adjust the refinery operations. Guide the recruiter to the conclusion that you are the best candidate for the refinery job. This allowed the refinery to increase the production of automotive gasoline by 1. Dr milosevic is a renowned authority in the field of refinery process optimisation and profit improvement. Engineering process simulation software that enables refinerywide modeling can greatly improve and facilitate profit margin analysis for both process engineers.
Maximizing refinery profit margins through process engineering. The idea is to capture and reuse the work done for a specific customer, with other customers in similar situations domains. Bp started using a refining marker margin rmm from 2011 and have made certain changes to reflect the impact of planned divestments and changes in global supply and demand balances. This way, you can position yourself in the best way to get hired. Maximum roi requires that a new refinery, major revamp, or existing asset. Refining process services personnel have extensive experience in the formulation and evaluation of fcc catalysts. Read more about our course eavreo economic optimization of refining operations ifp training. While all regions showed stronger margins, the us west coast continued to lead the rise, driven by unplanned regional refinery outages as margins hovered near record levels.
Capturing margin opportunities in oil and gas refining mckinsey. To test if a good margin program is in place, refiners should ask themselves. On the trailing twelve months basis gross margin in 4 q 2019 grew to 25. Gross margin is one common measure of refinery margin or economic performance gross margin is typically calculated per barrel of crude oil processed and is the difference between the value of the refined products produced and the cost of the crude oil and other feedstocks used to produce them typically, gross margin does not account for other costs such as energy, chemicals. Optimize energy costs in petroleum refineries, part i. Refineries can use models to accurately assess the economic impact of. Argus media workshop repi refinery economics and profit improvement course agenda trademark notice. However, over the last five years, low margins have forced refineries to cut crude charge. More than 85% of the worlds refining capacity relies on solomons fuels study year after year participants in our global refining studies have come to rely on our unique approach to benchmarking. The process simulation software has the predictive capability that comes with rigorous process analysis. On the trailing twelve months basis gross margin in 1 q 2020 grew to 94. Grm is the difference between crude oil priceand total value of petroleum products produced by the refinery. Oil refineries industry experienced contraction in gross profit by 161. In addition to using mavenlink as task management software, you can generate highly detailed, interactive reports with an advanced business intelligence engine.
He has published over 30 technical papers, conducted numerous refinery training courses worldwide, and chaired sessions and panel discussions at major international refining and petrochemical conferences. This course will provide the students with a complete understanding of the products, steps, technologies and economics that comprise a modern refinery. Blending, process heating, distillation, cracking, reforming, absorption, evaporation and cooling are typical processing operations involved in petroleum refineries. This latest edition of a bestselling text provides updated data and addresses changes in refinery. In order to sustain profitability, refineries must focus on leveraging process. The feed to the refinery is crude oil which is then refined and processed into finished products. It is ideal for refinery planning personnel, refinery engineers, product marketers and those in refinery coordination groups. Youll learn how refineries make money, and what affects their profitability. Strong experience in the downstream industry combining extensive knowledge in refinery economics, planning, scheduling and blending.
This two day course will offer participants a brief introduction to petroleum refining economics. Economics and technology 4 am0319 environmental emissions from refineries continue to be a major problem. Current trends by walker royce vice president and general manager strategic services rational software over the past two decades, the software industry has moved unrelentingly toward new methods for managing the everincreasing complexity of software projects. The rule of thumb is approximate, and for 2020 is based on bps portfolio at the start of the year. The gross refining margin grm is the difference between the total value of petroleum products coming out of an oil refinery output and the price of the raw material, input which is crude oil. For those of you who arent well versed in refining economics, calculating a refiners profit margin is actually quite simple. It is an essential read for software quality professionals who wish to better understand the challenges they face and the cost and effectiveness of potential solutions. The refinery cost and margin analytics 12month subscription provides an excel model updated on a quarterly basis, aligned to the ihs markit proprietary longterm price forecasts and supplydemand balances, as part of our annual strategic workbook. Solomon studies your refinery with an expert eye toward reliability, equipment utilization, operating expenses, gross margin, and overall performance range. Oil refineries essentially serve as the second stage in the production. His consulting project experience includes market entry studies, refinery modeling, refinery competitive analysis and economic modeling. Oct 25, 2004 the gross refining margin grm is the difference between the total value of petroleum products coming out of an oil refinery output and the price of the raw material, input which is crude oil.
Principle of estimation of the real margin in a refinery from the reference indicator. The impact of delays or overruns can quickly start to erode your project economics. The role of process engineering in order to sustain profitability, refineries must focus on leveraging process simulation technology and capabilities to achieve bestinclass operational excellence, explains sandeep ram mohan, product expert, aspen technology. He began his career as a process engineer with palm oleo. Refinery software solutions boost profitability flow. The first oil refinery unit is crude oil desalting. The grm gross refining margin of a refining company is derived by subtracting the cost of crude oil it consumes from the total market value of refined products it. Argus media workshop repi refinery economics and profit. Feb 21, 2012 a refinery monitors its profitability by evaluating its refining margin. The refinery evaluation model provides you access to visualisation tools and data that enable you to benchmark refineries cash margin performance at an asset level, analyse crude slates and product yields, evaluate global investment plans, track transactions, and compare refinery competitiveness and configuration over time. Oil refineries industry profitability by quarter, gross. Hedging refining profit margins with crack spread options.
Gross margin is simply the amount of money you have left after you pay for products or materials which you sell it at a higher price. Bpcl mumbai has improved sulfur removal and recovery by 90%, solely with a software investment. Get our newsletter get margin improvement strategies delivered right to your inbox. Capturing margin opportunities in oil and gas refining.
Dec 20, 2011 one approach that some of these firms are already taking, is to harvest assets out of their services engagements. Economic optimization of refining operations ifp training. The refinery margin will grow marginally by 2020 due to higher volume of gasoline and distillate availability in the global market for export purposes at very competitive price. Improving margins at oil refineries through operational excellence.
Forecast trends and make proactive decisions about every aspect of your projectbased. Refinery level yields, detailed refinery throughput, refinery crude slate. The net margin is the gross margin 25 minus operating costs per barrel of refined product sold. Event registration software powered by event registration pro.
The crack spread, of course, is not a perfect measure of refinery profitability. Capturing margin opportunities in oil and gas refining october 2015 article. Tailor your resume by picking relevant responsibilities from the examples below and then add your accomplishments. I am indebted to the faculty of economics, university of. Within energy sector, oil refineries industry achieved highest pretax margin. We offer a variety of services including the role as singlesource managing licensor for your project, offering exceptional value for multiunit, integrated complexes. Achieving significant improvement in refinery profitability. The deal will see sgs become a reseller and implementer for the planning, scheduling and blending module of the aspenone for petroleum solution. The debate on how the international maritime organizations imo 2020 regulations will impact refiners has been raging for years. With the correct process simulation software, users can accurately. Comprehensive system improves quality, increases yields and cuts costs. An internal benchmarking approach called margin opportunity analysis moa is suggested to improve refinery planning and increase profitability. One way to represent the economics of a refinery is to calculate.
At aspentech, we were discussing the broad impact on refinery economics back in 2018, and with individual refiners even longer. When more saleable products are sent out, the net refining margin increases. Refining process services develops and performs process optimization studies specifically targeted to meet the needs of a particular refinery or processing unit. This course covers the processes that comprises a typical oil refinery complex. Solomons comparative performance analysis cpa methodology normalizes data across all plant sizes, types, and geographies, giving you the insight you need to understand where you. Basic refinery economics in many businesses, profits or losses result primarily from the difference between the cost of inputs and the price of outputs. Economic benefits result from improved planning and scheduling, coupled with tighter control and increased.
How could an it services firm improve its operating margins. Crude oil quality, differentials and crack spreads, driven by seasonal product supply and demand balances and stock levels, impact margins differently depending on where your asset is located and how it is configured. Improving profitability in the era of lower utilisation digital refining. Nov 14, 2016 the grm gross refining margin of a refining company is derived by subtracting the cost of crude oil it consumes from the total market value of refined products it produces. The driver to maximise ulsd over gasoline is no longer present. We bring the best ideas in business analytics software and consulting services together to help companies find innovative ways to increase profitability. Raphael ross director, business consulting, manufacturing. The economics of software quality is a comprehensive, datarich study of challenges of quality software across the many application domains. The program begins with a detailed discussion of crude oil and products, including commercial. This resulted in an annual sixfigure improvement in refinery economics. Petroleum refinery processes are interactive in nature, and precise control is needed as product properties and process conditions change. Focus on identifying and developing margin improvement. An industrial plant that refines crude oil into petroleum products such as diesel, gasoline and heating oils. Theyve learned that, with our combination of patented methodologies and extensive industry experience, we can provide superior insights into the key drivers of sustainable high performance.
Refining process services will continue to develop innovative services of high value for clients in the petroleum refining industry. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Argus media workshop repi refinery economics and profit improvement. The modern petroleum refinery has a series of core process units that create clean gasoline and low sulfur diesel fuel. Refineries can use models to accurately assess the economic impact of strategic reconfiguration projects and support planners. This program combines a survey course, designed for anyone interested in the economics of the petroleum refining industry, with a more indepth look at opportunities to improve refinery profit margins.
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