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Thriving in uncertainty
Despite the economic crisis, there is consensus that energy demand will continue to grow in the long-term.
Thriving in uncertainty
"Today’s downstream market faces significant challenges. Fortunately there are several keys to success which can enable refiners to thrive in uncertainty whether the market dips further, recovers quickly or enters another pattern," explains Süleyman Özmen – VP, Refining and Chemical Licensing, Shell Global Solutions International B.V.
There will be a step change as fast developing nations, like China and India boost energy consumption, particularly for personal transportation. Energy supply will struggle to keep pace as oil become more difficult to access and process.
Refineries will face major challenges to meet growing energy demand, as well as upgrading different crudes to meet stringent environmental regulations, e.g. eliminating sulphur content in diesel and other fuel oils. Carbon dioxide emissions will also rise, despite global commitment to reduce carbon emissions. Consequently process engineers and project planners will have to take concerted action.
Despite constrained capital expenditure, refiners must prepare for the upturn. New refining capacity is being added worldwide, with major projects underway in Russia and Spain in partnership with Shell, and a rapidly growing refining sector in China.
However, demand for refining has stagnated in the last two years. Many assets are ageing, and no refineries have been built in the US for many years. Refiners have simply added units where necessary. In the current economic environment, financing for new projects has become hard to find. Refiners are short of cash even for basic revamps.
The business case must be very well prepared highlighting, for example, whether the refinery will handle product for export or internal supply; whether an off-take agreement is in place; and arrangements for crude oil supply. Furthermore, well informed bankers are eager to determine whether the technology is well proven, and what service infrastructure is required.