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Major Drivers of Competitive Advantage and Business Success

Major Drivers of Competitive Advantage and Business Success. The Future of Global Refining:. Khalid Buainain Vice President for Refining. Gap Between Distillation Capacity & Refinery Run Narrowed, Increasing Utilization Rates. Refining Capacity. (%Utilization). (MMBD). Crude Runs (Demand).

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Major Drivers of Competitive Advantage and Business Success

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  1. Major Drivers ofCompetitive Advantage andBusiness Success The Future of Global Refining: Khalid Buainain Vice President for Refining

  2. Gap Between Distillation Capacity & Refinery Run Narrowed, Increasing Utilization Rates Refining Capacity (%Utilization) (MMBD) Crude Runs (Demand)

  3. Refinery Investments • Go beyond top-line numbers and examine underlying factors • Future scenarios more important than current profitability • Most forecasts fall into one of three scenarios

  4. Scenario One • Margins will decrease • Over-investment now will lead to future over-capacity • A series of developments will undercut profitability in the sector

  5. Scenario Two • Healthy demand will mean healthy margins • Over-capacity is a thing of the past • The refining sector has undergone a fundamental shift

  6. Scenario Three • Consuming countries with high expected growth will invest aggressively now • Products first exported… • …Then gradually diverted to meet growing domestic demand • Impact on product margins could vary widely

  7. About 30 MMBD of distillation capacity additions are announced • 250 distillation capacity addition projects • Surge of new capacity after 2008 • 62% of the announcement are in Asia and ME

  8. Firm Projects • Already under construction • Financially strong • Strong JV partner with established marketing experience • Has location advantage • Located in high demand region • Well positioned to supply high demand region • Well supported by the government

  9. Reality Check: Only 10.9 MMBD is anticipated

  10. Critical Success Factors Access to ample, reliable supplies of crude oil Flexibility in product marketing Ability to use low-cost feedstocks, like heavy crudes Economies of scale Efficient energy management Petrochemical Integration

  11. Conclusion Refining is an indispensable link in the petroleum value chain Investors must go beyond the basics to understand keys to long-term profitability Prudent investments, the nature of new refineries, and the capabilities of individual investors will all be critical factors

  12. Major Drivers ofCompetitive Advantage andBusiness Success The Future of Global Refining: Khalid Buainain Vice President for Refining

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