Contents

A Brief History of Oil ......................................................................... 7
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How does a refinery work?.......................................................134
Key variables impacting refinery performance ................................138
Configuration and complexity ......................................................138
Choice of Crude – Heavy, sour, sweet and light ...................141
Location ...................................................................................143
Other factors..........................................................................143
Regional balances and market structure ..................................145
Measuring Refining Profitability ..............................................147
US margins ($/bbl).........................................................148
NWE margins ($/bbl) ..........................................................148
Asian margins ($/bbl)...................................................148
Gasoline/fuel oil crack spreads US/Europe......................149
What drives refining margins? ....................................149
Refining Industry Structure ..................................................151
Petroleum Administration for Defence Districts (PADDS) .........151
Marketing ....................................................................................... 153
Stability in a cyclical world ......................................................153
The wholesale/retail chain......................................................155
Removing capital, containing costs.............................................156
What’s in a litre of fuel? European Retail Data.........................157
What’s in a litre of fuel? US Retail Data ..............................................157
Biofuels........................................................................................... 158
What are biofuels? .............................................................158
Why use biofuels? ..................................................................158
Where are biofuels produced and used? .........................159
The regulatory framework..........................................160
Key legislative measures..............................................160
Bioethanol ..........................................................................162
Biodiesel ........................................................................164
Criticisms of biofuels ...........................................................165
Long-term developments in biofuel ..................................166
Petrochemicals .............................................................................. 167
Part of the integrated chain............................................... 167
The olefin plant (cracker) .................................................168
Petrochemical Industry profitability..................................170
Olefin and Aromatic Building Blocks and their Chains ..................172
Ethylene – C2 Olefin......................................................172
Propylene – C3 Olefin ..........................................172
Butadiene – C4 Olefin ......................................................173
Benzene – C6 Aromatic.........................................................173
Paraxylene – C8 Aromatic .................................................174
The Major Plastics or Polymers ...........................................175
Polyethylene (PE) ................................................................177
Polypropylene ...............................................................................177
Purified Terephthalic Acid (PTA).........................................177
Conventionals & Unconventionals............................................... 179
Conventionals ....................................................................179
Unconventionals ....................................................................179
Liquefied Natural Gas (LNG) ........................................................ 180
Overview................................................................................180
LNG - The process and the chain .................................182
LNG – returns across the chain..........................................183
Pricing of LNG..........................................................185
Costs of LNG Production ....................................187
Shipping of LNG...........................................................188
Re-gasification of LNG .............................................189
Existing LNG facilities and facilities planned 2006-12................ 191
LNG - The IOCs Portfolios and Positions ............................193
The IOC majors compared ......................................195