Refiners should look to "Smart" projects to improve margins

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The drop in the price of crude oil has depressed margins to such an extent that oil and gas refiners have been forced to cancel, or at least put on hold, mega investment projects.

But it doesn’t have to be all doom and gloom. Instead of mega projects, which have a world-scale capacity and come with a high price tag of several billion dollars, refiners should refocus on “Smart” projects instead.

At a time when budgets are tight, refinery managements will find that “Smart” projects will deliver a high return for relatively low investment. They can also help refiners to take advantage of the excess capacity within the engineering, procurement and construction (EPC) fraternity, which had geared up to work on the mega projects.

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Are national oil companies being hoisted with their own petard?

Hoist with own petard

The news that Petrobras faces another lawsuit over its corruption scandal has put national oil companies (NOCs) under the spotlight, and not in a good way.

Of course this is an extreme example of what can go wrong when governments run major commercial enterprises. Corruption aside, the Brazilian Government, probably had the best of intentions when it introduced fuel controls as a subsidy for the Brazilian people. Unfortunately, this meant there was less money for refining, leading to missed production targets.

In a similar way, the legislation by which NOCs are bound is intended to protect countries’ interests. But there are disadvantages to this approach. In particular, the requirement for lump-sum bidding for major projects tends to create long schedules and therefore cost overruns, whereas international oil companies have a much more flexible system, enabling projects to be delivered quickly and more cost-effectively. Continue reading…

Switching from fossil fuels to renewables – reality versus the hype

Reality vs hype

Despite the increasing awareness of the environmental damage caused by greenhouse gases and attempts to reduce emissions, CO2 levels are rising. With an ever growing population clamouring for more energy and other resources, it’s difficult to see how and when this trend will be reversed.

Renewables are widely seen as the ‘how’. But, unfortunately, the reality doesn’t live up to the hype. In particular, the lack of an efficient storage medium means that renewable sources such as solar and wind power are erratic and, therefore, unreliable. Continue reading…

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