The collapse in prices hurt many in the oil and gas industry, but refineries have enjoyed a period of relative stability and prosperity.

Now the easy times for refiners may be near an end as they face three challenges.

  • The mix of crude is becoming heavier and more sour.
  • The industry is building out and faces overcapacity in the near future.
  • Environmental regulations are becoming more stringent, especially in developing markets.

Bain examined 200 refineries ...

... the types of crude they can handle ...

... and their refining capacity ...

... to find those best positioned to thrive.

Which refineries will thrive?

  • More likely to thrive
  • Less likely to thrive
  • Nelson Complexity Index
  • 20
  • 15
  • 10
  • 5
  • 0
  • Refinery capacity (kbpd)
  • 50
  • 100
  • 150
  • 200
  • 250
  • 300
  • 350
  • 400
  • 450
  • 500
  • 550
  • 600
  • 650

Notes: Only refineries with capacity between 50,000 and 650,000 barrels per day; 3% of global capacity not categorized; kbpd=thousand barrels per day

Sources: Oil & Gas Journal report (Dec. 7, 2015); Bain analysis

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  • Click on a selection at right for a breakdown of refineries by regional independent and national oil companies, as well as the outlook and market operating conditions for each.
  • Global, integrated oil companies. This group has the strongest portfolio, controlling the largest share of the world’s global capacity (19%), with only 7% of it below the competitiveness line.  Although this group hasn’t built greenfield capacity in recent years, it leads the sector in project and operational capabilities.
  • US Independents. Refiners in this group make up a very strong portfolio, similar to the Global Independents, with 16% of global capacity and only 7% below the competitiveness curve. These refiners take advantage of the abundant light, tight oil supply, low energy costs and project capabilities -- which translates into advantageous capex costs -- to maintain a competitive edge.
  • European Independents. This small group, with only 7% of global capacity, is one of the most severely challenged, with high costs of feedstock, energy and labor, pushing 14% of its refiners below the competitiveness line.
  • Asia-Pacific Independents – The shift in consumption of refinery products from developed to developing markets, especially to China and other countries in the Asia-Pacific region, favors refiners there. This group has a sustainable portfolio, with balanced asset quality and operating conditions – and no major competitive factors working for or against it.
  • CIS NOCs. Refiners in the Commonwealth of Independent States have favorable access to feedstock, comparatively low energy costs, and relatively high capex efficiency. Although 26% of current capacity lies below the competitiveness line, CIS NOCs are well positioned to perform better over the long term.  
  • Asia-Pacific NOCs. This group is also well positioned geographically, and has 16% of global capacity but is starting out with 39% of capacity below the competitiveness line. Refiners in this group are investing heavily in new capacity to supply demand in their region, which is growing rapidly.
  • Middle East NOCs. Like national oil companies in the CIS, refiners in this group can take advantage of favorable feedstock and energy costs to upgrade their refineries to competitive levels. However this group is moving even more aggressively to add capacity and capabilities, and should remain very competitive.
  • Latin American NOCs. This group has not taken advantage of the integration in feedstocks to build a more competitive position, hindered in part by the worst performance in refinery project costs among all the groups. The group’s portfolio is balanced for now, but rising competitiveness by other groups will put pressure on refiners in Latin America.
  • Africa NOCs. Given low labor costs and feedstock surplus, Africa's NOCs would seem good candidates for favorable positions in refinery operations. But so far, African refiners have not taken advantage of these positions to build a more competitive position, and its portfolio remains small in size (only 3% of global capacity) and mostly below the competitiveness line.
  • Feedstock
  • Average crude slate adjusted by yield plus logistics (indexed)
  • Capex
  • Capex to expand capacity adjusted by cost of capital (thousand dollars per barrel)
  • Energy costs
  • Industrial electrical energy price (indexed)
  • Labor costs
  • Average yearly salary in the oil and gas industry (indexed)
  • Global Int.
  • 100
  • N/A
  • 100
  • 100
  • US Ind.
  • 96
  • 22
  • 71
  • 130
  • EU Ind.
  • 102
  • 27
  • 127
  • 96
  • APAC Ind.
  • 103
  • 23
  • 98
  • 90
  • 101
  • 43
  • 74
  • 46
  • ME NOC
  • 99
  • 34
  • 21
  • 86
  • LatAm NOC
  • 97
  • 58
  • 65
  • 101
  • 103
  • 28
  • 32
  • 82
  • Africa NOC
  • 103
  • 45
  • 64
  • 73
  • Best performers
  • Worst performers
  • Market vs. upstream breakeven price difference
  • Notes: NOCs=national oil companies; figures adjusted by cost of capital to oil and gas in each region; no recent investments in greenfield capacity for global integrateds; for energy costs, electrical energy price is a proxy for refining energy prices; CIS NOCs data includes CIS independents
  • Sources: Hays; Oil & Gas Journal; EIA; IJGlobal; WACC Expert; OPEC; Eni’s World Oil and Gas Review; Bain analysis
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