Analysis of the Marginality and Benchmarking of Russian Refineries
What is a refining margin?
The net refining margin (refinery margin) is a key characteristic of the profitability and competitiveness of a given refinery. It is calculated as the difference between the cost “at the gates of the refinery” of a basket of petroleum products obtained from a single ton of feedstock and the costs of the purchase, delivery and processing of that same ton of feedstock.
What is the benchmarking of a refinery and why is it necessary?
The benchmarking of a refinery is a factor analysis of the margin of the given refinery set against a reference (ideal), average or competing enterprise.
The key objective of benchmarking is to identify the strengths and weaknesses of a given refinery (in its configuration, in the logistics of supplying feedstock to the plant and delivering refinery products to their sales markets, in the distribution of refinery products by sales market, in the level of refinery operating costs, etc.) by comparing it with competing enterprises and using this to determine how plant marginality can be increased by means of “best practice”.
What are the core competencies of Petromarket RG?
Petromarket RG regularly evaluates refinery margins and benchmarks the operational effectiveness of all the petroleum processing enterprises in Russia without exception: 38 large- and medium-sized independent refineries and 117 mini-refineries.
What is special about the methodology used by Petromarket RG to assess refinery marginality?
- The basket of petroleum products of a given refinery contains almost all of its potentially-marketable products – more than 50 individual items all told.
- The feedstock basket of a refinery contains not only the feedstock itself (crude oil and gas condensate), but also any products brought from outside the refinery and used in the processes of refining or mixing (straight-run fractions, VGO, high-octane gasoline components and oxygenates).
- The contribution of each petroleum product in the basket is differentiated according to its sales market; together with the domestic market, there are four key areas for consideration (North-Western Europe, the European Mediterranean, Singapore and the countries of Central Asia)
- The cost of delivering feedstock to each refinery is calculated for each of the transportation routes from its point of shipment.
- Export netbacks for all refinery products delivered to external markets are calculated for all existing transportation routes (in all, options for the transportation of products to more than 70 export terminals located at seaports and land border crossing points are taken into account).
- Marginality calculations are performed using Petromarket RG’s own data, data provided by the manufacturers themselves, or data gleaned from the most reputable independent sources.
- All the data is verified and any erroneous or missing data is substituted with reliable estimates.
- Refinery material balances are reliably executed: the volume of feedstock delivered to a plant always corresponds to the total production volume (losses excepted), and the production volumes of each product always correspond to the total volume of supply of the given product to the markets in question (fluctuations in stock excepted).
What are the merits of the Russian refinery marginality and benchmarking evaluations offered by Petromarket RG?
Well thought-out methods of calculation and reliable sources of information are key to the accuracy of marginality ratings and quality benchmarking.
Flexible updating frequency
The standard updating frequency for marginality estimates and benchmarking is monthly. However, at the request of the client, updating can be carried out on a weekly basis.
We are not aware of any competitor capable of estimating Russian refinery margins and performing benchmarking as accurately and efficiently as Petromarket RG.
Our margin calculations and benchmarking are relevant to all Russian refineries regardless of their affiliation, capacity or location.
Petromarket RG invites you to subscribe to our refinery marginality ratings and/or enterprise efficiency benchmarking procedures. The standard frequency for updating marginality ratings and benchmarking is once monthly and prior to the 10th day of the month following the reporting one. However, at the request of the client, updating can be carried out on a weekly basis.
How do I subscribe to receive regular Russian refinery marginality estimates and enterprise benchmarking procedures?
Submit an application, indicating whether you are interested in benchmarking or only in our estimates of refinery marginality. Indicate your preferred period of subscription and your preferred margin estimate and benchmarking update frequency. Please also indicate whether you are interested in past margin estimates and benchmarking results and, if so, for what retrospective.