3. CLASSES OF REFINING CAPACITY

O ALTHOUGH THE CAPACITY SURPLUS IS WORLDWIDE, NOT ALL

CAPACITIES ARE CREATED EQUAL.

THEY DIFFER IN

O WHILE NO CLASSIFICATION SYSTEM CAN DESCRIBE THE TRUE
COMPLEXITY OF THE INDUSTRY, A ROUGH ASSESSMENT OF A
NATION'S REFINING INDUSTRY CAN BE MADE BY DIVIDING
CAPACITY INTO GROUPINGS ACCORDING TO CRUDE SOURCES AND
MARKET OUTLETS.

poor control over crude supply; good control over market

good control over crude supply; Door control over market

poor control over both crude supply and market
EXAMPLE: Netherlands Antilles

Classes of Refining Capacity

note: most countries have surplus capacity in two or three categories.

much surplus capacity ends up in this category despite the intention of the owners.

4.

COMPETITION BETWEEN CLASSES OF REFINERS

O A NATION'S CAPTIVE CAPACITY IS SECURE; IT IS ALMOST
IMPOSSIBLE TO COMPETE WITH DOMESTIC CRUDE SUPPLIES AND
DOMESTIC MARKET ACCESS. 44 PERCENT OF WORLD CAPACITY
IS IN THIS CATEGORY.

O IN TIMES OF STABLE CRUDE SUPPLIES AND LOW ENERGY COSTS,
MARKET REFINERS TEND TO HAVE A COMPETITIVE EDGE OVER
EXPORT REFINERS. 33 PERCENT OF WORLD CAPACITY IS IN
MARKET REFINING.

O UNCERTAIN CRUDE SUPPLIES AND HIGH ENERGY COSTS FAVOR
THE EXPORT REFINER. WHILE ONLY 7 PERCENT OF WORLD
CAPACITY IS IN THIS CLASS, IT IS EXPANDING RAPIDLY AT
A TIME WHEN CAPACITY IS BEING SCRAPPED ELSEWHERE.

O ENTREPOT REFINERS, SUCH AS THOSE IN THE CARIBBEAN, ARE
IN THE WORST COMPETITIVE POSITION OF ALL. 16 PERCENT
OF WORLD CAPACITY IS IN THIS CLASS; ONLY A SMALL FRACTION
CAN BE EXPECTED TO SURVIVE THE DECADE. U.S. REFINERS
HAVE ALREADY CLOSED 2.8 MILLION BARRELS/DAY OF SUCH
CAPACITY.