The profitability of refineries varies widely, across different individual refineries and over time for a single refinery.
The economic performance of a refinery can be measured in a number of different ways. Typical measures of refinery profitability are:
Refinery margins - A measure of the value created per unit of crude processed or per barrel of crude capacity.
Refinery returns - The value created by the refinery per unit of capital invested or employed in the refinery.
Refinery asset values - The lump sum value of a refinery, typically for a buyer or seller.
There are a number of factors that have a large effect on refinery profitability, but they can be grouped into the following major categories:
Oil market conditions (prices and spreads) – The pricing conditions for crude oil and refined products that determines the potential margin that a refinery can make processing crude to make finished products.
Refinery configuration – The design of the refinery (capacity and complexity) that determines which crudes the refinery can run and what yield of product it can achieve.
Refinery operating performance – The efficiency and effectiveness of running the refinery.
Refinery commercial performance – The efficiency and effectiveness of sourcing crude oil (and other feed stocks) and selling products (and intermediates).