Houston, July 21, 2009

Purvin & Gertz releases a new study titled Rationalization of Refining Capacity. Precipitous declines in demand for refined products that started in 2008 coupled with an emerging surplus of refining capacity are severely challenging the refining industry in many regions of the world. Profitability is being threatened worldwide by low refining margins with particularly weak conditions becoming evident in the developed economies of Canada, Europe, Japan and the United States. Alfred Luaces, Managing Consultant in Purvin & Gertz’ Houston office, says, “Product demand growth is expected to resume next year, but our view of very slow growth in the industrialized economies will only prolong the weak margin environment until adequate refining capacity is rationalized. We expect that no less than 1 million barrels per day of refining capacity needs to shut down in the Atlantic Basin to allow a return to profitable operating rates.”
Purvin & Gertz has developed and employed a proven methodology to identify those refineries that are most at risk of being rationalized in the market regions with the weakest conditions. We scored the economic viability of each refinery in these regions on the basis of key characteristics that are good indicators of survivability. Each refinery was assigned a competitiveness category based on its capacity and score. Results of our analysis are provided in a concise written report and user-friendly dashboards that will allow users to examine the detailed scores and competitive positioning of the refineries in each region. These interactive dashboards may also be used to test the impact of assumed closures of one or more refineries on the future refinery utilization rates in each region. This new and unique study is both timely and a one-of-a-kind work effort that builds on the process, methodologies and results from Purvin & Gertz' annual update of the Global Petroleum Market Outlook, a comprehensive analysis of the refining industry that covers over 150 countries.
This analysis is being offered to clients as a new multiclient study. For expert comment contact Alfred Luaces at alluaces@purvingertz.com or +1.713.331.4000.