Recipes from the "eight"

G8 leaders are thinking about how to force oil companies to invest in refining

The world's major powers continue to struggle with high prices for oil and petroleum products. To change the situation in the market, at the July G8 summit in Scotland, it is planned to consider proposals that should encourage oil producers to invest in the development of refining capacities in the United States and Europe. True, even if companies listen to the opinion of political leaders and begin to develop processing, prices are unlikely to fall in the near future, because it will take more than one year to build new or modernize existing enterprises.

The Financial Times reported, citing a “senior energy sector official,” that world leaders will try to figure out how to entice oil producers to develop refining capacity. According to the newspaper's interlocutor, measures such as tax breaks and various concessions are proposed. The result of economic stimulation should be an increase in investment in the construction of new refineries in the USA and Western Europe.

As experts note, over the past 30 years, no new oil refineries have been built in Europe and the United States. The utilization of available capacities is about 95%, while according to standards it should not exceed 75%. At the same time, fuel consumption in the world is growing steadily. As a result, buyers are concerned that there may not be enough refining capacity, and then there will be a shortage of petroleum products on the market. Therefore, gasoline and diesel fuel are rising in price, and following them, raw materials are becoming more expensive.

Oil holdings did not invest in refineries for various reasons. For example, in the USA, the construction of factories is difficult due to the complex procedure for obtaining permits related to compliance with environmental standards, and the need to take into account public opinion (which, as a rule, is against such production). In Europe, due to the increase in gasoline production accompanying the increase in diesel fuel production, refining has lost its profitability, since the excess gasoline does not find a market - in most Western European countries they prefer to use diesel as a vehicle fuel. In China, which in recent years has become one of the leaders in terms of consumption and export of oil and petroleum products, the construction of refineries is under strict control of the government, which has its own restrictive considerations. In addition, refining has never been a profitable business for oil workers: in the production sector, the return on investment is much faster. According to Bloomberg, earnings before taxes and interest payments, for example, BP from oil production in the first quarter of 2005 amounted to $6.45 billion, or 78% of the company's total income.

The Americans have already begun to save their economy from oil prices. In this, according to the White House, they should be helped by both the transition to alternative fuels and the construction of new oil refineries, which George Bush proposed to build on the territory of former military bases. The White House reported that the president instructed the Ministry of Energy to begin negotiations on this issue with the administrations of settlements that are located near the bases.

In the meantime, prices remain high. In America, the cost of raw materials fluctuates at $55 per barrel. Given the market situation, some OPEC countries do not rule out the possibility of the cartel increasing production. At the same time, the members of the organization in total produce more than 30 million barrels of raw materials per day, although the official quota is 27.5 million barrels per day. “The prices are too high and we need to do something. Therefore, we may raise the ceiling (of production - Ed. ) due to prices,” OPEC head and Kuwaiti Oil Minister Ahmad Fahd al-Sabah said on Monday, referring to the size of quotas. The OPEC session at which this issue will be discussed is scheduled for June 15.

Denis REBROV