A Framework for Economic and Financial Analysis of Refinery Projects: The Case of Siraf Refineries Complex

Document Type : Original Article

Authors

1 Assistant Professor of Economics, Faculty of Economics and Political Sciences, Shahid Beheshti University, Tehran, Iran.

2 MA in Economics, Faculty of Economics and Political Sciences, Shahid Beheshti University, Tehran, Iran.

Abstract

Oil rich countries are always faced by the question of exporting or refining the crude. Refining is classified as a low margin capital intensive industry, and it makes the question more complicated. In this research it is sought to develop an analytical framework for decision making on the same matter. A cost benefit model in which both economic and financial modelling is used is implemented on a local refinery. Findings reveal that the refinery is not financially profitable in spit of having discounts on the crude as the feed. However, extending the model to economic analysis change the results. To do that, different scenarios for the price of crude, price of the refined products, discount rate and environmental costs in addition to shadow prices and social discount rate are calculated. Results show that 44 scenarios out of 45, show profitability.

Keywords

References

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Journal of Economics and Modelling
Volume 12, Issue 3 - Serial Number 47
December 2021
Pages 165-193

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