More joint ventures seen in global refining

The Dow Jones reported that the global refining industry will witness a wave of joint ventures in the next few years because Middle-Eastern oil companies will be able to provide the struggling European, U.S. and African refiners with much-needed cash assistance in the form of investments for upgrades. The mergers could follow the process followed by carmakers that merge, yet preserve their brands and production volumes, while cutting costs. Domenico Elefante, executive vice president for refining for Italy’s Eni SpA said a refining boom in the Middle East is exerting pressure on European refiners. Elefante explained that Middle East producers, who have lower costs, are entering the Mediterranean market and other European markets. Italy was once a hub for Middle Eastern crude at a time when refining output in the region was low. The situation changed with the rise of advanced Middle-Eastern refiners who were capable of making a profit even when crude oil prices were high and fuel prices were low. Elefante said this situation has made it more difficult for Italian refiners to compete in a market, which is suffering from overcapacity. (May 23, 2012)