Rise noted in downstream construction costs

By OGJ editors
HOUSTON, Nov. 18
-- Design and construction costs for refining and petrochemical projects increased for the third 6-month period in a row, according to the IHS CERA Downstream Capital Costs Index (DCCI).

The third-quarter 2010 index rose to 180 from 175 in the first quarter of 2010. The DCCI uses 2000 costs as the base year with a value of 100.

The index peaked in the third quarter of 2008 at 187 and fell to 170 in the first quarter of 2009.

IHS CERA attributed recent cost increases to a weakened US dollar and rising commodity prices driven by global economic recovery and increased construction activity.

The firm cited “robust” construction in China, India, and the Middle East. It noted record refining and ethylene capacity additions in 2009 and a large number of projects planned or under construction.

“This trend is expected to continue until 2015,” IHS CERA said in a press release. “Government policies encourage investment in the downstream sector in anticipation of increasing demand for transportation fuels, plastics, and fibers.”

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