Refiners to see strong returns near-term despite looming capacity buildup

Aileen Jamieson, Wood Mackenzie, EdinburghnullOvercapacity and associated low margins are an unlikely outcome of 66 announced grassroots refinery projects.Current speculation that the world is running short of refining capacity is concerning in the industry. Long-term forecasts for high crude prices (greater than $50/bbl) and higher-than-normal refining margins are helping boost investment in the industry and investor confidence in the sector.At the end of January 2006, about 500 refinery projects (including 66 grassroots refineries) had been announced, with many more probably being considered in-house. This revival of investment is largely due to flourishing margins and concerns of a glo...

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