Behavior of the refining margin in the hydrocarbon sector of Ecuador in 2018

Abstract

The refining margin is a financial indicator that differentiates the income from refined products and the costs of crude oil and other inputs involved in the refining process. This indicator can also be improved, including additional costs for the operation and maintenance of the refining infrastructure, which relates to its result at a net production margin. The dynamics of the refining margin is conditioned by the technical efficiency in terms of the design and operation of a refinery, as well as the price conditions of oil and its derivatives in international markets. The refining margin of the hydrocarbon sector in Ecuador was analyzed to set benchmarks on the profitability of the refining business in the country. The flows of the final products obtained in each of the refineries, the raw material (Crudo Oriente), diluents, condensates and / or imported products that are used for the blending process were identified. In addition, the operating costs were recognized to obtain the finished products under quality parameters regulated by the State, which are then commercialized in the internal and external market. The prices of raw materials and final products were obtained from a reference point from international agencies, published monthly and inferred according to the quality of oil and derivatives, which are used and produced in national refineries. The study shows that the dynamics of the gross refining margin changes according to the variability of the international price of oil, since the prices of refined products are indexed to the price of oil commercialization. Although this study does not intend to report on energy policy, but rather to show a transparent methodology to analyze the profitability of the different refineries applied to the Ecuadorian case, the results obtained can be an approximation to inform the situation of the refineries with public policy fines, to which is necessary that the data be analyzed and improved in future work. In 2018, the Esmeraldas, La Liberad and Shushufindi refineries showed average monthly gross margin values ​​between US $ 2.3 to 9.4 dollars per barrel, however, according to reports by EP Petroecuador, the operating cost of the three refineries in the year of study was 6.24 dollars per barrel, which would reduce their competitiveness in the market.