| Submit your comments on this article |
| International-UN-NGOs |
| G8 looks to boost oil refining capacity |
| 2005-06-07 |
| Leading industrial countries are to consider tax breaks for large oil companies to stimulate refining capacity and reduce the risk of shortages. The plan follows International Monetary Fund warnings on the lack of spare refinery capacity and is expected to form part of the agenda for the Group of Eight meeting in Scotland next month, according to a senior energy official familiar with the proposal. However, as lobby groups gear up to press for a G8 commitment to global poverty relief and with oil companies earning record profits, the prospect of providing tax breaks is likely to run into political opposition. It is also likely to draw criticism from environmental groups. ADVERTISEMENT Oil prices have risen to nominal highs this year as refineries neared their limits, prompting calls from the International Energy Agency, the industrial countries' energy watchdog, for increased investment. The shortage of capacity is most acute in the US, which imports about 15 per cent of its petroleum supplies about 20m barrels a day. On Monday oil prices rose to a six-week high of $55.50 a barrel after supply problems at two US refineries, signs of strongerChinese demand and a sharp increase in Saudi Arabia's official selling prices. Kevin Norrish, of Barclays Capital, said: ?gChinese oil demand is very strong at present, underpinned by the need to meet peak power demand in the summer months . . . this will also seedistillate demand climb steeply over the coming weeks.?h Chinese refineries are operating near full capacity, industry executives said. Most refineries to be built over the next five years are in Asia particularly China and the Middle East. The draft refinery plan aims to use tax incentives and planning concessions to help overcome oil companies' reluctance to invest in new plants in the US and western Europe after two decades of low returns and large losses. It has been 30 years since a new refinery was built in the US or western Europe. IEA figures show refineries now operate at 95 per cent of capacity, up from 75 per cent two decades ago. Refinery revenues have helped provide bumper profits for oil companies over the past year. Margins are more than $10 a barrel in the US. Chakib Khelil, Algeria's energy minister, said: ?gRefineries are producing at full capacity. This will multiply the risk of accidents, which could obviously have an impact on prices.?h ?¡ International oil companies must learn to contend with the resurgent power of the state after a decade in which markets were thought to rule, a report by Royal Dutch/Shell, the energy company, said on Monday, outlining the challenges of the next 15 years. Shell reports during the 1990s reflected the prevailing view that global market forces would erode the power of the state, leaving international companies largely to regulate themselves. |
| Posted by:too true |
| #1 G8 looks to boost oil refining capacity Make that G7. The U.S. has too many NIMBYs in it to even consider any sort of refinery expansion or construction. |
| Posted by: Bomb-a-rama 2005-06-07 12:34 |