WERE THEIR COSTS HALVED?:

Refining loses its lustre (Chris Stanton, October 27. 2008, The National)

Moody’s Investors Service, the global credit rating firm, changed its outlook for the world’s refining sector from “stable” to “negative” on Friday, citing slowing world demand for oil products and a forecasted glut of spare refining capacity.

“While cyclicality is built into our refining outlooks, the move to a negative outlook stems from demand changes that appear to be structural and enduring,” said Andrew Oram, a senior credit officer for Moody’s.

That is bad news for the UAE, which is in the midst of expanding its refinery at Ruwais and studying the feasibility of building a refinery in Fujairah. Together, the two export-orientated projects would add 617,000 barrels per day (bpd) to the country’s current refining capacity of 628,000 bpd.

Moody’s predicted refiners would now on average earn US$10 (Dh36.76) for every barrel of crude oil they converted into usable products like diesel and jet fuel, compared with an average of close to $20 earlier this year.

The downturn marks the end of a long boom period for refiners that began in 2003 as world demand for diesel and other products took off, said Raja Kiwan, an analyst for PFC Energy who is based in Dubai.