A framework for economic analysis of refinery projects, the case of siraf refineries complex

By the self-sufficiency in production of essential refining products (e.g. gasoline, gas oil) in Iran, always there has been a constant debate about constructing new refineries or exporting oil in crude form instead. On the one hand, refineries are vital for modern life but on other hand, Refining is a capital-intensive and low profit industry; because of these, it’s always been difficult to make decision in dilemma of constructing new refineries or exporting crude. Due to this, in this research will be tried by presenting a theoretical framework, be assist in making better decision about refinery construction. Our method in this research is Cost-Benefit Analysis(CBA) that in addition of financial view contains the economic point of view and also as the case study, the Siraf refineries complex is chosen. The results indicate that, despite the advantage of Siraf, the full feasibility doesn’t approved; but by regarding the economic view, feasibility increases meaningfully. In financial model, project is feasible in 3 scenarios (out of 5) whereas; in economic model, project is feasible in every 15 scenarios. In economic model besides using shadow prices, the externalities (energy security and environmental effects) has monetarized. By considering the results, in current consumption and production conditions of refined products, stablishing a new refinery leads to more welfare for society; accordingly stablishing Siraf is recommended.