Feasibility Analysis for a New Refinery in Lebanon

Abstract

Oil refineries continue to be a valuable resource for many countries since they generate the primary energy sources used in a variety of industries. The technical and financial viability of an oil refinery in Lebanon is the focus of this project. SWOT, PESTEL, Stakeholder analyses in addition to a managerial study were conducted to assess the effect of the surrounding factors. The various costs and revenues were estimated, and profitability indicators like NPV and IRR were calculated to be more than $10 billion and 50% respectively. A sensitivity analysis was also performed. Existing Location (Zahrani) and pipeline transportation mode showed the lowest costs on the project. Petrol prices were forecasted throughout the refinery’s lifetime and the economic analysis signals showed that the model is profitable considering risks raised by the fluctuations in prices. Changing the refinery design was also performed to meet the rising demand of propylene and ethylene products or to encounter an imposed shift for electrical cars. Results showed that NPV is greater than $7 billion which means that the project remains profitable. The effect of gas exploration on the refinery is also studied and showed that the condensate from the gas may be used as input to the refinery, but more detailed studies shall be done to reach accurate results. Although oil refineries constitute a huge asset for the Lebanese economy and remain one of the main pillars of the economic upturn, especially during the current crisis, more studies are still required, in order to maximize profitability while minimizing risk.