Feasibility study for a new oil refinery in Lebanon

Abstract

The purpose of this project is to examine the feasibility of a new oil refinery to replace the Tripoli Oil Installation, which is nonoperational since 1992. The study will also test the competitiveness of such a project with respect to the outside market, as well as incorporating the effect of using the prospected national oil reserves in the Lebanese offshore. For this purpose, the demand of the major petroleum product in Lebanon was studied over the past 14 years and then a forecast was made for the next 23 years in order to find out the required processing capacity of the refinery. The corresponding costs and revenues were estimated, and profitability indicators like NPV and IRR were applied. The results under the base scenario showed not only a profitable project, but also a competitive advantage with respect to the global market. The project’s profitability was further improved where the prospected national oil reserves in the Lebanese offshore were included in the study. Not ignoring the riskiness of the project, which was explicit under the worst case scenario, we concluded that a new oil refinery is in the benefit of the Lebanese government for a better economic security.