International Energy Agency Homepage



Refining
Processing Gain
The volumetric amount by which total refinery output is greater than input for a given period of time. This difference is due to the processing of crude oil into products, which, in total, have a lower specific gravity than the crude oil and feedstocks processed (e.g. in conversion processes).
Refining
Gross Product Worth
Gross Product Worth (GPW) is weighted average value of all refined product components (less an allowance for refinery fuel and loss) of a barrel of the marker crude. GPW is computed by multiplying the spot price of each product by its percentage share in the yield of the total barrel of crude.
Refining
Net Product Worth
Net Product Worth, is the Gross Product Worth (calculated by multiplying the spot price of each product by its percentage share in the yield of he total barrel of crude) Less variable refinery operating costs; defined to include the feed dependent costs for power, water, chemicals, additives, catalyst and refinery fuels beyond own production. Less fixed refinery operating costs; defined to include labour, maintenance, taxes and overhead costs adjusted monthly to take account of escalations based on industry cost indices. Less refinery delivered crude cost; defined to include transport and credit allowance costs Transport costs; marginal crude freight, insurance and ocean loss (in case of an FOB crude), and applicable fees and duties, assuming a single voyage for an appropriately sized tanker chartered on the spot market Credit allowance; representing the financial effect of the time delay between paying for crude versus when it is received in the refinery (crude credit, crude transit time).
Refining
IEA Refining Margins
The International Energy Agency (IEA) changed its Refinery Margin Calculation methodology with the 12 September 2012 Oil Market Report. With the help of KBC Advanced Technologies (KBC), a new set of global indicator refinery margins for primary refined product markets in Northwest Europe, the Mediterranean, the US Gulf Coast and Midcontinent as well as Singapore were developed.

IEA global Indicator Refining Margins are calculated for various complexity configurations, each optimised for processing the specific crude(s) in a specific refining centre. Margins include energy cost, but exclude other variable costs, depreciation and amortisation. Consequently, reported margins should be taken as an indication, or proxy, of changes in profitability for a given refining centre. No attempt is made to model or otherwise comment upon the relative economics of specific refineries running individual crude slates and producing custom product sales, nor are these calculations intended to infer the marginal values of crude for pricing purposes.

The new refinery margins are based on indicator refinery yields derived from KBC’s Petro-SIM simulation. These yields are used by both IEA and KBC to generate indicative refining margins for these main products markets, to be referenced as “KBC/IEA Global Indicator Refinery Margins”.

The IEA uses Argus Media Ltd price input for all refinery margin calculations.

For a full description of the new methodology, please refer to the IEA Refinery Margins – Methodology Notes document, available on the OMR Website.
Refining
Additive
A substance added to an oil product in order to improve its properties.
Refining
Alkylation
A refining process for chemically combining isobutane with olefinic hydrocarbons (e.g. propylene, butylene) through the control of temperature and pressure in the presence of an acid catalyst, usually sulphuric acid or hydrofluoric acid. The product, alkylate (an isoparaffin) has a high octane value and is blended into motor and aviation gasoline to improve the antiknock value of the fuel.
Refining
Antiknock
The resistance to detonation in spark-ignition or compression-ignition internal combustion engines. The antiknock value is measured in terms of octane number for gasoline engines and of cetane number for diesel fuels.
Refining
Catalytic Cracking
A refining process which breaks down the larger, heavier, and more complex hydrocarbon molecules into simpler and lighter molecules by the action of heat and aided by the presence of a catalyst but without the addition of hydrogen. In this way heavy oils (fuel oil components) can be converted into lighter and more valuable products (notably gasoline and middle distillate components).
Refining
Cetane Number
The cetane number of a diesel fuel is a number equal to the percentage by volume of cetane in a mixture with alpha-methyl-naphthalene having the same ignition quality as the fuel under consideration.
Refining
Coking
A process by which heavy crude oil fractions can be thermally decomposed under conditions of elevated temperatures and pressure to produce a mixture of lighter oils and petroleum coke. The light oils can be processed further in other refinery units and blended to meet product specifications. The coke can be used either as a fuel or in other applications such as the manufacturing of steel or aluminium.
Refining
Conversion/Upgrading
Refinery processes whereby heavier petroleum fractions are subject to changes in size or structure of the hydrocarbon molecules, thus providing new compounds with different properties and higher average value (cracking, reforming).
Refining
Cracking
Refinery processes whereby large, heavy, complex hydrocarbon molecules are broken down into simpler and lighter molecules in order to derive a variety of lighter, higher valued products. When this process is brought about applying heat only, the process is referred to as thermal cracking. If a catalyst is also used, the process is known as catalytic cracking, or hydrocracking if the process is conducted over special catalysts in the presence of hydrogen.
Refining
Distillation
Atmospheric Crude Oil Distillation
The first stage in the refining process of separating crude oil components at atmospheric pressure by the heating, and subsequent condensing, of the fractions (unfinished petroleum products) by cooling.
Refining
Downstream
The oil industry term used to refer to all petroleum activities from the process of refining crude oil into petroleum products to the distribution, marketing, and shipping of these products (see Upstream).
Refining
Gross Input to Atmospheric Crude Oil Distillation Units
Total input to atmospheric crude oil distillation units. Includes all crude oil, lease condensate, natural gas plant liquids, refinery feedstock, liquefied refinery gases, slop oils, and other liquid hydrocarbons produced from tar sands and oil shale.
Refining
Hydrocracking
A refining process that uses catalysts and hydrogen at high pressures for converting heavy oils (fuel oil components) to lighter and more valuable products (notably naphtha and middle distillate components). The process can handle high sulphur feedstock without prior desulphurisation, yielding low sulphur blending components.
Refining
Hydrotreating
A refining process for treating petroleum fractions from atmospheric or vacuum distillation units (e.g. naphtha, middle distillates, reformer feeds, residual fuel oil, and heavy gasoil) and other petroleum streams (e.g. cat-cracked naphtha, coker naphtha, gasoil, etc.) in the presence of catalysts and substantial quantities of hydrogen. Hydrotreating results in desulphurisation, removal of substances that deactivate catalysts (e.g. nitrogen compounds) and conversion of olefins to paraffins to reduce gum formation in gasoline.
Refining
Isomerisation
A refining process that alters the fundamental arrangement of atoms in the molecule without adding or removing any atoms from the original material. Isomerisation is used to convert normal butane into isobutane (iC4), an alkylation process feedstock, and normal pentane and hexane into isopentane (iC5) and isohexane (iC6) (high octane gasoline components).
Refining
Netback
(to point of origin)
Sales price at destination minus the full cost of transportation (including working capital, the risk of price changes in transit, etc.).
Refining
Octane Number
The octane number of a fuel is a number equal to the percentage by volume of iso octane in a mixture of iso-octane and normal heptane having the same resistance to detonation as the fuel under consideration in a special test engine. It is a measure of the anti-knock value of a gasoline.
Refining
Operating Capacity
The amount of refinery capacity that is available for immediate use (including spare capacity and capacity under active repair).
Refining
Refinery
An installation that manufactures finished petroleum products from crude oil, unfinished oils, natural gas liquids, other hydrocarbons, and oxygenates and additives. Refineries can be classified as topping, hydroskimming or complex. Topping refineries are the least sophisticated and contain only the atmospheric distillation column and possibly a vacuum distillation column. The topping refinery will obtain those light products that are most easily separated from the crude oil namely; LPG, naphtha, jet kerosene and gasoil, with a high yield of residual fuel oil. In addition to this basic configuration hydroskimming refineries have the ability to produce higher octane gasoline and lower sulphur distillate thanks to the addition of naphtha reforming and desulphurisation process units. Complex refineries contain upgrading units such as catalytic cracking, hydrocracking or coking.
Refining
Refinery Yield
Refinery yield (expressed as a percentage) represents the percent of finished product produced from the input of crude oil and the net input of feedstock. It is calculated by dividing total net production of finished products by the sum of crude oil and net unfinished input.
Refining
Refining Margin
Refining margin is the net difference in value between the products produced by a refinery and the CIF value of the crude oil used to produce them, taking into account the marginal refinery operating costs. Refining margins will thus vary from refinery to refinery and depend on the cost and characteristics of the crude used, its yield and the value of its products (and hence its location).
Refining
Reforming
A refining process using controlled heat and pressure with catalysts to rearrange hydrocarbon molecules in the naphtha (or naphtha-type) feed, thereby converting paraffinic and naphthenic type hydrocarbons (low octane gasoline boiling range fractions) into higher octane stocks suitable for blending into finished gasoline. Since the product of the process, reformate, is richer in aromatics than its feed, naphtha, this process is also used to produce aromatic petrochemicals (Benzene, Toluene and Xylene).
Refining
Residue
The heavy residual liquid from the atmospheric distillation of crude oil is called Atmospheric Residue. If such residue is further distilled under vacuum a still heavier residual liquid results, which is called Vacuum Residue. The heavy residual liquid from cracking operations is called Cracked Residue.
Refining
Spare (Idle) Capacity
The component of operating capacity that is not in operation and not under active repair, but capable of being placed in operation within 30 days; plus capacity not in operation but under active repair that can be completed within 90 days.
Refining
Straight-Run
A term applied to a product of petroleum made by distillation without conversion.
Refining
Thermal Cracking
A refining process in which heat and pressure are used to break down, rearrange, or combine hydrocarbon molecules. Thermal cracking includes visbreaking, fluid coking, delayed coking, and other similar processes.
Refining
Treating
Refining processes whereby intermediate products obtained by distillation and conversion are refined by physical or chemical means to remove substances that impair their odour, colour, stability or performance.
Refining
Utilisation Rate
Represents the utilisation rate of the atmospheric crude oil distillation units. The rate is calculated by dividing the gross input to these units by the operating capacity of the units.
Refining
Vacuum Distillation
Distillation under reduced pressure (less than atmospheric) which lowers the boiling temperature of the liquid being distilled. This technique permits the production of distillates at lower temperature than would be necessary in atmospheric distillation, thus avoiding coke formation.
Refining
Viscosity
The measure of a fluid’s internal resistance to flow. This is not typically a problem for light products and is usually applicable to residual fuel oils which are derived from atmospheric and vacuum residues. These need to be maintained at temperatures of around 65-70°C to ensure that they are sufficiently fluid to be usable, otherwise they become a semi-solid tar. Diesel and gasoil are usually sufficiently fluid so that viscosity is not an issue, although at temperatures below 0°C diesel and gasoil can become cloudy and viscous, preventing their use in engines or boilers. The addition of jet/kerosene (with a freeze point of around -50°C) significantly improves the cold weather properties of gasoil and diesel.
Refining
Volatility/Reid Vapour Pressure
(RVP)
Is the ease with which gasoline evaporates. Volatility is an essential part of the combustion process as gasoline must be in a vapour form to ignite. However, insufficient or excess volatility has adverse consequences. Gasoline typically has different volatility levels depending on the time of year and the associated average ambient temperature. Summer grade gasoline needs to be less volatile than winter grade, allowing less evaporation than would otherwise be the case. Insufficiently volatile gasoline can lead to poor cold-start properties, while excess volatility can cause vapour lock and excess emissions. Measurement of gasoline volatility is usually described as the Reid Vapour Pressure (RVP). This refers to the amount of pressure that the gasoline can generate under test conditions.
Refining
Visbreaking
A thermal cracking process in which heavy atmospheric or vacuum-distillation bottoms are cracked at moderate temperatures to make light products and to produce a lower viscosity residue than the initial feed to the unit.

 

© OECD/IEA 2011. All rights reserved.
Read disclaimer