New refinery opportunity assessment

An Oil and Gas company  was evaluating the possibility of opening a refinery in Argentina. They were seeking to increase their processing capacity, both in terms of quality and quantity.

Challenge

The new refinery would imply an improvement in terms of technology, capacity, safety and environmental care compared to the one they were operating at the time. However, they wanted to assess the profitability of the project, and create the optimal action plan.

Project

To conduct the assessment, we created a mixed team of client experts and Tandem consultants, who used the collaborative decision-making methodology Integral Decision Management®. This methodology provided better understanding of the critical uncertainties that were strongly impacting the results of the project, and allowed the team to focus the analysis.

Business impact

The analysis revealed that in order to achieve a positive outcome, the refinery’s product had to be sold to the internal and external markets in equal parts. The sensitivity analysis showed that any action to get more information, mitigation or control over Fuel Oil’s price or Escalante crude oil would have a greater impact over the project’s NPV. Our client is currently operating this refinery, and it represents one of its main sources of income.