Management,Case study-GULF REFINERY



Gulf Refinery
Downstream Co. is a refining company that has many refineries around the world. Gulf refineryis one of its two refineries in the Middle East. Located in the Arabia Gulf, it is a semi-conversionrefinery with a capacity of 300 MBD. Major products of the refinery include gasoline,kerosene/diesel, fuel oil and asphalt. The refinery has the flexibility to run several crudes.
The last Solomon survey showed mixed results for the Gulf refinery. In the Cost of ProductionIndex, the refinery was in the fourth quartile, while in the Maintenance Index the refinery was inthe third quartile. The Operation Availability Index improved to the second quartile in the lastsurvey. Overall the refinery was placed in the fourth quartile compared to its peers.For the last two years, the refinery net cash margins were negative, which is impacting theoverall performance of the Downstream Co. (See table 1) The shareholders and the BoD areasking the CEO to develop strategies for turning the Gulf refinery performance around.You are requested by the CEO to provide a recommendation on what course of action should themanagement take in the next five years. Your assessment should take into consideration globaland regional refining outlook and the available information on the Gulf Refinery.Recommendations may range from optimizing current operations, investing in capital toimprove the refinery yields and expanding into a chemical to increase the value of the current refinery streams. Divesting the Gulf Refinery is the last option that the managementcan consider to improve the overall performance of the company.Please prepare four to five slides on your recommendation to the CEO of the Company. Includein your response the current status of the refinery, the refining industry outlook, assessmentof the Solomon results and your recommendations. In addition, assumptions used to arrive tothe conclusions and final recommendations should be clearly identified and included in aone-page executive summary
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