Refining margins: Recent trends

Despite a business environment that was globally mediocre due primarily to the Asian crisis and to a mild winter in the northern hemisphere, the signs of improvement noted in the refining activity in 1996 were borne out in 19 97. But the situation is not yet satisfactory in this sector: the low return on invested capital and the financing of environmental protection expenditure are giving cause for concern. In 1998, the drop in crude oil prices and th e concomitant fall in petroleum product prices was ultimately rather favora ble to margins. Two elements tended to put a damper on this relative optimi sm. First of all, margins continue to be extremely volatile and, secondly, the worsening of the economic and financial crisis observed during the summ er made for a sharp decline in margins in all geographic regions, especiall y Asia. Since the beginning of 1999, refining margins are weak and utilization rate s of refining capacities have decreased.