Refineries
Refineries essentially process the crude oil into a range of refined products such as diesel fuel, gasoline, naphtha, asphalt, heating oil, kerosene and LPG. Refineries are usually of large size and required significant capital investment often exceeding billion dollars. Indeed while emerging markets are often the producers of petrol, it is also frequent, that especially in the early stages of development, they do not have enough refining capacity to utilise their products, exporting the crude and importing the refined products.
Building a refinery is essentially a combination of three variables.
1) Ontake agreement, which gurantees a supply of crude
2) Offtake agreement that guarantees the market for the refined products
3) Crack spread, which essentially calculates the profitability of the refinery
Vision Finance assists clients at both the greenfield stages as well as the development stages. In addition it provides fairness opinions and often a second side of the transaction for the crack spreads, which especially in transactions with long term financing might need to be in place in order to guarantee the refining margins that will be needed in order to repay the financing.
In addition Vision Finance assists the clients with other parts of the downstream activities, such as M&A activity in the dynamic and increasingly consolidating petrol stations segment.