Petroleum contract and economics - Essay Example

It is reported that crack spreads are mostly higher in areas that have a constricted capacity for refining oil and a high demand for refined products. Some areas are categorized as having a constrained capability of refining oil and an above average growth for the demand of refined oil products. In the last decade, some areas such as Tema, have experienced higher profit margins for oil products than other areas. The location of a refinery is also vital because it affects the supply of crude oil which is processed at the refinery.

It is worth noting that access to cheaper heavy crude oil helps the refinery optimize on feedback differentials such as feedstock (Economic impacts of oil spills Spill unit costs for tankers, pipelines, refineries, and offshore facilities 1993). The site for the new oil refinery was chosen for a number of reasons but mainly due to strategic purposes. Ghanaville has a well-connected infrastructure consisting of roads and an existing port. This is coupled with the recent government’s initiative (Ghana Ports & Harbors Authority) to implement new changes at the port with an aim of upgrading and modern sing the port.

The site Ghanaville, has an already existing operational port with ease of access to a railway line and a network of roads that will facilitate the receival of feedstock and the shipment of refined products at the new location. The location is also very secure with regards to the specially designated area that is patrolled routinely by police officers. The security is further aided by the already established contract between the authority body and the company relating to the tenure of the land where the new refinery is going to be located.

A long term lease has been already approved. The new location is surrounded by a growing urban center which will be able to offer a relatively good support system for families and businesses. The quality of life of both businesses and families that will be