Abstract
A critical analysis is provided of the recent reorganisations of the downstream and petrochemical activities of BP and Shell.
BP (or BP Amoco including Arco) and Shell are preparing for the next decade anticipating the environment and changing the companies to maximise their profitability in that environment. For the oil producing countries of the Middle East and North Africa (MENA), there are lessons to be learned both from the forecasts which BP Amoco and Shell are making and from the way these companies intend to operate.
BP Amoco's view of oil refining is that the surplus capacity is endemic; Shell's view is that it is transient. BP Amoco will market oil products selectively across the world; Shell is still intent on a global approach. Both BP Amoco and Shell will minimise their wholesaling activities in the retail market and expand their merchandising with ever better quality sites. In the petrochemicals sector, the companies are taking similar actions, ie concentrating on positions of strength and selling business activities with low market shares or poor profitability. Petrochemical sites will be favoured when they have access to company produced hydrocarbon feedstocks.
From the analysis, it is suggested that MENA oil companies will need to consider carefully the timing of any new refinery building. The reorganisation of the major OECD-based oil companies should offer opportunities for MENA companies to secure outlets for LPG and condensates, to form marketing alliances in OECD markets and to become involved in OECD-based petrochemical businesses.