PDF hosted at the Radboud Repository of the Radboud University Nijmegen The following full text is a publisher's version. For additional information about this publication click this link. http://hdl.handle.net/2066/146437 Please be advised that this information was generated on 2021-10-03 and may be subject to change. DYNAMICS OF THE EUROPEAN REFINING AND PETROCHEMICAL INDUSTRY Strategies, Structure and Change Karin Steenbakkers Nijmegen University Ρ DYNAMICS OF THE EUROPEAN REFINING AND PETROCHEMICAL INDUSTRY Strategies, Structure and Change een wetenschappelijke proeve op het gebied van de Beleidswetenschappen PROEFSCHRIFT ter verkrijging van de graad van doctor aan de Katholieke Universiteit Nijmegen volgens besluit van het College van Decanen in het openbaar te verdedigen op woensdag 17 september 1997 des namiddags om 1.30 uur precies door Karina Bernardina Johannetta Steenbakkers geboren op 29 februari 1964 te Schijndel Promotor: Prof. dr. E. Wever (Universiteit Utrecht) Manuscriptcommissie: Prof. dr. J. Buursink Prof. dr. J.G. Lambooy (UU) Prof. dr. W. Molle (EUR) Van die proefschrift is een handelseditie verschenen bij de uitgeverij van de KU Nijmegen onder ISBN 90 5710 031 2. To my mother In memory of my father Contents List of Figures vii List of Tables ix Preface xv 1 Introduction 1 1.1 Setting the scene 1 1.2 Research questions 8 1.3 Overview of the study 10 2 Oil Refining and Petrochemical Industry: Some Central Concepts 13 2.1 Introduction 13 2.2 Complex and formation: the intertwining of both concepts 15 2.3 Agglomeration economies 19 2.4 Basic technology 21 2.5 Commercial integration 31 3 De Jong's Dynamic Market Theory 38 3.1 Introduction 38 3.2 The dynamics of market structure: de Jong's model 40 3.3 Limited applicability of de Jong's dynamic market model 44 3.4 Conclusion 53 4 Research Design: Choices and Strategies 55 4.1 Introduction 55 4.2 Type of research 55 4.3 Population, sample and level of analysis 56 4.4 Operational deñnitions 59 4.5 Data collection 65 4.6 Data analysis 61 Contents ν 5 Global Shifts in Oil and Petrochemical Produäion 68 5.1 Introduction 68 5.2 The world context 70 5.2.1 The oil industry 70 5.2.2 The basic petrochemical industry 18 5.3 Shifts in production within Western Europe 85 5.3.1 Oil refining 85 5.3.2 Ethylene crackers 86 5.4 Summary 87 6 Structural Changes in the Western European Oil Refining and Basic Petrochemical Industry 89 6.1 Introduction 89 6.2 Industry life cycle 90 6.2.1 Oil refining 90 6.2.2 Petrochemical industry 94 6.2.3 Conclusions 95 6.3 The international major oil companies 97 6.4 The chemical companies 124 6.5 The national oil companies from consumer countries 149 6.6 The companies from oil producing countries 174 6.7 The independent private oil companies 190 6.8 Comparison between the various categories of companies discerned; summary and conclusions 217 6.8.1 Oil refining 219 6.8.2 Investments in conversion facilities 221 6.8.3 Access to crude oil supplies 223 6.8.4 Access to distribution channels and marketing oudets 224 6.8.5 Ethylene manufacture 227 7 Evaluation and Final Considerations 230 7.1 Introduction 230 7.2 Summary 231 7.2.1 De Jong's dynamic market theory: a life-cycle perspective on the changes in market structure 231 7.2.2 Research design: choices and strategies 233 7.2.3 Global shifts in oil and petrochemical production 235 7.2.4 Structural changes in the Western European oil refining and basic petrochemical industry 237 7.3 Issues for the future 241 vi Contents References 246 Nederlandse Samenvatting 263 Figures 1.1 Structure of research 12 2.1 Formation-complex continuum 17 2.2 Average production capacity of oil refineries (primary 23 distillation) in Western Europe, 1950-1990 (Mt/year) 2.3 Average production capacity of ethylene crackers in 24 Western Europe, 1960-1990 (1,000 t/year) 2.4 Simplified flow diagram of oil refining and primary 26 petrochemical production 3.1 General life cycle of industry and accessory structural 40 changes 3.2 Conceptual framework 45 4.1 Conceptual framework 60 5.1 Major trade movements of crude oil between zones, 73 1976, 1993 5.2 Evolution of primary distillation capacity by major world 75 region, 1950-1995 (Mt/year) 5.3 Primary distillation capacity and market size by country 77 in 1990 viii Figures 5.4 Ethylene capacity by geographic region, 1950-2000 80 (1,000 t/year) 5.5 Present and future ethylene capacity by world region, 81 various years 5.6 Ethylene capacity and market size by country in 1990 83 6.1 Oil refining capacity of the major oil companies totally as 101 a percentage of total refining capacity in Western Europe, 1950-1995 6.2 Spatial pattern of oil refineries of the major oil companies 104 in Western Europe in 1995 6.3 Spatial pattern of the closed oil refineries of the major oil 106 companies, 1980-1995 6.4 Shares of the categories of oil producers in the total 117 Western European network of service stations, 1985-1991 6.5 Spatial pattern of ethylene crackers of the major oil 121 companies in Western Europe in 1993 6.6 Spatial pattern of oil refineries of the chemical companies 131 in Western Europe in 1995 6.7 Geographical distribution of ethylene crackers of the 145 chemical companies in Western Europe in 1993 6.8 Spatial pattern of oil refineries of the national oil 156 companies in Western Europe in 1995 6.9 Spatial pattern of ethylene crackers of the national oil 170 companies in Western Europe in 1993 6.10 Spatial pattern of oil refineries of the companies from oil 179 producing countries in Western Europe in 1995 6.11 Spatial pattern of oil refineries of the independent oil 200 companies in Western Europe in 1995 Tables 3.1 Expected impact of intrinsic and extrinsic mobility barriers 54 on the level of market concentration in the Western European oil refining and basic petrochemical industry in the maturity stage 5.1 Changes in production (PRO) and consumption (COP) 7J of crude oil and capacity of refineries (RJiC) by world region between 1950 and 1993 (percentages) 5.2 World ethylene capacity by geographic region in the 79 1950-2000 period 5.3 Growth in ethylene demand (million tonnes) 82 5.4 Oil refining capacity (primary distillation) in Western 86 Europe, by country, between 1950 and 1995 (1975 = 100) 5.5 Ethylene capacity in Western Europe, by country, 87 between 1960 and 1993 (1980 = 100) 6.1 Changes in the number of oil refineries and in their 91 composition regarding size class in Western Europe in the 1950-1995 period (1975 = 100) 6.2 Changes in refining capacity (primary distillation) in Wes- 92 tern Europe; components of change (Mt/y), 1950-1995 6.3 Changes in production capacity of ethylene crackers in 94 Western Europe; components of change (Mt/y), 1960-1990 χ Tables 6.4 Number of oil refining units of the major oil companies in99 Western Europe in the period 1950-1995 6.5 Oil refining capacity (primary distillation) of the major oil 100 companies in Western Europe between 1950 and 1995 (Mt/year) 6.6 Changes in refining capacity (primary distillation) of Shell, 102 Esso, BP, Texaco, Mobil and CFP-Total in Western Europe in the 1980-1995 period; components of change (Mt/year) 6.7 Composition of the oil refining units of the major oil 103 companies by size class and by inland/coastal location in Western Europe in the 1980-1995 period 6.8 Joint ventures of the majors with other (major) oil 108 companies in Western European oil refining in 1995 6.9 Takeovers of refineries from the majors by other (major) 110 oil companies in Western Europe between 1980 and 1995 6.10 Catalytic cracking and hydrocracking capacity of the 113 major oil companies in Western Europe between 1985 and 1995 (Mt/year) 6.11 World production of oil of the major oil companies 114 between 1980 and 1990 (Mt/year) 6.12 Ethylene capacity of the major oil companies in Western 118 Europe in the 1960-1993 period (1,000 t/year) 6.13 Changes in ethylene capacity of the major oil companies 119 in Western Europe in the 1980-1993 period; components of change (Mt/year) 6.14 Joint ventures of the major oil companies with another 122 company in ethylene production in Western Europe in 1993 Tables χι 6.15 Number of oil refining units of the chemical companies in 126 Western Europe in the period 1950-1995 6.16 Oil refining capacity (primary distillation) of the chemical 127 companies in Western Europe, 1950-1995 (Mt/year) 6.17 Changes in refining capacity (primary distillation) of the 129 chemical companies in Western Europe in the 1980-1995 period; components of change (Mt/year) 6.18 Composition of the oil refining units of the chemical 130 companies by size class and by inland/coastal location in Western Europe in the 1980-1995 period 6.19 Joint ventures of the chemical companies with other 132 companies in Western European oil refining in 1995 6.20 Catalytic cracking and hydrocracking capacity of the 136 chemical companies in Western Europe in the 1985-1995 period (Mt/year) 6.21 Ethylene capacity of the chemical companies in Western 141 Europe in the 1960-1993 period (1,000 t/year) 6.22 Changes in ethylene capacity of the chemical companies 143 in Western Europe in the 1980-1993 period; components of change (Mt/year) 6.23 Composition of the ethylene crackers of the chemical 144 companies by size class and by inland/coastal location in Western Europe in the 1980-1993 period 6.24 Joint ventures of the chemical companies with another 146 company in ethylene production in Western Europe in 1993 6.25 Number of oil refining units of the national oil companies 150 in Western Europe in the period 1950-1995 6.26 Oil refining