OVERVIEW

Operation of a joint-ownership refinery requires that the companies enter into a proper agreement on the procedures to be employed for establishing the ownership of stock and sharing the operating costs of the refinery. Also, the processing agreement defines the procedure for day-to-day running of the refinery, the split of processing unit and storage tanks capacity between the participants for processing their crude and storing inventory. It must, however, be emphasized that there is no physical split of processing unit or tankage capacities in the refinery. The split exits only in the refinery linear programming (LP) models and accounting procedures.

For proper operation of the refinery, a joint operating company (JOC) is formed. The JOC is responsible for the day-to-day operation of the refinery. Coordination between the refinery and the participants is through a Process Coordination Committee (PCC). The PCC has at least one member representing each participant and a member from the JOC. The structure of JOC is shown in Figure A-1.

Figure A-1: Organizational structure of joint-ownership refinery.

Most refineries export their products from a marine terminal, the operation of which is closely controlled by the refinery. As the participating companies load their product from the marine terminal, close coordination between the participants and between the refinery and the participants is required. Processing agreement lays down the procedure for coordination and smooth operation of the marine terminal.

Presented here is an outline of an agreement used successfully for operation of a joint-ownership refinery which can serve as...