Western oil companies are divesting their refineries after a decades-long slump that has led to prolonged overcapacity and, thus, weak margins. Refining margins, which reached a high of $4.50 a barrel, are now 10% of that and declining, and are expected to remain weak in the future. Weak margins, however, are not discouraging state-owned and private-equity firms from purchasing refineries. According to FACTS Global Energy, in the last two years, private equity firms have purchased refining capacity of approximately one million barrels of crude oil per day, and state oil companies have purchased almost the same amount. The refineries are inexpensive and allow buyers to serve world markets. However, Asian and Middle Eastern companies continue to build refineries at home in hopes of self-sufficiency.

Source: The Economist