[Solved] Petroleum refineries are not necessarily located nearer to crude oil producing areas, particularly in many of the developing countries. Explain its implications ( UPSC GS-1 mains 2017)

[Solved] Petroleum refineries are not necessarily located nearer to crude oil producing areas, particularly in many of the developing countries. Explain its implications ( UPSC GS-1 mains 2017)

An oil refinery or petroleum refinery is an industrial process plant where crude oil is processed and refined into more useful products such as petroleum naphtha, gasoline, diesel fuel, asphalt base, heating oil, kerosene, and liquefied petroleum gas.

 FACTORS AFFECTING –

  • The salinity of water in the surface layer  of oceans depend mainly on evaporation  and precipitation.
  • Surface salinity is greatly influenced in  coastal regions by the fresh water flow  from rivers, and in polar regions by the  processes of freezing and thawing of ice.
  • Wind, also influences salinity of an area  by transferring water to other areas.
  • The ocean currents contribute to the  salinity variations. Salinity, temperature and density of water are interrelated. Hence,  any change in the temperature or density  influences the salinity of water in an area.

 Some of the reasons for petroleum refineries not located near oil fields are

• For Petroleum refineries, the raw material sources were less decisive factors for industrial location.

 Because industries were already setup in coalfields and did not move away due to industrial inertia.

 • Petroleum refining does not lead significant weight-loss, unlike the aluminum/copper/sugarcane/ timber processing.

 • Virtually all the by-products can be used. Therefore, refineries can be set up 1. near the raw material or at an intermediate break of the bulk location (ports/coastal locations)

• Multinational companies do not feel confident to setup refineries inside the middle-east or South America because of Arab-Israel war, Israel-Palestine issue and other terrorist activities.

 • In country such as India mostly government has established oil refineries just to develop the growth pole in that region E.g. Mathura oil refinery, Panipat oil refinery etc.

 • In the wake of development of various oil and gas pipelines the importance of oil field as a locational factor for refinery industry has reduced.

 Implications

 • If the refinery is situated closer to oil fields then once the oil is exhausted the refinery will also become useless.

 • Oil refining close to production site represents a weight loss of 10-11 % only thus not much cost saving in transport even if located near raw material site.

 • In India it has helped in the development of the cities such as Mathura, Panipat by providing employment opportunities.

 For Petroleum refineries, the raw material sources were less decisive factors for industrial location. Petroleum refining does not lead significant weight loss, unlike the aluminum /copper /sugarcane /timber processing. Virtually all the by-products can be used. Therefore, refineries can be set up near the raw material or near the market or at an intermediate break of the bulk location (ports/coastal locations). ).

 Raw material site: Disadvantages

 Refinery will become useless after oil is exhausted from oil well. So whatever millions of dollars you had invested in setting up that refinery is wasted. oil refining close to production site represents a weight loss of 10-11 % only, is not much cost saving in transport even if located near raw material site. Refined products have higher rate of evaporation, therefore it is better to set up the refinery near the source (where you want to use that products). ).

 Nationalisation:

 After 1970s, many of the Middle East and African countries started nationalizing their oil operations. The ownership of refineries/oil wells were transferred from MNCs to government owned PSUs. Hence nowadays, MNCs are reluctant to setup refineries in this region for the fear of nationalization.

 Oil refineries usually in developing countries are built away from the oil producing areas, the implications of which are both negative and positive, vis –a- vis environmental and economic costs:

Positive implications:

  • Rrefineries tend to be situated closer to markets or distribution centres as it helps in saving transport costs of refined products because transport costs of refined products tends to be higher than transporting crude, as refined products lose weight through evaporation during transporting.
  • Since pipeline transfer of refined products in India is still only with private companies, it is not evenly distributed, making transportation through this method difficult. When refineries are far away from the market, other modes of transport for refined products like railways, road or waterways, always increases the economical as well as the environmental costs (eg. air pollution).
  • Since oil producing areas have a limited oil producing capacity the investments in setting up a refinery in its vicinity can go to waste once oil in the area dries up. Hence, it becomes economical to set up refineries near markets where a continuous consumer demand keeps it viable for longer durations of time.
  • Refineries also need abundant sources of water for cooling purpose and for discharge of wastes, and hence environmental concerns make refineries viable only where there are sufficient water resources available.
  • Promote decentralized industrial growth and balanced regional development.
  • Seaboard location eases the export of petrochemical products.

 Negative implications:

  • Having crude transported to large distances add to environmental pollution and economic costs.
  • Also, it does not incentivise further exploration and setting up of oil producing areas as it doesn’t attract other industrial investments.
  • Benefits
  • The byproducts generated during the refining process are very useful in industries like chemical, pharmaceutical, fertilizer, etc.
  • It helps in additional employment generation and economic development in a particular region.
  • Refineries near the ports enable a country to export the oil to other nations.
  • Petroleum refineries, located nearer to crude oil-producing areas will also allow crude oil from multiple fields.

 Drawbacks

  • The transportation of crude oil to large distances will increase environmental pollution and costs.
  • If the refineries and the crude oil-producing areas are located in different states it may create conflict.
  • An abandoned oil-producing area doesn’t attract other industrial investments.
  • Comment
  • The location of the refinery located near the market has both pros and cons. It helps in employment generation, economic development, and foreign exchange.

For latest Articles [Paper wise GS 1-4] and Solved papers[2010-2020] join us @ https://t.me/UPSCexamNotes1

For solved

UPSC ESSAYS click here

GS Paper 1 click here


Gs Paper 2 click here

Gs paper 3 click here

GS paper 4 click here

Sociology click here

Entertainment click here

Leave a Reply

%d bloggers like this: