Heavy fuel oil analysis at Iraq's Bayji refinery

CATEGORY: SIMULATION

Journal of the Operational Research Society advance online publication 6 June 2012; doi: 10.1057/jors.2012.67

Heavy fuel oil analysis at Iraq's Bayji refinery

M L Zarracina 1

1 Cornell University, Minneapolis, MN, USA

Abstract

Develops a dynamic model to analyze Heavy Fuel Oil (HFO) production and distribution at Iraq's largest oil refinery.  

Author studies the impact of instituting a more flexible export pricing model for HFO removal, which constrains production due to physical storage limitations on refined fuel production and revenue generation. The production model utilizes system dynamics concepts and incorporates six independent, uncorrelated inputs to effectively simulate historical trends.

The author adds an export pricing model to optimize the production model.  The analysis reveals significant increased revenue potential, ranging from $50 million USD to $1 billion USD annually, by implementing a pricing system that adjusts HFO export prices based on HFO storage levels with minimal downside risk.

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