European Refining Business Risks: What Drives Cycles And Profits? Oct 06

Standard & Poors, October 2006

Abstract
Cycles, differentiating factors between regional markets, company-specific crack spreads and light-heavy crude differentials, each of these has a pronounced impact on a refining company's profits and credit quality. As part of a series of articles on the European refining sector, Standard & Poor's Ratings Services takes a deeper look at the key business risks of the sector and sets out the key rating drivers. An introduction and overview is provided in the report titled "Will European Oil Refiners Be Prepared When The Cycle Turns?" while our financial approach to the sector is described in a follow-up article, "European Refining Financial Risks: Prudence Needed In Determining Future Refining Margins." To avoid confusion about terminology, definitions of crack spreads and refining margins...

Companies mentioned in this report are: BP PLC,Royal Dutch Shell PLC,Repsol-YPF S.A.,Eni SpA,Total S.A.,MOL Hungarian Oil and Gas PLC

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

BP PLC,Royal Dutch Shell PLC,Repsol-YPF S.A.,Eni SpA,Total S.A.,MOL Hungarian Oil and Gas PLC

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