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NEW YORK, June 15 (Reuters) - The market incentives are still not sufficient to spur BP Plc or other oil majors to build new refineries, BP America Inc. President Ross Pillari said on Wednesday.
"I don't think the market incentives are there," Pillari told an audience of reporters and analysts at BP's New York offices, where the company, the world's No. 2 company, was doing the U.S. roll-out of its annual world energy statistical review.
No new oil refinery has been built in the United States since 1976.
Projects to upgrade or expand existing refineries are supported by recent high refinery margins, but not new facilities, Pillari said.
U.S. refinery capacity rose 0.9 percent to 17.042 million barrels per day in 2005, according to the BP data released this week. U.S. refinery throughputs were up 1.1 percent in 2004, compared with a 13.4 percent rise by China, according the BP report.
BP reported a 29 percent rise in first-quarter 2005 profit, boosted by high oil and natural gas prices. Excluding nonoperating items such as gains from asset sales of $535 million, BP's first-quarter profit was $4.96 billion, up from $3.5 billion in the first quarter of 2004.
BP's chief economist, Peter Davies, noted that though refinery margins have been strong in 2004 and thus far in 2005, they were near historic lows in 2002.
In its weekly refining margins report issued Monday, Credit Suisse First Boston said refining margins, the profit companies make on a barrel of crude oil refined into products, were above mid-business cycle levels for the U.S., European and Asian markets.
But as of June 10, four-week averages for U.S. refining margins were slightly lower than the similar period in 2004.
BP's Pillari said that regulatory issues were also a hindrance to building new refineries.
He added that the Bush administration's idea of siting new facilities on closed military bases, with permitting issues perhaps more easily expedited, did not take into account the infrastructure needed nearby to get crude oil to any refinery and products to market after being refined.
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