Implications of Petroleum refineries located in developing countries

Petroleum refineries are not necessarily located nearer to crude oil producing areas, particularly in many of the developing countries. Explain its implications.

    Petroleum refineries are not located near to crude oil producing areas because,

• Exhaustion of resources at the site would cause the investment at that location inactive and futile.
• The finished products do not weigh much lesser than the input since almost all by-products are put to some use.

Developing countries have attracted refineries because of cheap skilled labor, favorable government policies and expanding markets for consumption. Moreover, since processed petroleum products vaporize faster the location nearer to markets is economically profitable.

    Ports which are located strategically nearer to both petroleum producing and consuming nations have been the main attraction of refineries. Many developing countries with long coast lines have turned out to be the natural destination.

    Establishment of petroleum refineries has led to the numerous positive spin off effects.

• The refineries need forward and backward transport linkages for smooth and efficient delivery. This has led to the infusion of capital and spurred infrastructure growth in the developing countries.
• Stand alone refineries have given rise to townships with self sustaining capabilities and infrastructure.
• Numerous industries which use the by-products of petroleum refineries as inputs have come up in the locality. This has further increased jobs and propelled growth in the economy.

    The developing nations have benefited from infrastructure, jobs and growth due to location of petroleum refineries in the region.