Petroleum refineries are set up near three locations viz. Raw material site, Market place or Break of the bulk location i.e. ports or coastal areas were mode of transportation changes from ships to pipelines.
Location at Raw material
Petroleum industry will become useless after the raw material is exhausted. The cost of transportation saved is only 10-11% so not much impact. Petroleum is not a high weight loss raw material and all by-products obtained at different stages are utilized. However refined products have a high rate of evaporation so industry has certain advantages for location near site of raw materials.
Areas of raw materials such as Middle east and Africa have seen nationalization and so tough for industries to be located here. The political situation is also tense.
Location near Ports
Petro-chemical complexes are also located near ports as the facilitation of exports and imports is high there. The regions like Middle east and South America aren’t industrialized and so prefer to export crude oil or refined products. The countries like Japan that depend on imported oil also have refineries at port location.
Location near Market Place
Petro-chemical refineries located near market place too have advantage as they can switch from getting raw material like crude oil from one place to another. Improvement in transportation like tankers, pipelines also make supply to market easy. The by products too are consumed. Metropolitan areas provide unskilled labor and skilled labor for the industries. Secondary industries too can come up.
Secondary industry like Nylon, polyester i.e. true synthetic fiber industry depends on petro-chemical industry. Benzene is a base material needed for manufacturing of true synthetic fibers but this is volatile and toxic hence difficult to transport. However manufacturing of synthetic fibers is done then the fibers are non volatile and can be transported easily. Hence such industries are located close to petro-chemical complexes.
Natural synthetic fibers like rayon are made from cellulose or wood pulp. They are present close to pulp mills.
Natural gas is also a source of energy but it has advantages over petroleum like cheap, no extensive need for refining and lower carbon emissions. The disadvantages are transportation is difficult, pipelines are cheapest option however the initial capital is high and once a pipeline is laid it can’t be increased. If natural gas isn’t consumed it is destroyed by fracking.As it is economical to mine gas only where market is available and pipeline distribution is laid the location of industries depends on this.
Natural gas is also needed for manufacturing of ammonia. Ammonia is essential in urea based fertilizers. The other constituent of urea based fertilizers is Neptha obtained from crude oil refining. Thus fertilizer industry is located near Natural gas refineries.
Labor requirement is less and skilled labor is needed. But skilled labor is highly mobile and so can migrate to townships specifically built for petro-chemical employees.