A game theoretic framework for petroleum refinery strategic production planning

A game theoretic framework for strategic refinery production planning is presented in which strategic planning problems are formulated as non‐cooperative potential games whose solutions represent Nash equilibria. The potential game model takes the form of a nonconvex nonlinear program (NLP) and we examine an additional scenario extending this to a nonconvex mixed integer nonlinear program (MINLP). Tactical planning decisions are linked to strategic decision processes through a potential game structure derived from a Cournot oligopoly‐type game in which multiple crude oil refineries supply several markets. Two scenarios are presented which illustrate the utility of the game theoretic framework in the analysis of production planning problems in competitive scenarios. Solutions to these problems are interpreted as mutual best responses yielding maximum profit in the competitive planning game. The resulting production planning decisions are rational in a game theoretic sense and are robust to deviations in competitor strategies. © 2017 American Institute of Chemical Engineers AIChE J , 63: 2751–2763, 2017