[the_ad id="121217"]

popular articles

Europe: Reducing Refining Capacity in the Face of Energy Transition

Europe's once-thriving refining industry is gearing up for a historic capacity reduction, driven by the pressures of the energy transition and falling margins.
Réduction capacité raffinage Europe

Please share:

Experts predict that up to 1.5 million barrels per day could be eliminated in Europe by 2030, radically transforming the refining sector.

Energy Transition and Capacity Reduction

The golden era of European refining is coming to an end as companies face a major transformation due to the energy transition.
Demand for fossil fuels is gradually declining, driven by the rise of electric vehicles and policies to reduce CO2 emissions.
The International Energy Agency (IEA) predicts that 1 to 1.5 million barrels per day (b/d) of refining capacity in Europe could be shut down by 2030, well above the average annual shutdowns of 220,000 b/d observed to date.

Closures and Conversions in progress

Recent announcements of refinery closures in Germany, Italy and the UK demonstrate the trend.
Shell plans to cease crude processing at its Wesseling site by 2025, while BP is reducing its capacity at Gelsenkirchen by a third.
In Italy, the Livorno refinery has suspended operations, and the Grangemouth refinery in the UK may also close.
These initial announcements mark the beginning of a wider transformation, as refiners adapt their business models to new market realities.

Declining Margins and New Challenges

The war in Ukraine temporarily delayed refinery closures, boosting margins.
However, margins have now returned to more normal levels.
According to S&P Global Commodity Insights, ultra-low sulfur diesel (ULSD) margins in Northwest Europe, which peaked at $42/b in 2022, have fallen to $29.71/b in 2023.
In the long term, margins should continue to decline, with demand for diesel and gasoline falling as early as 2025.

Adjustment strategies and future prospects

Faced with this decline in margins, many refiners are choosing to close down their sites in Europe and concentrate on other regions.
ExxonMobil has cut its Western European capacity by a third since 2000, while Shell aims to have just two refineries left in Europe, focusing on North America and China.
According to forecasts, refinery utilization rates in North-Western Europe could fall from 84% in 2024 to 81% in 2027, leading to accelerated closures between 2029 and 2030.

Conversions to Biofuels

Some refiners see a long-term opportunity in converting their facilities into biofuel production sites or integrating them with petrochemical facilities.
The Livorno refinery in Italy and the La Mède and Grandpuits refineries in France are examples of this trend.
However, the profitability of these projects remains uncertain, depending heavily on government policies to stimulate demand and investment in this nascent sector.
The European refining industry is heading for a profound transformation, driven by the pressures of energy transition and global competition.
Refinery closures and conversions mark a historic turning point, requiring strategic adaptation to survive and thrive in a future where clean energy will dominate.

Register free of charge for uninterrupted access.

Publicite

Recently published in

Marathon Petroleum exceeded financial forecasts by increasing its refinery throughput and maximizing utilization rates. This strategy leverages fluctuations in the oil market to enhance profitability.
As oil reserves dwindle, Gabon and Equatorial Guinea vie for control over Mbanie Island, a strategic economic asset. A ruling from the International Court of Justice is expected in 2025.
As oil reserves dwindle, Gabon and Equatorial Guinea vie for control over Mbanie Island, a strategic economic asset. A ruling from the International Court of Justice is expected in 2025.
Saudi oil giant Aramco reports a 15% drop in net profit in the third quarter, driven by falling oil prices and reduced production, adding uncertainty to the global energy market outlook.
Saudi oil giant Aramco reports a 15% drop in net profit in the third quarter, driven by falling oil prices and reduced production, adding uncertainty to the global energy market outlook.
The American group ExxonMobil has finalized the sale of the Fos-sur-Mer refinery to Rhône Energies, a consortium led by Trafigura, marking a step in its strategy to reduce activities in France.
The American group ExxonMobil has finalized the sale of the Fos-sur-Mer refinery to Rhône Energies, a consortium led by Trafigura, marking a step in its strategy to reduce activities in France.
[the_ad id="121209"]
[the_ad id="121211"]
Italian energy giant Eni has finalized the sale of its Alaskan oil fields to American firm Hilcorp for $1 billion, advancing its strategy of refocusing on strategic assets.
Saudi Arabia, Russia, and six other OPEC+ countries extend their production cuts by 2.2 million barrels per day until the end of December to support oil prices weakened by uncertain demand.
Saudi Arabia, Russia, and six other OPEC+ countries extend their production cuts by 2.2 million barrels per day until the end of December to support oil prices weakened by uncertain demand.
Saudi Aramco and PetroVietnam signed a collaboration agreement to strengthen their activities in refining and petrochemicals in Vietnam, marking a new phase of strategic energy cooperation.
Saudi Aramco and PetroVietnam signed a collaboration agreement to strengthen their activities in refining and petrochemicals in Vietnam, marking a new phase of strategic energy cooperation.
The World Bank predicts an oil surplus that should drive down commodity prices despite tensions in the Middle East. Demand in China is slowing, contributing to this unprecedented imbalance.
The World Bank predicts an oil surplus that should drive down commodity prices despite tensions in the Middle East. Demand in China is slowing, contributing to this unprecedented imbalance.
[the_ad id="121213"]
[the_ad id="121214"]
In Venezuela, five of the last eight Oil Ministers are imprisoned or on the run, accused of corruption. This strategic sector, vital to the country, is plagued by recurring scandals.
U.S. crude inventories are expected to increase by 800,000 barrels as refineries slow down, leading to reduced stocks of essential refined products like gasoline and distillates.
U.S. crude inventories are expected to increase by 800,000 barrels as refineries slow down, leading to reduced stocks of essential refined products like gasoline and distillates.
European energy giants Eni and BP resume onshore drilling activities in Libya after ten years, as the country seeks to double its oil production within five years.
European energy giants Eni and BP resume onshore drilling activities in Libya after ten years, as the country seeks to double its oil production within five years.
OMV, the Austrian energy giant, exceeds forecasts for the third quarter of 2024, driven by its chemical division, which offsets declining results in the fuel and raw materials sector.
OMV, the Austrian energy giant, exceeds forecasts for the third quarter of 2024, driven by its chemical division, which offsets declining results in the fuel and raw materials sector.
BP reports a 30% drop in profit for the third quarter of 2024, impacted by a decline in global oil demand and reduced refining margins. How is the energy giant responding to these new challenges?
Ghana plans to source petroleum products from Nigeria's Dangote refinery, aiming to reduce its monthly fuel import bill, estimated at $400 million.
Ghana plans to source petroleum products from Nigeria's Dangote refinery, aiming to reduce its monthly fuel import bill, estimated at $400 million.
The Thali oil project of Tower Resources in Cameroon receives a major financing offer that could unlock crucial advancements, conditional on obtaining an essential license extension.
The Thali oil project of Tower Resources in Cameroon receives a major financing offer that could unlock crucial advancements, conditional on obtaining an essential license extension.
Canadian company Zimar Inc has signed an agreement to develop a modular refinery in Niger, aiming to increase the country’s oil processing capacity and stimulate refined product exports.
Canadian company Zimar Inc has signed an agreement to develop a modular refinery in Niger, aiming to increase the country’s oil processing capacity and stimulate refined product exports.
[the_ad id="121219"]
CNOOC Limited, a Chinese oil and gas company, reports record growth in production and net profit for the first three quarters of 2024, marking unprecedented performance despite an unstable external environment.
Galp has launched a new drilling phase to assess the potential of Mopane, off the coast of Namibia, marking a turning point for the development of what could become the country’s largest oil discovery.
Galp has launched a new drilling phase to assess the potential of Mopane, off the coast of Namibia, marking a turning point for the development of what could become the country’s largest oil discovery.
African economies dependent on oil are stagnating, growing at half the rate of the rest of the region. The IMF highlights a lack of diversification and investment as key factors behind this lag.
African economies dependent on oil are stagnating, growing at half the rate of the rest of the region. The IMF highlights a lack of diversification and investment as key factors behind this lag.
Benin intensifies efforts to attract investors in the offshore oil sector. TGS begins 3D seismic surveys to identify new offshore oil prospects in Beninese waters.
Benin intensifies efforts to attract investors in the offshore oil sector. TGS begins 3D seismic surveys to identify new offshore oil prospects in Beninese waters.
In September, Brazil replaced Malaysia as the top supplier of blended bitumen to China, due to banking restrictions and new trade opportunities with Latin American countries.
BW Energy plans to reach a production of 40,000 barrels per day off the coast of Gabon by the end of 2024, thanks to an intensive drilling campaign in the Dussafu block.
BW Energy plans to reach a production of 40,000 barrels per day off the coast of Gabon by the end of 2024, thanks to an intensive drilling campaign in the Dussafu block.
Venezuela has arrested the former oil minister and ex-CEO of PDVSA over accusations of collaborating with U.S. intelligence, sparking new political tensions in the country.
Venezuela has arrested the former oil minister and ex-CEO of PDVSA over accusations of collaborating with U.S. intelligence, sparking new political tensions in the country.
South Sudan has resumed its crude oil exports via Sudan after a prolonged halt due to technical issues. This restart marks a crucial step for the country’s struggling economy.
South Sudan has resumed its crude oil exports via Sudan after a prolonged halt due to technical issues. This restart marks a crucial step for the country’s struggling economy.

Advertising