Europe Refiners face New Wave Closures due US plants?

[basil parmesan]

European refiners face new wave of closuresWednesday, 02 October 2013 00:08 Posted by Muhammad IqbalBusiness Recorder PakistanLONDON:Europe faces a new wave of refinery closures due to rising competitiveness of US plants which can run on cheap gas and a continued fall in European demand, the heads of major trading houses said on Tuesday.
Torbjorn Tornqvist, chief executive of traders Gunvor said overcapacity in Europe and increasing flows from the United States would further pressure an already vulnerable industry.
“Last year you saw a wave of closures. Gasoline demand has lost more than anticipated which is worrying for refiners,” he told the Oil & Money conference in London.
“In the next two years we will see probably five, six plants, 500,000-700,000 barrels per day being closed,” he said speaking on a panel with representatives from his two major rivals, Vitol and Glencore.
He said increased production and lower costs from other regions, in part the shale revolution in the United States, made the closures inevitable.
“I think it’s necessary to bring balance because in the rest of the world it will increase by about 2 million bpd a day this year or one and a half clearly, refiners are going to be under pressure.”
Alex Beard, director of the oil commodity department at Glencore highlighted the importance of the growing strength of US refiners relative to their European peers in coming years.
“It’s important to say the US refining sector is doing fantastically well compared to five years ago,” Beard said.“The trend of US exporting products is going to continue, you’re going to see diesel coming from the United States to Europe for the foreseeable future,” he said.
Ian Taylor, chief executive of Vitol, also stressed the importance of the US refiners’ resurgence.
“We saw a ship for the first time ever ballasting empty to go to the Gulf coast to pick up a cargo,” he said. “It was not taking gasoline across to the United States. The best place to find a cargo for distillate was the United States.”
Tornqvist said US refiners benefited from being able to run refiners exclusively on gas. “If you generalise, (the cost base is) an average of $2 per barrel less in Europe than in the United States,” he said.

[Charles Randall]

Here is update forecasting more EU Refineries closing mostly due to US competitive plants.  The US position and diesel exports are probably overstated based on Shale crude discount price that has largely disappeared already from rail moves eliminating the Cushing glut and WTI discounts (along with Shale crude trapped there).
 
But there is little doubt that several small  refineries in Europe that are over environmentally regulated and neither complex or competitive will continue to be closed. A lot of the capacity for EU region is more likely to pass to East EU and Russian plants (see post coking.local Energy – Flood Russian Diesel hits EU refiners) and also from Imports from China and India. It is true that US recent exports have cut drastically into these countries exports for Europe.
 
As they say doesn’t matter if the cup hits the hammer or hammer hits cup ….. its still very bad for the cup (Europe Refineries in this case).  Since it is unlikely European Over-regulated environmental requirements will be relaxed – even without Kyoto Treaty driver, the path Europe is on for closure will be similar to the ones being taken by its US understudies on the East and West coast of the US.
Regards

[Anonymous]

This one is similar piece.
 
Europe Faces New Wave of Oil Refinery Extinctions
LONDON, Oct 16 (Reuters) – After a year of respite from bankruptcies, protests and closures, Europe’s oil refining industry is cracking again under pressure of ferocious global competition and shrinking domestic demand.
The decision this month to shut a small refinery in northern Italy and the possible closure of a major plant in Scotland signal that a new wave of closures in the sector is coming – even faster than the industry had expected.
“The reason we didn’t hear about other shutdowns this year is because 2012 was a good year, with refinery utilization rates near 80 percent,” according to David Wech, managing director of Vienna-based JBC Energy consultancy.
“This year we haven’t seen closures and that is why pressure is accumulating… Especially in East European countries there is far too much capacity so you can expect much of the next consolidation round there,” he said.
Italy’s 52,000 barrels per day (bpd) Mantua refinery will halt operations on New Year’s Eve and be converted into a product storage terminal, its owner Hungary’s MOL Group said this month.
The closure was “a consequence of the unfavourable economic environment that the refining business faces in Italy,” said Ferenc Horváth, downstream vice president for MOL.
Demand for refined fuels in Italy dropped from 116 million tonnes in 2000 to 80 million tonnes in 2012, he said.
In Scotland, the 210,000 bpd Grangemouth refinery was shut down earlier this week in a labour dispute that could lead to the plant’s full closure.
A total of 16 European refineries, or 1.7 million bpd of refining capacity has been mothballed since 2008, according to the International Energy Agency.
Europe’s nameplate capacity stood at around 16 million bpd in 2012, according to the IEA.
Around 330,000 bpd of European refining capacity – or six Mantua refineries – need to be shut down every year by 2020 in order to meet declining demand and rising competitive pressures, Wech said.
THE LOSER IS EUROPE
Many of Europe’s refineries, numbering around 120, were built in the two decades following the Second World War and are heavily geared towards gasoline production.
But as demand for gasoline sharply declined in recent years in favour of diesel, refineries today face a huge surplus of gasoline which is increasingly hard to sell overseas as demand from the United States weakens.
At the same time, massive state-of-the-art refineries in the United States, Asia and the Middle East are sending ever-growing volumes of diesel to Europe.
And as they benefit from cheaper feedstock and lower energy costs, they can easily compete against Europe’s regional refiners.
“Cheap gas is making a huge difference to the profitability of U.S. refining industry. The loser is Europe. It has to be. There is no consolidation going on and no great consolidation hope,” Torbjorn Tornqvist, chief executive officer of trading house Gunvor told the Oil & Money conference this month.
Diesel imports from Russia, Asia and the U.S. Gulf Coast reached a record 4 million tonnes in September, according to traders.
“The trend of U.S. exporting products is going to continue, you’re going to see diesel coming from the United States to Europe for the foreseeable future,” the head of Glencore’s oil division Alex Beard said this month.
2013 may go down as one of the weakest in recent decades, as refining margins in the third and fourth quarter plummeted due to high crude costs and weak product demand.
Total, Europe’s biggest refiner, said refining margins in the region had dropped to a near four-year low of $10.6 per tonne in the third quarter.
Other than the old, simple East European refineries, plants in coastal areas such as Italy that are easily accessible for importing remain the most vulnerable.
This year was set to go down as one of the worst for the European refining industry, with refinery utilisation slipping down to around 78 percent in 2013, according to JBC.
The path taken by the Mantua refinery is not new.
Last year, TotalErg, a joint venture between France’s Total and Italian refiner ERG, converted its 90,000 bpd refinery outside Rome to a storage hub.
Reflecting the region’s changing realities, the Fiumicino terminal receives around 100,000 tonnes of diesel per month from India’s Reliance Industries, which operates the world’s largest refining complex, according to trading sources.
Major traders and refiners have invested heavily in oil storage terminals in Europe and other key as trade becomes global. (Reporting by Ron Bousso and Dmitry Zhdannikov, additional reporting by Stephen Jewkes in Milan, editing by William Hardy)

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