More refineries in Europe are at risk of permanent closures, with fuel demand on the continent falling again as major economies re-imposed lockdowns to fight the spike in coronavirus cases.
Gasoline demand in Europe is expected to be between 15 and 20 percent lower in November and December compared to the same months of 2019, Argus reported, citing market participants.
The new lockdowns, partial lockdowns, and curfews in the biggest economies in Europe, including the UK, Germany, France, Italy, and Spain, are dragging down oil demand again while a double-dip recession in the Eurozone and wider Europe now looks almost inevitable.
Refiners have struggled since the spring with the crash in fuel demand, and many of them are restructuring operations, including closing down permanently crude oil processing capacity.
Petroineos, a joint venture of Ineos and PetroChina, said earlier this month it plans to permanently close some units at the 210,000-bpd Grangemouth refinery, the only refinery in Scotland, which will cut the facility’s refining capacity to 150,000 bpd.
Neste of Finland said in September that it was exploring the shutdown of its refinery operations in Naantali and transforming the Porvoo refinery operations to co-processing renewable and circular raw materials.
“The forthcoming operating and maintenance investments in the Naantali refinery are not viable nor sustainable in a situation where there is large over-capacity for oil refining globally,” Neste’s President and CEO Peter Vanacker said in September.
Refiners in the United States are also idling refinery capacity and cutting jobs to cope with the losses from the demand crash.
Refiners around the world have been announcing permanent closures of refinery capacity this year, but significant overcapacity still remains, the International Energy Agency (IEA) said in its monthly Oil Market Report last week. Permanent shutdowns of refinery capacity have reached 1.7 million bpd. But more than 20 million bpd crude oil distillation capacity now sits idle, the Paris-based agency said, noting that “there remains significant structural overcapacity.”
Credit: oilprice.com
