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European refining outlook unlikely to improve for next two years

09.24.2012  |  HP News Services

S&P executives say the depressed outlook for European refiners is unlikely to improve as the industry's export market shrinks and excess volumes of gasoline build.



BRUSSELS -- The depressed outlook for European refiners is unlikely to improve in the next two years as the industry's export market shrinks and excess volumes of gasoline build, Simon Redmond, director at Standard & Poor’s, said on the sidelines of the 6th Annual European Refining Markets Conference.

He said this gloomy outlook is deterring investors from injecting money into the sector, but without upgrades the industry won't be competitive in the long term.

“Lenders may say, at some point, we're not going to roll on to next year - we might want out,” he said.

Declining demand for fuel in Europe as cars become more fuel efficient amid ample supply of products like gasoline has put the industry at risk.

Since 2009, at least five European refiners have shut, 13 have changed ownership and three more are for sale.

The US is also importing fewer products from Europe thanks to access to cheap shale gas and strong refining margins there. Excess volumes of gasoline are struggling to find a home.

“Our traditional export market is disappearing,” said Isabelle Muller, secretary general of Europia, which represents the oil refining and marketing industry in Europe.

Even more European refineries are likely to close in the coming years as capacity in the European market far outweighs demand, Ms. Muller said.

Dow Jones Newswires

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