By ANDY HOFFMAN
Gunvor Group expects as many as 10 European refineries to
shut, mostly in Southern Europe, because of falling demand
for oil products.
A reduction in European capacity of 1 million to 2 million
bpd is possible, said David Fyfe, the Swiss commodity
traders global head of market research and analysis, in
an interview at the Global Energy conference in Geneva.
It is quite easy to say that five to 10 refineries,
probably the bulk of them in Southern Europe, may close over
the next five to seven years, said Fyfe, whose company
is the fifth-largest independent commodity trader.
European refineries are struggling with low capacity
utilization because of falling demand and a rise in
oil-product imports from U.S. refineries that have been
revived because of the shale-energy boom.
I dont think we are likely to see a scenario
where oil demand recovers structurally in Europe, Fyfe
said. This is a mature market.
Gunvors outlook is less bleak than some forecasts, Fyfe
said. Closures wont occur quickly and new entrants,
including commodity-trading companies, will step in to
purchase some troubled assets, he said.
You have the national oil companies, you have the
trading companies who see distressed assets and believe they
can run them more efficiently or they can gain a strategic
foothold in a given market, he said. That means
that capacity keeps on running.
Swiss commodity traders such as Vitol SA, Mercuria Energy
Trading SA and Gunvor are buying refineries in the belief
they can wring efficiencies out of the operations by pairing
them with their trading businesses. Gunvor, which is
registered in Cyprus
with major trading
operations in Geneva, purchased two refineries last year, one
in Ingolstadt, Germany, and another in Antwerp, Belgium.
Swiss-based independent refiner Petroplus filed for
insolvency last year and two of its five refineries remain