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French refiners report $946 million in 2013 losses

02.05.2014  | 

France’s eight working refineries ran at 70% of capacity last year, while imports of diesel from the US and the Middle East increased and European exports of gasoline to the US dropped.

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By TARA PATEL
Bloomberg

Refiners in France lost 700 million euros ($946 million) last year as oil-processing margins shrank and the country imported more than half the diesel it used.

Refiners earned an average of 18 euros/ton, down from 36 euros/ton the previous year, according to the Union Francaise des Industries Petrolieres, or UFIP. The group, which represents companies such as Total and ExxonMobil, estimates margins of about 30 euros/ton are needed to break even.

“We are in a situation that is extremely worrying,” Jean- Louis Schilansky, who is head of UFIP, said at a press conference. “The current situation is not sustainable.”

More refineries will have to close in Europe, he said, without saying whether there will be shutdowns in France.

Political debate about the future of refining in the country intensified last year after Petroplus and Total shut plants and LyondellBasell mothballed another to adapt to lower demand. Total CEO Christophe de Margerie said last month that domestic capacity should be cut further to weather the decline in consumption.

France’s eight working refineries ran at 70% of capacity last year, while imports of diesel from the US and the Middle East increased and European exports of gasoline to the US dropped, according to a UFIP presentation.

French demand for oil products fell 0.7% to 75 million tons in 2013, UFIP said. The country, where most new cars sold run on diesel, imported 21.7 million tons of the fuel, or 56% of consumption.

Energy Costs

European refiners must contend with higher costs than their US counterparts, who benefit from cheap natural gas from shale. Energy makes up 30% of total expenses for oil processors in the US, compared with 60% for their European competitors, UFIP said.

French refining capacity dropped to 74.8 million tpy in 2013, including the mothballed LyondellBasell plant at Berre, from 98 million tons in 2009, according to UFIP statistics.

Customers in France can expect higher prices at the pump in 2015 and 2016 as fuel producers are more heavily taxed for carbon output, the Paris-based lobby group said. Diesel prices will rise by 8.5 euro cents per liter in 2016 compared with this year, while gasoline will increase by 7.7 cents per liter over the same period, UFIP data show.



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