By RUPERT ROWLING
Europes biggest wave of refinery
shutdowns since the 1980s
will probably last through the end of the decade, deepening
nations dependence on imports, according to the
UKs biggest buyer of automotive fuels.
The UK will import 70% of its diesel by 2020, from about 40%
now, with similar trends likely across the region, Andrew
Owens, CEO of Greenergy Fuels, said in an interview in
Many of Europe
s refineries were
built decades ago to produce gasoline, the main fuel at the
time. Diesel demand has since surged and some plants
cant adapt, creating a gasoline glut and diminishing
About 15% ceased all or some production since 2008, the
International Energy Agency in Paris estimates. Some
converted into fuel stores, something Greenergy is seeking
partners for at two or three sites.
As we look at increasingly dark times on refining
, the case for converting,
not all but some, to terminals is increasing, Owens
said March 12. Its kind of the opposite of a
Gasolines crack, a measure of the profit from producing
the fuel from crude oil, averaged about $8/bbl in the past
year, according to data from brokerage PVM Oil Associates.
The crack for gasoil, a price benchmark for diesel, averaged
$14.28/bbl, according to data compiled by Bloomberg.
While Europe made more gasoline than it consumed last year,
the continent imported 13% of its diesel, jet fuel and
gasoil, mostly from Russia, India
and the US, according to
Wood Mackenzie, a consultant to the industry.
Europes major product was gasoline as recently as
2000 and most refineries were built before then, said
Jonathan Leitch, a London-based senior analyst at Wood
Mackenzie. Gasoline demand has since weakened as more of Europe
s cars switched to
diesel, he said.
In order to produce more diesel, European refiners also need
to make more gasoline, compounding the glut, Owens said.
In the UK we have seven refineries, but probably by
2020 three refineries will be enough to make enough
gasoline, he said. Based on UK yields, you
probably will need about 14 refineries to make the
Demand for gasoline in developed European economies was 1.93
million bpd last year, while refiners in the region produced
2.73 million bpd, according to Wood Mackenzie. Consumption of
diesel and gasoil was 5.98 million bpd, with output totaling
5.31 million bpd.
Europe has the capacity to import more oil products and less
crude, according to Royal Vopak, the worlds largest
independent storage provider. Key hubs and secondary
distribution locations will need some additional
investment to adapt to the changes, Frits Eulderink,
Vopaks chief operating officer, said March 18 in
response to e-mailed questions.
The economies will import a total of 25% of their diesel, jet
fuel and gasoil by 2020, Wood Mackenzie estimates.
The whole situation for refineries now is like the
gunfight at the O.K. Corral, Chris Hunt, director
general of the UK Petroleum Industry Association, said at a
conference in Dusseldorf, Germany on March 18. Everyone
is looking at everyone else and thinking, if you guys die,
that means my life gets better. The UK is no different from
the rest of Europe
, we have a supply-demand