IRPC Europe '17: European refiners look to preserve market share in expanding global industry

VIENNA—Viren Doshi, former Senior Vice President and Head of Oil and Gas Practice at Strategy&, discussed the market outlook for the European refining industry in a market keynote on Day 1 of International Refining and Petrochemical Conference (IRPC) Europe.

Viren Doshi, former Senior Vice President and Head of Oil and Gas Practice at Strategy&.
Viren Doshi, former Senior Vice President and Head of Oil and Gas Practice at Strategy&.

Mr. Doshi discussed how feedstock trends are aggravating the situation for European refiners. New feedstock pathways are becoming economical or seeing resurgence, including as gas to liquids. Expanding refining capacity in Asia is also taking market share away from Europe.

In 1985, Europe claimed 24.2% of global fuel demand; however, this percentage decreased to 19.5% in 2005 and to 15.1% in 2015. Meanwhile, Asia-Pacific claimed 17.7% of global demand in 1985, and the region's share increased to 29% in 2005 and to 34.1% in 2015.

Risks facing European refiners. One risk for the European refining sector is the possibility of the US ending gasoline imports from Europe. The US already exports gasoline components to Latin America, and refinery upgrades in the US Midwest have added to a gasoline surplus in the US. However, the US East Coast still imports gasoline from the EU, the Former Soviet Union and the Middle East.

Another risk for European refiners is Russia's anticipated flood of on-specification jet fuel and diesel. Russia has launched a $55-B program to crack deeper and produce Euro 4- and Euro 5-specification fuels. This means that Russia could start exporting more finished product to Europe, instead of dumping off-spec jet fuel and gasoil supplies to European refiners for blending.

A third risk is the refining expansion trend in the Middle East. The ME region wants to export more product and add value to its crude, as well as increase its global presence. Saudi Arabia and Kuwait are already producing Euro-spec fuels for export, and Iran and Iraq are expected to follow suit as their political environments stabilize, Mr. Doshi noted.

IRPC Europe is taking place at the Hilton Vienna Danube Waterfront in Vienna, Austria, from June 6–8.

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