UK lawmakers to investigate decline in refining


LONDON -- An influential body of UK lawmakers said Friday it will open an inquiry into the challenges facing the country's oil-refining industry, to see if recent closures threaten security of supply.

The Energy and Climate Change Committee, which is appointed by parliament to examine government expenditure, administration and policy, said it was seeking evidence on what needs to be done to maintain a suitable baseline level of refining capacity.

The UK had 18 oil refineries in the late 1970s, but it has just seven in 2013.

The most recent to close, in 2012, was Coryton, one of the largest and most modern facilities in Europe that supplied 10% of the UK's fuel market. It was the second to shutter in the UK since the economic crisis hit in 2008.

Increased competition from ultra-modern refineries in Asia and the Middle East, and increasingly stringent environmental standards, are adversely affecting UK refineries, the committee said Wednesday.

Europe's economic woes are also playing their part, reducing demand for fuels such as diesel and gasoline. This combination of factors led to the insolvency of Swiss-based Petroplus, which owned Coryton.

Also, a continued spell of high crude prices has meant that refineries across Europe have struggled to make a profit. This week a French court ordered the liquidation of the Petit-Couronne refinery, which was part of Petroplus's stable, after rejecting two bids to take over the facility on the grounds that they didn't have the requisite investment financing.

The Energy and Climate Change Committee is seeking written evidence by May 20 on the reasons for UK refinery closures, the impact of domestic and European Union regulation on the industry and what mix of products is likely to be required in the future.

The committee is also seeking opinion on what factors will determine the future viability of the UK refining industry, the effect of closures on the country's energy security and what steps the government could take to maintain an appropriate level of refining capacity.

A spokeswoman for UKPIA, the industry group that represents the interests of the UK's refiners, described the decision to investigate the challenges facing the industry as "a very important step."

"The industry is going through a very difficult time," the spokeswoman said. "This is an important opportunity for us to get our voice heard."

Dow Jones Newswires

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