| WASHINGTON: Uncertainty over fuel demand and losses caused by the Covid-19 pandemic have led to oil refiners permanently closing processing plants in Asia and North America. There are fears facilities in Europe could soon follow suit. Global demand tumbled 30 per cent due to the pandemic and refiners maintained a wait and watch attitude, idling plants. However, with prospects of recovery bleak, many refiners are now opting for permanent shutdowns. Royal Dutch Shell will permanently shut its 110,000-barrels per day (bpd) Tabangao facility in the Philippines’ Batangas province, one of only two oil refineries in the country. Shell blamed a pandemic-led slump in margins for turning the plant into an import terminal. Marathon Petroleum, the largest US refiner by volume, plans to permanently halt processing at refineries in Martinez, California, and Gallup, New Mexico. The California plant would be turned into an oil storage facility and may convert to produce renewable diesel, a fuel made from industrial waste and used cooking oil.“Around four million bpd of shutdowns will be necessary over the next few years to underpin a meaningful refinery margin recovery,” said Kostantsa Rangelova, head of downstream, JBC Energy. “Of that, we see about 1.5 million bpd coming from Asia, with OECD and Southeast Asian refiners showing the greatest vulnerability,” Raneglova said. JBC Energy said it expected a strong push for consolidation in China’s refining sector, potentially offsetting part of the strong capacity growth expected in the country. Plants in Japan, Australia and New Zealand could be likely candidates for closure ahead, said Mia Geng, at consultancy FGE. Refining NZ said in late June it was considering shutting New Zealand’s only oil refinery and turning it into a fuel import terminal in the long run, but first would reduce its operations to cut costs and break even into 2021. The coronavirus-driven collapse in fuel demand is also threatening Australia’s oil refining industry, just as supply chain disruptions wrought by the pandemic have focused the government on the need to shore up fuel security.There have been no permanent plant closures in Europe due to the virus. However, Gunvor Group said in June it was considering mothballing its 110,000-bpd refinery in Antwerp as Covid-19 hurt the plant’s economic viability. Energy consultancy Wood Mackenzie separately estimated 1.4 million bpd – about 9 per cent – of refining capacity in Europe is at risk of shutdowns by 2022-2023. It put plants in Netherlands, France, and Scotland on a list of potential closures.  |
Demand uncertainty, losses lead to oil refiners closing plants
Many refiners are now opting for permanent shutdowns.
