Refining industry trends: Europe and surroundings
The European refining industry, along with its counterparts, is struggling with low profitability due to excess primary and conversion capacity, high operating costs and impending decisions of stringent environmental regulations that will require significant investments with hard to justify returns. This region was also faced in the early 1980s with excess capacity on the order of 4 MMb/d and satisfying the {open_quotes}at that point{close_quotes} demand by operating at very low utilization rates (60%). As was the case in the US, the rebalancing of the capacity led to the closure of some 51 refineries. Since the early 1990s, the increase in demand growth has essentially balanced the capacity threshold and utilization rates are settled around the 90% range. During the last two decades, the major oil companies have reduced their presence in the European refining sector, giving some state oil companies and producing countries the opportunity to gain access to the consumer market through the purchase of refining capacity in various countries-specifically, Kuwait in Italy; Libya and Venezuela in Germany; and Norway in other areas of Scandinavia. Although the market share for this new cast of characters remains small (4%) relative to participation by the majors (35%), their involvement in the European refining business set the foundation whereby US independent refiners relinquished control over assets that could not be operated profitably as part of a previous vertically integrated structure, unless access to the crude was ensured. The passage of time still seems to render this model valid.
- OSTI ID:
- 539159
- Journal Information:
- Fuel Technology amp Management, Vol. 7, Issue 4; Other Information: PBD: May 1997
- Country of Publication:
- United States
- Language:
- English
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