Europe’s Refining Industry under Pressure – the Consequences for Industry and for Supply Security

Date: 2012-10-31

Location: AF HQ


The outlook for the European refining industry is challenging. Weaker domestic demand, EU regulations and shrinking local crude supply in Northwest Europe will continue to put pressure on capacity utilization and refining margins. The shift in transportation fuel consumption towards diesel creates an increased surplus of gasoline for export as well as growing import needs of diesel and other middle distillates. At the same time, global market forces make the competitive climate harder.

Investments in new refining capacity, particularly in the Middle East and Asia, outpace the expected increase in global demand. The trade in the Atlantic basin will be affected by growing self-sufficiency of crude oil and gas in North America and thereby a reduced need for gasoline import, although closure of US East coast refineries could open some new business opportunities. A number of European refineries have been shut down or mothballed and still more are "under review" by their owners. Several international oil companies focus on their upstream business, concentrating their refining business to a few core plants. International organizations, e.g. the IEA and OPEC, foresee a further need for rationalization of Europe's refining industry.