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Drop in European oil products demand menaces refineries-CONCAWE
September 26, 2012 / 1:21 PM / 5 years ago

Drop in European oil products demand menaces refineries-CONCAWE

* Fall of 166 mln tonnes in fossil fuel demand seen by 2030
    * Demand loss equivalent to nine largest EU refineries
    * Investment of $51 bln needed to meet changing product mix

    By Claire Milhench
    LONDON, Sept 26 (Reuters) - Up to 40 small refineries in
Europe could close over the next two decades, if they cannot tap
growing export markets, because demand for oil products in the
region is expected to drop, a study by industry association
CONCAWE shows.
    A total of 166 million tonnes will be lost from fossil fuel
demand between 2005 and 2030, according to the study presented
by Michael Lane, secretary general of CONCAWE, at the Platts
European Refining Markets Conference in Brussels on Tuesday. 
    CONCAWE is the oil companies' European association for
environment, health and safety in refining and distribution. Its
members represent nearly 100 percent of European refining
capacity.
    "What is quite shocking is that this 166 million tonnes of
demand decline is equivalent to the combined capacity of the
nine biggest refineries in Europe or the 40 smallest, almost
half of the 90 currently active EU mainstream refineries," Lane
said, whilst noting that export demand could help offset this.
    The study shows some 32 million tonnes being stripped from
heating oil demand, 39 million tonnes from inland heavy fuel oil
demand due to substitution by natural gas and improved boiler
efficiency, and 43 million tonnes from road fuel demand.
    
    
    LEGISLATIVE PRESSURES
    Lane cited legislative pressures to reduce carbon emissions
from passenger vehicles in the European Union, which will lead
to some substitution of fossil fuels by renewables, as well as
improved vehicle efficiency. 
    Total road demand for diesel and gasoline is expected to
shrink by 81 million tonnes between 2005 and 2030, mainly due to
a steep decline in demand for gasoline.
    Middle distillates will therefore make up a greater
percentage of the demand mix, accounting for 61 percent by 2030,
up from 46 percent in 2000.
    "It will be increasingly difficult for gasoline-oriented EU
refineries to meet this changing demand ratio," Lane said.
    Instead, refinery operating rates are expected to decline in
line with demand trends, with utilisation rates of crude
distillation units (CDUs) - the central unit in a refinery -
seen slumping to 74.5 percent by 2030 from 85.8 percent in 2008,
the study showed. 
    The average EU refinery utilisation rate is seen by the
CONCAWE study falling to 82 percent in 2015, from 86 percent in
2008, in spite of the closure of 5 percent of refining capacity
between 2008 and 2015 that has already been announced.
    However, Europe will have to try to increase its production
of diesel and jet fuel to make up the growing shortfall as
demand patterns shift. The investment projects announced to date
should boost European distillates hydrocracker capacity by 28
percent, Lane said. 
    "But the announced investments only address part of the
total needs," he added, saying an estimated $51 billion in
expansion would be required between 2008 and 2020, compared with
the $30 billion in projects so far announced.

 (Reporting by Claire Milhench; Editing by Anthony Barker)

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