More European Refineries Face Closures or Conversion by 2035, Industry Panel Warns
(Reuters) — European oil refineries will have to adapt to the energy transition or face a heightened risk of closure by 2035, a panel of executives said at the Financial Times Commodities Global Summit in Lausanne on Monday.
European refiners must confront a drop in demand for road fuels as electrification and energy transition legislation transform energy markets, also driving growth in investments for biofuels and alternative fuels.
"In 10 years' time most refineries will have gone down either a biorefinery route... or they will have done electrification and fuel switching to low carbon hydrogen, low carbon fuel," said Ruth Herbert, director at Essar Energy Transition, adding that refineries unable to convert to carbon capture or biorefining will be at risk of closure.
"Refineries will be much more complex in terms of feedstock, but not in terms of operational complexity," said Antonio Joyanes of Spain's Moeve, formerly Cepsa, adding that refineries will have to get used to a fuel mix comprising e-fuels, fossil fuels, and biofuels.
Joyanes also said that Moeve had considered halting processing in one of its distillation columns in its future scenarios, without specifying which of its refineries that would be for.
European refiners faced weaker profit margins last year, after the post-COVID recovery and energy security drives following widespread sanctions on Russia boosted margins in 2022-2023.
European refiners' profitability has also come under pressure from newer, more modernized refineries coming online in Africa and the Middle East in recent years, accelerating closures in Europe.
The trend of oil refinery closures and conversions is set to occur in Europe this year, with Scotland's only refinery, at Grangemouth, to convert to a fuel import terminal, and Shell's German Wesseling plant to cease crude processing.
"I think you'll see more consolidation in the sector (by 2035)", said Jay Gleacher, investment director at Vitol.
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